SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995
____ Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ______________ to
_____________
Commission File Number: 0-16014
ADELPHIA COMMUNICATIONS
CORPORATION
(Exact name of registrant as specified in its charter)
Delaware ..........................23-2417713
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
5 West Third Street
P.O. Box 472
Coudersport, PA 16915
(Address of principal (Zip code)
executive offices)
814-274-9830
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No ______
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
At November 14, 1995, 15,364,009 shares of Class A Common
Stock, par value $0.01, and 10,944,476 shares of
Class B Common Stock, par value $0.01 per share, of the registrant
were outstanding.
ADELPHIA
COMMUNICATIONS CORPORATION
INDEX
..........
Page Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1995 and
September 30, 1995............................ 3
Consolidated Statements of Operations - Three and Six Months
Ended September 30, 1994
and 1995...................................... 4
Consolidated Statements of Cash Flows - Six Months Ended
September 30, 1994 and 1995......
........................................................ 5
Notes to Interim Consolidated Financial
Statements...............................................6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations........................................... 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.............................. 18
Item 2. Changes in Securities.......................... 18
Item 3 Defaults Upon Senior Securities..................18
Item 4 Submission of Matters to a Vote of Security
Holders................................................. 18
Item 5 Other Information............................... 19
Item 6. Exhibits and Reports on Form 8-K............... 19
SIGNATURE............................................... 20
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ADELPHIA COMMUNICATIONS CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share amounts)
March 31, Sept. 30,
ASSETS: 1995 1995
Cable television systems, at cost, net of
depreciation and amortization:
<S> <C> <C>
Property, plant and equipment $ 518,405 $ 542,225
Intangible assets 546,116 545,487
Total 1,064,521 1,087,712
Cash and cash equivalents 5,045 3,723
Investments 48,968 56,690
Preferred equity investment in Managed
Partnership 18,338 18,338
Subscriber receivables - net... 20,433 21,452
Prepaid expenses and other assets - net.... 48,352 62,266
Related party investments and receivables - net 61,634 50,669
Total..... $ 1,267,291 $ 1,300,850
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY):
Notes payable of subsidiaries to banks and
institutions..... $ 1,086,350 $ 1,149,141
12 1/2% Senior Notes due 2002....... 400,000 400,000
10 1/4% Senior Notes due 2000....... 99,011 99,082
11 7/8% Senior Debentures due 2004...... 124,470 124,486
9 7/8% Senior Debentures due 2005 127,994 128,055
9 1/2% Senior Pay-In-Kind Notes due 2004.... 164,370 172,178
Other debt...... 19,415 17,873
Accounts payable... 42,872 58,968
Subscriber advance payments and deposits..... 16,494 16,736
Accrued interest and other liabilities....... 87,751 91,431
Deferred income taxes... 110,139 107,777
Total liabilities..... 2,278,866 2,365,727
Commitments and contingencies (Note G)
Stockholders' equity (deficiency):
Class A Common Stock, $.01 par value,
50,000,000 and 200,000,000 shares authorized,
respectively; 14,906,691 and 15,364,009 shares
outstanding, respectively. 149 154
Class B Common Stock, $.01 par value,
25,000,000 shares authorized and 10,944,476
shares outstanding 109 109
Additional paid-in capital 211,190 216,185
Accumulated deficit (1,223,023) (1,281,325)
Total stockholders' equity
(deficiency) (1,011,575) (1,064,877)
Total $ 1,267,291 $ 1,300,850
See notes to interim consolidated financial
statements.
</TABLE>
<TABLE>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
September 30, September 30,
1994 1995 1994 1995
<S> <C> <C> <C> <C>
Revenues... $ 90,795 $ 97,082 $ 174,815 $ 194,003
Operating expenses:
Direct operating and 26,632 29,630 51,528 58,152
programming
Selling, general and 15,117 17,110 29,810 33,980
administrative
Depreciation and 25,267 26,165 46,756 53,789
amortization
Total 67,016 72,905 128,094 145,921
Operating income. 23,779 24,177 46,721 48,082
Other income (expense):
Interest income from
affiliates 2,386 3,378 4,755 6,788
Other income... 270 863
Priority investment
income from Olympus 5,575 6,575 11,150 12,150
Interest expense.. (48,412) (52,754) (95,325) (105,878)
Equity in loss of joint
ventures (8,984) (9,629) (21,618) (20,683)
Total (49,165) (52,430) (100,175) (107,623)
Loss before income taxes (25,386) (28,253) (53,454) (59,541)
Income tax benefit (expense) 1,119 195 (104) 1,239
Net loss...... $ (24,267) $ (28,058) $ (53,558) $ (58,302)
Net loss per weighed
average share
of common stock $ (0.99) $ (1.07) $ (2.19) $ (2.22)
Weighted average shares of
common stock outstanding 24,452 26,308 24,452 26,301
See notes to interim consolidated financial statements.
</TABLE>
<TABLE>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Six Months Ended
September 30,
1994 1995
Cash flows from operating activities:
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Net loss.. $ (53,558) $ (58,302)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation..... 31,920 33,383
Amortization.... 14,836 20,406
Noncash interest expense.... 7,162 7,956
Equity in loss of joint ventures... 21,618 20,683
Deferred income tax expense (benefit).. 36 (2,362)
Change in operating assets and liabilities,
net of effects of acquisitions:
Subscriber receivables..... 674 (1,019)
Prepaid expenses and other assets... (8,865) (20,980)
Accounts payable..... 9,483 16,096
Subscriber advance payments and deposits (1,171) 242
Accrued interest and other liabilities 530 3,469
Net cash provided by operating activities.. 22,665 19,572
Cash flows from investing activities:
Cable television systems acquired.... (47,693) (17,846)
Expenditures for property, plant and equipment . (40,703) (51,026)
Amounts invested in and advanced to Olympus and
related parties....... (47,889) (3,632)
Investments in other joint ventures... (20,587) (8,808)
Net cash used for investing activities. (156,872) (81,312)
Cash flows from financing activities:
Proceeds from debt 93,787 117,319
Repayments of debt.. (26,039) (56,901)
Net cash provided by financing activities.. 67,748 60,418
Decrease in cash and cash equivalents...... (66,459) (1,322)
Cash and cash equivalents, beginning of year 74,075 5,045
Cash and cash equivalents, end of period... $ 7,616 $ 3,723
See notes to interim consolidated financial statements.
</TABLE>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Dollars in thousands)
The accompanying unaudited interim financial statements of
Adelphia Communications Corporation and its majority owned
subsidiaries ("Adelphia") have been prepared in accordance with the
rules and regulations of the Securities and Exchange Commission.
In the opinion of management, all adjustments, consisting of
only normal recurring accruals necessary to present fairly the
unaudited results of operations for the three and six months ended
September 30, 1994 and 1995, have been included. These interim
consolidated financial statements should be read in conjunction
with Adelphia's consolidated financial statements included in its
Annual Report on Form 10-K for the fiscal year ended March 31, 1995
("Annual Report").
A. Significant Events Subsequent to the 1995 Annual Report:
On April 3, 1995, Olympus Communications, L.P. ("Olympus")
acquired all of the cable and security systems of WB Cable
Associates, Ltd. ("WB Cable") serving approximately 44,000 cable
and security monitoring subscribers for a purchase price of
$82,000. WB Cable provides cable services from one headend and
security monitoring services from one location in West Boca Raton,
Florida. Of the purchase price, $77,000 was paid in cash and
$5,000 was paid in Adelphia Class A Common Stock. The acquisition
has been accounted for under the purchase method of accounting, and
was financed principally through borrowings under an Olympus credit
agreement.
On April 12, 1995, Adelphia acquired cable systems from Clear
Channels Cable TV Company located in Kittanning, New Bethlehem and
Freeport, Pennsylvania, for $17,456. These systems serve
approximately 10,700 subscribers. The acquisition of these systems
has been accounted for using the purchase method of accounting.
The consolidated statements of operations and cash flows include
the operations of the acquired systems since April 12, 1995.
On June 12, 1995, Adelphia announced the signing of
definitive agreements for the purchase of all of the cable systems
of Eastern Telecom Corporation, Robinson Cable TV, Inc. and First
Carolina Cable TV, L.P. These systems together serve approximately
58,000 subscribers located in western Pennsylvania and Vermont and
are being purchased for an aggregate price of $92,000.
Concurrently, Olympus announced the signing of a definitive
agreement for the purchase of all of the southeast Florida cable
systems of the Leadership Cable division of Fairbanks
Communications, Inc., which serve approximately 50,000 cable and
security monitoring subscribers, for a purchase price of $94,000.
On June 28, 1995, Adelphia and other relevant parties
terminated their previously announced November 1994 letter of
intent to increase by $63,000 to $75,000 the overall investment of
Adelphia and the companies it manages (the "Adelphia Group") in
cable systems held by Tele-Media Investment Partnership, L.P. and
certain other Tele-Media controlled entities (collectively, "Tele-
Media").
As of September 30, 1995, wholly-owned subsidiaries of
Adelphia had commitments from a bank to enter into a $190,000 one
year loan, the terms of which provide for senior secured notes
maturing in October 1996. The initial proceeds from the loan of
$43,000, which were drawn in October 1995, were used to repay
existing debt totaling $35,000 and for working capital purposes.
B. Notes Payable to Banks and Institutions:
The following updates to September 30, 1995 the
disclosures made in Note 3 to Adelphia's
consolidated financial statements contained in the
Annual Report.
Commitments for additional borrowings.. $ 190,000
Weighted average interest rate.. 8.95%
Percentage of principal balance that bears interest
at fixed rates for at least one year.. 39.6%
<TABLE>
C. Investments:
Adelphia's nonconsolidated investments are as
follows:
March 31 Sept. 30
1995 1995
Investments accounted for using the equity method:
<S> <C> <C>
Gross investment:
Alternate access ventures....... $ 12,840 $ 18,748
Page Call, Inc....... 6,915 7,848
Other.... 2,847 2,779
Cumulative equity in net losses (1,458) (1,912)
Total.. 21,144 27,463
Investments accounted for using the cost method:
Niagara Frontier Hockey, L.P.. 15,000 15,000
Alternate access ventures. 2,924 3,141
Commonwealth Security, Inc... 4,200 4,200
SuperCable..... 3,000 3,163
Other....... 2,700 3,723
Total.. 27,824 29,227
Total investments... $ 48,968 $ 56,690
D. Investments and Related Party Receivables:
The following table summarizes the investments
in and receivables from Olympus and related parties:
March 31 Sept. 30
1995 1995
Investment in Olympus. $ (48,688) $ (51,510)
Amounts due from Olympus.... 60,631 58,876
Amounts due from other related parties - net... 49,691 43,303
$ 61,634 $ 50,669
The investment in Olympus represents a 50% voting interest in such
partnership and is being accounted for using the equity method. Summarized
unaudited results of operations of Olympus, forthe nine months ended
September 30, 1994 and 1995, are as follows:
Nine Months Ended
September 30,
1994 1995
Revenues. $ 72,575 $ 85,376
Net loss... (15,610) (16,235)
Net loss of general partners after priority
return requirements (62,834) (61,670)
</TABLE>
E. Accounting for Income Taxes:
The income tax benefit for the six months ended September 30,
1995 was $1,239, which is comprised of current tax expense of
$1,123 and a deferred tax benefit of $2,362.
F. Supplemental Cash Flow Information:
Cash payments for interest were $86,047 and $98,550 for the
six months ended September 30, 1994 and 1995, respectively. During
the six months ended September 30, 1995, $5,000 of Adelphia Class A
Common Stock was issued in conjunction with the WB Cable
acquisition by Olympus (see Note A).
G. Commitments and Contingencies
Reference is made to Management's Discussion and Analysis of
Financial Condition and Results of Operations for a discussion of
material commitments and contingencies.
H. Recent Accounting Pronouncements:
In October 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation," which requires adoption
no later than fiscal years beginning after December 15, 1995. The
new standard defines a fair value method of accounting for stock
options and similar equity instruments. Under the fair value
method, compensation cost is measured at the grant date based on
the fair value of the award and is recognized over the service
period, which is usually the vesting period. Pursuant to the new
standard, companies are encouraged, but not required, to adopt the
fair value method of accounting for employee stock-based
transactions. Companies are also permitted to continue to account
for such transactions under Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees," but would be
required to disclose in a note to the financial statements pro
forma net income and, if presented, earnings per share as if the
company had applied the new method of accounting. The accounting
requirements of the new method are effective for all employee
awards granted after the beginning of the fiscal year of adoption.
Adelphia has not yet determined if it will elect to change to the
fair value method, nor has it determined the effect the new
standard will have on net income and earnings per share should it
elect to make such a change. Adoption of the new standard will
have no effect on Adelphia's cash flows.
_________________________________________________
Item 2.Management's Discussion and Analysis of Financial Condition
and Results of Operations (dollars in thousands)
Results of Operations
Adelphia Communications Corporation ("Adelphia" or the
"Company") earned substantially all of its revenues in the six
months ended September 30, 1994 and 1995 from monthly subscriber
fees for basic, satellite, premium and ancillary services (such as
installations and equipment rentals), local and national
advertising sales, pay-per-view programming, home shopping networks
and competitive access telecommunications services. Certain
changes in the way the Company offers and charges for subscriber
services were implemented as of September 1, 1993 under the 1992
Cable Act and the Company's new method of offering certain
services. See "Regulatory and Competitive Matters" below.
The changes in Adelphia's results of operations for the six
months ended September 30, 1995, compared to the same period in the
prior year, were primarily the result of acquisitions and expanding
existing cable television operations.
The high level of depreciation and amortization associated
with the significant number of acquisitions in recent years, the
recent upgrading and expansion of systems and interest costs
associated with financing activities will continue to have a
negative impact on the reported results of operations. Also,
significant charges for depreciation, amortization and interest are
expected to be incurred in the future by the Olympus joint venture,
which will also adversely impact Adelphia's future results of
operations. Adelphia expects to report net losses for the next
several years.
A subsidiary of the Company, Hyperion Telecommunications, Inc.
("Hyperion") and its subsidiaries owns certain investments in
competitive access telecommunications ventures, and manages those
investments. As of July 1, 1995, a subsidiary that provides
management services with respect to the business operations of
those investments was classified an unrestricted subsidiary by the
Company's Board of Directors. The capital investments in the joint
ventures remain in a restricted subsidiary. The investment in
Hyperion resulted in a reduction in the Company's operating income
before depreciation and amortization for six-months ended September
30, 1994 and 1995 of $955 and $1,183, respectively. The equity in
net loss of Hyperion's joint venture partnerships amounted to $345
and $1,130 for the six months ended September 30, 1994 and 1995,
respectively.
The following tables set forth certain cable television system
data for the periods indicated for Company Owned, Olympus and
Managed Systems. The "Olympus Systems" are systems currently owned
by the Olympus joint venture. The "Managed Systems" are affiliated
systems managed by Adelphia.
<TABLE>
September 30,
1994 1995 % change
Homes Passed by Cable
<S> <C> <C> <C>
Company Owned Systems... 1,263,841 1,357,417 7.4%
Olympus Systems...... 413,349 561,037 35.7%
Managed Systems...... 268,423 415,558 54.8%
Total Systems.... 1,945,613 2,334,012 20.0%
Basic Subscribers
Company Owned Systems... 949,617 1,000,255 5.3%
Olympus Systems..... 243,288 337,487 38.7%
Managed Systems..... 194,721 304,297 56.3%
Total Systems.... 1,387,626 1,642,039 18.3%
Exclusive of acquisitions, basic subscribers grew 3.1%, 3.2% and 4.3% for
Company Owned, Olympus and Managed Systems, respectively, during the twelve
months ended September 30, 1995.
</TABLE>
<TABLE>
The following table is derived from Adelphia's Interim Consolidated
Financial Statements included in this interim report and sets forth the
historical percentage relationship of the components of operating income to
revenues contained in such financial statements for the period indicated.
Three Months ended Six Months Ended
September 30, September 30,
1994 1995 1994 1995
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Revenues. 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Direct operating and programming 29.3% 30.5% 29.5% 30.0%
Selling, general and administrative 16.6% 17.6% 17.1% 17.5%
Depreciation and amortization 27.8% 27.0% 26.7% 27.7%
Operating income....... 26.3% 24.9% 26.7% 24.8%
</TABLE>
<TABLE>
Revenues increased approximately 6.9% and11.0%, respectively, for the three and six month
periods ended September 30, 1995, compared with the same periods in the prior year.
The increase was attributable to the followng:
Three Six
Months Months
Ended Ended
Sept. 30 Sept. 30
1995 1995
<S> <C> <C>
Acquisitions 31% 56%
Basic subscriber growth. 24% 20%
Rate increases 0% 0%
Advertising sales and other services 45% 24%
100% 100%
</TABLE>
Revenues for the six months ended September 30, 1994 and 1995
fully reflected the repackaging and adjustment of equipment and
installation charges, effective in July 1993, and rates for basic
services and certain other satellite programming services under
CableSelect, the Company's method of offering services that was
implemented effective September 1, 1993. Effective October 1,
1995, rates for certain services were increased to reflect
increased programming costs and inflation in accordance with
applicable rate regulation.
Operating expenses (exclusive of depreciation and
amortization) increased 12.0% and 13.3% for the three and six month
periods ended September 30, 1995, compared with the same periods in
the prior year, primarily due to the increased operating expenses
from acquired systems, increased programming costs and incremental
costs associated with increased subscribers.
Operating income before depreciation and amortization
increased 2.6% and 9.0% for the three and six month periods ended
September 30, 1995 compared with the same periods of the prior
year, primarily due to the impact of acquisitions. Priority
investment income increased 17.9% and 9.0% for the three and six
month periods ended September 30, 1995. Interest income from
affiliates increased 41.6% and 42.8% for the three and six month
periods of the current year compared with the same periods of the
prior year. EBITDA (earnings before interest, income taxes,
depreciation and amortization, equity in net loss of joint ventures
and other non-cash charges) increased 5.3% and 9.6% for the three
and six month periods ended September 30, 1995 compared with the
same periods of the prior year, primarily due to the acquisition of
cable systems during the prior fiscal year. Increased revenues and
operating expenses during the current periods compared with the
prior year periods primarily reflect the impact of acquisitions
consummated since September 1994. While EBITDA is not an
alternative to operating income as defined by generally accepted
accounting principles, the Company's management believes EBITDA is
a meaningful measure of performance as substantially all of the
Company's financing agreements contain financial covenants based on
EBITDA.
Interest expense increased approximately 9.0% and 11.1% for
the three and six months ended September 30, 1995, compared with
the same periods of the prior year. The increase in the level of
indebtedness, excluding incremental debt related to acquisitions,
resulted in approximately 68% of the increase in interest expense
during the current quarter and 47% of the increase during the six
months ended September 30, 1995. Incremental debt related to
acquisitions increased interest expense by approximately 7% and 27%
during the three months and six month periods ended September 30,
1995.
Net loss for the three month and six month periods ended
September 30, 1995 increased by 15.6% and 8.9%, respectively,
primarily due to an increase in interest expense and additional net
losses of acquired systems, partially offset by increased operating
income, priority investment income from Olympus and interest income
from affiliates.
In October 1995, the Financial Accounting Standards Board
issued Statement of Financial Accountimg Standards No. 123,
"Accounting for Stock-Based Compensation," which requires adoption
no later than fiscal years beginning after December 15, 1995. The
new standard defines a fair value method of accounting for stock
options and similar equity instruments. Under the fair value
method, compensation cost is measured at the grant date based on
the fair value of the award and is recognized over the service
period, which is usually the vesting period. Pursuant to the new
standard, companies are encouraged, but not required, to adopt the
fair value method of accounting for employee stock-based
transactions. Companies are also permitted to continue to account
for such transactions under Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees," but would be
required to disclose in a note to the financial statements pro
forma net income and, if presented, earnings per share as if the
company had applied the new method of accounting. The accounting
requirements of the new method are effective for all employee
awards granted after the beginning of the fiscal year of adoption.
Adelphia has not yet determined if it will elect to change to the
fair value method, nor has it determined the effect the new
standard will have on net income and earnings per share should it
elect to make such a change. Adoption of the new standard will
have no effect on Adelphia's cash flows.
Liquidity and Capital Resources
The cable television business is capital intensive and
typically requires continual financing for the construction,
modernization, maintenance, expansion and acquisition of cable
systems. The Company historically has committed significant
capital resources for these purposes and for investments in Olympus
and other affiliates and entities. These expenditures were funded
through long-term borrowings and, to a lesser extent, internally
generated funds. The Company's ability to generate cash to meet
its future needs will depend generally on its results of operations
and the continued availability of external financing.
The Company generally has funded its working capital
requirements, capital expenditures and investments in Olympus and
other affiliates and entities through long-term borrowings,
primarily from banks and insurance companies, short-term
borrowings, internally generated funds and the issuance of parent
company public debt and equity. The Company generally has funded
the principal and interest obligations on its long-term borrowings
from banks and insurance companies by refinancing the principal
with new loans or through the issuance of parent company debt
securities, and by paying the interest out of internally generated
funds. Adelphia has funded the interest obligations on its public
borrowings from internally generated funds.
The Company's financing strategy has been to maintain its
public long-term debt at the parent holding company level while the
Company's consolidated subsidiaries have their own senior and
subordinated credit arrangements with banks and insurance
companies. The Company's public indentures and subsidiary credit
agreements contain covenants that, among other things, require the
maintenance of certain financial ratios (including compliance with
certain debt to cash flow ratios in order to incur additional
indebtedness); place limitations on borrowings, investments,
affiliate transactions, dividends and distributions; and contain
certain cross default provisions relating to Adelphia or its
subsidiaries.
At September 30, 1995, the Company's total outstanding debt
aggregated $2,090,815, which included $923,801 of parent debt and
$1,167,014 of subsidiary debt. At September 30, 1995, certain of
the Company's wholly-owned subsidiaries had a commitment from a
bank for a $190,000 loan, which is subject to achieving certain
levels of operating performance. The terms of the loan provide for
senior secured notes maturing in October 1996. The initial
proceeds from the loan of $43,000, which were drawn in October
1995, were used to repay existing debt totaling $35,000 and for
working capital purposes. Additionally, the bank has committed for
a portion of a nine year $690,000 revolving credit facility
expected to be completed during the quarter ended March 31, 1996.
A portion of such facility would be utilized to repay the
outstanding balance of the term loan due October 1996. The Company
had $3,723 in cash and cash equivalents available at September 30,
1995.
The Company's weighted average interest rate on notes payable
to banks and institutions was approximately 8.95% at September 30,
1995 compared to 8.72% at September 30, 1994. At September 30,
1995, approximately 39.6% of such debt was subject to fixed
interest rates for at least one year under the terms of such debt
or applicable interest rate swap agreements. During the three
months ended September 30, 1995 the obligations as a counterparty
under certain interest rate swap agreements were assumed by an
affiliate of the Company. These interest rate swap agreements have
a notional principal amount of $270,000 and expire through
November 1998. The Company's obligation under these agreements is
unchanged.
Maturities of debt for the four years and six months after
September 30, 1995 are as follows:
Six months ended March 31, 1996........ 68,762
Year ended March 31, 1997..............226,137
Year ended March 31, 1998..............288,007
Year ended March 31, 1999..............275,359
Year ended March 31, 2000..............125,751
On April 12, 1995, Adelphia acquired cable systems from Clear
Channels Cable TV Company located in Kittanning, New Bethlehem and
Freeport, Pennsylvania, for $17,456. These systems serve
approximately 10,700 subscribers. The acquisition of these systems
has been accounted for using the purchase method of accounting.
The consolidated statements of operations and cash flows include
the operations of the acquired systems since April 12, 1995.
On June 12, 1995, Adelphia announced the signing of definitive
agreements for the purchase of all of the cable systems of Eastern
Telecom Corporation, Robinson Cable TV, Inc. and First Carolina
Cable TV, L.P. These systems together serve approximately 58,000
subscribers located in western Pennsylvania and Vermont and are
being purchased for an aggregate price of $92,000.
On June 28, 1995, Adelphia and other relevant parties
terminated their previously announced November 1994 letter of
intent to increase by $63,000 to $75,000 the overall investment of
Adelphia and the companies it manages (the "Adelphia Group") in
cable systems held by Tele-Media Investment Partnership, L.P. and
certain other Tele-Media controlled entities (collectively, "Tele-
Media").
On April 3, 1995, Olympus acquired all of the cable and
security systems of WB Cable Associates, Ltd. ("WB Cable") serving
approximately 44,000 cable and security monitoring subscribers for
a purchase price of $82,000. WB Cable provides cable services from
one headend and security monitoring services from one location in
West Boca Raton, Florida. Of the purchase price, $77,000 was paid
in cash and $5,000 was paid in Adelphia Class A Common Stock. The
acquisition has been accounted for under the purchase method of
accounting, and was financed principally through borrowings under
an Olympus credit agreement.
On May 12, 1995, an Olympus subsidiary entered into a $475,000
revolving credit facility with several banks, maturing December 31,
2003. The proceeds at closing were used to repay existing bank
debt. At September 30, 1995, $74,000 of unused commitments was
available.
On June 12, 1995, Olympus announced the signing of a
definitive agreement for the purchase of all of the southeast
Florida cable systems of the Leadership Cable division of Fairbanks
Communications, Inc., which serve approximately 50,000 cable and
security monitoring subscribers, for a purchase price of $94,000,
which would include $40,000 in cash and the balance in seller
financing.
The Company plans to continue to explore and consider new
commitments, arrangements or transactions to refinance existing
debt, increase the Company's liquidity or decrease the Company's
leverage. These could include, among other things, the future
issuance by Adelphia of public or private equity or debt and the
negotiation of new or amended credit facilities. These could also
include entering into acquisitions, joint ventures or other
investment or financing activities, although no assurance can be
given that any such transactions will be consummated. The Company's
ability to borrow under current credit facilities and to enter into
refinancings and new financings is limited by covenants contained
in Adelphia's indentures and its subsidiaries' credit agreements,
including covenants under which the ability to incur indebtedness
is in part a function of applicable ratios of total debt to cash
flow.
The Company believes that cash and cash equivalents,
internally generated funds, borrowings under the existing credit
facility, and future financing sources will be sufficient to meet
its short-term and long-term liquidity and capital requirements.
Although in the past the Company has been able to refinance its
indebtedness or obtain new financing, there can be no assurance
that the Company will be able to do so in the future or that the
terms of such financings would be favorable.
Management believes that the telecommunications industry,
including the cable television and telephone industries, is in a
period of consolidation characterized by mergers, joint ventures,
acquisitions, sales of all or part of cable companies or their
assets, and other partnering and investment transactions of various
structures and sizes involving cable or other telecommunications
companies. The Company continues to evaluate new opportunities
that allow for the expansion of its business through the
acquisition of additional cable television systems in geographic
proximity to its existing regional markets or in locations that can
serve as a basis for new market areas. The Company, like other
cable television companies, has participated from time to time and
is participating in preliminary discussions with third parties
regarding a variety of potential transactions, and the Company has
considered and expects to continue to consider and explore
potential transactions of various types with other cable and
telecommunications companies. However, except as otherwise stated
herein, the Company has not reached any agreements, in principal or
otherwise, with respect to any material transaction and
no assurances can be given as to whether any such transaction may
be consummated or, if so, when.
Regulatory and Competitive Matters
The cable television operations of the Company may be
adversely affected by changes and developments in governmental
regulation, competitive forces and technology. The cable
television industry and the Company are subject to extensive
regulation at the federal, state and local levels. Many aspects of
such regulation are currently the subject of judicial proceedings
and administrative or legislative proceedings or proposals. On
October 5, 1992, Congress passed the 1992 Cable Act, which
significantly expands the scope of regulation of certain subscriber
rates and a number of other matters in the cable industry, such as
mandatory carriage of local broadcast stations and retransmission
consent, and which will increase the administrative costs of
complying with such regulations. The Federal Communications
Commission (the "FCC") has adopted rate regulations that establish,
on a system-by-system basis, maximum allowable rates for (i) basic
and cable programming services (other than programming offered on a
per-channel or per-program basis), based upon a benchmark
methodology, and (ii) associated equipment and installation
services based upon cost plus a reasonable profit. Under the FCC
rules, franchising authorities are authorized to regulate rates for
basic services and associated equipment and installation services,
and the FCC will regulate rates for regulated cable programming
services in response to complaints filed with the agency. The
original rate regulations became effective on September 1, 1993.
Amendments to the rate regulations became effective May 15, 1994.
Further amendments were adopted on November 10, 1994.
The original rate regulations required a reduction of existing
rates charged for basic services and regulated cable programming
services to the greater of (i) the applicable benchmark level or
(ii) the rates in force as of September 30, 1992, reduced by 10%,
adjusted forward for inflation. The amended regulations generally
require a reduction of up to 17 percent from the rates for
regulated services in force as of September 30, 1992, adjusted
forward for inflation and certain other factors. Rate reductions
are not required to the extent that a cable operator at its option
elects to use an alternative cost-of-service methodology and shows
that rates for basic and cable programming services are reasonable.
The FCC has adopted interim rules to govern cost-of-service
showings by cable operators. Refunds with interest will be
required to be paid by cable operators who are required to reduce
regulated rates after September 1, 1993, calculated retroactively
from the date of a local franchising authority's decision with
regard to basic rates, and from the date a complaint is filed with
the FCC with regard to the rates charged for regulated programming
services. The FCC has reserved the right to reduce or increase the
benchmarks it has established. The rate regulations will also
limit future increases in regulated rates to an inflation indexed
amount plus increases in certain costs such as taxes, franchise
fees, costs associated with specific franchise requirements and
increased programming costs. Cost-based adjustments to these
capped rates can also be made in the event a cable operator adds or
deletes channels. On November 10, 1994, the FCC adopted an
alternative method for adjusting the rates charged for a cable
programming services tier when new services are added. This will
allow cable operators to increase rates by as much as $1.50 over a
two year period to reflect the addition of up to six new channels
of service on cable programming service tiers. In addition, a new
programming tier can be created, the rate for which would not be
regulated as long as certain conditions are met, such as not moving
services from existing tiers to the new one. Because of the
limitation on rate increases for regulated services, future revenue
growth from cable services will rely to a much greater extent than
has been true in the past on increased revenues from unregulated
services and new subscribers than from increases in previously
unregulated rates.
The FCC has adopted regulations implementing virtually all of
the requirements of the 1992 Cable Act. The U.S. Court of Appeals
for the District of Columbia Circuit recently upheld all aspects of
the FCC's rate regulations except for certain minor matters. As
noted above, amendments to the rate regulations have been made and
the FCC is also likely to continue to modify, clarify or refine the
rate regulations. The Company cannot predict the effect or outcome
of future rulemaking proceedings or changes to the rate
regulations. Further, because the FCC has only issued its interim
rules and has not adopted final cost-of-service rules, the Company
has not determined to what extent it will be able to utilize cost-
of-service showings to justify rates.
Effective as of September 1, 1993, in accordance with the 1992
Cable Act, the Company adjusted the basic service rates and related
equipment and installation rates in all of its systems in order for
such rates to be in compliance with the applicable benchmark or
equipment and installation cost levels. The Company also
implemented a program in all of its systems called "CableSelect"
under which most of the Company's satellite-delivered programming
services are now offered individually on a per channel basis, or as
a group at a price of approximately 15% to 20% below the sum of the
per channel prices of all such services. For subscribers who elect
to customize their channel lineup, the Company will provide, for a
monthly rental fee, an electronic device located on the cable line
outside the home, enabling a subscriber's television to receive
only those channels selected by the subscriber. These basic
service rate adjustments and the CableSelect program have also been
implemented in all systems managed by the Company. The Company
believes CableSelect provides increased programming choices to the
Company's subscribers while providing flexibility to the Company to
respond to future changes in areas such as customer demand and
programming.
A letter of inquiry, one of at least 63 sent by the FCC to
numerous cable operators, was received by an Olympus System
regarding the implementation of this new method of offering
services. Olympus responded in writing to the FCC's inquiry. On
November 18, 1994, the Cable Services Bureau of the FCC issued a
decision holding that the "CableSelect" program was an evasion of
the rate regulations and ordered this package to be treated as a
regulated tier. This decision, and all other letter of inquiry
decisions, were principally decided on the number of programming
services moved from regulated tiers to a la carte packages.
Adelphia has appealed this decision to the full Commission. The
Company cannot predict the outcome or effect of this proceeding.
On November 10, 1994, the FCC ruled that, prospectively, any a
la carte package will be treated as a regulated tier, except for
packages involving premium services. The Company has appealed this
ruling to the U.S. Court of Appeals for the District of Columbia
Circuit. The Company is currently unable to predict the effect
that the amended regulations, future FCC treatment of "a la carte"
packages or other future FCC rulemaking proceedings will have on
its business and results of operations in future periods. No
assurance can be given at this time that such matters will not have
a material negative financial impact on the Company's business and
results of operations in the future. Also, no assurance can be
given as to what other future actions Congress, the FCC or other
regulatory authorities may take or the effects thereof on the
Company.
Cable television companies operate under franchises granted by
local authorities which are subject to renewal and renegotiation
from time to time. Because such franchises are generally non-
exclusive, there is a potential for competition with the Systems
from other operators of cable television systems, including public
systems operated by municipal franchising authorities themselves,
and from other distribution systems capable of delivering
television programming to homes. The 1992 Cable Act contains
provisions which encourage competition from such other sources.
Additionally, recent court and administrative decisions have
removed certain of the restrictions that have limited entry into
the cable television business by potential competitors such as
telephone companies, and proposals now under consideration by the
FCC, and which are being and from time to time have been considered
by Congress, could result in the elimination of other such
restrictions. The Company cannot predict the extent to which
competition will materialize from other cable television operators,
other distribution systems for delivering television programming to
the home, or other potential competitors, or, if such competition
materializes, the extent of its effect on the Company.
FCC rules permit local telephone companies to offer "video
dialtone" service for video programmers, including channel capacity
for the carriage of video programming and certain non-common
carrier activities such as video processing, billing and collection
and joint marketing agreements. On December 15, 1992, New Jersey
Bell Telephone Company filed an application with the FCC to operate
a "video dialtone" service in portions of Dover County, New Jersey,
in which the Company serves approximately 20,000 subscribers. The
FCC approved the application on July 18, 1994. The Company has
appealed this decision to the U.S. Court of Appeals for the
District of Columbia. This case is presently pending.
A number of telephone companies have filed suit seeking to
void as unconstitutional the provisions in the 1984 Cable Act that
prohibit telephone companies from owning cable television systems
in their telephone service areas. The U.S. Courts of Appeal for
the Fourth and Ninth Circuits have struck down the cross-ownership
ban on first amendment grounds. Several federal district courts
have also struck down the cross-ownership ban on the same grounds.
The U.S. Supreme Court has agreed to review this issue. In
addition, legislation which would eliminate the cross-ownership ban
has been passed by both houses of Congress.
Direct broadcast satellite ("DBS") service became available to
consumers during 1994. A single DBS satellite can provide more
than 100 channels of programming. DBS service can be received
virtually anywhere in the United States through the installation of
a small outdoor antenna. DBS service is being heavily marketed on
a nation-wide basis. The extent to which DBS will be competitive
with cable systems will depend on the continued availability of
reception equipment and programming at reasonable prices to the
consumer.
The Company cannot predict the ultimate outcome of the video
dialtone proceeding or the cross-ownership ban litigation.
However, the Company believes that the provision of video
programming by telephone companies in competition with the
Company's existing operations could have an adverse effect on the
Company's financial condition and results of operations. At this
time, the impact of any such effect is not known or estimable.
_________________________________________________
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting of the stockholders of the Company was held
on September 26, 1995. Stockholders entitled to vote a total of
121,560,727 votes out of 124,808,769 votes attributable to all
shares of the Company's outstanding capital stock were represented
at the meeting either in person or by proxy. At such meeting, (a)
one director (the "Class A Director") was elected by vote of the
holders of Class A Common Stock voting as a separate class, (b)
seven directors, ("Class A and B Directors") were elected by vote
of the holders of Class A Common Stock and the holders of Class B
Common Stock voting together, and (c) an amendment to the
Certificate of Incorporation of the Company to increase the
authorized capital stock from 80,000,000 to 230,000,000 and the
authorized number of shares of Class A Common Stock from 50,000,000
to 200,000,000 was approved by the holders of Class A Common Stock
and the holders of Class B Common Stock, voting together. The
stockholder voting results are as follows:
<TABLE>
Class of Broker
Stock Vote for Withheld Non-Votes
<S> <C> <C> <C> <C>
(a) Class A Director
Elected
Perry S. Patterson Class A 12,929,687 165,600 0
b) Class A and B
Directors Elected
John J. Rigas Class A 12,929,687 165,600 0
Class B 108,465,440 0 0
Michael J. Rigas Class A 12,929,687 165,600 0
Class B 108,465,440 0 0
Timothy J. Rigas Class A 12,929,687 165,600 0
Class B 108,465,440 0 0
James P. Rigas Class A 12,929,687 165,600 0
Class B 108,465,440 0 0
Class of Broker
Stock Vote for Withheld Non-Votes
Daniel R. Milliard Class A 12,929,687 165,600 0
Class B 108,465,440 0 0
Pete J. Metros Class A 12,929,687 165,600 0
Class B 108,465,440 0 0
Dennis P. Coyle Class A 12,929,687 165,600 0
Class B 108,465,440 0 0
(c) Approval of Amendment to Certificate of Incorporation
Increase in Number of Authorized Shares of
Capital stock and Class A Common stock
Class A 12,485,714 609,573 0
Class B 108,465,440 0 0
</TABLE>
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 3.01 Certificate of Incorporation of
Adelphia Communications Corporation
Exhibit 27.01 Financial Data Schedule (
supplied for the information of the Commission).
(b) Reports on Form 8-K:
None
_________________________________________________
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ADELPHIA COMMUNICATIONS CORPORATION
(Registrant)
Date: November 14, 1995 By: /s/ Timothy J. Rigas
Timothy J. Rigas
Executive Vice President
(authorized officer), Chief Financial Officer
and Chief Accounting Officer
- 7 -
CERTIFICATE OF INCORPORATION
OF
ADELPHIA COMMUNICATIONS CORPORATION
FIRST: The name of the corporation is Adelphia
Communications Corporation.
SECOND: The address of the corporation's registered
office in the State of Delaware is 32 Loockerman Square, Suite L-
100, in the City of Dover, County of Kent. The name of its
registered agent at such address is the Prentice-Hall Corporation
System, Inc.
THIRD: The purpose of the Corporation is to engage in
any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH: The aggregate number of shares of capital
stock which the Corporation shall have the authority to issue
shall be 230,000,000 shares which shall be classified into three
classes as follows:
5,000,000 shares of Preferred Stock, par value $.01 per
share (the "Preferred Stock");
200,000,000 shares of Class A Common Stock, par value
$.01 per share; and
25,000,000 shares of Class B Common Stock, par value
$.01 per share.
The Class A Common Stock and the Class B Common Stock are
sometimes together referred to as the "Common Stock."
A description of each class of shares and a statement
of the designations and the powers, preferences, and rights and
the qualifications, limitation, or restrictions thereof and of
the authority vested in the Board of Directors to establish
series of the Preferred Stock and to fix the variations in the
relative rights and preferences as between the series of such
class are as follows:
1. The Preferred Stock.
The Board of Directors is authorized, subject to
limitations prescribed by law, to provide for the issuance of the
Preferred Stock in series, and by filing a certificate pursuant
to the applicable law of the State of Delaware, to establish from
time to time the number of shares to be included in each such
series, and to fix the designations and the powers, preferences
and rights of the shares of each such series and the
qualifications, limitations, or restrictions thereof.
The authority of the Board with respect to each series
shall include, but not be limited to, determination of the
following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or
dates, and the relative rights of priority, if any, of payment of
dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition to
the voting rights provided by law, and, if so, the terms of such
voting rights;
(d) Whether that series shall have conversion privileges, and,
if so, the terms and conditions of such conversion, including
provision for adjustment of the conversion rate in such events as
the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such
redemption, including the date or dates upon or after which they
shall be redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions and
at different redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the
terms and amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up
of the Corporation, and the relative rights of priority, if any,
of payment of shares of that series;
(h) Any other relative rights, preferences and limitations of
that series.
Dividends on outstanding shares of Preferred Stock
shall be paid or declared and set apart for payment before any
dividends shall be paid or declared and set apart for payment on
the Common Stock with respect to the same dividend period.
If upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the assets
available for distribution to holders of shares of Preferred
Stock of all series shall be insufficient to pay such holders the
full preferential amount to which they are entitled, then such
assets shall be distributed ratably among the shares of all
series of Preferred Stock in accordance with the respective
preferential amounts (including unpaid cumulative dividends, if
any) payable with respect thereto.
2. The Common Stock.
a. Voting Rights
(i) The holders of Class A Common Stock shall be entitled by
class vote, exclusive of all other stockholders, to elect one
director of the entire Board of Directors of the Corporation at
any annual meeting of the stockholders for the election of
directors. If during the interval between annual meetings of
stockholders for the election of directors, the number of
directors who have been elected by the holders of Class A Common
Stock shall, by reason of resignation, death, disqualification or
removal, be reduced, the vacancy or vacancies in the directors so
created may be filled by a majority vote of the remaining
directors then in office, even if less than a quorum, or by a
sole remaining director. Any director elected by the remaining
directors then in office to fill any vacancy in the directorship
designated by the holders of Class A Common Stock may be removed
from office, with or without cause, by vote of the holders of or
majority of the shares of Class A Common Stock voting as a class.
(ii) Except as provided in Sub-paragraph (i) above, each holder
of Class A Common Stock shall be entitled to one vote for each
share of Class A Common Stock held by such stockholder in the
election of directors and on all other matters presented to the
stockholders, and each holder of Class B Common Stock shall be
entitled to ten votes for each share of Class B Common Stock held
by such stockholder in the election of directors and on all other
matters presented to stockholders. The stockholders of the
Corporation shall not be entitled to cumulate their votes in any
election of the directors of the Corporation.
(iii) Except as provided in Sub-paragraph (i) above, the
holders of Class A Common Stock and Class B Common Stock (and any
series or class of Preferred Stock, if such series or class of
Preferred Stock shall be entitled to vote as a single class with
the Common Stock, pursuant to the designations, powers,
preferences, privileges and rights of such class or series) shall
vote together as a single class, except as otherwise required by
the General Corporation Law of Delaware, provided further,
however, that the number of authorized shares of Class A Common
Stock may be increased or decreased (but not below the number of
shares thereof then outstanding) by the affirmative vote of the
holders of a majority of the stock of the Corporation entitled to
vote, voting as a single class.
b. Conversion Rights
(i) Subject to and upon compliance with the provisions of this
Paragraph b, Class B Common Stock shall be convertible into fully
paid and nonassessable Class A Common Stock on the basis of one
share of Class A Common Stock for each share of Class B Common
Stock surrendered for conversion. Any holder of Class B Common
Stock may, at the option of such holder, at any time during
normal business hours and from time to time convert any or all
shares of Class B Common Stock held by such holder into an equal
number of shares of Class A Common Stock by delivering to the
principal executive offices of the Corporation or any transfer
agent for the Class A Common Stock (i) the certificate or
certificates representing the share or shares of Class B Common
Stock to be converted, duly endorsed, (ii) written notice to the
Corporation stating that such holder elects to convert such share
or shares and stating the name and addresses in which each
certificate for the shares of Class A Common Stock issued upon
such conversion is to be issued, (iii) and any transfer tax
stamps or funds therefore required to be paid in connection with
the transfer.
(ii) Conversion shall be deemed to have been effected at the
close of business on the date of the surrender of the certificate
or certificates representing shares of Class B Common Stock in
the manner described above and such date is referred to herein as
the "Conversion Date." On the Conversion Date or as promptly
thereafter as practicable, the Corporation or its transfer agent
shall issue and deliver to the holder of the shares of Class B
Common Stock surrendered for conversion a certificate for the
number of full shares of Class A Common Stock issuable upon the
conversion or transfer of such shares of Class B Common Stock.
The person in whose name the certificate is to be issued shall be
deemed to have become a holder of record of the shares of Class A
Common Stock on the Conversion Date. The Corporation hereby
reserves and shall at all times reserve and keep available, out
of its authorized and unissued Class A Common Stock, for the
purposes of effecting conversions, such number of duly authorized
shares of Class A Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of
Class B Common Stock, provided, that nothing contained herein
shall be construed to preclude the Corporation from satisfying
its obligations in respect of the conversion by delivery of
purchased shares of Class A Common Stock which are held in the
treasury of the Corporation. The Corporation covenants that if
any Class A Common Stock required to be reserved for purposes of
the conversion hereunder require registration with or approval of
any governmental authority under any federal or state law before
such Class A Common Stock may be issued upon conversion, the
Corporation will cause such shares to be duly registered or
approval, as the case may be. The Corporation covenants that all
Class A Common Stock which shall be issued upon conversion of the
Class B Common Stock will, upon issue, be fully paid and
nonassessable and not subject to any preemptive rights.
(iii) No adjustments in respect to dividends shall be made
upon the conversion of any share of Class B Common Stock,
provided, however, that if a share shall be converted subsequent
to the record date for the payment of a dividend or other
distribution on Class B Common Stock but prior to such payment,
the registered holder of such share at the close of business on
such record date shall be entitled to receive the dividend or
other distribution payable on such share on the date set for
payment of such dividend or other distribution notwithstanding
the conversion thereof hereunder or the Corporation's default in
payment of the dividend due on such date.
c. Dividends
(i) After there shall have been paid or declared and set apart
for payment full cumulative dividends for all past dividend
periods and the then current dividend period on any class or
series of Preferred Stock as provided for in the terms and
provisions of any such class or series of Preferred Stock (with
any interest required to be paid thereon), and after there shall
have been set apart a sum or sums sufficient to provide for all
past and then current sinking fund installments for the Preferred
Stock as provided in the terms and provisions, if any, of any
class or series of any Preferred Stock (with any interest
required to be paid thereon), then out of any funds lawfully
available therefor dividends may be paid upon the Common Stock
and upon any class of shares ranking as to dividends or
distribution of assets subordinate to the Preferred Stock if,
when and as declared by the Board of Directors in its discretion,
and shares of any outstanding class of share of the Corporation
ranking as to dividends or distribution of assets subordinate to
the Preferred Stock may be purchased, acquired, redeemed or
otherwise retired by the Corporation.
(ii) Except as hereinafter in this Paragraph c provided and
except with respect to a "stock dividend" as hereinafter defined,
no dividend may be declared or paid in cash on Class B Common
Stock unless concurrently therewith a dividend in the amount per
share of one hundred five percent (105%) of the amount per share
of the dividend declared and paid in cash on the Class B Common
Stock is declared and paid on the Class A Common Stock; and no
dividend may be declared or paid in property on either class of
Common Stock unless concurrently therewith a dividend of the same
value per share is declared and paid on the other class of Common
Stock. If at any time a dividend is to be paid in Class A Common
Stock or Class B Common Stock (a "stock dividend"), such stock
dividend may be declared and paid only as follows: (i) so long
as no share of Class A Common Stock has been issued and is
outstanding, shares of Class A Common Stock may be paid to
holders of Class B Common stock and (ii) if shares of both Class
A Common Stock and Class B Common Stock are issued and
outstanding, shares of Class A Common Stock may be paid only to
holders of Class A Common Stock and shares of Class B Common
Stock may be paid only to holders of Class B Common Stock, and
whenever a stock dividend is paid, the same number of shares of
stock shall be paid in respect of each outstanding share of Class
A Common Stock and each outstanding share of Class B Common
Stock.
d. Liquidation Rights. In the event of any liquidation,
dissolution or winding up of the Corporation, or any reduction of
its capital, resulting in a distribution of its assets to its
stockholders, whether voluntary or involuntary, after there shall
have been paid or set apart for the holders of the Preferred
Stock the full preferential amount to which they are respectively
entitled pursuant to the terms and provisions of all outstanding
series and classes of Preferred Stock, there shall be paid to
holders of shares of Class A Common Stock the sum of $1.00 per
share and the amount of all unpaid declared dividends thereon
before any sums shall be paid or any assets distributed among the
holders of shares of Class B Common Stock (and if the assets of
the Corporation shall be insufficient to pay the holders of
shares of Class A Common Stock the full amount thus
distributable, then such assets shall be distributed ratably
among the holders of the shares of Class A Common Stock); then
and thereafter there shall be paid to the holders of shares of
Class B Common Stock the sum of $1.00 per share and the amount of
all unpaid declared dividends thereon (and if the assets of the
Corporation shall be insufficient to pay to holders of shares of
Class B Common Stock the full amount thus distributable, then the
entire remaining assets of the Corporation shall be distributed
ratably among the holders of the shares of Class B Common Stock);
and after the foregoing payments to the holders of the shares of
Class A Common Stock and the shares of Class B Common Stock, then
the remaining funds shall be distributed among and paid to the
holders of the shares of Class A Common Stock and the shares of
Class B Common Stock, share and share alike, and in proportion to
their holdings.
e. Change in Class. Neither the shares of Class A Common Stock
nor the shares of Class B Common Stock may be subdivided,
consolidated, reclassified or otherwise changed unless
concurrently the shares of the other class of Common Stock is
subdivided, consolidated, reclassified or otherwise changed in
the same proportion and the same manner.
f. General. Except as above provided, each share of Class A
Common Stock and each share of Class B Common Stock shall be
identical and have the same powers, preferences, rights,
qualifications, limitations and restrictions and rank equally,
share ratably and be identical in all respects as to all matters.
FIFTH: The name and mailing address of the
incorporator is Daniel R. Milliard, 5 West Third Street,
Coudersport, Pennsylvania 16915.
SIXTH: The Corporation shall have perpetual existence.
SEVENTH: The Board of Directors of the Corporation is
expressly authorized to adopt, amend or repeal by-laws of the
Corporation, but the stockholders may adopt additional by-laws
and may amend or repeal any by-law whether adopted by them or
otherwise.
EIGHTH: Elections of directors need not be by written
ballot except and to the extent provided in the by-laws of the
Corporation.
NINTH: Any director or the entire board of directors
may be removed, with or without cause, by the requisite vote of
the shares then entitled to vote upon such removal.
TENTH: A director of the Corporation shall not be
personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director for
any act or omission occurring on or after July 1, 1986; provided,
however, that the foregoing shall not eliminate or limit the
liability of a director (a) for any breach of the director's duty
of loyalty to the Corporation or its stockholders, (b) for any
act or omission not in good faith or which involves intentional
misconduct or a knowing violation of law, (c) under Section 174
of the General Corporation Law of the State of Delaware , or
(d) for any transaction from which the director derived an
improper personal benefit.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Schedule for Adelphia Communications Corp. for the
6 months ended September 30, 1995
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<CASH> 3723
<SECURITIES> 0
<RECEIVABLES> 21452<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 542225
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 1300850
<CURRENT-LIABILITIES> 0
<BONDS> 2090815
<COMMON> 263
0
0
<OTHER-SE> (1065140)
<TOTAL-LIABILITY-AND-EQUITY> 1300850
<SALES> 0
<TOTAL-REVENUES> 194003
<CGS> 0
<TOTAL-COSTS> 145921
<OTHER-EXPENSES> 1745
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 105878
<INCOME-PRETAX> (59541)
<INCOME-TAX> (1239)
<INCOME-CONTINUING> (58302)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (58302)
<EPS-PRIMARY> (2.22)
<EPS-DILUTED> (2.22)
<FN>
<F1>Amount net of allowance
<F2>PP&E net of Depreciation
</FN>
</TABLE>
