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, 1996
____ 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, 1996, 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, of
the registrant were outstanding.
<PAGE>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
INDEX
Page Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1996 and
September 30, 1996..............................................3
Consolidated Statements of Operations - Three and
Six Months Ended September 30, 1995 and 1996....................4
Consolidated Statements of Cash Flows - Six Months
Ended September 30, 1995 and 1996...............................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...............................................23
Item 2. Changes in Securities...........................................23
Item 3. Defaults Upon Senior Securities...............................23
Item 4. Submission of Matters to a Vote of Security Holders...........23
Item 5. Other Information.............................................24
Item 6. Exhibits and Reports on Form 8-K................................24
SIGNATURE................................................................25
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands, except share amounts)
March 31, September 30,
ASSETS: 1996 1996
----------- -----------
Cable television systems, at cost, net of accumulated depreciation and
amortization:
<S> <C> <C>
Property, plant and equipment $ 560,376 $ 622,295
Intangible assets 568,898 650,400
----------- -----------
Total 1,129,274 1,272,695
Cash and cash equivalents 10,809 130,412
Investments 68,147 83,589
Preferred equity investment in Managed Partnership 18,338 18,338
Subscriber receivables - net 23,803 27,578
Prepaid expenses and other assets - net 52,658 69,771
Related party investments and receivables - net 30,894 930
----------- -----------
Total $ 1,333,923 $ 1,603,313
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY):
Notes payable of subsidiaries to banks and institutions $ 1,224,675 $ 1,348,162
12 1/2% Senior Notes due 2002 400,000 400,000
10 1/4% Senior Notes due 2000 99,158 99,238
11 7/8% Senior Debentures due 2004 124,502 124,520
9 7/8% Senior Debentures due 2005 128,118 128,185
9 1/2% Senior Pay-In-Kind Notes due 2004 180,357 188,923
13% Senior Discount Notes of Unrestricted Subsidiary due 2003 -- 174,570
Other debt 18,663 19,581
Accounts payable 66,668 72,475
Subscriber advance payments and deposits 14,706 16,064
Accrued interest and other liabilities 99,106 111,063
Deferred income taxes 106,209 106,089
----------- -----------
Total liabilities 2,462,162 2,788,870
----------- -----------
Commitments and contingencies (Note 7)
Stockholders' equity (deficiency):
Class A Common Stock, $.01 par value, 200,000,000 shares
authorized and 15,364,009 shares outstanding 154 154
Class B Common Stock, $.01 par value, 25,000,000 shares
authorized and 10,944,476 shares outstanding 109 109
Additional paid-in capital 214,415 214,415
Accumulated deficit (1,342,917) (1,400,235)
----------- -----------
Total stockholders' equity (deficiency) (1,128,239) (1,185,557)
----------- -----------
Total $ 1,333,923 $ 1,603,313
=========== ===========
</TABLE>
See notes to interim consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended Six Months Ended
September 30, September 30,
---------------------- ----------------------
1995 1996 1995 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $ 97,082 $ 117,437 $ 194,003 $ 228,448
--------- --------- --------- ---------
Operating expenses:
Direct operating and programming 29,630 35,864 58,152 69,461
Selling, general and administrative 17,110 20,175 33,980 38,813
Depreciation and amortization 26,165 30,262 53,789 58,739
--------- --------- --------- ---------
Total 72,905 86,301 145,921 167,013
--------- --------- --------- ---------
Operating income 24,177 31,136 48,082 61,435
--------- --------- --------- ---------
Other income (expense):
Interest income from affiliates 3,378 2,163 6,788 4,212
Priority investment income from
Olympus 6,575 10,273 12,150 20,090
Interest expense (52,754) (60,969) (105,878) (121,465)
Equity in loss of joint ventures (9,629) (13,278) (20,683) (27,925)
Gain on sale of investment -- -- -- 8,405
--------- --------- --------- ---------
Total (52,430) (61,811) (107,623) (116,683)
--------- --------- --------- ---------
Loss before income taxes and
extraordinary loss (28,253) (30,675) (59,541) (55,248)
Income tax benefit 195 175 1,239 9
--------- --------- --------- ---------
Loss before extraordinary loss (28,058) (30,500) (58,302) (55,239)
Extraordinary loss on early retirement
of debt -- -- -- (2,079)
--------- --------- --------- ---------
Net loss $ (28,058) $ (30,500) $ (58,302) $ (57,318)
========= ========= ========= =========
Loss per weighted average share of
common stock before extraordinary loss $ (1.07) $ (1.16) $ (2.22) $ (2.10)
Extraordinary loss per weighted average
share of common stock on early
retirement of debt -- -- -- (0.08)
--------- --------- --------- ---------
Net loss per weighed average share
of common stock $ (1.07) $ (1.16) $ (2.22) $ (2.18)
========= ========= ========= =========
Weighted average shares of common
stock outstanding (in thousands) 26,308 26,308 26,301 26,308
========= ========= ========= =========
</TABLE>
See notes to interim consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Dollars in thousands)
Six Months Ended September 30,
------------------------------
1995 1996
--------- ---------
Cash flows from operating activities:
<S> <C> <C>
Net loss $ (58,302) $ (57,318)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation 33,383 36,337
Amortization 20,406 22,402
Non-cash interest expense 7,956 19,596
Equity in loss of joint ventures 20,683 27,925
Gain on sale of investment -- (8,405)
Extraordinary loss on early retirement of debt -- 2,079
Decrease in deferred income taxes (2,362) (120)
Change in operating assets and liabilities, net of effects of acquisitions:
Subscriber receivables (1,019) (3,699)
Prepaid expenses and other assets (20,980) (8,871)
Accounts payable 16,096 5,730
Subscriber advance payments and deposits 242 1,358
Accrued interest and other liabilities 3,469 (337)
--------- ---------
Net cash provided by operating activities 19,572 36,677
--------- ---------
Cash flows from investing activities:
Cable television system acquisitions (17,846) (136,370)
Expenditures for property, plant and equipment (51,026) (54,733)
Amounts invested in and advanced (to) from
Olympus and related parties (3,632) 4,585
Investments in other joint ventures (8,808) (22,399)
Proceeds from sale of investment -- 11,618
--------- ---------
Net cash used for investing activities (81,312) (197,299)
--------- ---------
Cash flows from financing activities:
Proceeds from debt 117,319 903,806
Repayments of debt (56,901) (619,640)
Costs associated with debt financing -- (15,028)
Proceeds from subsidiary's issuance of warrants -- 11,087
--------- ---------
Net cash provided by financing activities 60,418 280,225
--------- ---------
(Decrease) increase in cash and cash equivalents (1,322) 119,603
Cash and cash equivalents, beginning of period 5,045 10,809
--------- ---------
Cash and cash equivalents, end of period $ 3,723 $ 130,412
========= =========
</TABLE>
See notes to interim consolidated financial statements.
<PAGE>
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" or
the "Company") 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, 1995 and 1996, 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, 1996 ("1996
Annual Report"). The results of operations for the six months ended September
30, 1996 are not necessarily indicative of the results to be expected for the
year ending March 31, 1997.
1. Significant Events Subsequent to the 1996 Annual Report:
On April 1, 1996, Adelphia purchased the cable television operations
of Cable TV Fund 11-B, Ltd. This CATV system was acquired for $84,267 and served
approximately 39,700 subscribers at the acquisition date in the New York
counties of Erie and Niagara. The acquisition was financed through a combination
of debt proceeds from a $200,000 credit facility in which an Adelphia subsidiary
is a co-borrower with an affiliated entity and funds received through the
repayment of amounts previously advanced to related entities. These amounts may
be reborrowed by the related entities in future periods. The acquisition has
been accounted for using the purchase method. Accordingly, the financial results
of the acquired operations have been included in the consolidated results of
Adelphia effective from the date acquired.
On April 12, 1996, certain subsidiaries of the Company (collectively,
the "Borrowers") entered into a $690,000 financing arrangement consisting of a
$540,000 revolving credit facility maturing December 31, 2003 and a $150,000
term loan facility maturing December 31, 2004. Initial borrowings during April
1996 of $483,000 were used primarily to repay existing indebtedness. Interest
rates charged are based upon one or more of the following rates at the option of
the Borrowers: Eurodollar rate or the greater of the prime rate and the Federal
funds rate plus 1/2 of 1% plus a margin of from 0% to 2% depending upon the
Borrower's senior funded debt ratio. Interest on outstanding borrowings is
generally payable on a quarterly basis. The maximum available under the
revolving credit facility is reduced, in increasing quarterly amounts, beginning
June 30, 1998 through December 31, 2003. The Borrowers pay a commitment fee of
either .375% or .250% per annum (depending upon the Borrower's senior funded
debt ratio) of the unused revolving credit facility commitments during the term
of the agreement. Borrowings under the term loan facility are payable in
installments, in increasing quarterly amounts, commencing June 30, 1998 and
ending on December 31, 2004.
On April 15, 1996, an 89% owned subsidiary of Adelphia, Hyperion
Telecommunications, Inc. ("Hyperion"), realized proceeds, net of discounts,
commissions and other transaction costs, of $168,600 upon issuance of $329,000
aggregate principal amount of 13% Senior Discount Notes (the "Hyperion Senior
Notes") due April 15, 2003 and 329,000 warrants to purchase an aggregate of
613,427 shares of common stock of Hyperion expiring April 1, 2001. Proceeds of
$11,087 were allocated to the value of the warrants. If all warrants were
exercised, the warrants would represent approximately 5.78% of the common stock
of Hyperion on a fully diluted basis. Proceeds, net of discounts, commissions,
and other transaction costs were used to repay certain indebtedness to Adelphia,
to make loans to certain key Hyperion officers and will be used to fund
Hyperion's expansion of its existing markets, to complete construction of new
networks and to enter additional markets, including related capital
expenditures, working capital requirements, operating losses and investments in
joint ventures.
On May 16, 1996, Hyperion completed the sale of its 15.7% partnership
interest in TCG South Florida to Teleport Communications Group Inc. for an
aggregate sales price of $11,618 resulting in a pre-tax gain of $8,405. As part
of the transaction, Hyperion was released from its covenant not to compete with
respect to the South Florida market. Hyperion plans to use the proceeds from the
sale to continue to expand and develop its existing markets, complete new
networks under construction and enter additional markets.
On July 12, 1996, Adelphia acquired all of the cable systems of First
Carolina Cable TV, L.P. These systems served approximately 32,500 subscribers at
the date of acquisition primarily located in Vermont and were purchased for an
aggregate price of $48,500 in cash. The acquisition has been accounted for using
the purchase method. Accordingly, the financial results of the acquired systems
have been included in the consolidated results of Adelphia effective from the
date acquired.
On November 12, 1996, Olympus Communications, L.P. ("Olympus")
realized proceeds, net of discounts, commissions and other transaction costs, of
$195,500 upon issuance of $200,000 aggregate principal amount of 10 5/8% Senior
Notes (the "Olympus Senior Notes") due November 15, 2006. Proceeds net of
discounts, commissions and other transaction costs were contributed to Olympus'
operating subsidiaries which applied such funds to reduce outstanding bank
borrowings.
2. Notes Payable of Subsidiaries to Banks and Institutions:
The following updates to September 30, 1996 certain disclosures
included in Note 3 to Adelphia's consolidated financial statements contained in
the 1996 Annual Report:
Commitments for additional borrowings $45,000
Weighted average interest rate 8.20%
Percentage of principal balance that bears interest
at fixed rates for at least one year 32%
<PAGE>
3. Investments:
Adelphia's nonconsolidated investments are as follows:
March 31, September 30,
1996 1996
-------- --------
Investments accounted for using the equity method:
Gross investment:
CLEC ventures $ 28,754 $ 35,353
Page Call, Inc. 11,187 13,109
Other 800 1,126
Cumulative equity in net losses (6,814) (7,735)
-------- --------
Total 33,927 41,853
-------- --------
Investments accounted for using the cost method:
Niagara Frontier Hockey, L.P. 22,681 27,690
Commonwealth Security, Inc. 4,200 4,200
SuperCable ALK International 3,171 3,171
Programming ventures 2,806 2,903
Mobile communications 680 3,011
Other 682 761
-------- --------
Total 34,220 41,736
-------- --------
Total investments $ 68,147 $ 83,589
======== ========
4. Investments and Related Party Receivables:
The following table summarizes the investments in and receivables from
Olympus and other related parties:
March 31, September 30,
1996 1996
-------- --------
Investment in Olympus $(93,563) $(94,454)
Amounts due from Olympus 59,907 62,936
Amounts due from other related parties - net 64,550 32,448
-------- --------
$ 30,894 $ 930
======== ========
<PAGE>
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 are as follows:
Nine Months Ended
September 30,
------------------------
1995 1996
--------- ---------
Revenues $ 85,376 $ 118,604
Net loss (16,235) (8,285)
Net loss of general partners after
priority return requirements (61,670) (57,292)
5. Income Taxes:
Income tax benefit for the three months ended September 30, 1996 was
$175, which is comprised of current tax benefit of $55 and deferred tax benefit
of $120. For the six months ended September 30, 1996, the income tax benefit was
$9 which is comprised of current tax expense of $111 and a deferred tax benefit
of $120.
6. Supplemental Cash Flow Information:
Cash payments for interest were $98,550 and $97,124 for the six
months ended September 30, 1995 and 1996, respectively.
7. 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.
<PAGE>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
(Dollars in thousands)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Unless otherwise stated, the information contained in this Form 10-Q
is as of and for the three and six months ended September 30, 1996. This Form
10-Q, including Management's Discussion and Analysis of Financial Condition and
Results of Operations, contains certain statements of a forward looking nature
relating to future events or the future financial performance of the Company
which are forward looking statements under Section 21E of the Securities
Exchange Act of 1934. Persons reading this Form 10-Q are cautioned that such
statements are only predictions and that actual events or results may differ
materially. In evaluating such statements, readers should specifically consider
the various factors identified in this Form 10-Q, which could cause actual
events or results to differ materially from those indicated by such forward
looking statements.
Adelphia Communications Corporation and its subsidiaries ("Adelphia"
or the "Company") earned substantially all of its revenues in the six months
ended September 30, 1995 and 1996 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 local exchange carrier ("CLEC")
telecommunications services.
The changes in Adelphia's operating results for the quarter ended
September 30, 1996 compared to the same period of the prior year, were primarily
the result of acquisitions, the impact of subscriber rate increases which became
effective October 1, 1995 and August 1, 1996 and expanding existing cable
television operations.
The high level of depreciation and amortization associated with the
significant number of acquisitions in recent years, the continuing program of
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.
The following tables set forth certain cable television system data
for the periods indicated for Company Owned, Olympus and Managed Systems
(collectively, the "Systems"). The "Olympus Systems" are systems currently owned
by the Olympus joint venture. The "Managed Systems" are affiliated systems
managed by Adelphia.
September 30,
------------------------- Percent
1995 1996 Increase
--------- --------- --------
Homes Passed by Cable
Company Owned Systems 1,357,417 1,541,103 13.5%
Olympus Systems 561,037 642,313 14.5%
Managed Systems 415,558 428,945 3.2%
--------- --------- -------
Total Systems 2,334,012 2,612,361 11.9%
========= ========= =======
Basic Subscribers
Company Owned Systems 1,000,255 1,131,218 13.1%
Olympus Systems 337,487 402,102 19.1%
Managed Systems 304,297 309,743 1.8%
--------- --------- -------
Total Systems 1,642,039 1,843,063 12.2%
========= ========= =======
Exclusive of acquisitions, basic subscribers grew 1.5%, 3.8%
and 1.8% for Company Owned, Olympus and Managed Systems, respectively,
during the twelve months ended September 30, 1996.
The following table is derived from Adelphia's Consolidated Interim
Financial Statements that are included in this interim report and sets forth the
historical percentage relationship to revenues of the components of operating
income contained in such financial statements for the periods indicated.
Three Months Ended Six Months Ended
September 30, September 30,
----------------- -------------------
1995 1996 1995 1996
------ ------ ------ ------
Revenues 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Direct operating and programming 30.5% 30.5% 30.0% 30.4%
Selling, general and administrative 17.6% 17.2% 17.5% 17.0%
------ ------ ------ ------
Operating income before
depreciation and amortization 51.9% 52.3% 52.5% 52.6%
Depreciation and amortization 27.0% 25.8% 27.7% 25.7%
------ ------ ------ ------
Operating income 24.9% 26.5% 24.8% 26.9%
====== ====== ====== ======
Revenues. Revenues increased approximately 21.0% and 17.8% ,
respectively, for the three and six month periods ended September 30, 1996
compared with the same periods of the prior year. The increase was attributable
to the following:
Three Six
Months Months
Ended Ended
Sept. 30, Sept. 30,
1996 1996
-------------------
Acquisitions 42% 41%
Rate increases 41% 37%
Basic subscriber growth 4% 7%
Other 13% 15%
Certain rate increases related to regulated cable services were
implemented in substantially all of the Company's Systems on October 1, 1995 and
on August 1, 1996. Other non-cable revenues, including strategic service
offerings such as paging and CLEC services, also had a positive impact on
revenues for the quarter ended September 30, 1996. The Company expects to
implement rate increases related to certain regulated cable services in
substantially all of the Company's Systems during the next fiscal year.
Direct Operating and Programming Expenses. Direct operating and
programming expenses, which are mainly basic and premium programming costs and
technical expenses, increased 21.0% and 19.4% for the three and six month
periods ended September 30, 1996 compared with the same periods of the prior
year. Such increases were primarily due to increased operating expenses from
acquired systems and increased programming costs. Because of regulatory
limitations on the timing and extent to which cost increases may be passed on to
customers, operating and programming expenses during the six month period ended
September 30, 1996 have increased at a greater magnitude than corresponding
revenue increases. As a result of recent FCC regulatory rulemaking decisions,
the Company intends to implement a systematic program of rate increases to
reverse this trend. Consistent with such a program, the Company increased rates
in most markets, in accordance with FCC guidelines, effective August 1, 1996.
Selling, General and Administrative Expenses. These expenses, which
are mainly comprised of costs related to system offices, customer service
representatives, and sales and administrative employees, increased 17.9% and
14.2% for the three and six month periods ended September 30, 1996 compared with
the same periods of the prior year. The increase was primarily due to
incremental costs associated with acquisitions and revenue growth. Such expenses
declined as a percentage of revenues compared to the three and six month periods
ended September 30, 1995 primarily due to the favorable impact on revenues of
the above mentioned October 1, 1995 and August 1, 1996 rate increases.
Operating Income Before Depreciation and Amortization. Operating
income before depreciation and amortization increased 22.0% and 18.0% for the
three and six month periods ended September 30, 1996 compared with the same
periods of the prior year. The increase is attributable to a combination of
acquisitions, an increase in subscriber rates and the expansion of other
non-cable revenues, partially offset by increased programming, general and
administrative expenses.
Depreciation and Amortization. Depreciation and amortization was
higher for the three and six month periods ended September 30, 1996 compared
with the same quarter of the prior year primarily due to increased depreciation
and amortization related to acquisitions consummated since January 1, 1996.
Priority Investment Income. Priority investment income is comprised
of payments received from Olympus of accrued priority return on the Company's
investment in 16.5% preferred limited partner ("PLP") interests in Olympus.
Priority investment income increased during the three and six month periods
ended September 30, 1996 as compared with the same periods of the prior year as
a result of payment by Olympus of the entire amount of priority return accrued
during such periods.
EBITDA. EBITDA (earnings before interest expense, income taxes,
depreciation and amortization, equity in loss of joint ventures and other
non-cash charges) increased 22.5% and 19.6% for the three and six month periods
ended September 30, 1996 compared with the same periods of the prior year. The
increase is primarily due to the favorable impact of the acquisition of cable
systems, subscriber rate increases and increased priority investment income from
Olympus. The impact of acquisitions increased revenues and, to a lesser extent,
operating expenses for the three and six months ended September 30, 1996
compared with the same periods of the prior year. 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. Interest expense increased 15.6% and 14.7% for the
three and six month periods ended September 30, 1996 compared with the same
periods of the prior year. Interest expense increased due to incremental debt
outstanding during the current period and accretion of original issue discount,
partially offset by a decrease in the average interest rate on outstanding debt
during the current three and six month periods compared with the three and six
month periods ended September 30, 1995. Approximately 42% and 33% of the
increase in interest expense for the three and six month periods ended September
30, 1996 as compared with the same period of the prior year was attributable to
incremental debt related to acquisitions. The remaining increase is primarily
due to increases in non-cash accretion of original issue discount and non-cash
interest expense totaling $14,600 and $19,596 for the three and six month
periods ended September 30, 1996 compared with $7,883 and $7,956 for the three
and six month periods of the prior year. The increase in non-cash interest for
three and six month periods ended September 30, 1996 compared with the same
periods of the prior year is primarily due to the accretion of the original
issue discount related to the Hyperion 13% Senior Discount Notes which were
issued April 15, 1996 (see "Liquidity and Capital Resources").
Equity in Loss of Joint Ventures. The equity in loss of joint
ventures represents primarily (i) the Company's pro rata share of Olympus'
losses and the accretion requirements of Olympus' PLP interests, and (ii)
Hyperion's pro-rata share of its less than majority owned partnerships'
operating losses. The increase in the loss during the three and six month
periods ended September 30, 1996, compared with the same periods of the prior
year, is due to an increase in the Olympus priority return and an increase in
the losses of certain investments in the CLEC business in which the Company is a
less than majority partner partially offset by improved operating performance in
the Olympus partnership.
Gain on Sale of Investment. On May 16, 1996, Hyperion completed the
sale of its 15.7% partnership interest in TCG South Florida to Teleport
Communications Group Inc. for an aggregate sales price of $11,618 resulting in a
pre-tax gain of $8,405. As part of the transaction, Hyperion was released from
its covenant not to compete with respect to the South Florida market. Hyperion
plans to use the proceeds from the sale to continue to expand and develop its
existing markets, complete new networks under construction and enter additional
markets.
Extraordinary Loss on Early Retirement of Debt. During the six months
ended September 30, 1996, certain existing indebtedness was repaid resulting in
an extraordinary loss on retirement of debt of $2,079 which primarily represents
the write-off of the remaining deferred debt financing costs associated with the
debt retired.
Net Loss. The Company reported net losses of $28,058 and $30,500 for
the quarters ended September 30, 1995 and 1996, respectively. The increase in
net loss during the current quarter was due primarily to increased interest
expense and equity in loss of joint ventures partially offset by increased
operating income and increased priority investment income from Olympus. Net
losses of $58,302 and $57,318 were reported for the six month periods ended
September 30, 1995 and 1996. respectively. The decrease in net loss for the
current six month period was due primarily to increased operating income,
increased priority investment income from Olympus and the impact of a gain on
sale of an equity investment recognized during the quarter ended June 30, 1996,
partially offset by increased interest expense, increased equity in loss of
joint ventures and an extraordinary loss on early retirement of debt recognized
during the quarter ended June 30, 1996.
Hyperion Telecommunications, Inc.
An 89% owned unrestricted subsidiary of the Company, Hyperion,
together with its subsidiaries, owns certain investments in CLEC joint ventures
and manages those ventures. Hyperion is an unrestricted subsidiary for purposes
of the Company's indentures. On April 15, 1996, Hyperion realized net proceeds
of $168,600 upon issuance of notes and warrants (see "Liquidity and Capital
Resources"). For further information regarding Hyperion, which also files
reports pursuant to the Securities Exchange Act of 1934, see Hyperion's Form
10-Q for the quarterly period ended September 30, 1996.
<PAGE>
Summarized unaudited financial information of Adelphia, Hyperion and
Adelphia excluding Hyperion is as follows:
<TABLE>
<CAPTION>
Adelphia Adelphia
excluding excluding
Adelphia Hyperion Hyperion Adelphia Hyperion Hyperion
--------------------------------------------------- -----------------------------------------------
As of September 30, 1995 As of September 30, 1996
--------------------------------------------------- -----------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total debt $ 2,090,815 $ 44,128 $ 2,046,687 $ 2,483,179 $ 201,699 $ 2,281,480
Three Months Ended Three Months Ended
September 30, 1995 September 30, 1996
--------------------------------------------------- -----------------------------------------------
Revenues $ 97,082 $ 612 $ 96,470 $ 117,437 $ 1,175 $ 116,262
Operating expenses:
Direct operating
and programming 29,630 613 29,017 35,864 728 35,136
Selling, general and
administrative 17,110 278 16,832 20,175 1,164 19,011
--------------------------------------------------- -----------------------------------------------
Operating income
(loss) before
depreciation and
amortization 50,342 (279) 50,621 61,398 (717) 62,115
Affiliate interest
and priority
investment income 9,953 -- 9,953 12,436 -- 12,439
--------------------------------------------------- -----------------------------------------------
EBITDA (a) 60,295 (279) 60,574 73,834 (717) 74,551
Interest expense (52,754) (1,372) (51,382) (60,969) (7,108) (53,861)
Capital expenditures 24,649 1,946 22,703 29,789 8,862 20,927
<PAGE>
Adelphia Adelphia
excluding excluding
Adelphia Hyperion Hyperion Adelphia Hyperion Hyperion
------------------------------------------------ ----------------------------------------------
Six Months Ended Six Months Ended
September 30, 1995 September 30, 1996
------------------------------------------------ ----------------------------------------------
Revenues $ 194,003 $ 1,298 $ 192,705 $ 228,448 $ 2,277 $ 226,171
Operating expenses:
Direct operating
and programming 58,152 1,241 56,911 69,461 1,587 67,874
Selling, general and
administrative 33,980 1,365 32,615 38,813 2,191 36,622
------------------------------------------------ ----------------------------------------------
Operating income
(loss) before
depreciation and
amortization 101,871 (1,308) 103,179 120,174 (1,501) 121,675
Affiliate interest
and priority
investment income 18,938 -- 18,938 24,302 -- 24,302
------------------------------------------------ ----------------------------------------------
EBITDA (a) 120,809 (1,308) 122,117 144,476 (1,501) 145,977
Interest expense (105,878) (2,700) (103,178) (121,465) (13,277) (108,188)
Capital expenditures 51,026 3,316 47,710 54,733 10,680 44,053
</TABLE>
a) Earnings before interest expense, income taxes, depreciation and
amortization, equity in loss of joint ventures and other non-cash charges
("EBITDA"). 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.
Liquidity and Capital Resources
The cable television and telecommunication businesses are capital
intensive and typically require continual financing for the construction,
modernization, maintenance, expansion, and acquisition of cable systems and
other telecommunications infrastructure. 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.
In most of its recent upgrades, the Company has utilized a Modified
Passive Network Architecture ("MPNA") which utilizes fiber optic cable as an
alternative to the coaxial cable that historically has been used to distribute
cable signals to the subscriber's home. The MPNA design deploys on average one
fiber node for every two miles of fiber optic cable or approximately one fiber
node for every 180 homes passed. The Company believes this compares favorably
with current industry averages. This deep penetration of fiber optic cable into
the Systems' networks has the advantages of providing increased reliability to
customers, improved bandwidth, and easier implementation of the return path
plant capabilities. This will position the Company to offer additional video
programming services, to utilize the expanded bandwidth potential of digital
compression technology and to meet the anticipated transmission requirements for
high-definition television, digital television, high-speed data and telephone
services.
Capital expenditures for the six months ended September 30, 1995 and
1996, were $51,026 and $54,733, respectively. Management expects capital
expenditures for the fiscal year ending March 31, 1997 to be somewhat higher
than the prior fiscal year due to the further expansion of cable plant rebuilds
and due to further expansion by Hyperion.
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 primarily 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. Public indentures and
subsidiary credit agreements of the Company and its subsidiaries 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, 1996, the Company's total outstanding debt
aggregated $2,483,179 which included $940,866 of parent debt, and $1,542,313 of
subsidiary debt. In addition, the Company had an aggregate of $130,412 in cash
and cash equivalents, and $45,000 in unused credit lines with banks, part of
which is subject to achieving certain levels of operating performance.
At September 30, 1996, the Company's unused credit lines were
provided by reducing revolving credit facilities whose revolver periods expire
December 31, 2004. The Company's weighted average interest rate on notes payable
to banks and institutions was approximately 8.95% at September 30, 1995 compared
to 8.20% at September 30, 1996. At September 30, 1996, approximately 32% 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.
Maturities of debt for the four years and six months after September
30, 1996 are as follows:
Six months ended March 31, 1997 $ 13,576
Year ended March 31, 1998 177,486
Year ended March 31, 1999 220,641
Year ended March 31, 2000 142,183
Year ended March 31, 2001 250,906
On April 1, 1996, Adelphia purchased the cable television operations
of Cable TV Fund 11-B, Ltd. This CATV system was acquired for $84,267 and served
approximately 39,700 subscribers at the acquisition date in the New York
counties of Erie and Niagara. The acquisition was financed through a combination
of debt proceeds from a $200,000 credit facility in which an Adelphia subsidiary
is a co-borrower with an affiliated entity and funds received through the
repayment of amounts previously advanced to related entities. These amounts may
be reborrowed by the related entities in future periods.
On April 12, 1996, certain subsidiaries of the Company (collectively,
the "Borrowers") entered into a $690,000 financing arrangement consisting of a
$540,000 revolving credit facility maturing December 31, 2003 and a $150,000
term loan facility maturing December 31, 2004. Initial borrowings during April
1996 of $483,000 were used primarily to repay existing indebtedness. Interest
rates charged are based upon one or more of the following rates at the option of
the Borrowers: Eurodollar rate or the greater of the prime rate and the Federal
funds rate plus 1/2 of 1% plus a margin of from 0% to 2% depending upon the
Borrower's senior funded debt ratio. Interest on outstanding borrowings is
generally payable on a quarterly basis. The maximum available under the
revolving credit facility is reduced, in increasing quarterly amounts, beginning
June 30, 1998 through December 31, 2003. The Borrowers pay a commitment fee of
either .375% or .250% per annum (depending upon the Borrower's senior funded
debt ratio) of the unused revolving credit facility commitments during the term
of the agreement. Borrowings under the term loan facility are payable in
installments, in increasing quarterly amounts, commencing June 30, 1998 and
ending on December 31, 2004.
On April 15, 1996, Hyperion realized proceeds, net of discounts,
commissions and other transaction costs, of $168,600 upon issuance of $329,000
aggregate principal amount of 13% Senior Discount Notes (the "Hyperion Senior
Notes") due April 15, 2003 and 329,000 warrants to purchase an aggregate of
613,427 shares of common stock of Hyperion expiring April 1, 2001. Proceeds of
$11,087 were allocated to the value of the warrants. If all warrants were
exercised, the warrants would represent approximately 5.78% of the common stock
of Hyperion on a fully diluted basis. Proceeds, net of discounts, commissions,
and other transaction costs, were used to repay certain indebtedness to
Adelphia, to make loans to certain key Hyperion officers and will be used to
fund Hyperion's expansion of its existing markets, to complete construction of
new networks and to enter additional markets, including related capital
expenditures, working capital requirements, operating losses and investments in
joint ventures.
On July 12, 1996, Adelphia acquired all of the cable systems of First
Carolina Cable TV, L.P. These systems served approximately 32,500 subscribers at
the date of acquisition primarily located in Vermont and were purchased for an
aggregate price of $48,500.
On November 12, 1996, Olympus realized proceeds, net of discounts,
commissions and other transaction costs, of $195,500 upon issuance of $200,000
aggregate principal amount of 10 5/8% Senior Notes (the "Olympus Senior Notes")
due November 15, 2006. Proceeds, net of discounts, commissions and other
transaction costs, were contributed to Olympus' operating subsidiaries which
applied such funds to reduce outstanding bank borrowings.
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, or its subsidiaries, 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 facilities, 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. The 1992 Cable
Act significantly expanded 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 increased the
administrative costs of complying with such regulations. 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
Telecommunications Act of 1996 (the "1996 Act") ends FCC regulation of cable
programming service tier rates on March 31, 1999.
Rates for basic and cable programming services are set pursuant to a
benchmark formula. Alternatively, a cable operator may elect to use a
cost-of-service methodology to show that rates for basic and cable programming
services are reasonable. Refunds with interest will be required to be paid by
cable operators who are required to reduce regulated rates. The FCC has reserved
the right to reduce or increase the benchmarks it has established. The rate
regulations also limit 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 or completes a significant system
rebuild or upgrade. 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 has allowed 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 all of the requirements
of the 1992 Cable Act. The FCC is also likely to continue to modify, clarify or
refine the rate regulations. Adelphia cannot predict the effect of the 1996 Act
on future rulemaking proceedings or changes to the rate regulations.
Effective September 1, 1993, as a result of the 1992 Cable Act,
Adelphia repackaged certain existing cable services by adjusting rates for basic
service and introducing a new method of offering certain cable services.
Adelphia 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. Adelphia also
implemented a program in all of its systems called "CableSelect" under which
most of Adelphia'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, Adelphia 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
Adelphia. Adelphia believes CableSelect provides increased programming choices
to its subscribers while providing flexibility to Adelphia to respond to future
changes in areas such as customer demand and programming.
A letter of inquiry 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 letters 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 which affirmed the Cable Service Bureau's decision. Adelphia has
sought reconsideration of the decision. On November 18, 1994, the FCC released
amended rules under which, on a prospective basis, any a la carte package will
be treated as a regulated tier, except for packages involving premium services.
An appeal of this decision to the U.S. Court of Appeals for the D.C. Circuit was
unsuccessful.
Certain other cable television companies that utilized a la carte
packages have recently reached settlement/resolution with the FCC on this issue.
Adelphia has discussed such a settlement with the Cable Services Bureau of the
FCC and a proposed settlement of all outstanding rate proceedings, including "a
la carte" packages, has been made available for public comment by the FCC.
Accordingly, results of operations for the fiscal year ended March 31, 1996
included a $5,300 charge representing management's estimate of the total costs
associated with the resolution of this matter. Such costs included, (i) an
estimate of credits to be extended to customers in future periods of up to
$2,700, (ii) legal and other costs incurred during the fiscal year ended March
31, 1996, and (iii) an estimate of legal and other costs to be incurred
associated with the ultimate resolution of this matter. At September 30, 1996,
$3,641 of the charge to earnings remained in accrued interest and other
liabilities. While Adelphia cannot predict the ultimate outcome or effect of
this matter, management of Adelphia does not expect the ultimate outcome of this
matter to have a material adverse effect on Adelphia's financial position and
results of operations. 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. 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.
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 and the 1996 Act contain provisions
which encourage competition from such other sources. The Company cannot predict
the extent to which competition will materialize from other cable television
operators, local telephone companies, 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 heretofore permitted 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. New
Jersey Bell Telephone Company received authorization on July 18, 1994 to operate
a "video dialtone" service in portions of Dover County, New Jersey, in which the
Company serves approximately 20,000 subscribers.
The 1996 Act repealed the prohibition on local exchange telephone
companies ("LECs") from providing video programming directly to customers within
their local exchange areas other than in rural areas or by specific waiver of
FCC rules. The 1996 Act also authorized LECs to operate "open video systems"
("OVS") without obtaining a local cable franchise, although LECs operating such
a system can be required to make payments to local governmental bodies in lieu
of cable franchise fees. Where demand exceeds capacity, up to two-thirds of the
channels on an OVS must be available to programmers unaffiliated with the LEC.
The statute states that the OVS scheme supplants the FCC's "video dialtone"
rules. The FCC has promulgated rules to implement the OVS concept, and New
Jersey Bell has applied to convert its video dialtone authorization to an OVS
authorization.
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.
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.
<PAGE>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
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 20, 1996. Stockholders entitled to vote a total of 122,665,590 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 and (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.
The stockholder voting results are as follows:
<TABLE>
<CAPTION>
Class of Broker
Stock Vote for Withheld Non-Votes
(a) Class A Director Elected
<S> <C> <C> <C> <C>
Perry S. Patterson Class A 13,220,830 94,294 --
(b) Class A and B Directors Elected
John J. Rigas Class A 13,220,830 94,294 --
Class B 109,444,760 -- --
Michael J. Rigas Class A 13,220,830 94,294 --
Class B 109,444,760 -- --
Timothy J. Rigas Class A 13,221,330 94,294 --
Class B 109,444,760 -- --
James P. Rigas Class A 13,220,830 94,294 --
Class B 109,444,760 -- --
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class of Broker
Stock Vote for Withheld Non-Votes
<S> <C> <C> <C> <C>
Daniel R. Milliard Class A 13,220,830 94,294 --
Class B 109,444,760 -- --
Pete J. Metros Class A 13,220,830 94,294 --
Class B 109,444,760 -- --
Dennis P. Coyle Class A 13,220,830 94,294 --
Class B 109,444,760 -- --
</TABLE>
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 4.7 First Supplemental Indenture, dated as of September 11,
1996, between Hyperion Telecommunications, Inc. and Bank of Montreal Trust
Company (Incorporated herein by reference is Exhibit 4.2 of Hyperion
Telecommunications, Inc.'s Registration Statement No. 333-13663 on Form S-1.)
Exhibit 4.8 Form of 13% Hyperion Telecommunications, Inc. Senior
Discount Note (Incorporation herein by reference is Exhibit 4.3 to Hyperion
Telecommunications Inc.'s Registration Statement No. 333-13663 on Form S-1.)
Exhibit 10.48 Hyperion Telecommunications, Inc. Long-Term
Compensation Plan (Incorporated herein by reference is Exhibit 10.17 to Hyperion
Telecommunications Inc.'s Registration Statement No. 333-13663 on Form S-1.)
Exhibit 27.01 Financial Data Schedule (supplied for the information
of the Commission).
(b) Reports on Form 8-K:
Form 8-Ks were filed on October 29 and November 13, 1996 which
reported information under items 5 and 7 thereof. No financial statements were
filed.
<PAGE>
ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
SIGNATURE
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, 1996 By: /s/ Timothy J. Rigas
Timothy J. Rigas
Executive Vice President
(authorized officer), Chief
Financial Officer, Treasurer
and Chief Accounting Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Statement for Adelphia Communication Corp,
for the six months ended September 30, 1996
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<CASH> 130,412
<SECURITIES> 0
<RECEIVABLES> 27,578
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,272,695
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,603,313
<CURRENT-LIABILITIES> 0
<BONDS> 2,483,179
0
0
<COMMON> 263
<OTHER-SE> (1,185,820)
<TOTAL-LIABILITY-AND-EQUITY> 1,603,313
<SALES> 0
<TOTAL-REVENUES> 117,437
<CGS> 0
<TOTAL-COSTS> 86,301
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 60,969
<INCOME-PRETAX> (30,675)
<INCOME-TAX> (175)
<INCOME-CONTINUING> (30,500)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (30,500)
<EPS-PRIMARY> (1.16)
<EPS-DILUTED> (1.16)
</TABLE>
