1
ADELPHIA COMMUNICATIONS CORPORATION
P.O. Box 472
5 West Third Street
Coudersport, Pennsylvania 16915
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Notice of Annual Meeting of Stockholders
to be held on September 20, 1996
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To the Stockholders of
Adelphia Communications Corporation:
The Annual Meeting of Stockholders of Adelphia Communications Corporation
will be held at the Coudersport Theater, Main Street, Coudersport, Pennsylvania
on Friday, September 20, 1996 at 10:00 a.m., for the following purposes:
1. To elect one (1) Director by vote of the holders of Class A Common
Stock voting as a separate class.
2. To elect seven (7) Directors by vote of the holders of Class A Common
Stock and Class B Common Stock, voting together.
3. To consider and act upon such other matters as may properly come before
the meeting.
The Board of Directors has fixed the close of business on July 24, 1996 as
the record date for determination of stockholders entitled to notice of and to
vote at the Annual Meeting.
IF YOU ARE UNABLE TO ATTEND THE MEETING AND YOU WISH TO VOTE YOUR STOCK,
IT IS REQUESTED THAT YOU COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
Daniel R. Milliard
Senior Vice President and Secretary
August 23, 1996
<PAGE>
ADELPHIA COMMUNICATIONS CORPORATION
P.O. Box 472
5 West Third Street
Coudersport, Pennsylvania 16915
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PROXY STATEMENT FOR ANNUAL MEETING
OF STOCKHOLDERS
September 20, 1996
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This proxy statement is being furnished to the stockholders of Adelphia
Communications Corporation, a Delaware corporation (the "Company"), in
connection with the solicitation by the Board of Directors of the Company of
proxies to be voted at the annual meeting of stockholders (the "Annual Meeting")
scheduled to be held on Friday, September 20, 1996, at the Coudersport Theater,
Main Street, Coudersport, Pennsylvania. The address of the principal executive
offices of the Company is P.O. Box 472, 5 West Third Street, Coudersport,
Pennsylvania 16915, and the date this proxy statement was first mailed to
stockholders was on or about August 23, 1996. A copy of the Annual Report to
Stockholders for the fiscal year ended March 31, 1996 is being furnished with
this proxy statement.
Only stockholders of record as of the close of business on July 24, 1996
are entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof. The outstanding capital stock of the Company on that date consisted of
15,364,009 shares of Class A Common Stock, $.01 par value ("Class A Common
Stock"), and 10,944,476 shares of Class B Common Stock, $.01 par value ("Class B
Common Stock"). With respect to the matters described in this proxy statement,
other than the election of the Class A director as described below, the holders
of Class A Common Stock and of Class B Common Stock vote together as a single
class, and each holder of Class A Common Stock is entitled to cast one (1) vote
for each share of Class A Common Stock standing in their name on the books of
the Company and each holder of Class B Common Stock is entitled to cast ten (10)
votes for each share of Class B Common Stock standing in their name on the books
of the Company. A majority of the votes cast at the Annual Meeting are required
for the adoption of the proposals described below.
All shares represented by valid proxies received by the Company prior to
the Annual Meeting will be voted at the Annual Meeting as specified in the
proxy, unless such proxies previously have been revoked. If no specification is
made, the shares will be voted FOR the election of each of the Board's nominees
to the Board of Directors. Unless otherwise indicated by the stockholder, the
proxy card also confers discretionary authority on the Board-appointed proxies
to vote the shares represented by the proxy on any matter that is properly
presented for action at the Annual Meeting. A stockholder giving a proxy has the
power to revoke it any time prior to its exercise by delivering to the Secretary
of the Company a written revocation or a duly executed proxy bearing a later
date, or by attendance at the meeting and voting his shares in person.
Abstentions and broker non-votes on any matter submitted to the
stockholders for approval have no effect on the vote on such matter since the
affirmative vote of at least a majority of the votes cast by shareholders at the
meeting, in person or by proxy, is necessary for adoption of the proposals
described below. Broker non-votes as to any matter are shares held by nominees
of beneficial owners which are present and voted at the meeting on matters as to
which the nominee has discretionary authority but which are not voted on the
matter in question because the nominee does not have discretionary voting
authority as to such matter.
Recommendation of the Board of Directors
The Board of Directors of the Company recommends a vote FOR each of the
nominees named below for election as directors.
ELECTION OF DIRECTORS
Description of Board of Directors
The Certificate of Incorporation of the Company provides for the Board of
Directors to be elected as follows: a majority of the votes cast by holders of
Class A Common Stock, voting as a separate class, are entitled to elect one (1)
director; and a majority of the votes cast by holders of Class A Common Stock
and holders of Class B Common Stock, voting together as a single class, are
entitled to elect the remaining directors, with each share of Class A Common
Stock entitled to one (1) vote and each share of Class B Common Stock entitled
to ten (10) votes. Stockholders of the Corporation are not entitled to cumulate
their votes in the election of directors.
The Bylaws of the Company provide that the Board of Directors shall
establish the number of directors which shall not be less than five nor more
than nine. The Board currently consists of eight directors, all of whom are also
nominees for director.
Each director is to hold office until the next annual meeting of
stockholders and until his successor is duly elected and qualified, subject to
the right of the stockholders to remove any director as provided in the Bylaws.
Any vacancy in the office of a director elected by the holders of Class A Common
Stock voting as a separate class may be filled by such holders voting as a
separate class, and any vacancy in the office of a director elected by the
holders of Class A Common Stock and the holders of Class B Common Stock voting
as a single class may be filled by such holders voting as a single class. In the
absence of a stockholder vote, a vacancy in the office of a director elected by
the holders of Class A Common Stock voting as a separate class or by the holders
of Class A Common Stock and the holders of Class B Common Stock voting as a
single class, as the case may be, may be filled by the remaining directors then
in office, even if less than a quorum, or by the sole remaining director. Any
director elected by the Board of Directors to fill a vacancy shall serve until
the next annual meeting of stockholders and until his successor has been elected
and has qualified. If the Board of Directors increases the number of directors,
any vacancy so created may be filled by the Board of Directors.
The persons named as proxies in the enclosed form of proxy were selected by
the Board of Directors, and have advised the Board of Directors that, unless
authority is withheld, they intend to vote the shares represented by them at the
Annual Meeting for the election of Perry S. Patterson, on behalf of the Class A
Common Stockholders, and for the election of John J. Rigas, Michael J. Rigas,
Timothy J. Rigas, James P. Rigas, Daniel R. Milliard, Pete J. Metros and Dennis
P. Coyle on behalf of all of the stockholders of the Company. All nominees
except Mr. Coyle were first elected or appointed as directors of the Company in
1986. Mr. Coyle was first elected as a director of the Company in 1995.
The Board of Directors knows of no reason why any nominee for director
would be unable to serve as director. If at the time of the Annual Meeting any
of the named nominees are unable or unwilling to serve as directors of the
Company, the persons named in the proxy intend to vote for such substitutes as
may be nominated by the Board of Directors.
The following sets forth certain information concerning each nominee for
election as a director of the Company. Each of the current directors of the
Company is a nominee for reelection as a director.
Nominee for Election by Holders of Class A Common Stock
Perry S. Patterson
Age 79
Perry S. Patterson became a director of Adelphia on September 9, 1986.
Since 1977, Mr. Patterson has practiced law in Coudersport, Pennsylvania. From
1975 to 1977, Mr. Patterson served as President Judge of the Court of Common
Pleas of the 55th Judicial District in Potter County, Pennsylvania. He was a
partner of the law firm of Kirkland & Ellis, in Chicago, Illinois and
Washington, D.C. from 1950 to 1973. Mr. Patterson attended Georgetown University
and graduated from Northwestern University Law School in 1941.
Nominees for Election by Holders of Class A Common Stock and Class B Common
Stock
John J. Rigas
Age 71
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 42
Michael J. Rigas is Executive Vice President of Adelphia and Executive
Vice President of most of its subsidiaries. Since 1981, Mr. Rigas has served as
a Senior Vice President, Vice President, general partner or other officer of
Adelphia and the constituent entities which became wholly-owned subsidiaries of
Adelphia upon its formation in 1986, as well as the cable television operating
companies acquired by the Company which were wholly or partially owned by
members of the Rigas Family. From 1979 to 1981, he worked for Webster,
Chamberlain & Bean, a Washington, D.C. law firm. Mr. Rigas graduated from
Harvard University (magna cum laude) in 1976 and received his Juris Doctor
degree from Harvard Law School in 1979.
Timothy J. Rigas
Age 40
Timothy J. Rigas is Executive Vice President and also serves as Chief
Financial Officer and Treasurer of Adelphia and Executive Vice President of most
of its subsidiaries. Since 1979, Mr. Rigas has served as a Senior Vice
President, Vice President, General partner or other officer of Adelphia and 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 38
James P. Rigas is Executive Vice President of Adelphia and Executive Vice
President of most of its subsidiaries. Since February 1986, Mr. Rigas has served
as a Vice President or other officer of Adelphia and 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 49
Daniel R. Milliard is Senior Vice President and serves as Secretary of
Adelphia and most of its subsidiaries, and 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 56
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
Borroughs Corporation of Kalamazoo, Michigan. Mr. Metros received a BS degree
from the Georgia Institute of Technology in 1962.
Dennis P. Coyle
Age 58
Dennis P. 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.
Audit and Compensation Committees and Meetings of the Board of Directors
The Board of Directors has a Compensation Committee, consisting of Perry
S. Patterson and Pete J. Metros, which reviews and has authority to approve the
compensation of the key officers and employees of the Company. The Compensation
Committee met once during fiscal 1996. The Board also has an Audit Committee,
comprised of Perry S. Patterson, Pete J. Metros and Timothy J. Rigas, which is
responsible for monitoring the financial reporting of the Company on behalf of
the Board and the investing public. The Audit Committee met once to review the
Company's fiscal 1996 financial condition and results of operations. The Company
does not have a nominating committee. The Board of Directors met or acted by
written consent in lieu of meeting eleven times in fiscal 1996. Each director
attended at least 75% of the meetings of the Board and the respective committees
of which each is a member.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding compensation
paid by the Company for services rendered during the Company's last three fiscal
years in the period ended March 31, 1996 to the Company's Chief Executive
Officer and the four most highly compensated executive officers whose
compensation exceeded $100,000 in salary and bonus during fiscal 1996:
Annual Compensation
All Other
Name and Principal Position Fiscal Salary Compensation(a)(b)
Year ($) ($)
John J. Rigas 1996 641,963 474,495
Chairman, President and 1995 595,933 293,750
Chief Executive Officer 1994 576,153 119,750
Michael J. Rigas 1996 205,948 10,750
Executive Vice President, 1995 124,658 10,950
Operations 1994 124,658 10,750
Timothy J. Rigas 1996 205,948 10,750
Executive Vice President, Chief 1995 124,658 10,950
Financial Officer and Treasurer 1994 124,658 10,750
James P. Rigas 1996 205,948 11,201
Executive Vice President, 1995 124,658 11,250
Strategic Planning 1994 124,658 10,750
Daniel R. Milliard 1996 207,474 5,250
Senior Vice President and 1995 187,412 5,350
Secretary 1994 183,484 5,250
- - ----------
(a) Fiscal 1996, 1995 and 1994 amounts include: (i) life insurance premiums paid
during each respective fiscal year by the Company under employment
agreements with John J. Rigas, Michael J. Rigas, Timothy J. Rigas, James P.
Rigas and Daniel R. Milliard, in premium payment amounts of $200,000,
$10,000, $10,000, $10,451, and $4,500, respectively, during fiscal 1996,
$293,000, $10,200, $10,200, $10,500 and $4,600, respectively, during fiscal
1995, and $119,000, $10,000, $10,000, $10,000 and $4,500, respectively,
during fiscal 1994, on policies owned by the respective named executive
officers; (ii) $250,829 for John J. Rigas which represents the dollar value
of the benefit of the whole-life portion of the premiums paid by the Company
during fiscal 1996 pursuant to a split-dollar life insurance arrangement
projected on an actuarial basis; (iii) $22,916 for John J. Rigas which
represents payments by the Company during fiscal 1996 pursuant to a
split-dollar life insurance arrangement that is attributable to term life
insurance coverage; and (iv) $750 in Company matching contributions for each
executive officer under the Company's 401(k) savings plan for each of fiscal
1996, 1995 and 1994. 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."
In accordance with an agreement related to the split-dollar insurance life
arrangement referred to above, the Company will be reimbursed for all
premiums paid related to such arrangement upon the earlier of death of both
the insured and his spouse or termination of the insurance policies related
to such arrangement.
(b) Does not include the value of certain non-cash compensation to the named
individuals which did not exceed the lesser of $50,000 or 10% of such
individuals' total annual salary shown in the table.
- - ----------
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
1996.
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 listed in note
(a)(i) to the Summary Compensation Table 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 their salary plus the amount of
insurance premiums payable under such officer's employment agreement which, as
of April 1, 1996, in the aggregate in the case of John J. Rigas would be
approximately $157,000.
During fiscal 1996 the Company paid the annual premiums related to a
split-dollar life insurance arrangement for joint and survivor life insurance
coverage for John J. Rigas and his spouse. Upon the earlier of the death of Mr.
Rigas and the death of his spouse or the termination of the arrangement, the
Company will recover all of the premiums previously paid by the Company. The
compensation related to such arrangement is derived as described in notes
(a)(ii) and (iii) to the Summary Compensation Table above.
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. At
their request, directors who are employees of the Company and Mr. Coyle do not
receive any compensation for services as a director or as a member of Board
committees.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Issues relating to the compensation of executive officers are addressed by
the Compensation Committee of the Board of Directors (the "Compensation
Committee"), which is composed of two independent, non-employee directors, Pete
J. Metros and Perry S. Patterson.
The Compensation Committee recognizes that the compensation of executive
officers should be established at levels which are consistent with the Company's
objectives and achievements. However, no part of executive compensation is
strictly tied to statistical operating performance criteria. Each of the
executive officers of the Company, including the Chief Executive Officer,
entered into an employment agreement with the Company in July of 1986, which
fixed the initial annual base salary of each executive and provided the
Compensation Committee with the ability to increase the base salary as the
Compensation Committee deems appropriate to adequately reflect the scope and
success of the Company's operations, as well as to reflect increases in the
Consumer Price Index. The agreements also provide for bonus compensation in
amounts to be determined by the Compensation Committee from time to time, and
for certain de minimis fringe benefits. The agreements are renewable and have
been renewed at the end of each year.
With respect to compensation of executive officers other than the Chief
Executive Officer (the "Principal Executives"), the Compensation Committee
receives and accords significant weight to the input of the Chief Executive
Officer. Based on a review of public filings by other publicly-held cable system
operators and other independent compensation survey data, the Compensation
Committee believes that the annual base salaries of the Company's Principal
Executives historically have been set materially lower than the annual base
salaries and bonuses paid to corresponding Principal Executives of most other
publicly-held cable system operators and other telecommunications firms, and
have remained relatively constant compared to increases made in the annual base
salaries of Principal Executives of such other corporations over the past five
years prior to fiscal 1996. While the increases in the annual base salaries of
the Principal Executives for fiscal 1996 are significant, the Compensation
Committee believes that the annual base salaries of the Principal Executives
continue to be set materially lower than those paid to corresponding Principal
Executives of other publicly-held cable system operators and telecommunications
firms.
The Compensation Committee has recognized the success of the Principal
Executives in accomplishing the Company's various strategic objectives. The
Company has continued to refinance its shorter-term variable interest rate debt
at the level of the operating subsidiaries with longer-term fixed rate debt and
new equity infusions at the parent Company level, and with new credit facilities
at the subsidiary level. These actions extend the maturities of the Company's
long-term debt and increase the Company's overall longer-term liquidity and
flexibility to obtain financing, which in turn will assist the Company to meet
the challenges of achieving growth while facing increased competition and
regulation within the cable television industry. In addition, the Company has
made strategic acquisitions of existing cable systems, contributing to increases
in cash flow, and has continued to develop new and emerging product and service
offerings, such as competitive local exchange services, residential telephone
services, PCS, paging, cable data services and home security. The Company has
also continued to focus its efforts on other methods of increasing cash flow and
on providing superior customer service while realizing operating efficiencies
and cost-savings. Based upon its evaluation of these and other relevant factors,
the Compensation Committee is satisfied that the Principal Executives have
contributed positively to the Company's long-term financial performance, and the
Compensation Committee, in consultation with the Chief Executive Officer of the
Company, has set compensation under the employment agreements accordingly.
The annual base salary of John J. Rigas, the Chief Executive Officer, is
determined by the Compensation Committee in accordance with Mr. Rigas's
employment agreement. Over the past several years, the Compensation Committee
has recognized Mr. Rigas's success in achieving the strategic objectives
mentioned above with respect to the Principal Executives, and has also
recognized Mr. Rigas's leadership and vision in formulating strategies for
responding to the challenges of increased regulation and increasing competition,
and for positioning the Company for growth in a regulated environment. While the
increase in Mr. Rigas' compensation during fiscal 1996 was significant, based on
its survey of compensation data for other companies, the Compensation Committee
believes that Mr. Rigas's annual base salary and overall compensation package is
lower than the compensation (including salary, bonus, options and deferred
compensation) paid to chief executive officers of many other publicly-held cable
system operators and other telecommunications firms.
To date, the Company has not granted bonuses to its Chief Executive
Officer or its Principal Executives, but may in its discretion grant bonuses
from time to time as it deems appropriate. In light of the historically
significant equity interests of the Chief Executive Officer and the Principal
Executives, the Compensation Committee has generally judged it unnecessary to
offer its executive officers equity participation plans or other equity-based
incentives in order to align the interests of its executive officers with those
of its stockholders.
COMPENSATION COMMITTEE
Pete J. Metros, Chairman
Perry S. Patterson
<PAGE>
Stock Performance Graph
The following graph compares the yearly percentage change in the
cumulative total shareholder return on the weighted average of the Company's
Class A Common Stock ("Adelphia Class A Common Stock") during the five years
ended March 31, 1996 with the cumulative total return on the Standard & Poor's
500 Stock Index and with a selected peer group of five companies engaged in the
cable communications industry: Cablevision Systems Corporation (Class A);
Comcast Corporation (Class A); Tele-Communications, Inc. (Class A); TCA Cable
TV, Inc.; and Century Communications Corporation (Class A). The returns of each
component issuer in the foregoing peer group have been weighted according to the
respective issuer's market capitalization. The comparison assumes $100 was
invested on March 31, 1991 in the Company's Class A Common Stock and in each of
the foregoing indices, and also assumes reinvestment of dividends. The yearly
points marked on the horizontal axis correspond to March 31 of each year.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
3/31/91 3/31/92 3/31/93 3/31/94 3/31/95 3/31/96
<S> <C> <C> <C> <C> <C> <C>
Adelphia Class A Common Stock $100 $181 $195 $141 $108 $76
Peer Group $100 $107 $150 $148 $149 $172
S&P 500 $100 $111 $128 $130 $150 $198
</TABLE>
<PAGE>
CERTAIN TRANSACTIONS
Management Services
During the fiscal year ended March 31, 1996, 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 $3,062,000
for fiscal 1996. 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 1996, 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 totaled $127,000 for fiscal
1996.
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 $560,000 in fiscal 1996. Of these
leases, $451,000 in principal amount is capitalized by the Company for financial
reporting purposes at March 31, 1996. 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, 1996 are summarized below. Interest is charged
on such loans to affiliates at rates which ranged from 7.5% to 15% for the year
ended March 31, 1996.
Total interest income on loans to affiliates, excluding Olympus,
aggregated $4,023,000 for fiscal 1996. In addition, net settlement amounts under
interest rate swap agreements with the Managed Partnerships, recorded as
adjustments to interest expense during the period incurred, increased the
Company's interest expense by $826,000 for fiscal 1996.
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 $39,870,000
at March 31, 1996.
During fiscal 1996 the Company received net payments on advances of
$265,000 from Dorellenic. At March 31, 1996, net receivables from Dorellenic
(including accrued interest) were $24,475,000.
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, 1996, the outstanding amount of these loans, which
mature in calendar 1996, 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 1996 was
$64,550,000 at March 31, 1996.
Co-Borrowing Agreement
On March 29, 1996, a subsidiary of the Company entered into a $200,000,000
loan agreement with a Managed Partnership and an Olympus subsidiary, as
co-borrowers. See "Principal Stockholders."
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.
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.
Section 16(a) Beneficial Ownership Reporting Compliance
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, 1995 through March 31, 1996.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth, based on information available to the
Company as of July 24, 1996, 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) -- --
Perry S. Patterson 3,250 (f) -- --
Pete J. Metros 100 (f) -- --
Dennis P. Coyle -- (f) -- --
All executive officers and directors
as a group (eight persons) 17,414,485 (a)(c) (b) 10,572,731 (c) 96.6%
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. 1,652,500 (k) 10.8% -- --
333 South Hope Street
Los Angeles, California 90071
Telesat Cablevision, Inc. 1,091,399 (l) 7.1% -- --
700 Universe Blvd.
Juno Beach, Florida 33408
- - ----------
<FN>
(a) The holders of Class B Common Stock are deemed to be beneficial
owners of an equal number of shares of Class A Common Stock because
Class B Common Stock is convertible into Class A Common Stock on a
one-to-one basis. In addition, the following persons own or have
the power to direct the voting of shares of Class A Common Stock in
the following amounts: John J. Rigas, 424,500 shares--64,400 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 SHHH. Each of John J. Rigas, Michael J. Rigas,
Timothy J. Rigas and James P. Rigas also share 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
(eight persons), would be 59.9%, 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 67.5%.
(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 SHHH 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 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 and other information provided to the
Company, certain operating subsidiaries of the named entity have
sole dispositive power with respect to all of such shares, and sole
voting power with respect to 572,500 of such shares. An operating
subsidiary of the named entity, Capital Research and Management
Company, exercises sole dispositive power with respect to 1,080,000
of such shares. Capital Guardian Trust Company and Capital
International, S.A., which also are operating subsidiaries of the
named entity, exercise sole dispositive power and sole voting power
with respect to 536,500 and 36,000 of such shares, respectively.
(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., FPL Group, Inc., the
parent of FPL Group Capital, Inc., and Cable L.P. I, Inc. and
Telesat Cablevision of South Florida, Inc., subsidiaries of Telesat
Cablevision, Inc. Telesat Cablevision, Inc. is the Company's joint
venture partner in Olympus and is also a holder of in excess of
five percent of the Company's Class A Common Stock. The consent
of both the Company and Telesat Cablevision, Inc. is required under
the Olympus partnership agreement for certain material
transactions. Mr. Dennis P. Coyle, is the nominee of Telesat for
election to the Board of Directors of the Company.
</FN>
</TABLE>
- - ----------
John J. Rigas, Michael J. Rigas, Timothy J. Rigas, James P. Rigas, Ellen
K. Rigas, Daniel R. Milliard, Dorellenic and the Company have entered into a
Class B Stockholders Agreement providing that such stockholders shall vote their
shares of Common Stock for the election of directors designated by a majority of
voting power (as defined in the Agreement) of the shares of Common Stock held by
them. The Class B Stockholders Agreement also provides that, in the absence of
the consent of the holders of a majority of the voting power of the shares of
Common Stock owned by the parties to the Agreement, (i) none of the stockholder
parties may sell, assign or transfer all or any part of their shares of Common
Stock in a public sale (as defined in the Agreement) without first offering the
shares to the other parties to the Agreement and (ii) no stockholder party may
accept a bona fide offer from a third party to purchase shares of such
stockholder without first offering the shares to the Company and then to the
other parties to the Class B Stockholders Agreement. In addition, each party has
certain rights to acquire the shares of Common Stock of the others under certain
conditions. John J. Rigas has also entered into a Stock Purchase Agreement with
the other holder of Class B Common Stock who is not a party to the Class B
Stockholders Agreement which gives John J. Rigas certain rights to acquire the
shares of Common Stock of such stockholder under certain conditions.
FORM 10-K ANNUAL REPORT TO THE SECURITIES
AND EXCHANGE COMMISSION
A COPY OF THE ANNUAL REPORT ON FORM 10-K (EXCLUDING EXHIBITS) OF THE
COMPANY FOR THE FISCAL YEAR ENDED MARCH 31, 1996, AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION, WILL BE FURNISHED FREE OF CHARGE, UPON WRITTEN REQUEST,
TO STOCKHOLDERS WHO HAVE NOT PREVIOUSLY RECEIVED A COPY FROM THE COMPANY.
WRITTEN REQUESTS MAY BE DIRECTED TO THE SECRETARY, ADELPHIA COMMUNICATIONS
CORPORATION, 5 WEST THIRD STREET, COUDERSPORT, PENNSYLVANIA 16915.
OTHER MATTERS
The Company knows of no other matters to be presented for action at the
meeting. If any other matters should properly come before the meeting, however,
it is intended that votes will be cast pursuant to the proxy in respect thereto
in accordance with the best judgment of the persons acting as proxies.
The Company will pay the expense in connection with the printing,
assembling and mailing to the holders of capital stock of the Company the notice
of meeting, this proxy statement and the accompanying form of proxy. In addition
to the use of the mails, proxies may be solicited by directors, officers or
regular employees of the Company personally or by telephone or telegraph. The
Company may request the persons holding stock in their names, or in the names of
their nominees, to send proxy material to and obtain proxies from their
principals, and will reimburse such persons for their expense in so doing.
The Company's certified public accountants during fiscal 1996 were, and
for fiscal 1997 will be, Deloitte & Touche LLP. Such accountants are not
expected to attend the Annual Meeting.
Stockholder Proposals
Stockholders who intend to submit a proposal at the Annual Meeting of the
stockholders of the Company expected to be held in September 1997 must submit
such proposal to the attention of the Secretary of the Company at the address of
its executive offices no later than April 8, 1997.
------------------------------
<PAGE>
PROXY
ADELPHIA COMMUNICATIONS CORPORATION
This Proxy Is Solicited On Behalf Of The Board of Directors Of The Company
The undersigned hereby appoints John J. Rigas, Timothy J. Rigas and Daniel R.
Milliard, or any one or more of them, with power of substitution to each, as
proxies to represent and to vote as designated below all the shares of Class A
Common Stock held of record at the close of business on July 24, 1996 by the
undersigned at the annual meeting of the stockholders of Adelphia Communications
Corporation to be held at the Coudersport Theater, Main Street, Coudersport,
Pennsylvania on September 20, 1996 at 10:00 a.m. and at any adjournment thereof.
The Board of Directors recommends a vote "FOR" proposals numbered 1 and 2.
The Proxies shall:
1. Vote FOR Perry S. Patterson as WITHHOLD AUTHORITY
director to be elected by the to vote for Perry S. Patterson [_]
Class A Common Stockholders [_]
2. Vote FOR all nominees listed below WITHHOLD AUTHORITY
(except as indicated to the to vote for all nominees listed [_]
contrary below) [_]
Dennis P. Coyle, Pete J. Metros, Daniel R. Milliard, John J. Rigas,
James P. Rigas, Michael J. Rigas and Timothy J. Rigas
(Instruction: To withhold authority to vote for any individual nominee,
strike a line through that nominee's name.)
3. In their discretion vote upon such other matters as any properly come before
the meeting or any adjournment thereof.
Vote [_] Abstain [_]
(Please sign on reverse side and return promptly)
- - --------------------------------------------------------------------------------
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. Unless otherwise specified in the squares
provided, the proxies shall vote in the election of directors for the nominees
listed on the reverse side hereof, and shall have discretionary power to vote
upon such other matters as may properly come before the meeting or any
adjournment thereof.
A majority of such proxies who shall be present and shall act at the meeting (or
if only one shall be present and act, then that one) may exercise all powers
hereunder.
Dated........................ , 1996
...........................................
...........................................
Stockholder sign here
exactly as
name appears hereon.
