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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
Annual Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
for the fiscal year ended March 31, 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, Pennsylvania 16915
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 814-274-9830
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.01 par value.
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. _____
Aggregate market value of outstanding Class A Common Stock $.01 par value, held
by non-affiliates of the Registrant at June 26, 1995 was $76,870,845, based on
the closing sale price as computed by the NASDAQ National Market System as of
that date. For purposes of this calculation only, affiliates are deemed to be
directors and executive officers of the Registrant.
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Number of outstanding shares of Class A Common Stock, $.01 par value, at June
26, 1995 was 15,364,009.
Number of outstanding shares of Class B Common Stock, $.01 par value, at June
26, 1995 was 10,944,476.
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The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-K for the
fiscal year ended March 31, 1995 as set forth in the pages attached hereto:
Item 10 - Directors and Executive Officers of the Registrant
Item 11 - Executive Compensation
Item 12 - Security Ownership of Certain Beneficial Owners and Management
Item 13 - Certain Relationships and Related Transactions
SIGNATURES
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.
July 31, 1995 ADELPHIA COMMUNICATIONS
CORPORATION
By: /s/ Timothy J. Rigas
------------------------------
Timothy J. Rigas
Senior Vice President, Chief
Financial Officer, Treasurer,
Director and Chief Accounting
Officer
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Item 10. - Directors and Executive Officers of the Registrant.
The information set forth in Part I under the caption "Executive Officers
of the Registrant" is incorporated herein by reference. All of the following
nominees for director are currently directors who were first elected or
appointed as directors in 1986, except for Mr. Dennis Coyle who is not currently
a director of the Company.
Perry S. Patterson
Age 78
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.
John J. Rigas
Age 70
John J. Rigas is the founder, Chairman, President and Chief Executive
Officer of Adelphia and is President of most 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 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 41
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.
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Timothy J. Rigas
Age 39
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 37
James P. Rigas is Vice President, Strategic Planning 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 48
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 55
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 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
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Borroughs Corporation of Kalamazoo, Michigan. Mr. Metros received a BS degree
from the Georgia Institute of Technology in 1962.
Dennis P. Coyle
Age 57
Dennis P. Coyle is a 1995 nominee for the Board of Directors, which will be
expanded to be eight in number effective as of the date of the 1995 Annual
Meeting. Mr. Coyle is General Counsel and Secretary of FPL Group, Inc. and
Florida Power & Light Company. Mr. Coyle was named General Counsel of FPL
Group, Inc. and Florida Power & Light Company in 1989, and assumed the
additional title and responsibilities of Secretary of such companies in 1991.
He graduated from Dartmouth College in 1960 and received his law degree from
Columbia University in 1965. In an investment agreement with respect to
Olympus Communications, L.P. ("Olympus," a joint venture of the Company), John,
Michael, Timothy and James Rigas have agreed to vote a sufficient number of
shares of the Company's Class A Common Stock to elect to the Board a nominee of
Telesat Cablevision, Inc., which is the Company's joint venture partner in
Olympus. Mr. Coyle is the nominee of Telesat Cablevision, Inc., which is an
indirect, wholly-owned subsidiary of FPL Group, Inc.
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 from April 1, 1994 through March 31, 1995, except that John
J. Rigas, Timothy J. Rigas and Michael J. Rigas each filed one late report on
Form 4 covering the same transaction.
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Item 11. - 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, 1995 to the Company's Chief Executive
Officer and the four most highly compensated executive officers whose
compensation exceeded $100,000 in salary and bonus during fiscal 1995:
Annual Compensation
<TABLE>
<CAPTION>
All Other
Name and Fiscal Salary Compensation(a)
Principal Position Year ($) ($)
------------------ ------ ------ ---------------
<S> <C> <C> <C>
John J. Rigas 1995 595,933 293,750
Chairman, President and Chief 1994 576,153 119,750
Executive Officer 1993 552,358 200,750
Michael J. Rigas 1995 124,658 10,950
Senior Vice President, 1994 124,658 10,750
Operations 1993 124,658 10,750
Timothy J. Rigas 1995 124,658 10,950
Senior Vice President, 1994 124,658 10,750
Chief Financial Officer, 1993 124,658 10,750
Treasurer and Chief Accounting
Officer
James P. Rigas 1995 124,658 11,250
Vice President, Strategic Planning 1994 124,658 10,750
1993 124,658 10,750
Daniel R. Milliard 1995 187,412 5,350
Vice President and Secretary 1994 183,484 5,250
1993 174,972(b) 5,250
</TABLE>
________________________
a) Fiscal 1995, 1994 and 1993 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 $293,000,
$10,200, $10,200, $10,500 and $4,600, respectively, during fiscal 1995,
$119,000, $10,000, $10,000, $10,000 and $4,500, respectively, during fiscal
1994 and $200,000, $10,000, $10,000, $10,000 and $4,500, respectively,
during fiscal 1993, 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 for each of fiscal 1995,
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1994 and 1993. 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."
b) Includes $2,445 paid in fiscal 1994.
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 1995.
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 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, 1995, in the aggregate in the case of
John J. Rigas would be approximately $148,000.
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.
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Item 12. - Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, based on information available to the
Company as of July 29, 1995, certain information with respect to the beneficial
ownership of Class A Common Stock and Class B Common Stock by each director or
nominee for director, all executive 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 5% beneficial owner 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 2,000 (f) 0 --
Pete J. Metros 100 (f) 0 --
Dennis P. Coyle 0 (f) 0 --
All executive officers and directors as a group 17,396,035(a)(c) (b) 10,572,731(c) 96.6%
(seven persons)
Syracuse Hilton Head Holdings, L.P. 2,398,151(g) 15.6% -- --
5 West Third Street
Coudersport, Pennsylvania 16915
Highland Holdings 4,374,453(h) 28.5% -- --
5 West Third Street
Coudersport, Pennsylvania 16915
Ellen K. Rigas (i) (j) 371,762(c) 3.4%
5 West Third Street
Coudersport, Pennsylvania 16915
The Capital Group Companies, Inc. 1,914,950(k) 12.5% -- --
333 South Hope Street
Los Angeles, California 90071
Telesat Cablevision, Inc. 1,000,000(l) 6.5% -- --
700 Universe Blvd.
Juno Beach, Florida 33408
</TABLE>
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(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
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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, 407,300 shares--47,200 shares
directly and 360,100 shares through Syracuse Hilton Head Holdings, L.P.
("SHHH"); Michael J. Rigas, 193,500 shares--200 shares directly and
193,300 shares through SHHH; Timothy J. Rigas, 193,500 shares--200 shares
directly and 193,300 shares through SHHH; James P. Rigas, 193,300 shares
indirectly through SHHH. 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 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 SHHH. See notes (g) and (h) 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 (g) 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 executive officers and directors as a group
(seven persons), would be 59.8%, 50.3%, 50.3%, 48.0% and 67.1%,
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 67.4%.
(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
executive 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 (h) 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
28.5%.
(f) Less than 1%.
(g) 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. In addition, through irrevocable proxies, each of the above-
named individuals shares with SHHH the power to vote or direct the vote of
such number of shares of Class A Common Stock held by as is specified in
note (a) above.
(h) 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
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Ellen K. Rigas, each of whom is deemed to share voting and investment power
with respect to the shares held by Highland.
(i) 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 (h)
above. Ellen K. Rigas is the daughter of John J. Rigas.
(j) 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 (i) above,
the percentage of Class A Common Stock owned by Ellen K. Rigas would be
30.2%.
(k) 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
764,950 of such shares. An operating subsidiary of the named entity,
Capital Research and Management Company, exercises investment discretion
with respect to 1,080,000 of such shares, and another operating subsidiary,
Capital Group Trust Company, exercises investment discretion with respect
to 783,950 of such shares, and exercises sole voting power over 713,950 of
such shares.
(l) According to a Schedule 13D, the named entity shares voting and dispositive
power over the shares with FPL Group Capital, Inc., the parent of Telesat
Cablevision, Inc., and FPL Group, Inc., the parent of FPL Group Capital,
Inc.
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.
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Item 13. - Certain Relationships and Related Transactions.
Management Services
During the fiscal year ended March 31, 1995, 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. Ellen K. Rigas is the
daughter of John J. Rigas. 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 $7,225,000
for fiscal 1995. 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 1995, the Company leased from Dorellenic (a partnership owned
principally by the Company's executive officers) certain real estate used in
connection with the operations of the Company. 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 $97,000 for fiscal
1995.
Equipment Leases
The Company leases certain 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 $594,000 in fiscal 1995. Of these
leases, $933,000 in principal amount is capitalized by the Company for financial
reporting purposes at March 31, 1995. 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, 1995 are summarized below. Interest is charged
on such loans to affiliates at rates which ranged from 6% to 9% for the year
ended March 31, 1995.
Total interest income on loans to affiliates, excluding Olympus, aggregated
$3,174,000 for fiscal 1995. In addition, net settlement amounts under interest
rate swap agreements with the Managed
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Partnerships, recorded as adjustments to interest expense during the period
incurred, decreased the Company's interest expense by $50,000 for fiscal 1995.
Net receivables due from the Managed Partnerships for advances made by the
Company for the construction and acquisition of cable television systems and for
working capital purposes, including accrued interest thereon, were $24,746,000
at March 31, 1995.
During fiscal 1995 the Company made net advances of $9,466,000 to
Dorellenic. At March 31, 1995, net receivables from Dorellenic (including
accrued interest) were $24,740,000. Amounts advanced to Dorellenic during
fiscal 1995 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, 1995, the outstanding amount of these loans, which
mature in calendar 1995, was $205,000.
On an end-of-quarter basis, the largest aggregate amount of net outstanding
loans and advances receivable from affiliates (directors, executive 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 1995 was
$61,917,000 at December 31, 1994. At March 31, 1995, such aggregate net amount
was $49,691,000.
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.
During fiscal 1995, the Company sold its $13,000,000 partnership interests
in Tele-Media Investment Partnership, L.P. to a Managed Partnership, sold
$20,000,000 in preferred stock in one of its subsidiaries to a Managed
Partnership in connection with an acquisition, and elected not to exercise its
right of first refusal with respect to the acquisition of a small North Carolina
cable system, which was acquired by a Managed Partnership. 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.
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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.
Olympus Matters
On February 28, 1995, the Company and certain of its subsidiaries and
Telesat Cablevision, Inc. and certain of its subsidiaries ("Telesat") entered
into an Investment Agreement and an amended and restated limited partnership
agreement for Olympus Communications, L.P. Under these agreements, Telesat is
contributing cable systems serving approximately 50,000 subscribers in Florida
and certain proceeds from the sale of other cable joint ventures in exchange for
Olympus preferred limited partnership interests in the face amount of
$112,500,000. Pursuant to these agreements, Telesat also purchased 1,000,000
shares of Adelphia Class A Common Stock at $15 per share and received
registration rights with respect thereto. Pursuant to these agreements, a
Company subsidiary holds Olympus preferred limited partnership interests in the
face amount of $225,000,000 and serves as the managing general partner of
Olympus. The consent of both the Company and Telesat is required under the
Olympus partnership agreement for certain material transactions. As noted
earlier, Mr. Dennis Coyle is a nominee of Telesat for election to the Board of
Directors of the Company.
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