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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON October 5, 1998
REGISTRATION NO. 333-63075
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO THE
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ADELPHIA COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 4841 23-2417713
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
MAIN AT WATER STREET
COUDERSPORT, PENNSYLVANIA 16915
(814) 274-9830
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
COLIN HIGGIN, ESQUIRE
DEPUTY GENERAL COUNSEL
ADELPHIA COMMUNICATIONS CORPORATION
MAIN AT WATER STREET
COUDERSPORT, PENNSYLVANIA 16915
(814) 274-9830
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
PLEASE ADDRESS A COPY OF ALL COMMUNICATIONS TO:
CARL E. ROTHENBERGER, JR., ESQUIRE
BUCHANAN INGERSOLL PROFESSIONAL CORPORATION
21ST FLOOR, 301 GRANT STREET
PITTSBURGH, PENNSYLVANIA 15219
(412) 562-8826
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.[ ]
If any of the securities being registered on this Form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ X ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PROSPECTUS
333,929 Shares
ADELPHIA COMMUNICATIONS CORPORATION
Class A Common Stock
($.01 par value)
This Prospectus relates to 333,929 shares (the "Shares") of Class A Common
Stock, $.01 par value (the "Class A Common Stock") of Adelphia Communications
Corporation ("Adelphia" or the "Company"), which may be sold by or for the
account of the Selling Stockholders named herein. The Shares were originally
acquired by the Selling Stockholders from Adelphia in a privately negotiated
acquisition transaction. See "Selling Stockholders."
The Shares may be sold from time to time by the Selling Stockholders in open
market or over-the-counter transactions, in private or negotiated transactions
or in a combination of such methods of sale, at fixed prices, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at varying or negotiated prices. See "Plan of Distribution."
Adelphia will not receive any of the proceeds from the sale of the Shares.
The Class A Common Stock is listed for trading on the NASDAQ National Market
System. On October 1, 1998, the closing sale price of the Class A Common Stock
was $38.375 per share.
The rights of holders of Class A Common Stock and Class B Common Stock, $.01 par
value (the "Class B Common Stock" and together with the Class A Common Stock,
the "Common Stock") differ with respect to certain aspects of dividend,
liquidation and voting rights. The Class A Common Stock has certain
preferential rights with respect to cash dividends and distributions upon the
liquidation of Adelphia. Holders of Class B Common Stock are entitled to
greater voting rights than the holders of Class A Common Stock; however, the
holders of Class A Common Stock, voting as a separate class, are entitled to
elect one of Adelphia's directors.
PROSPECTIVE PURCHASERS OF CLASS A COMMON STOCK SHOULD CAREFULLY CONSIDER THE
MATTERS SET FORTH UNDER THE CAPTION "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is October 5, 1998.
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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING
STOCKHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREBY SHALL UNDER ANY
CIRCUMSTANCES IMPLY THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
DATE SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
Adelphia is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act" or the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "SEC" or the "Commission"). Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities of the SEC at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, as well as at the Regional Offices
of the SEC located at Citicorp Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New
York 10048. Copies of such information can be obtained from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549
at prescribed rates. Adelphia's Class A Common Stock is listed on the NASDAQ
National Market System under the symbol "ADLAC".
Adelphia has filed with the SEC a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"1933 Act"), with respect to the Shares. This Prospectus, which is part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the SEC. Reference is hereby made to the
Registration Statement and related exhibits for further information with respect
to the Company and the Shares offered hereby. Statements contained herein
concerning the provisions of documents are necessarily summaries of such
documents, and each statement is qualified in its entirety by reference to the
copy of the applicable document filed with the SEC. The Registration Statement
and the exhibits thereto may be inspected without charge at the office of the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies thereof may be
obtained from the SEC at prescribed rates. The Commission maintains a web site
that contains reports, proxy and information statements and other information
regarding the Company that is electronically filed through the Commission's
Electronic Data Gathering, Analysis and Retrieval system. Such information is
publicly available through the Commission's web site (http://www.sec.gov).
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Adelphia hereby incorporates by reference into this Prospectus the following
documents or information previously filed with the Commission under the Exchange
Act (file number 000-16014): (a) Adelphia's Annual Report on Form 10-K for the
fiscal year ended March 31, 1998, which incorporates, in Items 7 and 8 to such
Form 10-K, portions of the Form 10-K for the fiscal year ended December 31, 1997
of Olympus Communications. L.P. and Olympus Capital Corporation, as amended by
Form 10-K/A (the "Form 10-K/A") dated July 27, 1998 (collectively, the "Form 10-
K"); (b) Adelphia's Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1998 (the "Form 10-Q"); (c) Adelphia's Current Report on Form 8-K for
the events dated June 29, 1998, July 2, 1998, August 3, 1998, August 18, 1998
and September 10, 1998; (d) Adelphia's definitive proxy statement dated
September 11, 1998 with respect to the Annual Meeting of Stockholders to be held
October 6, 1998 (the "Proxy Statement"); and (e) the descriptions of common
stock contained in Adelphia's Registration Statement filed under Section 12(g)
of the 1934 Act, including any amendments or reports filed for the purpose of
updating such description.
All documents filed by Adelphia pursuant to Section 13(a), 13(c), 14 or 15(d)
of the 1934 Act on or after the date of this Prospectus and prior to the
termination of the offering of the Shares made hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in any
documents incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for the purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Adelphia will provide without charge to each person to whom this Prospectus
has been delivered, upon written or oral request of such person, a copy of any
or all other documents incorporated by reference into this Prospectus. Requests
for such copies should be directed to Adelphia Communications Corporation, Main
at Water Street, Coudersport, Pennsylvania 16915, Attention: Deputy General
Counsel; telephone number (814) 274-9830.
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PROSPECTUS SUMMARY
The following information is qualified in its entirety by the more
detailed information and financial statements appearing in this Prospectus or
incorporated by reference herein. The Private Securities Litigation Reform Act
of 1995 provides a "safe harbor" for forward-looking statements. Certain
information included or incorporated by reference in this Prospectus, including
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the Form 10-K and the Form 10-Q, is forward-looking,
such as information relating to the effects of future regulation, future capital
commitments and the effects of competition. Such forward-looking information
involves important risks and uncertainties that could significantly affect
expected results in the future from those expressed in any forward-looking
statements made by, or on behalf of, the Company. These risks and uncertainties
include, but are not limited to, uncertainties relating to economic conditions,
acquisitions and divestitures, government and regulatory policies, the pricing
and availability of equipment, materials, inventories and programming,
technological developments and changes in the competitive environment in which
the Company operates. Persons reading this Prospectus are cautioned that such
forward-looking statements are only predictions and that actual events or
results may differ materially. In evaluating such statements, readers should
specifically consider the various factors which could cause actual events or
results to differ materially from those indicated by such forward looking
statements. Prospective investors should carefully consider the factors set
forth herein under the caption "Risk Factors."
The Company
As of June 30, 1998, Adelphia Communications Corporation was the seventh-
largest cable television operator in the United States with cable television
systems owned or managed by the Company (the "Systems") in the aggregate
passing 2,796,747 homes and serving 1,998,411 basic subscribers. John J. Rigas,
the Chairman, President, Chief Executive Officer and founder of Adelphia, has
owned and operated cable television systems since 1952.
As of June 30, 1998, the Company's owned cable systems (the "Company
Systems") are located in twelve states and are organized into seven regional
clusters: Western New York, Virginia, Western Pennsylvania, New England, Eastern
Pennsylvania, Ohio and Coastal New Jersey. The Company Systems are located
primarily in suburban areas of large and medium-sized cities within the 50
largest television markets. As of June 30, 1998, the Company Systems passed
1,696,294 homes and served 1,244,310 basic subscribers.
The Company also provides, for a fee, management and consulting services to
certain partnerships and certain corporations engaged in the ownership and
operation of cable television systems (the "Managed Partnerships"). John J.
Rigas and certain members of his immediate family, including entities they own
or control (collectively the "Rigas Family") have substantial ownership
interests in the Managed Partnerships. As of June 30, 1998, cable systems (the
"Managed Systems") owned by the Managed Partnerships passed 348,441 homes and
served 260,843 basic subscribers.
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The Company also owns a 50% voting interest and nonvoting Preferred Limited
Partnership interests entitling the Company to a 16.5% preferred return in
Olympus Communications, L.P. ("Olympus"). Olympus is a joint venture limited
partnership between the Company and subsidiaries of FPL Group, Inc. Olympus
operates a large cable system in southern Florida that, as of June 30, 1998,
passed 752,012 homes and served 493,258 basic subscribers. The Company's
investment in Olympus is accounted for under the equity method of accounting.
Among its other significant investments in addition to its cable operations,
the Company owns a 66% interest, based on outstanding common stock at September
8, 1998, in Hyperion Telecommunications, Inc. ("Hyperion"), a leading
competitive local exchange carrier ("CLEC") that designs, constructs, operates
and manages state-of-the-art, fiber optic networks and facilities. Hyperion
operates one of the largest CLECs in the United States based upon route miles
and buildings connected. As of June 30, 1998, Hyperion managed and operated 22
networks (including two under construction), which served 46 cities and had
approximately 5,455 route miles, connecting approximately 2,034 buildings.
Hyperion offers switched services, including local dial tone, in 19 markets and
expects to begin offering local dial tone in the remainder of its operating
networks in 1998. Hyperion is consolidated in Adelphia's financial results and
is currently an unrestricted subsidiary of Adelphia for purposes of Adelphia's
indentures.
Adelphia was incorporated in Delaware on July 1, 1986 for the purpose of
reorganizing five cable television companies, then principally owned by the
Rigas Family, into a holding company structure in connection with the initial
public offering of Adelphia's Class A Common Stock. The Company's executive
offices are located at Main at Water Street, Coudersport, Pennsylvania 16915,
and its telephone number is (814) 274-9830.
Recent Developments
On March 2, 1998, Adelphia entered into a definitive agreement to acquire
cable television systems serving approximately 62,000 subscribers in Connecticut
and Virginia from Marcus Cable, Inc. for approximately $150,000,000 in cash.
This acquisition closed on September 1, 1998.
On August 18, 1998, Adelphia issued 8,190,315 shares of its Class A Common
Stock, $.01 par value (the "August Offering"). Of this total, 4,100,000 shares
were sold to the public at a price of $32.00 per share, pursuant to agreements
with several underwriters with an underwriting discount of $1.44 per share. The
remaining 4,090,315 shares were sold to entities controlled by the Rigas Family
at the public offering price less the underwriting discount. Net proceeds to
Adelphia after offering expenses from the August Offering were approximately
$250,000,000. On September 14, 1998, Adelphia issued an additional 615,000
shares in connection with the several underwriters exercising the August
Offering's over-allotment option (the "Option Offering") (the August Offering
and the Option Offering, collectively being, the "Equity Offering"). Net
proceeds to Adelphia after offering expenses from the Option Offering were
approximately $18,800,000.
On September 30, 1998, the Company consummated an agreement to merge a
subsidiary of the Company with the subsidiary of Tele-Communications Inc.
("TCI") that held an interest in
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Syracuse Hilton Head Holdings, L.P. ("SHHH, L.P."), an Adelphia managed
partnership controlled by the Rigas Family. Pursuant to the agreement, TCI
received 2,250,000 newly issued shares of the Company's Class A Common Stock,
$.01 par value, as a result of the merger. Simultaneously, SHHH, L.P.
distributed certain SHHH, L.P. cable systems in Virginia and North Carolina (the
"Virginia and North Carolina Systems") to Adelphia, in exchange for the interest
acquired by Adelphia from TCI as described above, the remainder of Adelphia's
minority equity interests in SHHH, L.P., and certain affiliate receivables owed
to Adelphia. The Virginia and North Carolina Systems were distributed to
Adelphia without indebtedness.
For other recent developments regarding the Company, reference is made to the
Form 10-Q and future filings by the Company under the Exchange Act.
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THE OFFERING
Shares Offered by the Selling Stockholders.........333,929 shares,
Class A Common
Shares outstanding as of October 1, 1998...........31,258,843 shares,
Class A Common
10,834,476 shares,
Class B Common
NASDAQ National Market System Symbol...............ADLAC
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RISK FACTORS
In addition to the other information contained or incorporated by reference in
this Prospectus, the following risk factors should be carefully considered in
evaluating the Company and its business before purchasing the securities offered
hereby.
Substantial Leverage
The Company is highly leveraged and has incurred substantial indebtedness to
finance acquisitions and expansion of its operations and, to a lesser extent,
for investments in and advances to affiliates. At June 30, 1998, the Company's
total indebtedness aggregated approximately $2,996,821,000, which included
approximately $1,013,276,000 of subsidiary bank, institutional and other debt,
approximately $472,949,000 of Hyperion public debt and approximately
$1,510,596,000 of indebtedness of the parent company. The Company's total debt
has varying maturities to 2008, including an aggregate of approximately
$1,158,487,000 maturing on or prior to March 31, 2003. The Company has
maintained its public long-term debt at the holding company level and at
Hyperion while borrowing in the private debt markets (e.g., bank and insurance
company debt) through the Company's wholly-owned subsidiaries. The Company's
subsidiary financings are effected through separate borrowing groups, and
substantially all of the indebtedness in these borrowing groups is non-recourse
to Adelphia. The subsidiary credit arrangements have varied revolving credit and
term loan periods and contain separately negotiated covenants relating to, among
other things, cross-defaults and the incurrence of additional debt for each
borrowing group. In addition, Olympus has substantial leverage. The high level
of the Company's indebtedness will have important consequences to investors,
including: (i) a substantial portion of the Company's cash flow from operations
must be dedicated to debt service and will not be available for general
corporate purposes or for capital improvements; (ii) the Company's ability to
obtain additional debt financing in the future for working capital, capital
expenditures, acquisitions or for capital improvements may be limited; and (iii)
the Company's level of indebtedness could limit its flexibility in reacting to
changes in the industry and economic conditions generally. In addition, at June
30, 1998, Adelphia had approximately $148,105,000 and Hyperion had approximately
$214,085,000 of redeemable exchangeable preferred stock. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
the Form 10-K and the Form 10-Q.
Net Losses and Convertible Preferred Stock, Common Stock and Other Stockholders'
Equity (Deficiency)
The Total Convertible Preferred Stock, Common Stock and Other Stockholders'
Equity (Deficiency) at June 30, 1998 was approximately ($1,217,429,000). The
stockholders' deficiency generally has resulted from the Company's reported net
losses which have been caused primarily by high levels of depreciation and
amortization and interest expense. The Company reported net losses applicable to
common stockholders of approximately $119,894,000, $130,642,000, $192,729,000
and $48,285,000 for the years ended March 31, 1996, 1997, 1998 and the three
months ended June 30, 1998, respectively. The Company expects to continue to
incur significant
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net losses for the next several years. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Form 10-K and
the Form 10-Q.
For the years ended March 31, 1997 and 1998, and the three months ended June
30, 1998, the Company's earnings were insufficient to cover its combined fixed
charges and preferred stock dividends by approximately $61,848,000, $113,941,000
and $38,757,000, respectively. However, such amounts reflect non-cash charges
totaling approximately $165,426,000, $182,471,000 and $46,454,000, respectively,
consisting of depreciation, amortization and non-cash interest expense on
certain indebtedness of the Company and Hyperion preferred stock dividends.
Historically, the Company's cash generated from operating activities and
borrowings has been sufficient to meet its requirements for debt service,
working capital, capital expenditures, and investments in and advances to
affiliates, and the Company has depended on the availability of additional
borrowings to meet its liquidity requirements. The Company believes that it will
continue to generate cash and obtain financing sufficient to meet such
requirements. However, the Company's ability to incur additional indebtedness is
limited by covenants in its indentures and its subsidiary credit agreements.
Although in the past the Company has been able both to refinance its
indebtedness and to obtain new financing, there can be no assurance that the
Company would be able to do so in the future or that, if the Company were able
to do so, the terms available would be favorable to the Company. In the event
that the Company were unable to refinance its indebtedness or obtain new
financing under these circumstances, the Company would likely have to consider
various options such as the sale of certain assets to meet its required debt
service, negotiation with its lenders to restructure applicable indebtedness or
other options available to it under applicable law. There can be no assurance
that any such options would yield net proceeds sufficient to repay its
indebtedness in full. See "Selected Consolidated Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Form 10-K and the Form 10-Q.
Voting Control and Disparate Voting Rights
As of October 1, 1998, the Rigas Family beneficially owned 10,736,544 shares,
or 99.1%, of Adelphia's outstanding Class B Common Stock and 11,029,119 shares,
or 35.3%, of Adelphia's outstanding Class A Common Stock. On a combined basis,
these shares represented 51.7% of the total number of outstanding shares of both
classes of Common Stock and 84.8% of the total voting power of both classes.
Assuming conversion of the 8% Series C Cumulative Convertible Preferred Stock
("Convertible Preferred Stock") held by the Rigas Family, family members would
have held on an as adjusted basis as of October 1, 1998 20,463,081 shares, or
approximately 50.3%, of Adelphia's Class A Common Stock and would have held
approximately 60.5% of the total number of shares and approximately 85.8% of the
total voting power of both classes of Common Stock. As a result of the stock
ownership by the Rigas Family and the Class B Stockholders' Agreement, John J.
Rigas and members of his family have the power to elect all seven directors
subject to election by both classes on a combined basis, which directors
constitute seven of the eight members of the Board of Directors of Adelphia.
(The holders of the Class A Common Stock are entitled, as a separate class, to
elect one of Adelphia's directors.) Moreover, because holders of Class B Common
Stock are entitled to ten votes per
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share while holders of Class A Common Stock are entitled to one vote per share,
the Rigas Family may control stockholder decisions on matters in which holders
of Class A Common Stock and Class B Common Stock vote together as a class. These
matters include the amendment of certain provisions of Adelphia's Certificate of
Incorporation and the approval of certain fundamental corporate transactions,
including mergers.
Holding Company Structure; Restrictive Covenants
As a holding company, Adelphia holds no significant assets other than its
investments in and advances to its subsidiaries and other investments.
Adelphia's ability to make interest and principal payments when due to holders
of debt of Adelphia is dependent upon the receipt of sufficient funds from its
subsidiaries or other investments. Under the terms of various debt agreements
between the Adelphia subsidiaries and other investments and their respective
lending institutions, upon the occurrence of an event of default (including
certain cross-defaults resulting from defaults under Adelphia's debt agreements)
or unless certain financial performance tests are met, the Adelphia subsidiaries
and other investments are restricted from distributing funds to Adelphia. The
Indentures governing the 8 1/8% Senior Notes due 2003 (the "8 1/8% Notes"), the
8 3/8% Senior Notes due 2008 (the "8 3/8% Notes"), the 9 1/4% Senior Notes due
2002 (the "9 1/4% Notes"), the 9 7/8% Senior Notes due 2007 (the "9 7/8%
Notes"), the 10 1/2% Senior Notes due 2004 (the "10 1/2% Notes"), the 12 1/2%
Senior Notes due 2002 (the "12 1/2% Notes"), the 10 1/4% Senior Notes due 2000
(the "10 1/4% Notes"), the 9 1/2% Senior Pay-In-Kind Notes due 2004 (the "9 1/2%
Notes"), the 11 7/8% Senior Debentures due 2004 (the "11 7/8% Debentures") and
the 9 7/8% Senior Debentures due 2005 (the "9 7/8% Debentures") (collectively,
"Adelphia's Public Debt") will not restrict the Company's subsidiaries or other
investments from contractually restricting their ability to pay dividends to
Adelphia in the future. In addition, because Adelphia's subsidiaries and other
investments do not guarantee the payment of principal of and interest on debt of
Adelphia, the claims of holders of such debt effectively will be subordinated to
the claim of creditors of such entities. At June 30, 1998, the total amount of
long-term debt of such subsidiaries was approximately $1,486,225,000. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Form 10-K and the Form 10-Q.
The agreements governing the bank debt of the Company's subsidiaries (the
"Subsidiary Bank Agreements") contain, among other covenants, requirements
that Adelphia's subsidiaries maintain specified financial ratios, including
maximum leverage and minimum interest coverage. The ability of a subsidiary to
comply with such provisions may be affected by events that are beyond Adelphia's
control. The breach of any of these covenants could result in a default by a
subsidiary under its Subsidiary Bank Agreement. In the event of any such
default, lenders party to that Subsidiary Bank Agreement could elect to declare
all amounts borrowed under that Subsidiary Bank Agreement, together with accrued
interest and other fees, to be due and payable. If the indebtedness under a
Subsidiary Bank Agreement were to be accelerated, all indebtedness outstanding
under such Subsidiary Bank Agreement would be required to be paid in full before
such subsidiary would be permitted to distribute any assets or cash to Adelphia.
There can be no assurance that the assets of Adelphia and its subsidiaries would
be sufficient to repay all borrowings under the Subsidiary Bank Agreements and
indebtedness owed to the other creditors of such subsidiaries in full. In
addition, as a result of these covenants, the ability of Adelphia's
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subsidiaries to respond to changing business and economic conditions and to
secure additional financing, if needed, may be significantly restricted, and
Adelphia may be prevented from engaging in transactions that might otherwise be
considered beneficial to Adelphia. There are similar restrictions under other
institutional debt of the Company's subsidiaries.
Potential Conflicts of Interest
As of October 1, 1998, the Rigas Family held substantially all of Adelphia's
Class B Common Stock and 84.8% of the combined voting power of both classes of
Adelphia's outstanding Common Stock (85.8% assuming the conversion of the
Convertible Preferred Stock owned by the Rigas Family) and has the power to
elect seven of eight members of Adelphia's Board of Directors. John J. Rigas and
the other executive officers of Adelphia (including other members of the Rigas
Family) hold direct and indirect ownership interests in the Managed
Partnerships, which are managed by the Company for a fee. Subject to the
restrictions contained in a business opportunity agreement regarding future
acquisitions, Rigas Family members and the executive officers are free to
continue to own these interests and acquire additional interests in cable
television systems. Such activities could present a conflict of interest with
the Company in the allocation of management time and resources of the executive
officers. In addition, there have been and will continue to be transactions
between the Company and the executive officers or other entities in which the
executive officers have ownership interests or with which they are affiliated.
The indentures under which Adelphia's Public Debt was issued contain covenants
that place certain restrictions on transactions between the Company and its
affiliates. See "Certain Relationships and Related Transactions" in the Form
10-K/A and Proxy Statement.
Competition
The cable television systems owned by the Company compete with other
communications and entertainment media as well as other means of video
distribution including Direct Broadcast Satellite Systems ("DBS") and
Multichannel Multipoint Distribution Systems ("MMDS"). In addition, some of
the Regional Bell Operating Companies (the "RBOCs") and other local telephone
companies are in the process of entering the video-to-home business and several
have expressed their intention to enter the video-to-home business. In addition,
some RBOCs and local telephone companies have in place facilities which are
capable of delivering cable television service.
In addition, the Telecommunications Act of 1996 (the "1996 Act") has
repealed the cable/telephone cross-ownership plan, and telephone companies will
now be permitted to provide cable television service within their service areas.
Certain of such potential service providers have greater financial resources
than the Company, and in the case of local exchange carriers seeking to provide
cable service within their service areas, have an installed plant and switching
capabilities, any of which could give them competitive advantages with respect
to cable television operators such as the Company. The Company cannot predict
either the extent to which competition will materialize or, if such competition
materializes, the extent of its effect on
-11-
<PAGE>
the Company. See "Business--Competition" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Form 10-K and
the Form 10-Q.
The Company also faces competition from other communications and
entertainment media, including conventional off-air television broadcasting
services, newspapers, movie theaters, live sporting events and home video
products. The Company cannot predict the extent to which competition may affect
the Company.
In each of the markets served by Hyperion's networks, the services offered by
Hyperion compete principally with the services offered by the incumbent local
exchange carrier ("LEC") serving that area. Incumbent LECs have long-standing
relationships with their customers, have the potential to subsidize competitive
services from monopoly service revenues, and benefit from favorable state and
federal regulations. In light of the passage of the 1996 Act, federal and state
regulatory initiatives will provide increased business opportunities to CLECs
such as Hyperion, but regulators are likely to provide incumbent LECs with
increased pricing flexibility for their services as competition increases. If
incumbent LECs are allowed by regulators to lower their rates substantially or
selectively engage in excessive volume and term discount pricing practices for
their customers or charge CLECs excessive fees for interconnection to the
incumbent LECs' networks, the net income and cash flow of CLECs, including
Hyperion, could be materially and adversely affected.
The 1996 Act also establishes procedures under which the RBOCs can obtain
authority to provide long distance services if they comply with certain
interconnection requirements. To date, the Federal Communications Commission
(the "FCC") authority to provide in-region interLATA service has been sought by
Ameritech in Michigan, Southwestern Bell in Oklahoma, and BellSouth in Louisiana
and South Carolina. The Department of Justice has opposed each request, and each
request has been denied by the FCC. An approval could result in decreased market
share for the major Inter-Exchange Carriers ("IXCs"), which are among
Hyperion's significant customers. Such a result could have an adverse effect on
Hyperion.
There has been significant merger activity among the RBOCs in anticipation of
entry into the long distance market, including the merger of Bell Atlantic and
NYNEX, whose combined territory covers a substantial portion of Hyperion's
markets. If RBOCs are permitted to provide such services, they will ultimately
be in a position to offer single source service for local and long distance
communications and subsidize the price of their long distance prices with
charges on local service. Other combinations are occurring in the industry,
which may have a material adverse effect on Hyperion. Hyperion also faces, and
will continue to face, competition from other current and potential market
entrants, including other CLECs, incumbent LECs which are not subject to RBOC
restrictions on long distance, AT&T, MCI, Sprint and other IXCs, cable
television companies, electric utilities, microwave carriers, wireless
telecommunications providers and private networks built by large end users. In
addition, all of the major IXCs are expected to enter the market for local
telecommunications services. Both AT&T and MCI have announced that they have
begun to offer local telephone services in some areas of the country, and AT&T
recently announced a new wireless technology for providing local telephone
service. AT&T and TCI also recently announced that they will merge. Although
Hyperion has good
-12-
<PAGE>
relationships with the IXCs, there are no assurances that any of these IXCs will
not build their own facilities, purchase other carriers or their facilities, or
resell the services of other carriers rather than use Hyperion's services when
entering the market for local exchange services.
Many of Hyperion's current and potential competitors, particularly incumbent
LECs, have financial, personnel and other resources substantially greater than
those of Hyperion, as well as other competitive advantages over Hyperion.
See "Business--Competition" and "--Legislation and Regulation" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Regulatory and Competitive Matters" in the Form 10-K and the Form
10-Q.
Need for Additional Financing
The Company's business requires substantial investment on a continuing basis
to finance capital expenditures and related expenses for, among other things,
upgrade of the Company's plant (including the need to make cable system upgrades
mandated by franchise authorities), the offering of new services and the
servicing, repayment or refinancing of its indebtedness. The Company will
require significant additional financing, through debt and/or equity issuances,
to meet its capital expenditure plans and to pay its debt obligations. There can
be no assurance that Adelphia will be able to issue additional debt or obtain
additional equity capital on satisfactory terms, or at all, to meet its future
financing needs. See "Business--Technological Developments" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
the Form 10-K and the Form 10-Q.
Regulation in the Telecommunications Industry
The cable television industry is subject to extensive regulation at the
federal, state and local levels, and many aspects of such regulation are
currently the subject of judicial proceedings and administrative or legislative
proposals. The Cable Television Consumer Protection and Competition Act of 1992
(the "1992 Cable Act") significantly expanded the scope of cable television
regulation. In particular, pursuant to the 1992 Cable Act, the FCC adopted
regulations that limit the Company's ability to set and increase rates for the
Company's basic and cable programming service ("CPS") packages and for the
provision of cable television-related equipment. The 1992 Cable Act permits
certified local franchising authorities to order refunds of rates paid in the
previous twelve-month period determined to be in excess of the permitted
reasonable rates. It is possible that rate reductions or refunds of previously
collected fees may be required in the future.
The 1996 Act, which became law on February 8, 1996, materially alters
federal, state and local laws and regulations pertaining to cable television,
telecommunications and other related services and, in particular, substantially
amends the Communications Act of 1934 (the "Communications Act"). Certain
provisions of the 1996 Act could materially affect the growth and operation of
the cable television industry and the cable services provided by the Company.
Although the new legislation may substantially lessen certain regulatory
burdens, the cable television industry may be subject to additional competition
as a result. See "Business--
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<PAGE>
Competition" in the Form 10-K. There are numerous rulemakings that have been and
continue to be undertaken by the FCC which will interpret and implement the
provisions of the 1996 Act. In addition, certain provisions of the new
legislation (such as the deregulation of rates for CPS packages) will not
immediately be effective. Furthermore, certain provisions of the 1996 Act have
been, and likely will be, subject to judicial challenge. The Company is unable
at this time to predict the outcome of such rulemakings or litigation or the
short and long-term effect (financial or otherwise) of the 1996 Act and FCC
rulemakings on the Company.
The cable television industry is subject to state and local regulations and
the Company must comply with rules of the local franchising authorities to
retain and renew its cable franchises, among other matters. There can be no
assurances that the franchising authorities will not impose new and more
restrictive requirements as a condition to franchise renewal.
Although the 1996 Act eliminates many legal barriers to entry (i.e.,
telephone companies entering the cable industry and cable companies entering the
telephone industry), the Company cannot assure that rules adopted by the FCC or
state regulators or other legislative or judicial initiatives relating to the
telecommunications industry will not have a material adverse effect on the
Company. In addition, the 1996 Act removes entry barriers for all companies and
could increase substantially the number of competitors offering comparable
services in the Company's potential markets. See "Legislation and Regulation"
in the Form 10-K and "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Regulatory and Competitive Matters" in the
Form 10-K and the Form 10-Q.
No Dividends Paid or to Be Paid
Adelphia has never declared or paid dividends on any of its Common Stock and
has no intention to pay cash dividends on such stock in the foreseeable future.
In addition, the indentures for Adelphia's Public Debt contain covenants which
limit Adelphia's ability to pay such dividends.
Shares Eligible for Future Sale
As of October 1, 1998, 31,258,843 shares of Class A Common Stock, 10,834,476
shares of Class B Common Stock, each share of which is presently convertible
into a share of Class A Common Stock, and 100,000 shares of Convertible
Preferred Stock, each share of which is presently convertible into approximately
117.9245 shares of Class A Common Stock, were outstanding. As of such date, the
Rigas Family beneficially owned 10,736,544 shares of Class B Common Stock,
11,029,119 shares of Class A Common Stock and 80,000 shares of Convertible
Preferred Stock. Pursuant to various registration rights agreements, the Rigas
Family has the right, subject to certain limitations, to require Adelphia to
register substantially all of these shares including Class A Common Stock
issuable upon conversion of the Class B Common Stock and the Convertible
Preferred Stock. Adelphia has filed a registration statement to register up to
11,000,000 shares of Class A Common Stock, and the 80,000 shares of Convertible
Preferred Stock and Class A Common Stock issuable upon conversion thereof, for
the Rigas Family and a registration statement for Booth American Company which
as of March 24, 1998 owned 3,571,428 shares of Class A Common Stock.
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<PAGE>
Although members of the Rigas Family have agreed in connection with the August
18,1998 public offering of Adelphia Class A Common Stock that they will not,
directly or indirectly, offer, sell, contract to sell or otherwise dispose of
any Common Stock or securities convertible or exchangeable or exerciseable for
Common Stock or grant any options or warrants to purchase shares of Common Stock
without the permission of Smith Barney Inc. for a period of 90 days from August
12, 1998, approximately 8,506,000 shares of Class A Common Stock and up to
80,000 shares of Convertible Preferred Stock (including the underlying Class A
Common Stock) have been pledged in connection with margin loans by the Rigas
Family to pledgees who are not subject to any restriction on their sale of any
shares of Class A Common Stock acquired upon a foreclosure or upon conversion of
Convertible Preferred Stock acquired upon a foreclosure. Sales of a substantial
number of shares of Class A Common Stock or Class B Common Stock including sale
by any pledgees of such shares could adversely affect the market price of the
Class A Common Stock and could impair Adelphia's ability in the future to raise
capital through an offering of its equity securities.
Impact of the Year 2000 Issues
The year 2000 issue refers to the inability of computerized systems and
technologies to recognize and process dates beyond December 31, 1999. The
Company is evaluating the impact of the year 2000 issue on its business
applications and its products and services. The evaluation includes a review of
the Company's information technology systems, cable network equipment and other
embedded technologies. A significant portion of the Company's computerized
systems and technologies have been developed, installed or upgraded in recent
years and are generally more likely to be year 2000 ready. The Company is also
evaluating the potential impact as a result of its reliance on third-party
systems that may have year 2000 issues.
Computerized business applications that could be affected by the year 2000
issue could include:
. information processing and financial reporting systems
. customer billing systems
. customer service systems
. telecommunication transmission and reception systems
. facility systems
System failure or miscalculation could result in a temporary inability to
process transactions, send invoices, accept customer orders or provide customers
with products and services. Customers could also experience a temporary
inability to receive or use the Company's products and services.
The Company has developed a program to assess and address the year 2000
issue. This program consists of the following phases:
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<PAGE>
. inventorying and assessing the impact on affected technology
. developing solutions for affected technology
. modifying or replacing affected technology
. testing and verifying solutions
. implementing solutions
. developing contingency plans
The Company has substantially completed inventorying and assessing the
affected computerized systems and technologies. The Company is in various
stages of its year 2000 compliance program with respect to the remaining phases
as it relates to the affected systems and technologies.
The Company has engaged a consulting firm familiar with its financial
reporting systems. This firm has developed and tested year 2000 solutions that
the Company is in the process of implementing. The Company expects its
financial reporting systems to be year 2000 compliant by June 1999.
A third-party billing vendor currently facilitates customer billing. The
Company is currently in the process of testing an in-house service ordering,
provisioning, maintenance and billing system that would replace the third-party
billing vendor. The Company expects to have this new system implemented by June
1999. On a contingency basis, the third-party vendor has provided a written
assertion that it will certify it is fully year 2000 compliant by June 1999.
Telecommunication plant rebuilds and upgrades in recent years have minimized
the potential impact of the year 2000 issue on the Company's facilities,
customer service, telecommunication transmission and reception systems. The
Company is engaged in a comprehensive internal inventory and assessment of all
hardware components and component controlling software throughout its
telecommunication networks. The Company expects to implement any hardware and
software modifications, upgrades or replacements resulting from the internal
review by June 1999.
Costs incurred to date directly related to addressing the year 2000 issue
have not been material. The Company has also redeployed internal resources to
meet the goals of its year 2000 program. The Company currently estimates the
total cost of its year 2000 remediation program to be approximately $2,500,000.
Although the Company will continue to incur substantial capital expenditures in
the ordinary course of meeting its telecommunication system upgrade goals
through the year 2000, it will not specifically accelerate its expenditures to
facilitate year 2000 readiness, and accordingly such expenditures are not
included in the above estimate.
The Company has begun communicating with others with whom it does significant
business to determine their year 2000 readiness and to determine the extent to
which the Company is vulnerable to year 2000 issues related to those third-
parties. The Company purchases much of its technology from third-parties.
There can be no assurance that the systems of other companies on which the
Company's systems rely will be year 2000 ready or timely converted into systems
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<PAGE>
compatible with the Company systems. The Company's failure or a third-party's
failure to become year 2000 ready or the Company's inability to become
compatible with third-parties with which the Company has a material
relationship, may have a material adverse effect on the Company, including
significant service interruption or outages.
The Company is in the process of identifying secondary sources to supply its
systems or services in the event it becomes probable that any of its systems
will not be year 2000 ready prior to the end of 1999. The Company is also in
the process of identifying secondary vendors and service providers to replace
those vendors and service providers whose failure to be year 2000 ready could
lead to a significant delay in the Company's ability to provide its services to
its customers.
Dilution
Persons purchasing Class A Common Stock will incur immediate and substantial
net tangible book value dilution. See "Dilution."
Potential Volatility of Stock Price
The market price of the shares of Class A Common Stock may be significantly
affected by factors such as actual or anticipated fluctuations in the Company's
operating results, new products or services or new contracts by the Company or
its competitors, legislative and regulatory developments, conditions and trends
in the telecommunications industry, general market conditions and other factors
beyond the Company's control. In addition, the stock market has, from time to
time, experienced significant price and volume fluctuations that have
particularly affected the market prices for the common stock of
telecommunications companies and that have often been unrelated to the operating
performance of particular companies. These broad market fluctuations may also
adversely affect the market price of the Company's Class A Common Stock.
Forward Looking Statements
The statements contained or incorporated by reference in this Prospectus that
are not historical facts are "forward looking statements" (as such term is
defined in the Private Securities Litigation Reform Act of 1995) which
statements can be identified by the use of forward looking terminology such as
"believes," "expects," "may," "will," "should," "intends" or "anticipates" or
the negative thereof or other variations thereon or comparable terminology, or
by discussions of strategy that involve risks and uncertainties.
Certain information included or incorporated by reference in this Prospectus,
including "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Form 10-K and the Form 10-Q, is forward-looking,
such as information relating to the effects of future regulation, future capital
commitments and the effects of competition. Such forward-looking information
involves important risks and uncertainties that could significantly affect
expected results in the future from those expressed in any forward-looking
statements made by, or on behalf of, the Company. These risks and uncertainties
include, but are not limited to,
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<PAGE>
uncertainties relating to economic conditions, acquisitions and divestitures,
government and regulatory policies, the pricing and availability of equipment,
materials, inventories and programming, technological developments and changes
in the competitive environment in which the Company operates. Persons reading
this Prospectus 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 which could cause
actual events or results to differ materially from those indicated by such
forward-looking statements.
DILUTION
The net tangible book value of the Company's Common Stock as of June 30, 1998
was a deficit of approximately ($1,937,804,000) or ($62.53) per share. Net
tangible book value per share represents the amount of the Company's convertible
preferred stock, common stock and other stockholders' equity (deficiency), less
intangible assets, divided by shares of Common Stock outstanding. Purchasers of
Class A Common Stock will have an immediate dilution of net tangible book value
which, due to the Company having a net tangible book value deficit, will exceed
the purchase price per share. For example, in the August 1998 Adelphia public
offering, with the purchase price of $32.00 per share, the net tangible book
value dilution per share was $76.95. Net tangible book value dilution per share
represents the difference between the amount per share paid by purchasers of
shares of Class A Common Stock in an offering from the Company and the pro forma
net tangible book value per share of the Common Stock immediately after
completion of such offering.
SELLING STOCKHOLDERS
The Selling Stockholders (which term includes their transferees, pledgees,
donees or their successors) may from time to time offer and sell pursuant to
this Prospectus any or all of the Shares. The following table sets forth
certain information regarding the Selling Stockholders' ownership of the
Company's Class A Common Stock. No Selling Stockholder has held any position,
office or had any other material relationship with the Company, its predecessors
or affiliates during the past two years. Although the Selling Stockholders may
offer some or all of their respective Shares pursuant to this Prospectus, the
following table assumes that all such Shares have been sold upon termination of
any such sales. In addition, the Selling Stockholders may have sold,
transferred or otherwise disposed of all or a portion of their respective Shares
since the date on which they provided information thereon in transactions exempt
from the registration requirements of the 1933 Act. To the knowledge of the
Company, except as disclosed in the table below, the Selling Stockholders did
not own, nor did they have any rights to acquire, any other shares of Common
Stock as of the date of this Prospectus.
<TABLE>
<CAPTION>
Percent of Class
Class A Common Percent of Class A Class A Class A Common A Common Shares
Shares Held Common Shares Held Common Shares Shares Held Shares Held
Name Before Offering Before Offering Offered Hereby After Offering After Offering
------------------ -------------------- ------------------ ------------------ -----------------
<S> <C> <C> <C> <C> <C>
Joseph S. Gans, Sr.
and Irene F. Gans 95,075 0.3% 95,075 0 0
</TABLE>
-18-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Joseph S. Gans, Sr. 17,061 *% 17,061 0 0
Irene F. Gans 17,061 *% 17,061 0 0
Joseph S. Gans, III 102,366 0.3% 102,366 0 0
Janice Gans Moisey 102,366 0.3% 102,366 0 0
------- --- ------- - -
TOTAL 333,929 1.1% 333,929 0 0
======= === ======= = =
</TABLE>
- ------------------------
* Less than 0.1%.
The Shares referenced above were issued to the Selling Stockholders in March
1998 pursuant to an agreement with the Company, in a private placement
transaction, as consideration for the acquisition by Adelphia of equity
interests in cable television systems. In connection with that private
placement transaction, the Company and the Selling Stockholder have agreed that
the Company shall in no event be obligated to cause the Registration Statement
covering this Prospectus to remain effective for more than one hundred twenty
(120) days, excluding any suspension of such effectiveness. In the event that
the above named Selling Stockholders transfer Shares, by gift, assignment or
otherwise, such transferees would also then become Selling Stockholders under
this Prospectus.
Adelphia will not receive any proceeds from the sale of the Shares.
PLAN OF DISTRIBUTION
The Shares may be sold by a Selling Stockholder from time to time, in one or
more transactions at fixed prices, at prevailing market prices or at prices
related thereto at the time of sale, at varying prices determined at the time of
sale or at negotiated prices. Such prices will be determined by the Selling
Stockholders. The sale of the Shares may be effected (i) in transactions (which
may involve crosses or block transactions) on any national securities exchange
or quotation service on which the Shares may be listed or quoted at the time of
sale, (ii) in the over-the-counter market, (iii) in private or negotiated
transactions otherwise than on such exchanges or in the over-the-counter market,
(iv) through the writing of options or (v) in combinations of such methods. In
effecting such sales, underwriters, brokers or dealers engaged by the Selling
Stockholders may arrange for other underwriters, brokers or dealers to
participate. Underwriters, brokers or dealers may purchase Shares as principals
for their own accounts and resell such Shares pursuant to this Prospectus.
Underwriters, brokers and dealers may receive commissions or discounts from such
Selling Stockholders in amounts to be negotiated immediately prior to the sale.
The Selling Stockholders, any such underwriters, brokers or dealers and any
other participating brokers or dealers may be deemed to be "underwriters" within
the meaning of the 1933 Act in connection with such sales, and any profits
realized or commissions received may be deemed underwriting compensation.
At the time a particular offering of the Shares is made, if required, a
prospectus supplement will be distributed which will set forth the names of the
Selling Stockholders, the aggregate amount and type of Shares being offered, the
number of such securities owned prior to and after the completion of any such
offering, and, to the extent required, the terms of the offering, including the
name or names of any underwriters, broker/dealers or agents, any discounts,
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<PAGE>
commissions and other terms constituting compensation from the Selling
Stockholders and any discounts, commissions or concessions allowed or reallowed
or paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if applicable,
the Shares will be offered or sold in such jurisdictions only through registered
or licensed brokers or dealers. In addition, in certain jurisdictions the
Shares may not be offered or sold unless they have been registered or qualified
for sale in such jurisdictions or any exemption from registration or
qualification is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Shares may be limited in its ability to engage
in market activities with respect to such Shares. In addition and without
limiting the foregoing, each Selling Stockholder will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder, which
provisions may limit the timing of purchases and sales of any of the Shares by
the Selling Stockholders. All of the foregoing may affect the marketability of
the Shares.
All expenses of the registration of the Shares will be paid by the Company,
including, without limitation, Commission filing fees and expenses of compliance
with state securities or "blue sky" laws; provided, however, that the Selling
Stockholders will pay all underwriting discounts and selling commissions, if
any. The Selling Stockholders will be indemnified by the Company against
certain civil liabilities, including certain liabilities under the 1933 Act, or
will be entitled to contribution in connection therewith. The Company will be
indemnified by the Selling Stockholders against certain civil liabilities,
including certain liabilities under the 1933 Act, or will be entitled to
contribution in connection therewith.
If required, a supplement to this Prospectus ("Prospectus Supplement") will
set forth, with respect to the Selling Stockholders, any necessary further
information regarding them or the distribution of the shares offered hereby.
Such Prospectus Supplement may be appropriately modified or supplemented.
EXPERTS
The consolidated financial statements and the related financial statement
schedules of Adelphia and its subsidiaries as of March 31, 1997 and 1998, and
for each of the three years in the period ended March 31, 1998, and the
consolidated financial statements of Olympus and its subsidiaries as of December
31, 1996 and 1997, and for each of the three years in the period ended December
31, 1997, all incorporated in this Prospectus by reference from the Company's
Annual Report on Form 10-K for the year ended March 31, 1998 have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their reports,
which are incorporated herein by reference, and have been so incorporated in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
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<PAGE>
No dealer, salesman or any other person has been 333,929 Shares
authorized to give any information or to make any
representations other than those contained in this
Prospectus in connection with the offer made by this
Prospectus and, if given or made, such information or
representations must not be relied upon as having
been authorized. Neither the delivery of this
Prospectus nor any sale made hereunder shall under
any circumstances create any implication that there
has been no change in the affairs of Adelphia since
the date hereof. This Prospectus does not constitute
an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is
not authorized or in which the person making such
offer or solicitation is not qualified to do so or to
anyone to whom it is unlawful to make such offer or
solicitation.
-----------------------------------
ADELPHIA
COMMUNICATIONS
CORPORATION
Class A Common Stock
($.01 par value)
Prospectus
Dated October 5, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an estimate of the expenses which will be incurred by the
Company in connection with the issuance and distribution of the securities being
registered.
<TABLE>
<CAPTION>
AMOUNT
<S> <C>
SEC filing fee....................................... $ 3,361
Legal fees and expenses.............................. $12,000
Accounting fees and expenses......................... $ 7,500
Miscellaneous expenses............................... $ 3,000
-------
Total................................................ $25,861
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides in general that
a corporation may indemnify its directors, officers, employees or agents against
expenditures (including judgments, fines, amounts paid in settlement and
attorneys' fees) made by them in connection with certain lawsuits to which they
may be made parties by reason of their being directors, officers, employees or
agents and shall so indemnify such persons against expenses (including
attorneys' fees) if they have been successful on the merits or otherwise. The
bylaws of Adelphia provide for indemnification of the officers and directors of
Adelphia to the full extent permissible under Delaware law.
Adelphia's Certificate of Incorporation also provides, pursuant to Section
102(b)(7) of the Delaware General Corporation Law, that directors of Adelphia
shall not be personally liable to Adelphia or its stockholders for monetary
damages for breach of fiduciary duty as a director for acts or omissions after
July 1, 1986, provided that directors shall nonetheless be liable for breaches
of the duty of loyalty, bad faith, intentional misconduct, knowing violations of
law, unlawful distributions to stockholders, or transactions from which a
director derived an improper personal benefit.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following is a complete list of Exhibits filed as part of this
Registration Statement, which are incorporated herein:
II-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Reference
- ----------- ---------
<C> <S> <C>
4.01 The Certificate of Incorporation of Adelphia Incorporated herein by
Communications Corporation reference is Exhibit 3.01
to Registrant's Current
Report on Form 8-K dated
July 24, 1997 (File No.
000-16104).
23.01 Consent of Deloitte & Touche LLP Filed herewith.
24.01 Power of Attorney (included on the signature page of *
the Registration Statement)
</TABLE>
* Previously filed.
ITEM 17. UNDERTAKINGS
(a) Rule 415 Offering.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be
II-2
<PAGE>
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Request for Acceleration of Effective Date.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant of expenses incurred or paid by
a director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933, as amended, and will be governed by the
final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 1 to registration statement on Form
S-3 and has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Coudersport,
Commonwealth of Pennsylvania, on the 5th day of October, 1998.
ADELPHIA COMMUNICATIONS CORPORATION
By /s/ Timothy J. Rigas
----------------------------------------
Timothy J. Rigas, Executive Vice President
Pursuant to the requirements of the Securities Act, this Amendment No. 1 to
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
/s/ * Chairman, President and Chief Executive October 5, 1998
- ----------------------------- Officer
JOHN J. RIGAS
/s/ * Executive Vice President and Director October 5, 1998
- -----------------------------
MICHAEL J. RIGAS
/s/ Timothy J. Rigas Executive Vice President, Chief October 5, 1998
- ----------------------------- Financial Officer, Chief Accounting
TIMOTHY J. RIGAS Officer, Treasurer and Director
/s/ * Executive Vice President and Director October 5, 1998
- -----------------------------
JAMES P. RIGAS
/s/ * Senior Vice President, Secretary and October 5, 1998
- ----------------------------- Director
DANIEL R. MILLIARD
/s/ * Director October 5, 1998
- -----------------------------
PERRY S. PATTERSON
/s/ * Director October 5, 1998
- -----------------------------
PETE J. METROS
/s/ * Director October 5, 1998
- -----------------------------
DENNIS P. COYLE
/s/ Timothy J. Rigas October 5, 1998
- -----------------------------
Timothy J. Rigas
as attorney-in-fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Reference
- ------------- ---------
<C> <S> <C>
4.01 The Certificate of Incorporation of Adelphia Incorporated herein by
Communications Corporation reference is Exhibit 3.01 to
Registrant's Current Report on
Form 8-K dated July 24, 1997
(File No. 000-16104).
23.01 Consent of Deloitte & Touche LLP Filed herewith.
24.01 Power of Attorney (included on the signature page *
of the Registration Statement)
</TABLE>
* Previously filed.
<PAGE>
Exhibit 23.01
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-63075 of Adelphia Communications Corporation on
Form S-3 of our report dated June 10, 1998 and our report dated March 6, 1998 on
our audits of the financial statements of Adelphia Communications Corporation
and subsidiaries and of Olympus Communications, L.P. and subsidiaries,
respectively, appearing in and incorporated by reference in the Annual Report on
Form 10-K of Adelphia Communications Corporation for the year ended March 31,
1998, and to the reference to us under the heading "Experts" in the
Prospectus, which is part of such Registration Statement.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
October 2, 1998
