<PAGE>
Filed Pursuant to Rule 424b(5)
Registration No. 333-78027
PROSPECTUS SUPPLEMENT
(To Prospectus Dated May 14, 1999)
[LOGO OF ADELPHIA]
6,000,000 Shares
Adelphia Communications Corporation
Class A Common Stock
$57.00 per share
------------
We are selling 6,000,000 shares of our Class A common stock that will result
in gross proceeds of approximately $342,000,000. The underwriters named in this
prospectus supplement may purchase up to 900,000 additional shares of our Class
A common stock under certain circumstances.
Our Class A common stock is quoted on the Nasdaq National Market under the
symbol "ADLAC." The last reported sale price of our Class A common stock on the
Nasdaq National Market on September 30, 1999, was $58 13/16 per share.
------------
Investing in the common stock involves risks. See "Risk Factors" beginning on
page S-7.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus supplement is truthful or complete. Any representation to the
contrary is a criminal offense.
------------
<TABLE>
<CAPTION>
Per Share Total
--------- ------------
<S> <C> <C>
Public Offering Price................................... $57.00 $342,000,000
Underwriting Discount................................... $ 2.00 $ 12,000,000
Proceeds to Adelphia (before expenses).................. $55.00 $330,000,000
</TABLE>
The underwriters are offering the shares subject to various conditions. The
underwriters expect to deliver the shares to purchasers on or about October 6,
1999.
------------
Joint Lead Manager & Sole Book Runner
Salomon Smith Barney
Joint Lead Manager Joint Lead Manager
Credit Suisse First Boston Goldman, Sachs & Co.
Banc of America Securities LLC
Donaldson, Lufkin & Jenrette
Lehman Brothers
Merrill Lynch & Co.
Morgan Stanley Dean
Witter
CIBC World Markets
Credit Lyonnais Securities (USA) Inc.
First Union Securities, Inc.
SG Cowen
October 1, 1999
<PAGE>
You should rely only on the information contained in or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not authorized anyone to provide you with different information. We are
not making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information contained in or
incorporated by reference in this prospectus supplement or the accompanying
prospectus is accurate as of any date other than the date on the front of this
prospectus supplement.
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Supplement Summary.............................................. S-2
Risk Factors............................................................... S-7
Use of Proceeds............................................................ S-20
Capitalization............................................................. S-21
Price Range of Adelphia's Common Equity and Dividend Policy................ S-22
Dilution................................................................... S-23
Certain United States Tax Consequences to Non-United States Holders........ S-24
Underwriting............................................................... S-27
Where You Can Find More Information........................................ S-30
Legal Matters.............................................................. S-31
Experts.................................................................... S-31
</TABLE>
Prospectus
<TABLE>
<CAPTION>
Page
----
<S> <C>
Adelphia................................................................... 2
Risk Factors............................................................... 4
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends........... 16
Dilution................................................................... 17
Use of Proceeds............................................................ 17
Description of Debt Securities............................................. 18
Description of Capital Stock............................................... 31
Book Entry Issuance........................................................ 36
Plan of Distribution....................................................... 38
Where You Can Find More Information........................................ 40
Legal Matters.............................................................. 41
Experts.................................................................... 42
</TABLE>
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
This summary may not contain all the information that may be important to
you. You should read this entire prospectus supplement and the entire attached
prospectus and those documents incorporated by reference into this document,
including the risk factors, financial data and related notes, before making an
investment decision. When we use the term Adelphia Parent Company in this
prospectus supplement, we are referring only to the parent holding company
entity, Adelphia Communications Corporation, and not to its subsidiaries.
Adelphia
Adelphia is a leader in the telecommunications industry with cable
television and local telephone operations. We are the sixth largest cable
television operator in the United States, after giving effect to the recent and
pending cable system acquisitions and swaps described in "Recent Developments."
Through our subsidiary Hyperion Telecommunications, Inc., we own and operate a
super regional provider of integrated communications services in the eastern
half of the United States. John J. Rigas, the Chairman, President, Chief
Executive Officer and founder of Adelphia, has owned and operated cable
television systems since 1952.
Our operations consist of providing telecommunications services primarily
over our networks, which are commonly referred to as broadband networks because
they can transmit large quantities of voice, video and data by way of digital
or analog signals. We owned cable television systems with broadband networks
that passed in front of approximately 7.9 million homes and served
approximately 5.0 million basic subscribers as of June 30, 1999, after giving
effect to the recent and pending cable system acquisitions and swaps described
in "Recent Developments." After giving effect to these acquisitions and swaps,
our cable systems are organized into ten regional clusters: Los Angeles,
Florida, New England, Midwest, Western New York, Virginia, Western
Pennsylvania, Puerto Rico, Colorado Springs and Eastern Pennsylvania.
Approximately 40% of our basic subscribers are located in our Los Angeles and
Florida clusters and approximately 75% of our basic subscribers are located in
our five largest clusters.
Hyperion provides its customers with alternatives to the incumbent local
telephone company for local and long distance voice services, messaging, high-
speed data and Internet services. Hyperion's telephone operations are referred
to as being facilities based, which means it generally owns the local
telecommunications networks and facilities it uses to deliver these services,
rather than leasing or renting the use of another party's networks to do so. As
of June 30, 1999, Hyperion was serving 40 metropolitan statistical areas and
had sold 212,191 access lines of which 191,285 were installed, approximately
65% of which Hyperion provisioned on its own switches. Hyperion Class A common
stock is quoted on the Nasdaq National Market under the symbol "HYPT."
Recent Developments
October Rigas Direct Placement
On October 1, 1999, we entered into a stock purchase agreement with Highland
Holdings, a general partnership controlled by members of the family of John
Rigas, under which Adelphia agreed to sell to Highland Holdings and Highland
Holdings agreed to purchase 2.5 million shares of Adelphia
S-2
<PAGE>
Class B common stock. In this prospectus, we will refer to this stock purchase
as the October Rigas Direct Placement. The October Rigas Direct Placement will
be at a per share price equal to the public offering price less the
underwriting discount in the public offering of Class A common stock described
in this prospectus supplement, plus an interest factor. Closing on the October
Rigas Direct Placement will occur within 270 days of the closing of the Class A
common stock offering. The agreement for the October Rigas Direct Placement is
similar to the agreement for the April Rigas Direct Placement described below,
and is subject to customary closing conditions.
Hyperion Name Change Announcement
On July 1, 1999, Adelphia and Hyperion announced their decision to further
combine the efforts of both companies and that Hyperion was changing the name
under which it will be doing business to Adelphia Business Solutions. Hyperion
expects to ask its stockholders to approve a change of its legal name from
Hyperion Telecommunications, Inc. to Adelphia Business Solutions, Inc. at its
annual stockholders meeting on October 25, 1999.
May 1999 Cable System Swap Agreements
On May 26, 1999, Adelphia announced that it had agreed to exchange certain
cable systems with Comcast Corporation and Jones Intercable, Inc. in a
geographic rationalization of the companies' respective markets. As a result of
this transaction, Adelphia would add approximately 443,000 basic subscribers in
Los Angeles, California and West Palm/Fort Pierce, Florida. In exchange,
Comcast and Jones would receive systems currently owned, managed or under
contract to be acquired by Adelphia serving approximately 468,000 basic
subscribers in suburban Philadelphia, Pennsylvania, Ocean County, New Jersey,
Ft. Myers, Florida, Michigan, New Mexico and Indiana. All systems involved in
the transactions will be valued by agreement between the parties or, following
a failure to reach agreement, by independent appraisals, and any difference in
relative value will be funded with cash or additional cable systems. The system
exchanges are subject to customary closing conditions and regulatory approvals
and are expected to close by mid-2000.
April 1999 Series D Convertible Preferred Stock Offering
On April 30, 1999, and in a related transaction on May 14, 1999, Adelphia
consummated an offering of 2.875 million shares of 5 1/2% Series D Convertible
Preferred Stock, liquidation preference $200 per share. Net proceeds to
Adelphia from this offering, after deducting offering expenses, were
approximately $557.0 million. Adelphia invested a portion of the net proceeds
in cash equivalents and advanced or contributed the remaining net proceeds to
certain subsidiaries to repay borrowings under subsidiary credit agreements,
all of which, subject to compliance with the terms and maturities of such
credit agreements, Adelphia plans to reborrow to fund one or more of its
pending acquisitions described in this section.
April 1999 Common Stock Offering
On April 28, 1999, Adelphia consummated an offering of 8.0 million shares of
Class A common stock. Net proceeds to Adelphia from this offering, after
deducting offering expenses, were approximately $485.5 million. Adelphia
advanced or contributed the net proceeds to certain
S-3
<PAGE>
subsidiaries to repay borrowings under subsidiary credit agreements, all of
which, subject to compliance with the terms and maturities of such credit
agreements, Adelphia plans to reborrow to fund one or more of its pending
acquisitions described in this section.
April 1999 Senior Notes Offering
On April 28, 1999, Adelphia consummated an offering of $350 million of 7
7/8% Senior Notes due 2009. Net proceeds from this offering, after deducting
offering expenses, were approximately $345.0 million. The net proceeds were
used to repay borrowings under subsidiary credit agreements, all of which,
subject to compliance with the terms of and maturities of such credit
agreements, may be reborrowed and used for general corporate purposes,
including acquisitions, capital expenditures and investments.
Pending Harron Acquisition
On April 12, 1999, Adelphia entered into a definitive agreement to purchase
the cable television systems owned by Harron Communications Corp. for
approximately $1.17 billion in cash. This transaction is subject to customary
closing conditions. As of June 30, 1999, Harron had approximately 299,000 basic
subscribers after giving effect to recent and pending acquisitions by Harron
involving systems with approximately 6,000 basic subscribers. The closing is
expected to occur early in the calendar quarter ending December 31, 1999.
April Rigas Direct Placement
On April 9, 1999, Adelphia entered into a stock purchase agreement with
Highland Holdings, a general partnership controlled by members of the family of
John J. Rigas, pursuant to which Adelphia agreed to sell to Highland Holdings
and Highland Holdings agreed to purchase $375.0 million of Adelphia Class B
common stock. We will refer to this purchase as the April Rigas Direct
Placement. The purchase price for the Class B common stock will be $60.76 per
share, which is equal to the public offering price in Adelphia's April 28, 1999
public offering of Class A common stock described above less the underwriting
discount, plus an interest factor. Closing under this stock purchase agreement
is to occur on or prior to January 23, 2000 as determined by Highland Holdings
at its discretion.
Pending Century Acquisition
On March 5, 1999, Adelphia announced that it had entered into a definitive
merger agreement to acquire Century Communications Corp. Under the agreement,
Adelphia would acquire the outstanding common stock of Century for an aggregate
of approximately $826 million in cash, approximately 48.7 million shares of
Adelphia Class A common stock and the assumption of approximately $1.6 billion
of debt. This transaction is subject to shareholder approval by Century and
Adelphia at their respective stockholders meetings on October 1, 1999, and to
other customary closing conditions. As of May 31, 1999, Century had
approximately 1,610,000 basic subscribers after giving effect to Century's
pending joint venture with AT&T. Adelphia believes this acquisition will close
early in the calendar quarter ending December 31, 1999.
S-4
<PAGE>
March 1999 Hyperion Notes Offering
On March 2, 1999, Hyperion issued $300 million of 12% Senior Subordinated
Notes due 2007. An entity controlled by members of the Rigas family purchased
$100 million of the $300 million of Senior Subordinated Notes directly from
Hyperion at a price equal to the aggregate principal amount less the discount
to the initial purchasers. The net proceeds of approximately $292 million will
be used to fund Hyperion's acquisition of interests held by local partners in
certain of its networks, for capital expenditures and investments in its
networks, for working capital purposes and for general corporate purposes.
Pending FrontierVision and Other Acquisitions
On February 23, 1999, Adelphia entered into a definitive agreement to
acquire FrontierVision Partners, L.P. for approximately $2.1 billion. Under
that agreement, Adelphia would acquire 100% of FrontierVision in exchange for
approximately $550 million in cash, 7.0 million shares of Adelphia Class A
common stock and assumed debt of approximately $1.1 billion. The transaction is
subject to customary closing conditions. As of June 30, 1999, FrontierVision
had approximately 710,000 basic subscribers. Adelphia believes that the
FrontierVision acquisition will close early in the calendar quarter ending
December 31, 1999. In addition to the Century, FrontierVision and Harron
acquisitions, the May 1999 cable system swap agreements, and the acquisition of
Telesat's interests in Olympus described below, Adelphia also has pending or
has consummated, agreements for acquisitions covering an aggregate of
approximately 102,000 basic subscribers for an aggregate price of approximately
$484.5 million.
Telesat Stock Repurchase and Pending Acquisition of Olympus Interests
On January 29, 1999, Adelphia purchased from subsidiaries of Telesat
Cablevision, Inc., a subsidiary of FPL Group, Inc., shares of Adelphia's stock
owned by such Telesat subsidiaries. Adelphia purchased 1,091,524 shares of
Adelphia Class A common stock and 20,000 shares of its Series C cumulative
convertible preferred stock which were convertible into an additional 2,358,490
shares of Adelphia Class A common stock. These shares represented 3,450,014
shares of Adelphia Class A common stock on a fully converted basis. Adelphia
also agreed to acquire Telesat's equity interests in Olympus Communications,
L.P., a non-consolidated joint venture between Adelphia and Telesat. The
acquisition is subject to applicable third party approvals and is expected to
close early in the calendar quarter ending December 31, 1999. The aggregate
purchase price for Telesat's interests in Olympus will be approximately $108.0
million.
For other recent developments regarding Adelphia, we refer you to our most
recent and future filings under the Exchange Act.
------------
Our executive offices are located at One North Main Street, Coudersport,
Pennsylvania 16915, and our telephone number is (814) 274-9830.
S-5
<PAGE>
The Offering
Class A Common Stock Offered........
6,000,000 shares
--------
Common Stock to be Outstanding:
Class A Common Stock.............
Class B Common Stock ............ 56,328,343 shares (1)
10,834,476 shares (2)
--------
Total ..........................
67,162,819 shares
--------
--------
Use of Proceeds..................... The net proceeds from the Class A
common stock offering will be used
for general corporate purposes. See
"Use of Proceeds."
Rights of Holders of Class A Common
Stock and Class B Common Stock..... The rights of holders of Class A
common stock and Class B 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 10 votes per share
while the holders of Class A common
stock are entitled to 1 vote per
share on all matters presented to
stockholders; however, the holders
of Class A common stock, voting as
a separate class, are entitled to
elect one of Adelphia's directors.
See "Description of Capital Stock"
in the attached prospectus.
Nasdaq National Market symbol for
Class A Common Stock...............
ADLAC
- --------
(1) Does not include (i) 9,433,962 shares of Class A common stock into which
Series C cumulative convertible preferred stock can be converted or
7,059,546 shares of Class A common stock into which the Series D
convertible preferred stock can be converted and (ii) any shares of Class
A common stock to be issued in any acquisition described in "Recent
Developments." See "Description of Capital Stock--Preferred Stock" in the
attached prospectus.
(2) Does not include the approximately 6,200,000 and 2,500,000 shares of Class
B common stock to be sold in the April Rigas Direct Placement and the
October Rigas Direct Placement, respectively.
S-6
<PAGE>
RISK FACTORS
Before you invest in our Class A common stock, you should be aware that
there are various risks associated with investing in Adelphia, including those
described below. You should carefully consider these risk factors together with
all of the other information included or incorporated by reference in this
prospectus supplement before you decide to purchase shares of Adelphia Class A
common stock.
High Level Of Indebtedness
Adelphia has a substantial amount of debt. We
As of June 30, 1999, borrowed this money to purchase and to expand our
we owed approximately cable systems and other operations and, to a lesser
$3.8 billion and as of extent, for investments and loans to our
that date we would have affiliates. At June 30, 1999, our indebtedness
owed approximately $5.8 totaled approximately $3.8 billion. This included
billion after the approximately:
acquisition of Century,
approximately $7.0
billion after the
acquisition of Century
and FrontierVision and
approximately $8.3
billion after such
transactions and
the Harron and Olympus
acquisitions. Our high
level of indebtedness
can have important
adverse consequences to
us and to you.
. $2.4 billion of Adelphia Parent Company public
debt;
. $601.7 million of debt owed by our subsidiaries
to banks, other financial institutions and other
persons; and
. $786.7 million of public debt owed by Hyperion,
Adelphia's subsidiary, which is a super-regional
provider of integrated communications services.
Olympus, a non-consolidated joint venture, also has
approximately $207.5 million of debt as of June 30,
1999. Olympus will be consolidated with Adelphia
upon completion of Adelphia's proposed acquisition
of Telesat's interests in Olympus. That acquisition
is expected to close early in the calendar quarter
ending December 31, 1999.
We may need to Century and its subsidiaries have substantial
refinance significant indebtedness. At May 31, 1999, Century and its
Century indebtedness subsidiaries had long-term debt of approximately
that we will be $2.0 billion (exclusive of current maturities of
assuming. $20.1 million), including approximately $1.9
billion principal amount of public indebtedness
under indentures, $89.0 million of indebtedness
under four credit agreements entered into by
subsidiaries of Century and various banks and $80.0
million of indebtedness under a note agreement
entered into by a subsidiary of Century. As of
August 26, 1999, Century and its subsidiaries had
borrowed an additional $875 million and has
invested these proceeds in short-term deposits.
Without a consent from the lenders to Century's
subsidiaries, the Century merger will violate
certain covenants contained in the Century credit
agreements. As a result, we will either secure a
waiver from the lenders under these credit
agreements or will refinance such credit agreements
with new or existing credit facilities. Although we
currently have sufficient liquidity under our
existing credit facilities to refinance the
borrowings under Century's credit agreements,
Adelphia is seeking consents to keep
S-7
<PAGE>
some or all of such credit agreements in place. In
the event that these consents cannot be obtained
upon reasonable terms, we could seek to refinance
some or all of them under one or more new
facilities in order to preserve our existing
liquidity. There can be no assurance, however, that
we will be able to obtain these consents or
refinance these credit agreements under any terms
or on terms acceptable to Adelphia. As a result,
the failure to obtain the required consents or to
refinance these credit agreements could materially
decrease Adelphia's liquidity.
Under the indentures for Century's public notes,
the merger will require Century to make an offer to
purchase the public notes if the merger results in
the public notes being downgraded to a specified
level by certain national rating agencies. Upon
announcement of the merger, certain rating agencies
announced that the Century notes were under review
with a view to a downgrade to a level which would
not require Century to make an offer to repurchase
public notes. In the event that the public notes
were to be downgraded to a level beyond that
announced by the rating agencies upon disclosure of
the merger, Century would be required to make an
offer to repurchase the public notes at 101% of the
amount of the notes. In the event that a
significant amount of notes were tendered to
Century for repurchase, this could materially
decrease Adelphia's liquidity.
We may need to On February 23, 1999, we announced our proposed
refinance significant acquisition of FrontierVision. FrontierVision and
FrontierVision its subsidiaries have substantial indebtedness. At
indebtedness that we June 30, 1999, FrontierVision and its subsidiaries
will be assuming. had nonaffiliate long-term debt of approximately
$1.1 billion, including approximately $681.0
million owed to banks under a credit agreement and
approximately $462.3 million owed under indentures
for public notes. We have secured consents and
waivers from the lenders to permit the credit
agreement to remain outstanding. As a result of the
acquisition by Adelphia, the indentures for the
public debt will require FrontierVision to make an
offer to repurchase the public notes at 101% of the
amount of the public notes. In the event that a
significant amount of notes were tendered to
FrontierVision for repurchase, this could
materially decrease Adelphia's liquidity.
We will need to raise We will need to raise significant funds to pay for
significant financing the $1.17 billion acquisition of Harron.
for the Harron
acquisition.
The Century, FrontierVision, Olympus and Harron
acquisitions are reflected in Adelphia's unaudited
condensed consolidated pro forma financial
statements incorporated by reference in this
prospectus supplement.
S-8
<PAGE>
Debt service consumes
a substantial portion of Our high level of indebtedness can have important
the cash we generate. adverse consequences to us and to you. It requires
This could affect our that we spend a substantial portion of the cash we
ability to invest in our get from our business to repay the principal and
business in the future interest on these debts. Otherwise, we could use
as well as to react to these funds for general corporate purposes or for
changes in our industry capital improvements. Our ability to obtain new
or economic downturns. loans for working capital, capital expenditures,
acquisitions or capital improvements may be limited
by our current level of debt. In addition, having
such a high level of debt could limit our ability
to react to changes in our industry and to economic
conditions generally. In addition to our debt, at
June 30, 1999, the Adelphia Parent Company had
approximately $148 million and Hyperion had
approximately $244 million of redeemable
exchangeable preferred stock which contain payment
obligations that are similar to Adelphia's debt
obligations.
Approximately 29% of Our debt comes due at various times up to the year
our debt outstanding at 2009, including an aggregate of approximately $1.1
June 30, 1999 must be billion as of June 30, 1999, which we must pay by
repaid by January 1, December 31, 2004.
2004 and all of it must
be paid by 2009.
As discussed above, Century, FrontierVision and
Olympus also have a substantial amount of debt.
Under its current terms, this debt comes due at
various times up to the year 2017, including an
aggregate of approximately $1.1 billion as of June
30, 1999 (May 31, 1999 as to Century), which must
be paid over the next five years. In addition, we
will be required to make offers to purchase at
least $662.3 million of this debt as a result of
the FrontierVision and Olympus transactions and as
described above we could be required to offer to
purchase additional debt as a result of the Century
acquisition.
Our Business Requires Our business requires substantial additional
Substantial Additional financing on a continuing basis for capital
Financing And If We Do expenditures and other purposes including:
Not Obtain That
Financing We May Not Be
Able To Upgrade Our
Plant, Offer Services,
Make Payments When Due
Or Refinance Existing
Debt
. constructing and upgrading our plant and
networks--some of these upgrades we must make to
comply with the requirements of local cable
franchise authorities;
. offering new services;
. scheduled principal and interest payments;
. refinancing existing debt; and
. acquisitions and investments.
There can be no guarantee that we will be able to
issue additional debt or sell stock or other
additional equity on satisfactory terms, or at all,
to meet our future financing needs.
S-9
<PAGE>
We Have Had Negative
Stockholders' Equity And The Total Convertible Preferred Stock, Common Stock
Large Losses And We and Other Stockholders' Equity at June 30, 1999 was
Expect This To Continue approximately $267.7 million.
Our continuing net losses, which are mainly due to
our high levels of depreciation and amortization
and interest expense, may create deficiencies in or
reduce our Total Convertible Preferred Stock,
Common Stock and Other Stockholders' Equity. Our
recent net losses applicable to our common
stockholders were approximately as follows for the
periods specified:
. fiscal year ended March 31, 1997--$130.6
million;
. fiscal year ended March 31, 1998--$192.7
million;
. nine months ended December 31, 1998--$135.8
million; and
. six months ended June 30, 1999--$97.6 million.
We expect to continue to incur large net losses for
the next several years.
Our earnings have Our earnings could not pay for our combined fixed
been insufficient to pay charges and preferred stock dividends during these
for our fixed charges periods by the amounts set forth in the table
and preferred stock below, although combined fixed charges and
dividends. preferred stock dividends included substantial non-
cash charges for depreciation, amortization and
non-cash interest expense on some of our debts and
the non-cash expense of Hyperion's preferred stock
dividends:
<TABLE>
<CAPTION>
Earnings Non-Cash
Deficiency Charges
---------- --------
(in thousands)
<S> <C> <C>
. fiscal year ended March 31, 1997 $ 61,848 $165,426
. fiscal year ended March 31, 1998 $113,941 $195,153
. nine months ended December 31,
1998 $116,899 $186,022
. six months ended June 30, 1999 $ 81,014 $152,406
</TABLE>
Historically, the cash we generate from our
If we cannot operating activities and borrowings has been
refinance our debt sufficient to meet our requirements for debt
including debt incurred service, working capital, capital expenditures and
in connection with the investments in and advances to our affiliates, and
pending acquisitions of we have depended on additional borrowings to meet
FrontierVision, Century, our liquidity requirements. Although in the past we
Harron and Telesat's have been able both to refinance our debt and to
interest in Olympus or obtain new debt, there can be no guarantee that we
obtain new loans, we will be able to continue to do so in the future or
would likely have to that the cost to us or the other terms which would
consider various affect us would be as favorable to us as current
financing options. We loans and credit agreements. Under these
cannot guarantee that circumstances, we may need to consider various
any options available to financing options, such as the sale of additional
us would enable us to equity or some of our assets to meet the principal
repay our debt in full. and interest payments we owe, negotiate with our
lenders to restructure existing loans or explore
other options available under applicable laws
including those under reorganization or bankruptcy
laws. We believe that our business will continue to
S-10
<PAGE>
generate cash and that we will be able to obtain
new loans to meet our cash needs. However, the
covenants in the indentures and credit agreements
for our current debt provide some limitations on
our ability to borrow more money.
The telecommunications services provided by
Competition Adelphia are subject to strong competition and
potential competition from various sources.
Our cable television Our cable television systems compete with other
business is subject to means of distributing video to home televisions
strong competition from such as Direct Broadcast Satellite systems,
several sources which commonly known as DBS systems, and Multichannel
could adversely affect Multipoint Distribution systems commonly known as
revenue or revenue wireless cable. Some of the regional Bell telephone
growth. operating companies 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, because our systems are operated under
non-exclusive franchises, other applicants may
obtain franchises in our franchise areas. For
example, some regional Bell operating companies and
local telephone companies have facilities which are
capable of delivering cable television service and
could seek competitive franchises.
The equipment which telephone companies use in
providing local exchange service may give them
competitive advantages over Adelphia in
distributing video to home televisions. The
regional Bell operating companies and other
potential competitors have much greater resources
than Adelphia and would constitute formidable
competition for our cable television business. We
cannot predict either the extent to which
competition will continue to materialize or, if
such competition materializes, the extent of its
effect on our cable television business.
Our cable television systems also face competition
from other communications and entertainment media,
including conventional off-air television
broadcasting services, newspapers, movie theaters,
live sporting events and home video products. We
cannot predict the extent to which competition may
affect us.
Our cable modem and dial up Internet access
business is currently subject to strong competition
and there exists the potential for future
competition from a number of sources. With respect
to high-speed cable modem service, telephone
companies are beginning to implement various
digital subscriber line services (xDSL) that allow
high-speed internet access services to be offered
over telephone lines. DBS companies offer high-
speed Internet access over their satellite
facilities and other terrestrial based wireless
S-11
<PAGE>
operators (e.g., MMDS) are beginning to introduce
high-speed access as well. In addition, there are
now a number of legislative and FCC initiatives and
efforts seeking to mandate cable television
operators to provide open access to their
facilities to competitors that want to offer
Internet access over cable services. With respect
to dial up Internet access services, there are
numerous competitive Internet Service Providers
(ISPs) in virtually every franchise area. The local
telephone exchange company typically offers ISP
services, as do a number of other nationally
marketed ISPs such as America Online, Compuserve
and AT&T Worldnet. Adelphia cannot predict the
extent to which competition will continue to
materialize or, if such competition materializes,
the extent of its effect on our Internet access
business.
Hyperion's operations In each of the markets served by Hyperion's
are also subject to risk networks, the competitive local exchange carrier
because Hyperion services offered by Hyperion compete principally
competes principally with the services offered by the incumbent local
with established local telephone exchange carrier company serving that
telephone carriers that area. Local telephone companies have long-standing
have long-standing relationships with their customers, have the
utility relationships potential to subsidize competitive services from
with their customers and monopoly service revenues, and benefit from
pricing flexibility for favorable state and federal regulations. The merger
local telephone of Bell Atlantic and NYNEX created a very large
services. company whose combined territory covers a
substantial portion of Hyperion's markets. Other
combinations are occurring in the industry, which
may have a material adverse effect on Hyperion and
us.
We believe that local telephone companies will gain
increased pricing flexibility from regulators as
competition increases. Hyperion's operating results
and cash flow could be materially and adversely
affected by actions by regulators, including
permitting the incumbent local telephone companies
in Hyperion's markets to do the following:
. lower their rates substantially;
. engage in aggressive volume and term discount
pricing practices for their customers; or
. charge excessive fees to Hyperion for
interconnection to the incumbent local telephone
company's networks.
If the regional Bell The regional Bell operating companies can now
telephone companies obtain regulatory approval to offer long distance
could get regulatory services if they comply with the interconnection
approval to offer long requirements of the federal Telecommunications Act
distance service in of 1996. To date, the FCC has denied the requests
competition with for approval filed by regional Bell operating
Hyperion's significant companies in Hyperion's operating areas. However,
customers, some of approval of such a request could result in
Hyperion's major decreased market share for the major long distance
customers could lose carriers which are among Hyperion's significant
market share. customers. This could have a material adverse
effect on Hyperion.
S-12
<PAGE>
The regional Bell
telephone companies Legislation has been introduced in Congress
continue to seek other proposing to relieve the regional Bell operating
regulatory approvals companies from the resale and unbundling
that could significantly requirements of the federal Telecommunications Act
enhance their of 1996 with respect to high-speed data services,
competitive position and to otherwise faciliate the deployment of such
against Hyperion. services. The adoption of such legislation by
Congress could have a material adverse effect on
Hyperion.
Potential competitors Potential competitors for Hyperion include other
to Hyperion's competitive local exchange carriers, incumbent
telecommunications local telephone companies which are not subject to
services include the regional Bell operating companies' restrictions on
regional Bell telephone offering long distance service, AT&T, MCIWorldCom,
companies, AT&T, Sprint and other long distance carriers, cable
MCIWorldCom and Sprint, television companies, electric utilities, microwave
electric utilities and carriers, wireless telecommunications providers,
other companies that including cellular and Personal Communication
have advantages over Services (PCS), and private networks built by large
Hyperion. end users. Both AT&T and MCIWorldCom 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. In addition, the
long distance carriers could 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 local telephone
companies, have financial, personnel and other
resources substantially greater than those of
Hyperion, as well as other competitive advantages
over Hyperion.
We Are Subject To The cable television industry and the provision of
Extensive Regulation local telephone exchange services are 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. In
particular, the FCC adopted regulations that limit
our ability to set and increase rates for our basic
service package and for the provision of cable
television-related equipment. The law permits
certified local franchising authorities to order
refunds of rates paid in the previous 12-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. In addition, the FCC
has commenced a proceeding to determine whether
cable operators will be required to carry the
digital signals of broadcast television stations.
Such a requirement could require the removal of
popular programming services with materially
adverse results for cable operators.
Our cable television
and telecommunications
businesses are heavily
regulated as to rates we
can charge and other
matters. This regulation
could limit our ability
to increase rates, cause
us to decrease then
current rates or require
us to refund previously
collected fees.
S-13
<PAGE>
We must comply with rules of the local franchising
authorities to retain and renew our 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.
Similarly, Hyperion is subject to state and local
regulations and in some cases must obtain
appropriate certifications and/or local franchises
to construct facilities and offer services. There
can be no assurance that Hyperion's state and local
regulators will not impose new and more restrictive
requirements as a condition to renew any required
certifications and franchises.
Proposals are currently before Congress and the FCC
to mandate cable operators to provide "open access"
over their cable systems to other ISPs. To date,
the FCC has declined to impose such requirements.
This same open access issue is being considered by
some local franchising authorities as well.
Recently, a federal district court in Portland,
Oregon, upheld the authority of the local
franchising authority to impose an open access
requirement in connection with a cable television
franchise transfer and that decision has been
appealed to the U.S. Court of Appeals for the Ninth
Circuit. If the FCC or other authorities mandate
additional access to Adelphia's cable systems, we
cannot predict the effect that this would have on
our Internet access over cable business.
The federal The federal Telecommunications Act of 1996
Telecommunications Act substantially changed federal, state and local laws
of 1996 may have a and regulations governing our cable television and
significant impact on telecommunications businesses. This law could
our cable television and materially affect the growth and operation of the
telephone businesses. cable television industry and the cable services we
provide. Although this legislation may lessen
regulatory burdens, the cable television industry
may be subject to new competition as a result.
There are numerous rulemakings that have been and
continue to be undertaken by the FCC which will
interpret and implement the provisions of this law.
Furthermore, portions of this law have been, and
likely other portions will be, challenged in the
courts. We cannot predict the outcome of such
rulemakings or lawsuits or the short- and long-term
effect, financial or otherwise, of this law and FCC
rulemakings on us.
Similarly, the federal Telecommunications Act of
1996 removes entry barriers for all companies and
could increase substantially the number of
competitors offering comparable services in
Hyperion's markets or potential markets.
Furthermore, we cannot guarantee that rules adopted
by the FCC or state regulators or other legislative
or judicial initiatives relating to the
S-14
<PAGE>
telecommunications industry will not have a
material adverse effect on Hyperion.
Unequal Voting Rights Adelphia has two classes of common stock--Class A
Of Stockholders which carries one vote per share and Class B which
carries ten votes per share. Under Adelphia's
Certificate of Incorporation, the Class A shares
elect only one of our eight directors.
Control Of Voting Power
By The Rigas Family As of September 1, 1999, the Rigas family
beneficially owned shares representing
approximately 42% of the total number of
outstanding shares of both classes of Adelphia's
common stock and approximately 77% of the total
voting power of Adelphia's shares. The public holds
a majority of the outstanding shares of Class A
common stock, although the Rigas family also owns
about 30% of those shares as of September 1, 1999.
The Rigas family owns substantially all of
Adelphia's shares of Class B common stock. The
Rigas family also owns shares of Adelphia's 8 1/8%
Series C cumulative convertible preferred stock
which, if converted, would increase its voting
power and beneficial ownership. The Rigas family
also has agreed to acquire approximately 6,200,000
and 2,500,000 shares of Class B common stock in the
April Rigas Direct Placement and the October Rigas
Direct Placement, respectively, which would
increase its beneficial ownership and voting power.
As a result of the Rigas family's stock ownership
and an agreement among the Class B stockholders,
members of the Rigas family have the power to elect
seven of eight Adelphia directors, and if they
converted their convertible preferred stock might
be able to elect all eight directors. In addition,
the Rigas family could control stockholder
decisions on other matters such as amendments to
Adelphia's Certificate of Incorporation and Bylaws,
and mergers or other fundamental corporate
transactions.
The Rigas family can
control stockholder
decisions on very
important matters.
There Are Potential
Conflicts Of Interest John J. Rigas and the other executive officers of
Between Adelphia And The Adelphia, including other members of the Rigas
Rigas Family family, own other corporations and partnerships,
which are managed by us 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.
These activities could present a conflict of
interest with Adelphia, such as how much time our
executive officers devote to our business. In
addition, there have been and will continue to be
transactions between us and the executive officers
or the other entities they own or have affiliations
with. Our public debt indentures contain covenants
that place some restrictions on transactions
between us and our affiliates.
S-15
<PAGE>
Holding Company
Structure And Potential The Adelphia Parent Company directly owns no
Impact Of Restrictive significant assets other than stock, partnership
Covenants In Subsidiary interests and equity and other interests in our
Debt Agreements subsidiaries and in other companies. This creates
risks regarding our ability to provide cash to the
Adelphia Parent Company to repay the interest and
principal which it owes, our ability to pay cash
dividends to our common stockholders in the future,
and the ability of our subsidiaries and other
companies to respond to changing business and
economic conditions and to get new loans.
The Adelphia Parent The public indentures and the credit agreements for
Company depends on its bank and other financial institution loans of our
subsidiaries and other subsidiaries and other companies in which we have
companies in which it invested, restrict their ability and the ability of
has investments to fund the companies they own to make payments to the
its cash needs. Adelphia Parent Company. These agreements also
place other restrictions on the borrower's ability
to borrow new funds. The ability of a subsidiary or
a company in which we have invested to comply with
debt restrictions may be affected by events that
are beyond our control. The breach of any of these
covenants could result in a default which could
result in all loans and other amounts owed to its
lenders becoming due and payable. Our subsidiaries
and companies in which we have invested might not
be able to repay in full the accelerated loans.
It Is Unlikely You Will Adelphia has never declared or paid cash dividends
Receive A Return On Your on any of its common stock and has no intention of
Shares Through The doing so in the foreseeable future. As a result, it
Payment Of Cash is unlikely that you will receive a return on your
Dividends shares through the payment of cash dividends.
Future Sales Of Adelphia Sales, or availability for sale, of a substantial
Common Stock Could number of shares of our common stock, including
Adversely Affect Its sales by any pledgees of such shares, could
Market Price adversely affect the market price of Class A common
stock and could impair our ability in the future to
raise capital through stock offerings.
Under various registration rights agreements or
arrangements, as of September 1, 1999, the Rigas
family has the right, subject to some limitations,
to require Adelphia to register substantially all
of the shares which it owns of Class A common
stock, consisting of 15,029,119 shares, Class B
common stock, consisting of 10,736,544 shares and
the equivalent number of shares of Class A common
stock into which they may be converted, and Series
C cumulative convertible preferred stock,
consisting of 80,000 shares and the 9,433,962
shares of Class A common stock into which they may
be converted. Among others, Adelphia has registered
or agreed to register for public sale the following
shares:
. for the Rigas family--up to 11,000,000 shares of
Class A common stock, 80,000 shares of Series C
cumulative
S-16
<PAGE>
convertible preferred stock and the Class A
common stock issuable upon conversion of the
Series C cumulative convertible preferred stock;
. for the selling stockholders receiving shares in
the Verto acquisition--2,561,024 shares of Class
A common stock;
. for Highland Holdings, a Rigas family
partnership--4,000,000 shares of Class A common
stock purchased by it in connection with the
January 14, 1999 equity offering and
approximately 6,200,000 shares of Class B (and
the underlying Class A) common stock to be
purchased by Highland Holdings on or before
January 23, 2000 and 2,500,000 shares of Class B
(and the underlying Class A) common stock to be
purchased by Highland Holdings within 270 days
following the closing of the public offering
described in this prospectus supplement.
. for the owners of FrontierVision--7,000,000
shares of Class A common stock in connection
with the pending FrontierVision acquisition, and
1,000,000 shares of Class A common stock held
pursuant to an escrow agreement for the benefit
of FrontierVision in certain circumstances if
the transaction does not close;
. for the owners of Century--approximately
48,700,000 shares of Class A common stock to be
issued in connection with the pending Century
acquisition; and
. for other transactions--4,102,302 shares of
Class A common stock to be issued.
Approximately 14,904,000 shares of Class A common
stock and up to 80,000 shares of Series C
cumulative convertible preferred stock, including
the underlying Class A common stock, have been
pledged by members of the Rigas family in
connection with margin loans made to members of the
Rigas family. These pledgees could freely sell any
shares acquired upon a foreclosure.
The Century Merger May The Century merger requires approvals from
Not Be Completed If The Century's stockholders and our stockholders.
Required Approval Of Although the Class B stockholders of Century and
Century's Class A the controlling stockholders of Adelphia have
Stockholders Is Not agreed to vote in favor of the merger, the
Obtained companies cannot be certain of the ultimate outcome
of the required vote of the Class A stockholders of
Century. If that vote is not obtained, the
companies will not be able to complete the proposed
transaction as currently structured or in a timely
manner, if at all.
The failure to Even if Century's stockholders approve the Century
satisfy conditions to merger, one or more of the pending acquisitions may
completion of the not close unless several other conditions are met.
acquisitions could These include:
jeopardize the
acquisitions.
. Receipt of all required consents of governmental
authorities have been received, except where the
failure to obtain any
S-17
<PAGE>
such required consent would not have a material
adverse effect;
. Neither Adelphia nor the selling parties have
breached any of their respective
representations, warranties or covenants made in
the applicable agreement; and
. There is no law or court order prohibiting the
applicable acquisition.
Our Acquisitions And Because we are experiencing a period of rapid
Expansion Could Involve expansion through acquisition, the operating
Operational And Other complexity of Adelphia, as well as the
Risks responsibilities of management personnel, have
increased. Our ability to manage such expansion
effectively will require us to continue to expand
and improve our operational and financial systems
and to expand, train and manage our employee base.
The Century, FrontierVision and Harron transactions
and some of our other recent acquisitions involve
the acquisition of companies that have previously
operated independently. We may not be able to
integrate the operations of these companies without
some level of difficulty, such as the loss of key
personnel. There is no guarantee that we will be
able to realize the benefits expected from the
integration of operations from these transactions.
Because the cable systems to be acquired in the
Century, FrontierVision and Harron acquisitions are
in the same industry as those of Adelphia, the
acquired systems will generally be subject to the
same risks as those of Adelphia, such as those
relating to competition, regulation, year 2000
issues and technological developments.
Purchasers Of Our Common Persons purchasing Class A common stock will incur
Stock Will Incur immediate and substantial net tangible book value
Immediate Dilution dilution.
Year 2000 Issues Present The year 2000 issue refers to the potential
Risks To Our Business inability of computerized systems and technologies
Operations In Several to properly recognize and process dates beyond
Ways December 31, 1999. This could present risks to the
operation of our business in several ways. Our
computerized business applications that could be
adversely affected by the year 2000 issue include:
. information processing and financial reporting
systems;
. customer billing systems;
. customer service systems;
. telecommunication transmission and reception
systems; and
. facility systems.
S-18
<PAGE>
System failure or miscalculation could result in an
inability to process transactions, send invoices,
accept customer orders or provide customers with
products and services. Although we are evaluating
the impact of the year 2000 issue on our business
and are seeking to implement necessary solutions,
this process has not been completed.
There can be no assurance that the systems of other
companies on which our systems rely will be year
2000 ready or compatible with our systems. Our
failure or a third-party's failure to become year
2000 ready, or its inability to become compatible
with third parties with which we have a material
relationship, including parties acquired by us, may
have a material adverse effect on Adelphia,
including significant service interruption or
outages; however, we cannot currently estimate the
extent of any such adverse effects.
Forward-Looking The statements contained or incorporated by
Statements In This reference in this prospectus supplement that are
Prospectus Supplement not historical facts are "forward-looking
Are Subject To Risks And statements" and can be identified by the use of
Uncertainties 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 set forth or incorporated by
reference in this prospectus supplement, including
"Management's Discussion and Analysis of Financial
Condition and Results of Operations" in Adelphia's
Transition Report on Form 10-K and in Adelphia's
Form 10-Qs, is forward-looking, such as information
related 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, us. These risks and
uncertainties include, but are not limited to,
uncertainties relating to economic conditions, the
availability and cost of capital, acquisitions and
divestitures, government and regulatory policies,
the pricing and availability of equipment,
materials, inventories and programming,
technological developments, year 2000 issues and
changes in the competitive environment in which we
operate. Persons reading this prospectus supplement
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.
S-19
<PAGE>
USE OF PROCEEDS
The net proceeds to Adelphia from the Class A common stock offering
described on the cover page of this prospectus supplement (the "Common Stock
Offering") will be approximately $329.5 million, after deducting estimated
underwriting discounts and commissions and offering expenses. The net proceeds
from the Common Stock Offering initially will be invested in cash equivalents
or advanced or contributed to Adelphia's subsidiaries which will apply such
funds to repay revolving credit facilities of such subsidiaries. As of June 30,
1999, the average effective interest rate on such credit facilities was
approximately 6.5%. Subject to compliance with the terms of and to the maturity
of the revolving credit facilities, Adelphia expects that these subsidiaries
will reborrow these amounts and distribute them to Adelphia which, together
with any cash equivalents into which the net proceeds were invested, Adelphia
intends to use for general corporate purposes including in connection with its
pending acquisitions described in "Recent Developments," for working capital
and for other corporate purposes.
Highland Holdings, a partnership controlled by members of the Rigas family,
has agreed in a stock purchase agreement dated October 1, 1999, to purchase in
the future $137.5 million of Class B common stock at a per share price equal to
the public offering price set forth on the cover page of this prospectus
supplement less the underwriting discount, plus an interest factor. See
Adelphia's Form 8-K for the event dated September 29, 1999 for further
information regarding the October Rigas Direct Placement. The net proceeds from
the October Rigas Direct Placement are expected to be similarly advanced to
Adelphia's subsidiaries to repay revolving credit facilities, temporarily
invested in short term investments or used for general corporate purposes.
S-20
<PAGE>
CAPITALIZATION
(dollars in thousands except par value amounts)
The following table sets forth the cash and cash equivalents and
capitalization of Adelphia as of June 30, 1999, on an actual and as adjusted
basis to reflect the Common Stock Offering and the pending transactions
described in "Recent Developments." This table should be read in conjunction
with Adelphia's consolidated financial statements and related notes thereto and
other financial data contained elsewhere or incorporated by reference in this
prospectus supplement.
<TABLE>
<CAPTION>
June 30, 1999
----------------------------
Actual As Adjusted (b)
----------- ---------------
<S> <C> <C>
Cash and cash equivalents......................... $ 802,701 $ 265,344
U.S. government securities--pledged............... 44,178 44,178
----------- -----------
Total cash, cash equivalents and U.S. government
securities--pledged............................ $ 846,879 $ 309,522
=========== ===========
Long-term debt including current maturities (a):
Subsidiary debt................................. $ 1,388,412 $ 5,833,931
Parent debt..................................... 2,406,127 2,406,127
----------- -----------
Total long-term debt including current
maturities................................... 3,794,539 8,240,058
----------- -----------
Hyperion redeemable exchangeable preferred stock.. 244,153 244,153
----------- -----------
Redeemable exchangeable preferred stock........... 148,277 148,277
----------- -----------
Convertible preferred stock, common stock and
other stockholders' equity:
8 1/8% Series C cumulative convertible preferred
stock ($100,000 liquidation preference)........ 1 1
5 1/2% Series D convertible preferred stock
($575,000 liquidation preference).............. 29 29
Class A common stock, $.01 par value,
200,000,000 shares authorized; 51,419,867
shares issued on an Actual basis and
112,094,454 shares issued on an As Adjusted
basis.......................................... 514 1,121
Class B common stock, $.01 par value, 25,000,000
shares authorized; 10,834,476 shares
outstanding on an Actual basis and 19,506,300
shares outstanding on an As Adjusted basis..... 108 195
Additional paid-in capital........................ 2,317,383 6,225,603
Accumulated deficit............................... (1,842,991) (1,842,991)
Class A common stock held in escrow............... (58,099) --
Treasury stock, at cost, 1,091,524 shares of Class
A common stock and 20,000 shares of 8 1/8% Series
C cumulative convertible preferred stock ........ (149,213) (149,213)
----------- -----------
Total convertible preferred stock, common
stock and other stockholders' equity ........ 267,732 4,234,745
----------- -----------
Total capitalization........................ $ 4,454,701 $12,867,233
=========== ===========
</TABLE>
- --------
(a) See Note 3 to Adelphia's consolidated financial statements in the Form 10-K
for a description of long-term debt of Adelphia and its subsidiaries. See
"The Company--Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources" in the Form 10-
K and the Form 10-Qs.
(b) Gives effect to (i) the application of the net proceeds of approximately
$329.5 million from the Common Stock Offering as described in "Use of
Proceeds," and (ii) the pending transactions described in "Recent
Developments."
S-21
<PAGE>
PRICE RANGE OF ADELPHIA'S COMMON EQUITY AND DIVIDEND POLICY
Our Class A common stock is quoted on the Nasdaq National Market under the
symbol "ADLAC."
The following table sets forth the range of high and low closing sale prices
of the Class A common stock for the fiscal periods indicated, as reported by
the Nasdaq National Market.
Class A common stock
<TABLE>
<CAPTION>
High Low
------- --------
1997
<S> <C> <C>
First Quarter Ended 3/31/97........................... $ 7 1/8 $ 5 3/8
Second Quarter Ended 6/30/97.......................... $ 7 3/4 $ 5
Third Quarter Ended 9/30/97........................... $12 1/8 $ 6 3/4
Fourth Quarter Ended 12/31/97......................... $18 3/4 $12
<CAPTION>
1998
<S> <C> <C>
First Quarter Ended 3/31/98........................... $30 3/8 $16 3/8
Second Quarter Ended 6/30/98.......................... $37 1/8 $21 1/2
Third Quarter Ended 9/30/98........................... $44 $30 7/16
Fourth Quarter Ended 12/31/98......................... $48 1/8 $29 1/8
<CAPTION>
1999
<S> <C> <C>
First Quarter Ended 3/31/99........................... $64 3/8 $44 7/8
Second Quarter Ended 6/30/99 ......................... $86 9/16 $56
Third Quarter Ended 9/30/99........................... $68 3/4 $55 1/2
</TABLE>
As of September 14, 1999, approximately 161 holders of record held our Class
A common stock. As of that date, five record holders were registered clearing
agencies holding Class A common stock on behalf of participants in such
clearing agencies.
No established public trading market exists for our Class B common stock. As
of the date hereof, the Class B common stock was held of record by seven
persons, principally members of the Rigas family, including a Pennsylvania
general partnership all of whose partners are members of the Rigas family. The
Class B common stock is convertible into shares of Class A common stock on a
one-to-one basis. As of the date of this prospectus supplement, the Rigas
family owned 99.1% of the outstanding Class B common stock.
Dividend Policy
We have never paid a cash dividend on our common stock and anticipate that
for the foreseeable future any earnings will be retained for use in our
business. Our ability to pay cash dividends on our common stock is limited by
the provisions of our indentures.
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<PAGE>
DILUTION
The net tangible book value of Adelphia's common stock as of June 30, 1999
was a deficit of approximately $899,747,000 or $14.71 a share. Net tangible
book value per share represents the amount of Adelphia's convertible preferred
stock, common stock and other stockholders' equity, less intangible assets,
divided by shares of Adelphia's common stock outstanding. Purchasers of Class A
common stock will have an immediate dilution of net tangible book value which,
due to our having a net tangible book value deficit, will exceed the purchase
price per share.
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
the Common Stock Offering and the pro forma net tangible book value per share
of the common stock immediately after completion of the Common Stock Offering.
After giving effect to the sale by Adelphia of 6,000,000 shares of Class A
common stock in the Common Stock Offering at a public offering price of $57.00
per share, and after deduction of underwriting discounts and commissions and
estimated offering expenses, the pro forma net tangible book value of Adelphia
as of June 30, 1999 was a deficit of approximately $570,247,000, or $8.49 per
share of common stock. This represents an immediate increase in net tangible
book value of $6.22 per share to existing stockholders and an immediate
dilution of net tangible book value of $65.49 per share to purchasers of Class
A common stock in the Common Stock Offering, as illustrated in the following
table:
<TABLE>
<S> <C> <C>
Public offering price per share of Class A common stock....... $ 57.00
Net tangible book value per share of common stock before
the Common Stock Offering.................................. $(14.71)
Increase per share of common stock attributable to the
Common Stock Offering...................................... 6.22
-------
Pro forma net tangible book value per share of common stock
after the Common Stock Offering.............................. (8.49)
-------
Net tangible book value dilution per share.................... $(65.49)
=======
</TABLE>
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<PAGE>
CERTAIN UNITED STATES TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS
The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of Class A
common stock applicable to "Non-United States Holders." A "Non-United States
Holder" is any beneficial owner of Class A common stock that, for United States
federal income tax purposes, is a non-resident alien individual, a foreign
corporation, a foreign partnership or a non-resident fiduciary of a foreign
estate or trust as such terms are defined in the Code. This discussion is based
on the Code and administrative and judicial interpretations as of the date
hereof, all of which are subject to change either retroactively or
prospectively. This discussion does not address all aspects of United States
federal income and estate taxation that may be relevant to Non-United States
Holders in light of their particular circumstances (for example, insurance
companies, tax exempt organizations, financial institutions, broker-dealers or
certain U.S. expatriates) and does not address any tax consequences arising
under the laws of any state, local or foreign taxing jurisdiction. Prospective
investors are urged to consult with their tax advisors regarding the United
States federal, state and local income and other tax consequences, and the non-
United States tax consequences, of owning and disposing of Class A common
stock.
Dividends
Subject to the discussion below, any dividend paid to a Non-United States
Holder generally will be subject to United States withholding tax either at a
rate of 30% of the gross amount of the dividend or such lower rate as may be
specified by an applicable income tax treaty. For purposes of determining
whether tax is to be withheld at a 30% rate or at a reduced rate as specified
by an income tax treaty, Adelphia ordinarily will presume that dividends paid
to an address in a foreign country are paid to a resident of such country
absent knowledge that such presumption is not warranted. However, under United
States Treasury regulations not currently in effect, a Non-United States Holder
would be required to file certain forms accompanied by a statement from a
competent authority of the treaty country in order to claim the benefits of a
tax treaty. Dividends paid to a holder with an address within the United States
generally will not be subject to this withholding tax, unless Adelphia has
actual knowledge that the holder is a Non-United States Holder.
Dividends received by a Non-United States Holder that are effectively
connected with a United States trade or business conducted by such Non-United
States Holder are exempt from withholding tax. However, such effectively
connected dividends are subject to regular United States income tax in the same
manner as if the Non-United States Holder were a United States resident. A Non-
United States Holder may claim exemption from withholding under the effectively
connected income exception by filing Form 4224 (Statement Claiming Exemption
from Withholding of Tax on Income Effectively Connected With the Conduct of
Business in the United States) each year with Adelphia or its paying agent
prior to the payment of the dividends for such year. Effectively connected
dividends received by a corporate Non-United States Holder may be subject to an
additional "branch profits tax" at a rate of 30% (or such lower rate as may be
specified by an applicable tax treaty) of such corporate Non-United States
Holder's effectively connected earnings and profits, subject to certain
adjustments. To the extent a distribution exceeds current or accumulated
earnings or profits, it will be treated first as a return of the holder's basis
to the extent thereof, and then as a gain from the sale of a capital asset. Any
withholding tax on distributions in excess of Adelphia's current and
accumulated earnings and profits is refundable to the Non-United States Holder
upon filing an appropriate claim with the United States Internal Revenue
Service (the "IRS").
S-24
<PAGE>
A Non-United States Holder eligible for a reduced rate of United States
withholding tax pursuant to a tax treaty may obtain a refund of any excess
amounts currently withheld by filing an appropriate claim for refund with the
IRS.
Gain on Disposition of Ordinary Common Stock
A Non-United States Holder generally will not be subject to United States
federal income tax with respect to a gain realized upon the sale or a
disposition of Class A common stock unless: (i) such gain is effectively
connected with a United States trade or business of the Non-United States
Holder, (ii) the Non-United States Holder is an individual who is present in
the United States for a period or periods aggregating 183 days or more during
the taxable year in which such sale or disposition occurs and certain other
conditions are met, or (iii) Adelphia is or has been a "United States real
property holding corporation" within the heading of Section 897(c)(2) of the
Code at any time within the shorter of the five-year period preceding such
disposition or such holder's holding period and certain other conditions are
met. Although not free from doubt, Adelphia believes that it is not, and has
not been for the last five years, a "United States real property holding
corporation" for federal income tax purposes. If a Non-United States Holder
falls under clause (i) above, the Non-United States holder will be taxed on the
net gain derived from the sale under regular graduated United States federal
income tax rates (and, with respect to corporate Non-United States Holders, may
also be subject to the branch profits tax described above). If an individual
Non-United States Holder falls under clause (ii) above, the Non-United States
Holder generally will be subject to a 30% tax on the gain derived from the
sale, which gain may be offset by United States capital losses recognized
within the same taxable year of such sale.
Backup Withholding and Information Reporting
Generally, Adelphia must report to the IRS the amount of dividends paid, the
name and address of the recipient, and the amount, if any, of tax withheld. A
similar report is sent to the holder. Pursuant to tax treaties or other
agreements, the IRS may make its reports available to tax authorities in the
recipient's country of residence.
Unless Adelphia has actual knowledge that a holder is a non-United States
person, dividends paid to a holder at an address within the United States may
be subject to backup withholding at a rate of 31% if the holder is not an
exempt recipient as defined in Treasury Regulation Section 1.6049-4(c)(1)(ii)
(which includes corporations) and fails to provide a correct taxpayer
identification number and other information to Adelphia. Backup withholding
will generally not apply to dividends paid to holders at an address outside the
United States (unless Adelphia has knowledge that the holder is a United States
person.)
If the proceeds of the disposition of Class A common stock by a Non-United
States Holder are paid over, by or through a United States office of a broker,
the payment is subject to information reporting and to backup withholding at a
rate of 31% unless the disposing holder certifies as to its name, address and
status as a Non-United States Holder under penalties of perjury or otherwise
establishes an exemption. Generally, United States information reporting and
backup withholding will not apply to a payment of disposition proceeds if the
payment is made outside the United States through a non-United States office of
a non-United States broker. However, United States information reporting
requirements (but not backup withholding) will apply to a payment of
disposition proceeds outside the United States if (a) the payment is made
through an office outside the United States of a broker that is either (i) a
United States person for United States federal income
S-25
<PAGE>
tax purposes, (ii) a "controlled foreign corporation" for United States federal
income tax purposes, or (iii) a foreign person which derives 50% or more of its
gross income for certain periods from the conduct of a United States trade or
business, and (b) the broker fails to maintain documentary
evidence in its files that the holder is a Non-United States Holder and that
certain conditions are met or that the holder otherwise is entitled to an
exemption.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to 31% backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the IRS.
New regulations relating to withholding tax on income paid to foreign
persons (the "New Withholding Regulations") will generally be effective for
payments made after December 31, 2000, subject to certain transition rules. The
New Withholding Regulations modify and, in general, unify the way in which you
establish your status as a non-United States "beneficial owner" eligible for
withholding exemptions including a reduced treaty rate or an exemption from
backup withholding. For example, the New Withholding Regulations will require
new forms, which you generally will have to provide earlier than you would have
had to provide replacements for expiring existing forms. Prospective purchasers
are urged to consult their own tax advisors regarding the application of the
New Withholding Regulations.
Estate Tax
An individual Non-United States Holder who is treated as the owner of Class
A common stock at the time of his or her death or has made certain lifetime
transfers of an interest in Class A common stock will be required to include
the value of such Class A common stock in his or her gross estate for United
States federal estate tax purposes and may be subject to United States federal
estate tax, unless an applicable estate tax treaty provides otherwise.
S-26
<PAGE>
UNDERWRITING
Subject to the terms and conditions stated in the underwriting agreement,
each underwriter named below has severally agreed to purchase, and we have
agreed to sell to such underwriter, the number of shares set forth opposite its
name:
<TABLE>
<CAPTION>
Number
Name of Shares
---- ---------
<S> <C>
Salomon Smith Barney Inc. ...................................... 600,000
Credit Suisse First Boston Corporation.......................... 600,000
Goldman, Sachs & Co. ........................................... 600,000
Banc of America Securities LLC.................................. 600,000
Donaldson, Lufkin & Jenrette Securities Corporation............. 600,000
Lehman Brothers Inc. ........................................... 600,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.............. 600,000
Morgan Stanley & Co. Incorporated............................... 600,000
CIBC World Markets Corp. ....................................... 300,000
Credit Lyonnais Securities (USA) Inc. .......................... 300,000
First Union Securities, Inc. ................................... 300,000
SG Cowen Securities Corporation................................. 300,000
---------
Total.......................................................... 6,000,000
=========
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares included in this offering are subject to
approval of certain legal matters by counsel and to certain other conditions.
The underwriters are obligated to purchase all the shares (other than those
covered by the over-allotment option described below) if they purchase any of
the shares.
The underwriters, for whom Salomon Smith Barney Inc. is acting as
representative, propose to offer some of the shares directly to the public at
the public offering price set forth on the cover page of this prospectus
supplement and some of the shares to certain dealers at the public offering
price less a concession not in excess of $1.20 per share. The underwriters may
allow, and such dealers may reallow, a concession not in excess of $0.10 per
share on sales to certain other dealers. After the initial offering of the
shares to the public, the public offering price and such concessions may be
changed by the representative.
We have granted to the underwriters an option, exercisable for 30 days from
the date of this prospectus supplement, to purchase up to 900,000 additional
shares of Class A common stock at the public offering price less the
underwriting discount. The underwriters may exercise such option solely for the
purpose of covering over-allotments, if any, in connection with this offering.
To the extent such option is exercised, each underwriter will be obligated,
subject to certain conditions, to purchase a number of additional shares
approximately proportionate to such underwriter's initial purchase commitment.
S-27
<PAGE>
Adelphia and the Rigas family have agreed that, for a period of 90 days
after the date of this prospectus supplement, they will not, without the prior
written consent of Salomon Smith Barney Inc. offer, sell, contract to sell or
otherwise dispose of any shares of Class A common stock or any securities
convertible into or exercisable or exchangeable for Class A common stock or
grant any options or warrants to purchase shares of Class A common stock
(except in connection with pending acquisitions, other strategic acquisitions
and certain other permitted transactions).
The Rigas family has agreed, subject to certain exceptions, not to sell any
of their shares of our Class B common stock without the prior written consent
of a majority of the independent members of our board of directors for a period
of 180 days from the closing of the April Rigas Direct Placement, but not to
exceed a year from the closing of our public offering of Class A common stock
on April 28, 1999. In addition, the Rigas family has agreed, subject to certain
exceptions, not to sell any of their shares of our Class B common stock without
the prior written consent of a majority of the independent members of our board
of directors for a period of 180 days from the date of closing of the October
Rigas Direct Placement, but not to exceed a year from the closing of our public
offering of Class A common stock under this prospectus supplement.
The Class A common stock is quoted on the Nasdaq National Market under the
symbol "ADLAC."
The following table shows the underwriting discounts and commissions to be
paid to the underwriters by us in connection with this offering.
<TABLE>
<CAPTION>
<S> <C>
Per Share..................................................... $2.00
Total......................................................... $12,000,000
</TABLE>
In connection with the offering, Salomon Smith Barney Inc., on behalf of the
underwriters, may over-allot or engage in syndicate covering transactions,
stabilizing transactions and penalty bids. Syndicate covering transactions
involve purchases of the common stock in the open market after the distribution
has been completed in order to cover syndicate short positions. Stabilizing
transactions consist of certain bids or purchases of common stock made for the
purpose of preventing or retarding a decline in the market price of the common
stock while the offering is in progress. Penalty bids permit the underwriters
to reclaim a selling concession from a syndicate member when Salomon Smith
Barney Inc., in covering syndicate short positions or making stabilizing
purchases, repurchases shares originally sold by that syndicate member. These
activities may cause the price of the common stock to be higher than the price
that otherwise would exist in the open market in the absence of such
transactions. These transactions may be effected on the Nasdaq National Market
or in the over-the-counter market, or otherwise and, if commenced, may be
discontinued at any time.
S-28
<PAGE>
In addition, in connection with this offering, certain of the underwriters
(and selling group members) may engage in passive market making transactions in
the Class A common stock on the Nasdaq National Market, prior to the pricing
and completion of the offering. Passive market making consists of displaying
bids on the Nasdaq National Market no higher than the bid prices of independent
market makers and making purchases at prices no higher than those independent
bids and effected in response to order flow. Net purchases by a passive market
maker on each day are limited to a specified percentage of the passive market
maker's average daily trading volume in the common stock during a specified
period and must be discontinued when such limit is reached. Passive market
making may cause the price of the common stock to be higher than the price that
otherwise would exist in the open market in the absence of such transactions.
If passive market making is commenced, it may be discontinued at any time.
We estimate that our total expenses of this offering will be $500,000.
The underwriters have performed certain investment banking and advisory
services for us from time to time for which they have received customary fees
and expenses. The underwriters may, from time to time, engage in transactions
with and perform services for us in the ordinary course of their business.
An affiliate of First Union Securities, Inc., one of the underwriters, is an
investor in FrontierVision Partners, L.P. Upon consummation of Adelphia's
pending acquisition of FrontierVision Partners, L.P., the affiliate may receive
more than 10% of the net proceeds of this offering. Accordingly, this offering
is being made in compliance with Rule 2710(c)(8) of the National Association of
Securities Dealers.
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
the underwriters may be required to make in respect of any of those
liabilities.
S-29
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, as well as proxy statements
and other information with the SEC. You may read and copy any document we file
with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549 or at its Regional Offices in Chicago, Illinois or New
York, New York. You may obtain further information about the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. Our SEC filings
are also available to the public over the Internet at the SEC's web site at
http://www.sec.gov, which contains reports, proxy statements and other
information regarding registrants like us that file electronically with the
SEC.
This prospectus supplement is part of a registration statement on Form S-3
filed by us with the SEC under the Securities Act. As permitted by SEC rules,
this prospectus supplement does not contain all of the information included in
the registration statement and the accompanying exhibits filed with the SEC.
You may refer to the registration statement and its exhibits for more
information.
The SEC allows us to "incorporate by reference" into this prospectus
supplement the information we file with the SEC. This means that we can
disclose important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus supplement. If we subsequently file updating or superseding
information in a document that is incorporated by reference into this
prospectus supplement, the subsequent information will also become part of
this prospectus supplement and will supersede the earlier information.
We are incorporating by reference the following documents that we have
filed with the SEC:
. our Transition Report on Form 10-K for the nine months ended December
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, 1998 of
Olympus Communications, L.P. and Olympus Capital Corporation, as amended
by Adelphia's Form 10-K/A;
. our Quarterly Reports on Form 10-Q for the quarters ended December 31,
1998, March 31, 1999 and June 30, 1999 (collectively, the "Form 10-Qs");
. our Current Reports on Form 8-K for the events dated January 11, 1999,
February 22, 1999, February 23, 1999, March 5, 1999, March 30, 1999,
March 31, 1999, April 9, 1999, April 19, 1999 April 21, 1999, April 23,
1999, April 27, 1999, April 28, 1999, May 26, 1999, June 22, 1999,
August 11, 1999, September 9, 1999, September 16, 1999, September 21,
1999 and September 29, and September 30, 1999;
. our definitive proxy statement dated September 11, 1998 with respect to
the Annual Meeting of Stockholders held on October 6, 1998; and
. the description of our Class A common stock contained in our
registration statement filed with the SEC under Section 12 of the
Exchange Act and subsequent amendments and reports filed to update such
description.
We are also incorporating by reference into this prospectus supplement all
of our future filings with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act until the Common Stock Offering has been completed.
S-30
<PAGE>
You may obtain a copy of any of our filings which are incorporated by
reference, at no cost, by writing to or telephoning us at the following
address:
Adelphia Communications Corporation
One North Main Street
Coudersport, Pennsylvania 16915
Attention: Investor Relations
Telephone: (814) 274-9830
You should rely only on the information provided in this prospectus
supplement or incorporated by reference. We have not authorized anyone to
provide you with different information. You should not assume that the
information in this prospectus supplement is accurate as of any date other than
the date on the first page of this prospectus supplement. We are not making
this offer of securities in any state or country in which the offer or sale is
not permitted.
LEGAL MATTERS
The validity of the Class A common stock will be passed upon for us by
Buchanan Ingersoll Professional Corporation, Pittsburgh, Pennsylvania.
Attorneys of that firm who are representing us in the Common Stock Offering own
an aggregate of 2,300 shares of our Class A common stock and 15,100 shares of
Hyperion Class A common stock. The validity of the Class A common stock offered
hereby will be passed upon on behalf of the underwriters by Latham & Watkins,
New York, New York.
EXPERTS
The consolidated financial statements of Adelphia and its subsidiaries as of
March 31, 1998 and December 31, 1998, and for the years ended March 31, 1997
and 1998 and the nine months ended December 31, 1998, and the consolidated
financial statements of Olympus and its subsidiaries as of December 31, 1997
and 1998, and for each of the three years in the period ended
December 31, 1998, all incorporated in this prospectus supplement by reference
from Adelphia's Transition Report on Form 10-K for the nine months ended
December 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.
The consolidated financial statements of FrontierVision Partners, L.P. and
subsidiaries as of December 31, 1998 and 1997, and for each of the years in the
three year period ended December 31, 1998, have been incorporated by reference
herein from Adelphia's Current Report on Form 8-K filed September 9, 1999, in
reliance upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
The consolidated financial statements of Harron Communications Corp. and
subsidiaries as of December 31, 1998 and 1997, and for each of the three years
in the period ended December 31, 1998, have been incorporated in this
prospectus supplement by reference from Adelphia's Current Report on Form 8-K
filed September 9, 1999, have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein
by reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
S-31
<PAGE>
The consolidated financial statements of Century Communication Corp. and
subsidiaries as of May 31, 1998 and 1997 and for each of the three years in the
period ended May 31, 1998, incorporated by reference in this prospectus
supplement from Adelphia's Current Report on Form 8-K filed April 19, 1999, and
the consolidated financial statements of Century Communications Corp. and
subsidiaries as of May 31, 1999 and 1998 and for each of the three years in the
period ended May 31, 1999, incorporated by reference in this prospectus
supplement from Adelphia's Current Report on Form 8-K filed September 9, 1999
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.
S-32
<PAGE>
Prospectus
ADELPHIA COMMUNICATIONS CORPORATION
Debt Securities
Preferred Stock
Class A Common Stock
Class B Common Stock
This prospectus relates to:
. Adelphia Communications Corporation's debentures, notes and other debt
securities in one or more series which may be senior debt securities or
subordinated debt securities,
. shares of preferred stock of Adelphia issuable in series designated by the
board of directors of Adelphia,
. shares of Class A common stock, and
. shares of Class B common stock, which may be offered in combination or
separately from time to time by Adelphia.
The aggregate initial offering price of all of the securities which may be
sold pursuant to this prospectus will not exceed U.S. $5,000,000,000, or its
equivalent based on the applicable exchange rate at the time of issue in one or
more foreign currencies or currency units as shall be designated by Adelphia.
The Class A common stock is quoted on the Nasdaq National Market. The Class
A common stock's ticker symbol is "ADLAC." On May 6, 1999, the closing sale
price on the Nasdaq National Market of a single share of Class A common stock
was $75.25.
Our common stock includes Class A and Class B common stock. The rights of
holders of the Class A common stock and Class B common stock differ with
respect to certain aspects of dividends, liquidations and voting. The Class A
common stock has 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.
You should carefully review "Risk Factors" beginning on page 4 for a
discussion of things you should consider when investing in securities of
Adelphia.
----------------
Neither the SEC nor any state securities commission has approved or
disapproved of these securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal offense.
This Prospectus May Not Be Used To Consummate Sales Of Securities Unless
Accompanied By A Prospectus Supplement.
----------------
The date of this Prospectus is May 14, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Adelphia................................................................... 2
Risk Factors............................................................... 4
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.. 16
Dilution................................................................... 17
Use of Proceeds............................................................ 17
Description of Debt Securities............................................. 18
Description of Capital Stock............................................... 31
Book Entry Issuance........................................................ 36
Plan of Distribution....................................................... 38
Where You Can Find More Information........................................ 40
Legal Matters.............................................................. 41
Experts.................................................................... 42
</TABLE>
<PAGE>
ADELPHIA
Adelphia is a leader in the telecommunications industry with cable
television and local telephone operations. Our operations consist of providing
telecommunications services primarily over our networks, which are commonly
referred to as broadband networks because they can transmit large quantities of
voice, video and data by way of digital or analog signals. As of December 31,
1998, we owned or managed cable television systems with broadband networks that
passed in front of 3,252,830 homes and served 2,304,325 basic subscribers. John
J. Rigas, the Chairman, President, Chief Executive Officer and founder of
Adelphia, has owned and operated cable television systems since 1952.
We own cable systems in twelve states which are organized into seven
regional clusters: Western New York, Virginia, Western Pennsylvania, New
England, Eastern Pennsylvania, Ohio and New Jersey. These systems are located
primarily in suburban areas of large and medium-sized cities within the 50
largest television markets. As of December 31, 1998, the broadband networks for
these systems passed in front of 2,131,978 homes and served 1,528,307 basic
subscribers.
We also provide management and consulting services to other partnerships and
corporations engaged in the ownership and operation of cable television
systems. John J. Rigas and members of his immediate family, including entities
they own or control, have substantial ownership interests in these partnerships
and corporations. As of December 31, 1998, the broadband networks for cable
systems owned by these Rigas family partnerships and corporations passed in
front of 177,250 homes and served 134,443 basic subscribers.
We also own a 50% voting interest and nonvoting preferred limited
partnership interests in Olympus Communications, L.P. Olympus is a joint
venture limited partnership that operates a large cable system in Florida. As
of December 31, 1998, the broadband networks for this system passed in front of
943,602 homes and served 641,575 basic subscribers.
Through our subsidiary, Hyperion Telecommunications, Inc., we own and
operate a large competitive local exchange carrier in the eastern United
States. This means that Hyperion provides its customers with alternatives to
the incumbent local telephone company for local telephone and
telecommunications services. Hyperion's telephone operations are referred to as
being facilities based, which means it generally owns the local
telecommunications networks and facilities it uses to deliver these services,
rather than leasing or renting the use of another party's networks to do so. As
of December 31, 1998, Hyperion managed and operated 22 telecommunications
networks, including two under construction, serving 46 markets. Hyperion's
Class A common stock is listed on the Nasdaq National Market under the symbol
"HYPT."
Our executive offices are located at Main at Water Street, Coudersport,
Pennsylvania 16915, and our telephone number is (814) 274-9830.
2
<PAGE>
Recent Developments
Please see the applicable prospectus supplement and Adelphia's recent public
filings for recent developments.
3
<PAGE>
RISK FACTORS
Before you invest in Adelphia's securities, you should be aware that there
are various risks, including those described below. You should consider
carefully these risk factors together with all of the other information
included in this prospectus before you decide to purchase any securities of
Adelphia.
High Level Of
Indebtedness
As of December 31, Adelphia has a substantial amount of debt. We
1998, we owed borrowed this money to purchase and to expand our
approximately $3.5 cable systems and other operations and, to a lesser
billion. Our high level extent, for investments and loans to our
of indebtedness can have affiliates. At December 31, 1998, our indebtedness
important adverse totaled approximately $3,527,452,000. This included
consequences to us and approximately:
to you.
. $1,810,212,000 of Adelphia Parent Company
public debt. When we use the term "Adelphia
Parent Company" in this prospectus, we are
referring only to Adelphia Communications
Corporation as a parent holding company
entity, and not to its subsidiaries;
. $1,246,456,000 of debt owed by our
subsidiaries to banks, other financial
institutions and other persons; and
. $470,784,000 of public debt owed by Hyperion.
Debt service consumes Our high level of indebtedness can have important
a substantial portion of adverse consequences to us and to you. It requires
the cash we generate. that we spend a substantial portion of the cash we
This could affect our get from our business to repay the principal and
ability to invest in our interest on these debts. Otherwise, we could use
business in the future these funds for general corporate purposes or for
as well as to react to capital improvements. Our ability to obtain new
changes in our industry loans for working capital, capital expenditures,
or economic downturns. acquisitions or capital improvements may be limited
by our current level of debt. In addition, having
such a high level of debt could limit our ability
to react to changes in our industry and to economic
conditions generally. In addition to our debt, at
December 31, 1998, the Adelphia Parent Company also
had approximately $148,191,000 and Hyperion had
approximately $228,674,000 of redeemable
exchangeable preferred stock which contain payment
obligations that are
4
<PAGE>
similar to our debt obligations in these respects.
Olympus also has a substantial amount of debt.
Approximately 32% of Our debt comes due at various times up to the year
this debt must be paid 2009, including an aggregate of approximately
by April 1, 2003 and all $1,126,169,000 which, as of December 31, 1998, we
of it must be paid by must pay by April 1, 2003.
2009.
Our Business Requires Our business requires substantial additional
Substantial Additional financing on a continuing basis for capital
Financing And If We Do expenditures and other purposes including:
Not Obtain That
Financing We May Not Be
Able To Upgrade Our
Plant, Offer Services,
Make Payments When Due
Or Refinance Existing
Debt.
. constructing and upgrading our plant and
networks--some of these upgrades we must make
to comply with the requirements of local
cable franchise authorities;
. offering new services;
. scheduled principal and interest payments;
. refinancing existing debt; and
. acquisitions and investments.
There can be no guarantee that we will be able to
issue additional debt or sell stock or other
additional equity on satisfactory terms, or at all,
to meet our future financing needs.
We Have Had Large Losses The Total Convertible Preferred Stock, Common Stock
And Negative and Other Stockholders' Equity (Deficiency) at
Stockholders' Equity And December 31, 1998 was a deficit of approximately
We Expect This To $1,021,746,000. Our continuing net losses, which
Continue are mainly due to our high levels of depreciation
and amortization and interest expense, have created
this deficiency. Our recent net losses applicable
to our common stockholders were approximately as
follows for the periods specified:
. fiscal year ended March 31, 1996--
$119,894,000;
. fiscal year ended March 31, 1997--
$130,642,000;
. fiscal year ended March 31, 1998--
$192,729,000; and
. nine months ended December 31, 1998--
$135,848,000.
5
<PAGE>
We expect to continue to incur large net losses for
the next several years.
Our earnings have Our earnings could not pay for our combined fixed
been insufficient to pay charges and preferred stock dividends during these
for our fixed charges periods by the amounts set forth in the table
and preferred stock below, although combined fixed charges and
dividends. preferred stock dividends included substantial non-
cash charges for depreciation, amortization and
non-cash interest expense on some of our debts and
the non-cash expense of Hyperion's preferred stock
dividends:
<TABLE>
<CAPTION>
Earnings Non-Cash
Deficiency Charges
------------ ------------
<S> <C> <C>
. fiscal year ended
March 31, 1996 $ 78,189,000 $127,319,000
. fiscal year ended
March 31, 1997 $ 61,848,000 $165,426,000
. fiscal year ended
March 31, 1998 $113,941,000 $195,153,000
. nine months ended
December 31, 1998 $116,899,000 $186,022,000
</TABLE>
Historically, the cash we generate from our
If we could not operating activities and borrowings has been
refinance our debt or sufficient to meet our requirements for debt
obtain new loans, we service, working capital, capital expenditures, and
would likely have to investments in and advances to our affiliates, and
consider various options we have depended on getting additional borrowings
such as the sale of to meet our liquidity requirements. Although in the
additional equity or past we have been able both to refinance our debt
some of our assets to and to obtain new debt, there can be no guarantee
meet the principal and that we will be able to continue to do so in the
interest payments we future or that the cost to us or the other terms
owe, negotiate with our which would affect us would be as favorable to us
lenders to restructure as our current loans and credit agreements. We
existing loans or believe that our business will continue to generate
explore other options cash and that we will be able to obtain new loans
available under to meet our cash needs. However, the covenants in
applicable laws the indentures and credit agreements for our
including those under current debt limit our ability to borrow more
reorganization or money.
bankruptcy laws. We can
not guarantee that any
options available to us
would enable us to repay
our debt in full.
6
<PAGE>
Competition
Our cable television The telecommunications services provided by
business is subject to Adelphia are subject to strong competition and
strong competition from potential competition from various sources. Our
several sources which cable television systems compete with other means
could adversely affect of distributing video to home televisions such as
revenue or revenue Direct Broadcast Satellite systems, commonly known
growth. as DBS systems, and Multichannel Multipoint
Distribution systems. Some of the regional Bell
telephone operating companies 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 regional Bell
operating companies and local telephone companies
have facilities which are capable of delivering
cable television service. The equipment which
telephone companies use in providing local exchange
service may give them competitive advantages over
us in distributing video to home televisions. The
regional Bell operating companies and other
potential competitors have much greater resources
than Adelphia and would constitute formidable
competition for our cable television business. We
cannot predict either the extent to which
competition will continue to materialize or, if
such competition materializes, the extent of its
effect on our cable television business.
We also face competition from other communications
and entertainment media, including conventional
off-air television broadcasting services,
newspapers, movie theaters, live sporting events
and home video products. We cannot predict the
extent to which competition may affect us.
Hyperion's operations In each of the markets served by Hyperion's
are also subject to risk networks, the competitive local exchange carrier
because Hyperion services offered by Hyperion compete principally
competes principally with the services offered by the incumbent local
with established local telephone exchange carrier company serving that
telephone carriers that area. Local telephone companies have long-standing
have long-standing relationships with their customers, have the
utility relationships potential to subsidize competitive services from
with their customers and monopoly service revenues, and benefit from
pricing flexibility for favorable state and federal regulations. The merger
local telephone of Bell Atlantic and NYNEX created a very large
services. company whose combined territory covers a
substantial portion of Hyperion's markets. Other
combinations are occurring in the industry, which
may have a material adverse effect on Hyperion and
us.
7
<PAGE>
We believe that local telephone companies will gain
increased pricing flexibility from regulators as
competition increases. Hyperion's operating results
and cash flow could be materially and adversely
affected by actions by regulators, including
permitting the incumbent local telephone companies
in Hyperion's markets to do the following:
. lower their rates substantially;
. engage in aggressive volume and term discount
pricing practices for their customers; or
. charge excessive fees to Hyperion for
interconnection to the incumbent local
telephone company's networks.
If the regional Bell The regional Bell operating companies can now
telephone companies obtain regulatory approval to offer long distance
could get regulatory services if they comply with the interconnection
approval to offer long requirements of the federal Telecommunications Act
distance service in of 1996. To date, the FCC has denied the requests
competition with for approval filed by regional Bell operating
Hyperion's significant companies in Hyperion's operating areas. However,
customers, some of an approval of such a request could result in
Hyperion's major decreased market share for the major long distance
customers could lose carriers which are among Hyperion's significant
market share. customers. This could have a material adverse
effect on Hyperion.
The regional Bell Some of the Regional Bell operating companies have
telephone companies also recently filed petitions with the FCC
continue to seek other requesting waivers of other obligations under the
regulatory approvals federal Telecommunications Act of 1996. These
that could significantly involve services Hyperion also provides such as
enhance their high-speed data, long distance, and services to
competitive position Internet Service Providers. If the FCC grants the
against Hyperion. regional Bell operating companies' petitions, this
could have a material adverse effect on Hyperion.
Potential competitors Potential competitors for Hyperion include other
to Hyperion's competitive local exchange carriers, incumbent
telecommunications local telephone companies which are not subject to
services include the regional Bell operating companies' restrictions on
regional Bell telephone offering long distance service, AT&T, MCIWorldCom,
companies, AT&T, Sprint and other long distance carriers, cable
MCIWorldCom and Sprint, television companies, electric utilities, microwave
electric utilities and carriers, wireless telecommunications providers and
other companies that private networks built by large end users. Both
have advantages over AT&T and MCIWorldCom have announced that they have
Hyperion. begun to offer local telephone services in some
areas of the country, and AT&T recently announced a
new wireless technology
8
<PAGE>
for providing local telephone service. AT&T and
Tele-Communications, Inc. have merged. Although
Hyperion has good relationships with the long
distance carriers, they could 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 local telephone
companies, have financial, personnel and other
resources substantially greater than those of
Hyperion, as well as other competitive advantages
over Hyperion.
We Are Subject To
Extensive Regulation
Our cable television The cable television industry and the provision of
and telecommunications local telephone exchange services are subject to
businesses are heavily extensive regulation at the federal, state and
regulated as to rates we local levels, and many aspects of such regulation
can charge and other are currently the subject of judicial proceedings
matters. This regulation and administrative or legislative proposals. In
could limit our ability particular, the FCC adopted regulations that limit
to increase rates, cause our ability to set and increase rates for our basic
us to decrease then and cable programming service packages and for the
current rates or require provision of cable television-related equipment.
us to refund previously The law permits certified local franchising
collected fees. 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 cable television industry is subject to state
and local regulations and we must comply with rules
of the local franchising authorities to retain and
renew our 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.
9
<PAGE>
The federal
Telecommunications Act The federal Telecommunications Act of 1996
of 1996 may have a substantially changed federal, state and local laws
significant impact on and regulations governing our cable television and
our cable television and telecommunications businesses. This law could
telephone businesses. materially affect the growth and operation of the
cable television industry and the cable services we
provide. Although this legislation may lessen
regulatory burdens, the cable television industry
may be subject to new competition as a result.
There are numerous rulemakings that have been and
continue to be undertaken by the FCC which will
interpret and implement the provisions of this law.
Furthermore, portions of this law have been, and
likely other portions will be, challenged in the
courts. We cannot predict the outcome of such
rulemakings or lawsuits or the shortand long-term
effect, financial or otherwise, of this law and FCC
rulemakings on us.
Similarly, the Telecommunications Act of 1996
removes entry barriers for all companies and could
increase substantially the number of competitors
offering comparable services in Hyperion's markets
or potential markets. Furthermore, we cannot
guarantee 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
Hyperion.
Unequal Voting Rights Of Adelphia has two classes of common stock--Class A
Stockholders which carries one vote per share and Class B which
carries ten votes per share. Under our Certificate
of Incorporation, the Class A shares elect only one
of our directors.
Control Of Voting Power As of May 1, 1999, the Rigas family beneficially
By The Rigas Family owned outstanding shares representing about 42% of
the total number of outstanding shares of both
classes of Adelphia's common stock and about 77% of
the total voting power of Adelphia's shares. The
public holds a majority of the outstanding Class A
shares, although the Rigas family also owns about
30% of those shares as of May 1, 1999. The Rigas
family owns about 99% of Adelphia's Class B shares.
The Rigas family also owns shares of Adelphia's 8
1/8% Series C Cumulative Convertible preferred
stock which, if converted, would increase its
voting power and beneficial ownership. The Rigas
family also has agreed to acquire 4,114,549 shares
of Class B common stock, and has rights to acquire
up to an additional 2,057,275 shares of Class B
The Rigas family can
control stockholder
decisions on very
important matters.
10
<PAGE>
common stock. As a result of the Rigas family's
stock ownership and an agreement among the Class B
stockholders, members of the Rigas family as of May
1, 1999 have the power to elect seven of eight
Adelphia directors, and if they converted their
convertible preferred stock might be able to elect
all eight directors. In addition, the Rigas family
could control stockholder decisions on other
matters such as amendments to our Certificate of
Incorporation and Bylaws, and mergers or other
fundamental corporate transactions.
There Are Potential John J. Rigas and the other executive officers of
Conflicts Of Interest Adelphia, including other members of the Rigas
Between Adelphia And The family, own other corporations and partnerships,
Rigas Family which are managed by us 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.
These activities could present a conflict of
interest with us, such as how much time our
executive officers devote to our business. In
addition, there have been and will continue to be
transactions between us and the executive officers
or the other entities they own or have affiliations
with. Our public debt indentures contain covenants
that place some restrictions on transactions
between us and our affiliates.
Holding Company The Adelphia Parent Company directly owns no
Structure And Potential significant assets other than stock, partnership
Impact Of Restrictive interests, equity and other interests in our
Covenants In Subsidiary subsidiaries and in other companies. This creates
Debt Agreements risks regarding our ability to provide cash to the
Adelphia Parent Company to repay the interest and
principal which it owes, our ability to pay cash
dividends to our common stockholders in the future,
and the ability of our subsidiaries and other
companies to respond to changing business and
economic conditions and to get new loans.
The Adelphia Parent The public indentures, and the credit agreements
Company depends on its for bank and other financial institution loans, of
subsidiaries and other our subsidiaries and other companies restrict their
companies in which it ability and the ability of the companies they own
has investments, to fund to make payments to the Adelphia Parent Company.
its cash needs. These agreements also place other restrictions on
the borrower's ability to borrow new funds and
include requirements for the borrowers to remain in
11
<PAGE>
compliance with the loans. The ability of a
subsidiary or a company in which we have invested
to comply with debt restrictions may be affected by
events that are beyond our control. The breach of
any of these covenants could result in a default
which could result in all loans and other amounts
owed to its lenders, to be due and payable. Our
subsidiaries and companies in which we have
invested might not be able to repay in full the
accelerated loans.
It Is Unlikely You Will Adelphia has never declared or paid cash dividends
Receive A Return On Your on any of its common stock and has no intention of
Shares Through The doing so in the foreseeable future. As a result, it
Payment Of Cash is unlikely that you will receive a return on your
Dividends shares through the payment of cash dividends.
Future Sales Of Sales of a substantial number of shares of Class A
Outstanding Common Stock common stock or Class B common stock, including
Could Adversely Affect sales by any pledgees of such shares, could
The Market Price Of Our adversely affect the market price of our Class A
Common Stock common stock and could impair our ability in the
future to raise capital through stock offerings.
Under various registration rights agreements or
arrangements, as of May 1, 1999, the Rigas family
has the right, subject to some limitations, to
require Adelphia to register substantially all of
the shares which it owns of the Class A common
stock--15,029,119 shares, Class B common stock--
10,736,544 shares and the equivalent number of
shares of Class A common stock into which they may
be converted, and convertible preferred stock--
80,000 shares and the 9,433,962 shares of Class A
common stock into which they may be converted.
Among others, Adelphia has registered or agreed to
register for public sale the following shares:
. for the Rigas family--up to 11,000,000 shares
of Class A common stock, 80,000 shares of
convertible preferred stock and the Class A
common stock issuable upon conversion of the
convertible preferred stock;
. for Booth American Company--3,571,428 shares
of Class A common stock owned as of March 24,
1998;
12
<PAGE>
. for the selling stockholders receiving shares
in the Verto Communications, Inc.
acquisition--2,561,024 shares of Class A
common stock;
. for a Rigas family partnership--4,000,000
shares of Class A common stock purchased by
it in connection with the January 14, 1999
equity offerings;
. for the owners of FrontierVision Partners,
L.P.--7,000,000 shares of Class A common
stock in connection with the FrontierVision
acquisition pending as of May 1, 1999, and
for the benefit of FrontierVision in certain
circumstances if that transaction does not
close, 1,000,000 shares of Class A common
stock; and
. in connection with the Century Communications
Corp. acquisition pending as of May 1, 1999,
Adelphia expects to register approximately
48,700,000 shares of Class A common stock.
Approximately 14,904,000 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 made to members of the Rigas family.
These pledgees could freely sell any shares
acquired upon a foreclosure.
Purchasers Of Our Common Persons purchasing common stock will incur
Stock Will Incur immediate and substantial net tangible book value
Immediate Dilution dilution.
Adelphia's Acquisitions Because we are experiencing a period of rapid
And Expansion Could expansion through acquisition, the operating
Involve Operational complexity of Adelphia, as well as the
Risks responsibilities of management personnel, have
increased. Our ability to manage such expansion
effectively will require us to continue to expand
and improve our operational and financial systems
and to expand, train and manage its employee base.
The Century, FrontierVision and Harron
Communications Corp. acquisitions, all pending as
of May 1, 1999, involve the acquisition of
companies that have previously operated
independently. We may not be able to integrate the
13
<PAGE>
operations of these companies without some level of
difficulty, such as the loss of key personnel.
There is no guarantee that we will be able to
realize the benefits expected from the integration
of operations from these transactions.
Because the cable systems in our pending
acquisitions are in the same industry as those of
Adelphia, the acquired systems will generally be
subject to the same risks as those of Adelphia,
such as those relating to competition, regulation,
year 2000 issues and technological developments.
Year 2000 Issues Present The year 2000 issue refers to the inability of
Risks To Our Business computerized systems and technologies to recognize
Operations In Several and process dates beyond December 31, 1999. This
Ways could present risks to the operation of our
business in several ways. Our computerized business
applications that could be adversely affected by
the year 2000 issue include:
. information processing and financial
reporting systems;
. customer billing systems;
. customer service systems;
. telecommunication transmission and reception
systems; and
. facility systems.
System failure or miscalculation could result in an
inability to process transactions, send invoices,
accept customer orders or provide customers with
products and services. Although we are evaluating
the impact of the year 2000 issue on our business
and are seeking to implement necessary solutions,
this process has not been completed.
There can be no assurance that the systems of other
companies on which our systems rely will be year
2000 ready or timely converted into systems
compatible with our systems. Our failure or a
third-party's failure to become year 2000 ready, or
our inability to become compatible with third
parties with which we have a material relationship,
may have a material adverse effect on us, including
significant service interruption or outages;
however, we cannot currently estimate the extent of
any such adverse effects.
14
<PAGE>
Forward-Looking
Statements In This The statements contained or incorporated by
Prospectus Are Subject reference in this prospectus that are not
To Risks And historical facts are "forward-looking statements"
Uncertainties and 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 set forth or incorporated by
reference in this prospectus, including
"Management's Discussion and Analysis of Financial
Condition and Results of Operations" in Adelphia's
1998 Annual Report on Form 10-K and in Adelphia's
Form 10-Qs, 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, us. These
risks and uncertainties include, but are not
limited to, uncertainties relating to economic
conditions, the availability and cost of capital,
acquisitions and divestitures, government and
regulatory policies, the pricing and availability
of equipment, materials, inventories and
programming, technological developments, year 2000
issues and changes in the competitive environment
in which we operate. 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.
15
<PAGE>
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to combined fixed
charges and preferred stock dividends of Adelphia for the periods indicated.
For purposes of calculating the ratio of earnings available to cover combined
fixed charges and preferred stock dividends:
. earnings consist of loss before income taxes and extraordinary items
plus fixed charges, excluding capitalized interest, and
. fixed charges consist of interest, whether expensed or capitalized, plus
amortization of debt issuance costs plus the assumed interest component
of rent expense.
<TABLE>
<CAPTION>
Fiscal Year Ended March 31,
- ----------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998
----- ----- ----- ----- -----
<S> <C> <C> <C> <C>
-- -- -- -- --
</TABLE>
For the years ended March 31, 1994, 1995, 1996, 1997 and 1998, and the nine
months ended December 31, 1998, Adelphia's earnings were insufficient to cover
its combined fixed charges and preferred stock dividends by approximately
$65,997,000, $69,146,000, $78,189,000, $61,848,000, $113,941,000, and
$116,899,000, respectively.
16
<PAGE>
DILUTION
The net tangible book value of Adelphia's common stock as of December 31,
1998 was a deficit of approximately $2,050,905,000 or negative $48.72 a share.
Net tangible book value per share represents the amount of Adelphia's
convertible preferred stock, common stock and other stockholders' equity
(deficiency), less intangible assets, divided by shares of Adelphia's common
stock outstanding. Purchasers of common stock will have an immediate dilution
of net tangible book value which, due to our having a net tangible book value
deficit, will exceed the purchase price per share. For example, in the January
14, 1999 equity offerings, the purchase price of a single share initially sold
to the public was $45.00 and the net tangible book value dilution per share was
$78.53 based on net tangible book value as of December 31, 1998. 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 by
Adelphia and the pro forma net tangible book value per share of the common
stock immediately after completion of such offering.
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement, we
intend to apply the net proceeds from the sale of the securities to which this
prospectus relates to general funds to be used for general corporate purposes
including capital expenditures, acquisitions, the reduction of indebtedness,
investments and other purposes. We may invest funds not required immediately
for such purposes in short-term obligations or we may use them to reduce the
future level of our indebtedness.
17
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The following description sets forth general terms and provisions of the
debt securities to which any prospectus supplement may relate. We will describe
the particular terms and provisions of the series of debt securities offered by
a prospectus supplement, and the extent to which such general terms and
provisions described below may apply thereto, in the prospectus supplement
relating to such series of debt securities.
The senior debt securities are to be issued in one or more series under an
indenture, as supplemented or amended from time to time between Adelphia and an
institution that we will name in the related prospectus supplement, as trustee.
For ease of reference, we will refer to the indenture relating to senior debt
securities as the senior indenture and we will refer to the trustee under that
indenture as the senior trustee. The subordinated debt securities are to be
issued in one or more series under an indenture, as supplemented or amended
from time to time, between Adelphia and an institution that we will name in the
related prospectus supplement, as trustee. For ease of reference, we will refer
to the indenture relating to subordinate debt securities as the subordinate
indenture and we will refer to the trustee under that indenture as the
subordinate trustee. This summary of certain terms and provisions of the debt
securities and the indentures is not necessarily complete, and we refer you to
the copy of the form of the indentures which are filed as an exhibit to the
registration statement of which this prospectus forms a part, and to the Trust
Indenture Act. Whenever we refer to particular defined terms of the indentures
in this Section or in a prospectus supplement, we are incorporating these
definitions into this prospectus or the prospectus supplement.
General
The debt securities will be issuable in one or more series pursuant to an
indenture supplemental to the applicable indenture or a resolution of
Adelphia's board of directors or a committee of the board. Unless otherwise
specified in a prospectus supplement, each series of senior debt securities
will rank pari passu in right of payment with all of Adelphia Parent Company's
other senior unsecured obligations. Each series of subordinated debt securities
will be subordinated and junior in right of payment to the extent and in the
manner set forth in the subordinated indenture and the supplemental indenture
relating to that debt. Except as otherwise provided in a prospectus supplement,
the indentures do not limit the incurrence or issuance of other secured or
unsecured debt of Adelphia, whether under the indentures, any other indenture
that Adelphia may enter into in the future or otherwise. For more information,
you should read the prospectus supplement relating to a particular offering of
securities.
The applicable prospectus supplement or prospectus supplements will describe
the following terms of each series of debt securities:
. the title of the debt securities and whether such series constitutes
senior debt securities or subordinated debt securities;
. any limit upon the aggregate principal amount of the debt securities;
18
<PAGE>
. the date or dates on which the principal of the debt securities is
payable or the method of that determination or the right, if any, of
Adelphia to defer payment of principal;
. the rate or rates, if any, at which the debt securities will bear
interest (including reset rates, if any, and the method by which any
such rate will be determined), the interest payment dates on which
interest will be payable and the right, if any, of Adelphia to defer any
interest payment;
. the place or places where, subject to the terms of the indenture as
described below under the caption "--Payment and Paying Agents," the
principal of and premium, if any, and interest, if any, on the debt
securities will be payable and where, subject to the terms of the
indenture as described below under the caption "--Denominations,
Registration and Transfer," Adelphia will maintain an office or agency
where debt securities may be presented for registration of transfer or
exchange and the place or places where notices and demands to or upon
Adelphia in respect of the debt securities and the indenture may be
made;
. any period or periods within, or date or dates on which, the price or
prices at which and the terms and conditions upon which debt securities
may be redeemed, in whole or in part, at the option of Adelphia pursuant
to any sinking fund or otherwise;
. the obligation, if any, of Adelphia to redeem or purchase the debt
securities pursuant to any sinking fund or analogous provisions or at
the option of a holder and the period or periods within which, the price
or prices at which, the currency or currencies including currency unit
or units, in which and the other terms and conditions upon which the
debt securities will be redeemed or purchased, in whole or in part,
pursuant to such obligation;
. the denominations in which any debt securities will be issuable if other
than denominations of $1,000 and any integral multiple thereof;
. if other than in U.S. Dollars, the currency or currencies, including
currency unit or units, in which the principal of, and premium, if any,
and interest, if any, on the debt securities will be payable, or in
which the debt securities shall be denominated;
. any additions, modifications or deletions in the events of default or
covenants of Adelphia specified in the indenture with respect to the
debt securities;
. if other than the principal amount, the portion of the principal amount
of debt securities that will be payable upon declaration of acceleration
of the maturity thereof;
. any additions or changes to the indenture with respect to a series of
debt securities that will be necessary to permit or facilitate the
issuance of the series in bearer form, registrable or not registrable as
to principal, and with or without interest coupons;
19
<PAGE>
. any index or indices used to determine the amount of payments of
principal of and premium, if any, on the debt securities and the manner
in which such amounts will be determined;
. subject to the terms described under "--Global Debt Securities," whether
the debt securities of the series will be issued in whole or in part in
the form of one or more global securities and, in such case, the
depositary for the global securities;
. the appointment of any trustee, registrar, paying agent or agents;
. the terms and conditions of any obligation or right of Adelphia or a
holder to convert or exchange debt securities into preferred securities
or other securities;
. whether the defeasance and covenant defeasance provisions described
under the caption "--Satisfaction and Discharge; Defeasance" will be
inapplicable or modified;
. any applicable subordination provisions in addition to those set forth
herein with respect to subordinated debt securities; and
. any other terms of the debt securities not inconsistent with the
provisions of the applicable indenture.
We may sell debt securities at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate which at the time
of issuance is below market rates. We will describe material U.S. federal
income tax consequences and special considerations applicable to the debt
securities in the applicable prospectus supplement.
If the purchase price of any of the debt securities is payable in one or
more foreign currencies or currency units or if any debt securities are
denominated in one or more foreign currencies or currency units or if the
principal of, premium, if any, or interest, if any, on any debt securities is
payable in one or more foreign currencies or currency units, we will set forth
the restrictions, elections, material U.S. federal income tax considerations,
specific terms and other information with respect to such issue of debt
securities and such foreign currency or currency units in the applicable
prospectus supplement.
If any index is used to determine the amount of payments of principal,
premium, if any, or interest on any series of debt securities, we will describe
the material U.S. federal income tax, accounting and other considerations
applicable thereto in the applicable prospectus supplement.
Denominations, Registration and Transfer
Unless otherwise specified in the applicable prospectus supplement, the debt
securities will be issuable only in registered form, without coupons, in
denominations of $1,000 and any integral multiple thereof. Debt securities of
any series will be exchangeable for other debt securities of the same issue and
series, of any authorized denominations of a like
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aggregate principal amount, the same original issue date, stated maturity and
bearing the same interest rate.
Holders may present each series of debt securities for exchange as provided
above, and for registration of transfer, with the form of transfer endorsed
thereon, or with a satisfactory written instrument of transfer, duly executed,
at the office of the appropriate securities registrar or at the office of any
transfer agent designated by Adelphia for such purpose and referred to in the
applicable prospectus supplement, without service charge and upon payment of
any taxes and other governmental charges as described in the indenture.
Adelphia will appoint the trustee of each series of debt securities as
securities registrar for such series under the indenture. If the applicable
prospectus supplement refers to any transfer agents, in addition to the
securities registrar initially designated by Adelphia with respect to any
series, Adelphia may at any time rescind the designation of any such transfer
agent or approve a change in the location through which any such transfer agent
acts, provided that Adelphia maintains a transfer agent in each place of
payment for the series. Adelphia may at any time designate additional transfer
agents with respect to any series of debt securities.
In the event of any redemption, neither Adelphia nor the trustee will be
required to:
. issue, register the transfer of or exchange debt securities of any
series during a period beginning at the opening of business 15 days
before the day of mailing of a notice for redemption of debt securities
of that series, and ending at the close of business on the day of
mailing of the relevant notice of redemption, or
. transfer or exchange any debt securities so selected for redemption,
except, in the case of any debt securities being redeemed in part, any
portion not being redeemed.
Global Debt Securities
Unless otherwise specified in the applicable prospectus supplement, the debt
securities of a series may be issued in whole or in part in the form of one or
more global securities that we will deposit with, or on behalf of, a depositary
identified in the prospectus supplement relating to such series. Global debt
securities may be issued only in fully registered form and in either temporary
or permanent form. Unless and until it is exchanged in whole or in part for the
individual debt securities represented by it, a global debt security may not be
transferred except as a whole by the depositary for the global debt security to
a nominee of the depositary or by a nominee of the depositary to the depositary
or another nominee of the depositary or by the depositary or any nominee to a
successor depositary or any nominee of the successor.
The specific terms of the depositary arrangement with respect to a series of
debt securities will be described in the prospectus supplement relating to the
series. Adelphia anticipates that the following provisions will generally apply
to depositary arrangements.
Upon the issuance of a global debt security, and the deposit of the global
debt security with or on behalf of the applicable depositary, the depositary
for the global debt security or
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its nominee will credit on its book-entry registration and transfer system, the
respective principal amounts of the individual debt securities represented by
the global debt security to the accounts of persons, more commonly known as
participants, that have accounts with the depositary. These accounts will be
designated by the dealers, underwriters or agents with respect to the debt
securities or by Adelphia if the debt securities are offered and sold directly
by Adelphia. Ownership of beneficial interests in a global debt security will
be limited to participants or persons that may hold interests through
participants. Ownership of beneficial interests in the global debt security
will be shown on, and the transfer of that ownership will be effected only
through, records maintained by the applicable depositary or its nominee with
respect to interests of participants and the records of participants with
respect to interests of persons who hold through participants. The laws of some
states require that certain purchasers of securities take physical delivery of
the securities in definitive form. These limits and laws may impair the ability
to transfer beneficial interests in a global debt security.
So long as the depositary for a global debt security, or its nominee, is the
registered owner of the global debt security, the depositary or its nominee, as
the case may be, will be considered the sole owner or holder of the debt
securities represented by the global debt security for all purposes under the
indenture. Except as provided below, owners of beneficial interests in a global
debt security will not be entitled to have any of the individual debt
securities of the series represented by the global debt security registered in
their names, will not receive or be entitled to receive physical delivery of
any debt securities of the series in definitive form and will not be considered
the owners or holders of them under the indenture.
Payments of principal of, and premium, if any, and interest on individual
debt securities represented by a global debt security registered in the name of
a depositary or its nominee will be made to the depositary or its nominee, as
the case may be, as the registered owner of the global debt security
representing the debt securities. None of Adelphia, or the trustee, any paying
agent, or the securities registrar for the debt securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interest of the global debt
security for the debt securities or for maintaining, supervising or reviewing
any records relating to those beneficial ownership interests.
Adelphia expects that the depositary for a series of debt securities or its
nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent global debt security representing any of the debt
securities, immediately will credit participants' accounts with payments in
amounts proportionate to their respective beneficial interest in the principal
amount of the global debt security for the debt securities as shown on the
records of the depositary or its nominee. Adelphia also expects that payments
by participants to owners of beneficial interests in the global debt security
held through the participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers in bearer form or registered in "street name." These payments will
be the responsibility of these participants.
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Unless otherwise specified in the applicable prospectus supplement, if the
depositary for a series of debt securities is at any time unwilling, unable or
ineligible to continue as depositary and a successor depositary is not
appointed by Adelphia within 90 days, Adelphia will issue individual debt
securities of the series in exchange for the global debt security representing
the series of debt securities. In addition, unless otherwise specified in the
applicable prospectus supplement, Adelphia may at any time and in its sole
discretion, subject to any limitations described in the prospectus supplement
relating to the debt securities, determine not to have any debt securities of
the series represented by one or more global debt securities and, in such
event, will issue individual debt securities of the series in exchange for such
global debt securities. Further, if Adelphia so specifies with respect to the
debt securities of a series, an owner of a beneficial interest in a global debt
security representing debt securities of the series may, on terms acceptable to
Adelphia, the trustee and the depositary for the global debt security, receive
individual debt securities of the series in exchange for such beneficial
interests, subject to any limitations described in the prospectus supplement
relating to the debt securities. In any such instance, an owner of a beneficial
interest in a global debt security will be entitled to physical delivery of
individual debt securities of the series represented by the global debt
security equal in principal amount to its beneficial interest and to have the
debt securities registered in its name. Individual debt securities of the
series so issued will be issued in denominations, unless otherwise specified by
Adelphia, of $1,000 and integral multiples thereof. The applicable prospectus
supplement may specify other circumstances under which individual debt
securities may be issued in exchange for the global debt security representing
any debt securities.
Payment and Paying Agents
Unless otherwise indicated in the applicable prospectus supplement, payment
of principal of, and premium, if any, and any interest on debt securities will
be made at the office of the trustee in New York or at the office of such
paying agent or paying agents as Adelphia may designate from time to time in
the applicable prospectus supplement, except that at the option of Adelphia
payment of any interest may be made:
. except in the case of global debt securities, by check mailed to the
address of the person or entity entitled thereto as such address shall
appear in the securities register; or
. by transfer to an account maintained by the person or entity entitled
thereto as specified in the securities register, provided that proper
transfer instructions have been received by the regular record date.
Unless otherwise indicated in the applicable prospectus supplement, we
will make payment of any interest on debt securities to the person or
entity in whose name the debt security is registered at the close of
business on the regular record date for the interest payment, except in
the case of defaulted interest. Adelphia may at any time designate
additional paying agents or rescind the designation of any paying agent;
however, Adelphia will at all times be required to maintain a paying
agent in each place of payment for each series of debt securities.
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Any moneys deposited with the trustee or any paying agent, or held by
Adelphia in trust, for the payment of the principal of, and premium, if any, or
interest on any debt security and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable will, at
the request of Adelphia, be repaid to Adelphia or released from such trust, as
applicable, and the holder of the debt security will thereafter look, as a
general unsecured creditor, only to Adelphia for payment.
Option to Defer Interest Payments or to Pay-in-Kind
If provided in the applicable prospectus supplement, Adelphia will have the
right, at any time and from time to time during the term of any series of debt
securities, to defer the payment of interest for such number of consecutive
interest payment periods as may be specified in the applicable prospectus
supplement, subject to the terms, conditions and covenants, if any, specified
in such prospectus supplement, provided that an extension period may not extend
beyond the stated maturity of the final installment of principal of the series
of debt securities. If provided in the applicable prospectus supplement,
Adelphia will have the right, at any time and from time to time during the term
of any series of debt securities, to make payments of interest by delivering
additional debt securities of the same series. Certain material U.S. federal
income tax consequences and special considerations applicable to the debt
securities will be described in the applicable prospectus supplement.
Subordination
Except as set forth in the applicable prospectus supplement, the
subordinated indenture provides that the subordinated debt securities are
subordinated and junior in right of payment to all senior indebtedness of
Adelphia. If:
. Adelphia defaults in the payment of any principal, or premium, if any,
or interest on any senior indebtedness when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or
declaration or otherwise; or
. an event of default occurs with respect to any senior indebtedness
permitting the holders thereof to accelerate the maturity thereof and
written notice of such event of default, requesting that payments on
subordinated debt securities cease, is given to Adelphia by the holders
of senior indebtedness,
then unless and until the default in payment or event of default shall have
been cured or waived or shall have ceased to exist, no direct or indirect
payment, in cash, property or securities, by set-off or otherwise, will be made
or agreed to be made on account of the subordinated debt securities or interest
thereon or in respect of any repayment, redemption, retirement, purchase or
other acquisition of subordinated debt securities.
Except as set forth in the applicable prospectus supplement, the
subordinated indenture provides that in the event of:
. any insolvency, bankruptcy, receivership, liquidation, reorganization,
readjustment, composition or other similar proceeding relating to
Adelphia, its creditors or its property;
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. any proceeding for the liquidation, dissolution or other winding-up of
Adelphia, voluntary or involuntary, whether or not involving insolvency
or bankruptcy proceedings;
. any assignment by Adelphia for the benefit of creditors; or
. any other marshaling of the assets of Adelphia;
all present and future senior indebtedness, including, without limitation,
interest accruing after the commencement of the proceeding, assignment or
marshaling of assets, will first be paid in full before any payment or
distribution, whether in cash, securities or other property, will be made by
Adelphia on account of subordinated debt securities. In that event, any
payment or distribution, whether in cash, securities or other property, other
than securities of Adelphia or any other corporation provided for by a plan of
reorganization or a readjustment, the payment of which is subordinate, at
least to the extent provided in the subordination provisions of the indenture,
to the payment of all senior indebtedness at the time outstanding and to any
securities issued in respect thereof under any such plan of reorganization or
readjustment and other than payments made from any trust described in the
"Satisfaction and Discharge; Defeasance" below, which would otherwise but for
the subordination provisions be payable or deliverable in respect of
subordinated debt securities, including any such payment or distribution which
may be payable or deliverable by reason of the payment of any other
indebtedness of Adelphia being subordinated to the payment of subordinated
debt securities will be paid or delivered directly to the holders of senior
indebtedness, or to their representative or trustee, in accordance with the
priorities then existing among such holders until all senior indebtedness
shall have been paid in full. No present or future holder of any senior
indebtedness will be prejudiced in the right to enforce subordination of the
indebtedness evidenced by subordinated debt securities by any act or failure
to act on the part of Adelphia.
The term "senior indebtedness" is defined as the principal, premium, if
any, and interest on:
. all indebtedness of Adelphia, whether outstanding on the date of the
issuance of subordinated debt securities or thereafter created, incurred
or assumed, which is for money borrowed, or which is evidenced by a note
or similar instrument given in connection with the acquisition of any
business, properties or assets, including securities;
. any indebtedness of others of the kinds described in the first bullet
point above for the payment of which Adelphia is responsible or liable
as guarantor or otherwise; and
. amendments, renewals, extensions and refundings of any such
indebtedness;
unless in any instrument or instruments evidencing or securing such
indebtedness or pursuant to which the same is outstanding, or in any such
amendment, renewal, extension or refunding, it is expressly provided that such
indebtedness is not superior in right of payment to subordinated debt
securities. The senior indebtedness will continue to be senior
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indebtedness and entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any term of the senior
indebtedness or extension or renewal of the senior indebtedness.
Except as provided in the applicable prospectus supplement, the subordinated
indenture for a series of subordinated debt does not limit the aggregate amount
of senior indebtedness that may be issued by Adelphia. As of December 31, 1998,
senior indebtedness of the Adelphia Parent Company aggregated approximately
$1,810,212,000. In addition, because Adelphia is a holding company, the
subordinated debt securities are effectively subordinated to all existing and
future liabilities of Adelphia's subsidiaries.
Modification of Indentures
From time to time, Adelphia and the trustees may modify the indentures
without the consent of any holders of any series of debt securities with
respect to some matters, including:
. to cure any ambiguity, defect or inconsistency or to correct or
supplement any provision which may be inconsistent with any other
provision of the indenture;
. to qualify, or maintain the qualification of, the indentures under the
Trust Indenture Act; and
. to make any change that does not materially adversely affect the
interests of any holder of such series of debt securities.
In addition, under the indentures, Adelphia and the trustee may modify some
rights, covenants and obligations of Adelphia and the rights of holders of any
series of debt securities with the written consent of the holders of at least a
majority in aggregate principal amount of the series of outstanding debt
securities; but no extension of the maturity of any series of debt securities,
reduction in the interest rate or extension of the time for payment of
interest, change in the optional redemption or repurchase provisions in a
manner adverse to any holder of the series of debt securities, other
modification in the terms of payment of the principal of, or interest on, the
series of debt securities, or reduction of the percentage required for
modification, will be effective against any holder of the series of outstanding
debt securities without the holder's consent.
In addition, Adelphia and the trustees may execute, without the consent of
any holder of the debt securities, any supplemental indenture for the purpose
of creating any new series of debt securities.
Events of Default
The indentures provide that any one or more of the following described
events with respect to a series of debt securities that has occurred and is
continuing constitutes an "event of default" with respect to that series of
debt securities:
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. failure for 60 days to pay any interest or any sinking fund payment on
the series of debt securities when due, (subject to the deferral of any
due date in the case of an extension period);
. failure to pay any principal or premium, if any, on the series of the
debt securities when due whether at maturity, upon redemption, by
declaration or otherwise;
. failure to observe or perform in any material respect certain other
covenants contained in the indenture for 90 days after written notice
has been given to Adelphia from the trustee or the holders of at least
25% in principal amount of the series of outstanding debt securities;
. default resulting in acceleration of other indebtedness of Adelphia for
borrowed money where the aggregate principal amount so accelerated
exceeds $25 million and the acceleration is not rescinded or annulled
within 30 days after the written notice thereof to Adelphia by the
trustee or to Adelphia and the trustee by the holders of 25% in
aggregate principal amount of the debt securities of the series then
outstanding, provided that the event of default will be remedied, cured
or waived if the default that resulted in the acceleration of such other
indebtedness is remedied, cured or waived; or
. certain events in bankruptcy, insolvency or reorganization of Adelphia.
The holders of a majority in outstanding principal amount of the series of
debt securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the trustee of the
series. The trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the series may declare the principal due and
payable immediately upon an event of default. The holders of a majority in
aggregate outstanding principal amount of the series may annul the declaration
and waive the default if the default (other than the non-payment of the
principal of the series which has become due solely by the acceleration) has
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the
trustee of the series.
The holders of a majority in outstanding principal amount of a series of
debt securities affected thereby may, on behalf of the holders of all the
holders of the series of debt securities, waive any past default, except a
default in the payment of principal or interest, unless the default has been
cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the
trustee of the series, or a default in respect of a covenant or provision which
under the related indenture cannot be modified or amended without the consent
of the holder of each outstanding debt security of the series. Adelphia is
required to file annually with the trustees a certificate as to whether or not
Adelphia is in compliance with all the conditions and covenants applicable to
it under the indentures.
In case an event of default shall occur and be continuing as to a series of
debt securities, the trustee of the series will have the right to declare the
principal of and the interest on the
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debt securities, and any other amounts payable under the indenture, to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the debt securities.
No holder of any debt securities will have any right to institute any
proceeding with respect to the indenture or for any remedy thereunder, unless
the holder shall have previously given to the trustee written notice of a
continuing event of default and unless also the holders of at least 25% in
aggregate principal amount of the outstanding debt securities of the series
shall have made written request and offered reasonably indemnity to the trustee
of the series to institute the proceeding as a trustee, and unless the trustee
shall not have received from the holders of a majority in aggregate principal
amount of the outstanding debt securities of the class a direction inconsistent
with the request and shall have failed to institute the proceeding within 60
days. However, these limitations do not apply to a suit instituted by a holder
of a debt security for enforcement of payment of the principal or interest on
the debt security on or after the respective due dates expressed in the debt
security.
Consolidation, Merger, Sale of Assets and Other Transactions
Unless otherwise indicated in the applicable prospectus supplement, the
indentures provide that Adelphia will not consolidate with or merge into any
other person or entity or sell, assign, convey, transfer or lease its
properties and assets substantially as an entirety to any person or entity
unless:
. either Adelphia is the continuing corporation, or any successor or
purchaser is a corporation, partnership, or trust or other entity
organized under the laws of the United States of America, any State
thereof or the District of Columbia, and the successor or purchaser
expressly assumes Adelphia's obligations on the debt securities under a
supplemental indenture; and
. immediately before and after giving effect thereto, no event of default,
and no event which, after notice or lapse of time or both, would become
an event of default, shall have happened and be continuing.
Unless otherwise indicated in the applicable prospectus supplement, the
general provisions of the indentures do not afford holders of the debt
securities protection in the event of a highly leveraged or other transaction
involving Adelphia that may adversely affect holders of the debt securities.
Satisfaction and Discharge; Defeasance
The indentures provide that when, among other things, all debt securities
not previously delivered to the trustee for cancellation:
. have become due and payable, or
. will become due and payable at their stated maturity within one year,
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and Adelphia deposits or causes to be deposited with the trustee, as trust
funds in trust for the purpose, an amount in the currency or currencies in
which the debt securities are payable sufficient to pay and discharge the
entire indebtedness on the debt securities not previously delivered to the
trustee for cancellation, for the principal, and premium, if any, and interest
to the date of the deposit or to the stated maturity, as the case may be, then
the indenture will cease to be of further effect (except as to Adelphia's
obligations to pay all other sums due pursuant to the indenture and to provide
the officers' certificates and opinions of counsel described therein), and
Adelphia will be deemed to have satisfied and discharged the indenture.
The indentures provide that Adelphia may elect either:
. to terminate, and be deemed to have satisfied, all its obligations with
respect to any series of debt securities, except for the obligations to
register the transfer or exchange of such debt securities, to replace
mutilated, destroyed, lost or stolen debt securities, to maintain an
office or agency in respect of the debt securities and to compensate and
indemnify the trustee ("defeasance"); or
. to be released from its obligations with respect to certain covenants,
("covenant defeasance") upon the deposit with the trustee, in trust for
such purpose, of money and/or U.S. Government Obligations, as defined in
the indenture, which through the payment of principal and interest in
accordance with the term used will provide money, in an amount
sufficient (in the opinion of a nationally recognized firm of
independent public accountants) to pay the principal of, interest on and
any other amounts payable in respect of the outstanding debt securities
of the series.
Such a trust may be established only if, among other things, Adelphia has
delivered to the trustee an opinion of counsel (as specified in the indenture)
with regard to certain matters, including an opinion to the effect that the
holders of the debt securities will not recognize income, gain or loss for
Federal income tax purposes as a result of the deposit and discharge and will
be subject to Federal income tax on the same amounts and in the same manner and
at the same times as would have been the case if the deposit and defeasance or
covenant defeasance, as the case may be, had not occurred.
Redemption
Unless otherwise indicated in the applicable prospectus supplement, debt
securities will not be subject to any sinking fund requirements.
Unless otherwise indicated in the applicable prospectus supplement, Adelphia
may, at its option, redeem the debt securities of any series in whole at any
time or in part from time to time, at the redemption price set forth in the
applicable prospectus supplement plus accrued and unpaid interest to the date
fixed for redemption, and debt securities in denominations larger than $1,000
may be redeemed in part but only in integral multiples of $1,000. If the debt
securities of any series are so redeemable only on or after a specified date or
upon the satisfaction of additional conditions, the applicable prospectus
supplement will specify the date or describe the conditions.
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Adelphia will mail notice of any redemption at least 30 days but not more
than 60 days before the redemption date to each holder of debt securities to be
redeemed at the holder's registered address. Unless Adelphia defaults in the
payment of the redemption price, on and after the redemption date interest
shall cease to accrue on the debt securities or portions thereof called for
redemption.
Conversion or Exchange
If and to the extent indicated in the applicable prospectus supplement, the
debt securities of any series may be convertible or exchangeable into other
securities. The specific terms on which debt securities of any series may be so
converted or exchanged will be set forth in the applicable prospectus
supplement. These terms may include provisions for conversion or exchange,
either mandatory, at the option of the holder, or at the option of Adelphia, in
which case the number of shares of other securities to be received by the
holders of debt securities would be calculated as of a time and in the manner
stated in the applicable prospectus supplement.
Certain Covenants
The indentures contain certain covenants regarding, among other matters,
corporate existence, payment of taxes and reports to holders of debt
securities. If and to the extent indicated in the applicable prospectus
supplement, these covenants may be removed or additional covenants added with
respect to any series of debt securities.
Governing Law
The indentures and the debt securities will be governed by and construed in
accordance with the laws of the State of New York.
Information Concerning the Trustees
Each trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to these provisions, each trustee is under no obligation
to exercise any of the powers vested in it by the indenture at the request of
any holder of the debt securities, unless offered reasonable indemnity by the
holder against the costs, expenses and liabilities which might be incurred
thereby. Each trustee is not required to expend or risk its own funds or
otherwise incur personal financial liability in the performance of its duties
if the trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
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DESCRIPTION OF CAPITAL STOCK
The following description of the capital stock of Adelphia and certain
provisions of Adelphia's Certificate of Incorporation and Bylaws as of April
18, 1999 is a summary and is qualified in its entirety by Adelphia's
Certificate of Incorporation and Bylaws, which documents are exhibits to the
registration statement covering this prospectus.
Adelphia's authorized capital stock consists of 200,000,000 shares of Class
A common stock, 25,000,000 shares of Class B common stock, and 5,000,000 shares
of preferred stock.
Common Stock
Dividends. Holders of Class A common stock and Class B common stock are
entitled to receive such dividends as may be declared by Adelphia's Board of
Directors out of funds legally available for this purpose, but only after
payment of dividends required to be paid on outstanding shares of any other
class or series of stock having preference over common stock as to dividends.
No dividend may be declared or paid in cash or property on either class of
common stock, however, unless simultaneously a dividend is paid on the other
class of common stock as follows. In the event a cash dividend is paid, the
holders of Class A common stock will be paid a cash dividend per share equal to
105% of the amount payable per share of Class B common stock. In the event of a
property dividend, holders of each class of common stock are entitled to
receive the same value per share of common stock outstanding. In the case of
any stock dividend, holders of Class A common stock are entitled to receive the
same percentage dividend (payable in Class A common stock) as the holders of
Class B common stock receive (payable in Class B common stock).
Voting Rights. Holders of Class A common stock and Class B common stock vote
as a single class on all matters submitted to a vote of the stockholders, with
each share of Class A common stock entitled to one vote and each share of Class
B common stock entitled to ten votes, except:
. for the election of directors, and
. as otherwise provided by law.
In the annual election of directors, the holders of Class A common stock,
voting as a separate class, are entitled to elect one of Adelphia's directors.
The holders of Class A common stock and Class B common stock, voting as a
single class with each share of Class A common stock entitled to one vote and
each share of Class B common stock entitled to ten votes, are entitled to elect
the remaining directors. Consequently, holders of Class B common stock have
sufficient voting power to elect the remaining seven members of the current
eight-member board of directors. Holders of Class A common stock and Class B
common stock are not entitled to cumulate votes in the election of directors.
Under Delaware law and Adelphia's Certificate of Incorporation, the affirmative
vote of a majority of the outstanding shares of Class A common stock is
required to approve, among other matters, a change in the powers, preferences
or special rights of the shares of Class A common stock
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so as to affect them adversely, but is not required to approve an increase or
decrease in the number of authorized shares of Class A common stock.
Liquidation Rights. Upon liquidation, dissolution or winding up of Adelphia,
any distributions to holders of any class of common stock would only be made
after payment in full of creditors and provision for the preference of any
other class or series of stock having a preference over the common stock upon
liquidation, dissolution or winding up that may then be outstanding.
Thereafter, the holders of Class A common stock are entitled to a preference of
$1.00 per share. After this amount is paid, holders of the Class B common stock
are entitled to receive $1.00 per share. Any remaining amount would then be
shared ratably by both classes.
Other Provisions. Each share of Class B common stock is convertible at the
option of its holder into one share of Class A common stock at any time. The
holders of Class A common stock and Class B common stock are not entitled to
preemptive or subscription rights. Neither the Class A common stock nor the
Class B common stock may be subdivided, consolidated, reclassified or otherwise
changed unless concurrently the other class of common stock is subdivided,
consolidated, reclassified or otherwise changed in the same proportion and in
the same manner.
Preferred Stock
The 5,000,000 shares of authorized preferred stock may be issued with such
designations, powers, preferences and other rights and qualifications,
limitations and restrictions thereof as Adelphia's board of directors may
authorize without further action by Adelphia's stockholders, including but not
limited to:
. the distinctive designation of each series and the number of shares that
will constitute the series;
. the voting rights, if any, of shares of the series;
. the dividend rate on the shares of the series, any restriction,
limitation or condition upon the payment of dividends, whether dividends
will be cumulative and the dates on which dividends are payable;
. the prices at which, and the terms and conditions on which, the shares
of the series may be redeemed, if the shares are redeemable;
. the purchase or sinking fund provisions, if any, for the purchase or
redemption of shares of the series;
. any preferential amount payable upon shares of the series in the event
of the liquidation, dissolution or winding up of Adelphia or the
distribution of its assets;
. the prices or rates of conversion at which, and the terms and conditions
on which, the shares of such series may be converted into other
securities, if such shares are
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convertible. Adelphia has designated and has outstanding three classes
of preferred stock--8 1/8% Series C Convertible preferred stock, 13%
Cumulative Exchangeable preferred stock and 5 1/2% Series D Convertible
preferred stock. For ease of reference, we refer to the 8 1/8% Series C
convertible preferred stock as the 8 1/8% Convertible preferred stock,
to the 13% Series B Cumulative Exchangeable preferred stock as the
Exchangeable preferred stock and to the 5 1/2% Series D Convertible
preferred stock as the 5 1/2% Convertible preferred stock; and
. In connection with the foregoing designations, the maximum number of
shares authorized of 8 1/8% Convertible preferred stock, Exchangeable
preferred stock and 5 1/2% Convertible preferred stock is 100,000
shares, 1,500,000 shares and 2,875,000 shares, respectively. The 8 1/8%
Convertible preferred stock, Exchangeable preferred stock and 5 1/2%
Convertible preferred stock rank senior to the common stock of Adelphia
with respect to dividends and liquidation. The 8 1/8% Convertible
preferred stock, Exchangeable preferred stock and 5 1/2% Convertible
preferred stock rank equal in right of payment as to dividends and upon
liquidation, dissolution or winding-up of Adelphia, except that no cash
dividends nor any distributions may be declared or paid on, nor any
redemptions made with respect to the Exchangeable preferred stock or the
5 1/2% Convertible preferred stock unless full cumulative dividends have
been paid on all outstanding shares of 8 1/8% Convertible preferred
stock for all prior dividend periods.
8 1/8% Convertible Preferred Stock. The 8 1/8% Convertible preferred stock
accrues cumulative dividends at the rate of 8 1/8% per annum, or $81.25 per
share of the 8 1/8% Convertible preferred stock per annum. The 8 1/8%
Convertible preferred stock has a liquidation preference of $1,000 per share.
Upon any voluntary or involuntary liquidation, dissolution or winding-up of
the affairs of Adelphia, the holders of the 8 1/8% Convertible preferred stock
are entitled to receive the liquidation preference for the 8 1/8% Convertible
preferred stock, plus any accrued but unpaid dividends thereon, and no more.
Neither the voluntary sale, conveyance, exchange or transfer, for cash, shares
of stock, securities or other consideration, of all or substantially all of
the property or assets of Adelphia nor the consolidation or merger of Adelphia
with or into one or more corporations will be deemed to be a voluntary or
involuntary liquidation, dissolution or winding-up of Adelphia, unless the
sale, conveyance, exchange or transfer shall be in connection with a
liquidation, dissolution or winding-up of the business of Adelphia.
Each share of 8 1/8% Convertible preferred stock is convertible based upon
its stated liquidation preference into shares of Class A common stock of
Adelphia at any time at the election of the holder of it at a conversion price
of $8.48 per share of Adelphia Class A common stock, or approximately 117.9245
shares of Class A common stock per share of 8 1/8% Convertible preferred
stock. The conversion price is subject to adjustment if Adelphia pays a
dividend in shares of Class A common stock or subdivides, combines or
reclassifies the shares of Class A common stock or distributes rights to
purchase common stock or makes certain other distributions to holders of
common stock. The 8 1/8% Convertible preferred stock is not entitled to vote
in the election of directors of Adelphia or upon any
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other matter, except as provided by law, unless a Voting Rights Triggering
Event, as defined in the related Certificate of Designation, occurs with
respect to the 8 1/8% Convertible preferred stock. If this occurs, the board of
directors will be expanded by two seats, the directors for which shall then be
elected by the holders of the 8 1/8% Convertible preferred stock. The 8 1/8%
Convertible preferred stock is not subject to mandatory redemption.
The 8 1/8% Convertible preferred stock may be redeemed at the option of
Adelphia, in whole or in part, at any time on or after August 1, 2000 at 104%,
102% and 100% of the liquidation preference of the 8 1/8% Convertible preferred
stock plus accrued dividends in the years beginning August 1, 2000, 2001 and
2002 and thereafter, respectively.
Exchangeable Preferred Stock. The shares of Exchangeable preferred stock are
redeemable at the option of Adelphia, on or after July 15, 2002. Adelphia is
required, subject to certain conditions, to redeem all of the Exchangeable
preferred stock outstanding on July 15, 2009, at a redemption price equal to
100% of the liquidation preference thereof, plus accumulated and unpaid
dividends to the date of redemption. Dividends on the Exchangeable preferred
stock accrue at a rate of 13% of the liquidation preference per annum and are
payable semiannually. The Exchangeable preferred stock is not entitled to vote
in the election of directors of Adelphia or upon any other matter, except as
provided by law, unless a Voting Rights Triggering Event, as defined in the
related Certificate of Designation, occurs with respect to the Exchangeable
preferred stock. If this occurs, the board of directors will be expanded by two
seats, the directors for which shall then be elected by the holders of the
Exchangeable preferred stock.
5 1/2% Convertible Preferred Stock. The 5 1/2% Convertible preferred stock
accrues cumulative dividends at the rate of 5 1/2% per annum, or $11.00 per
share of the 5 1/2% Convertible preferred stock per annum. The 5 1/2%
Convertible preferred stock has a liquidation preference of $200 per share.
Upon any voluntary or involuntary liquidation, dissolution or winding-up of the
affairs of Adelphia, the holders of the 5 1/2% Convertible preferred stock are
entitled to receive the liquidation preference for the 5 1/2% Convertible
preferred stock, plus any accrued but unpaid dividends thereon, and no more.
Neither the voluntary sale, conveyance, exchange or transfer, for cash, shares
of stock, securities or other consideration, of all or substantially all of the
property or assets of Adelphia nor the consolidation or merger of Adelphia with
or into one or more corporations will be deemed to be a voluntary or
involuntary liquidation, dissolution or winding-up of Adelphia, unless the
sale, conveyance, exchange or transfer shall be in connection with a
liquidation, dissolution or winding-up of the business of Adelphia.
Each share of 5 1/2% Convertible preferred stock is convertible based upon
its stated liquidation preference into shares of Class A common stock of
Adelphia at any time at the election of the holder of it at a conversion price
of $81.45 per share of Adelphia Class A common stock, or approximately 2.45549
shares of Class A common stock per share of 5 1/2% Convertible preferred stock.
The conversion price is subject to adjustment in certain circumstances, such as
if Adelphia pays a dividend in shares of Class A common stock or subdivides,
combines or reclassifies the shares of Class A common stock or distributes
rights to purchase common stock or makes certain other distributions to holders
of Class A
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common stock. The 5 1/2% Convertible preferred stock is not entitled to vote in
the election of directors of Adelphia or upon any other matter, except as
provided by law, unless dividends are in arrears in an amount equal to at least
six quarters. If this occurs, the board of directors will be expanded by two
seats, the directors for which shall then be elected by the holders of the 5
1/2% Convertible preferred stock and serve until the arrearage is eliminated.
The 5 1/2% Convertible preferred stock is not subject to mandatory redemption.
The 5 1/2% Convertible preferred stock may be redeemed at the option of
Adelphia, in whole or in part, at any time on or after May 1, 2002, at the
option of Adelphia in shares of Class A common stock at a redemption price of
$206 per share plus accrued and unpaid dividends, if any, to the redemption
date, or for cash at a redemption price of $200 per share plus accrued and
unpaid dividends.
The rights of holders of shares of common stock as described above will be
subject to, and may be adversely affected by, the rights of holders of any
additional classes of preferred stock that may be designated and issued in the
future.
We will describe the particular terms and conditions of a series of
preferred stock offered by a prospectus supplement in the prospectus supplement
relating to such series of preferred stock. The applicable prospectus
supplement or prospectus supplements will describe the following terms of each
series of preferred stock being offered:
. its title;
. the number of shares offered, any liquidation preference per share and
the purchase price;
. any applicable dividend rate(s), period(s) and/or payment date(s) or
method(s) of calculation;
. if dividends apply whether they shall be cumulative or non-cumulative
and, if cumulative, the date from which dividends shall accumulate;
. any procedures for any auction and remarketing;
. any provisions for a sinking fund;
. any provisions for redemption;
. any listing of such preferred stock on any securities exchange or
market;
. the terms and conditions, if applicable, upon which it will be
convertible into common stock or another series of preferred stock of
Adelphia, including the conversion price (or manner of calculation
thereof) and conversion period;
. the terms and conditions, if applicable, upon which it will be
exchangeable into debt securities of Adelphia, including the exchange
price (or manner of calculation thereof) and exchange period;
. any voting rights;
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. a discussion of any applicable material and/or special United States
federal income tax considerations;
. whether interests in that series of preferred stock will be represented
by depositary shares;
. its relative ranking and preferences as to any dividend rights and
rights upon liquidation, dissolution or winding up of the affairs of
Adelphia;
. any limitations on the future issuance of any class or series of
preferred stock ranking senior to or on a parity with the series of
preferred stock being offered as to dividend rights and rights upon
liquidation, dissolution or winding up of the affairs of Adelphia; and
. any other specific terms, preferences, rights, limitations or
restrictions.
Transfer Agent
The Transfer Agent and Registrar for the Class A common stock, the
Exchangeable preferred stock and the 5 1/2% Convertible preferred stock is
American Stock Transfer & Trust Company. The Transfer Agent and Registrar for
the Class B common stock is Adelphia.
BOOK ENTRY ISSUANCE
Unless otherwise specified in the applicable prospectus supplement, DTC will
act as depositary for securities issued in the form of global securities. Such
securities will be issued only as fully-registered securities registered in the
name of Cede & Co. (DTC's nominee). One or more fully-registered global
securities will be issued for such securities representing in the aggregate the
total number of such securities, and will be deposited with or on behalf of
DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants deposit with DTC. DTC also facilitates
the settlement among its participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic computerized
book-entry changes in participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. DTC is owned by a number of its direct
participants and by the New York Stock Exchange, the American Stock Exchange
and the National Association of Securities Dealers, Inc. Access to the DTC
system is also available to others, known as indirect participants, such as
securities brokers and dealers, banks and trust companies that clear through or
maintain custodial relationships with direct participants, either directly or
indirectly. The rules applicable to DTC and its participants are on file with
the Commission.
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Purchases of securities within the DTC system must be made by or through
direct participants, which will receive a credit for such Securities on DTC's
records. The ownership interest of each actual purchaser of each Security,
commonly referred to as the beneficial owner is in turn to be recorded on the
direct and indirect participants' records. Beneficial owners will not receive
written confirmation from DTC of their purchases, but beneficial owners are
expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the direct
or indirect participants through which the beneficial owners purchased
securities. Transfers of ownership interests in securities issued in the form
of global securities are to be accomplished by entries made on the books of
participants acting on behalf of beneficial owners. Beneficial owners will not
receive certificates representing their ownership interests in such securities,
except in the event that use of the book-entry system for such securities is
discontinued.
DTC has no knowledge of the actual beneficial owners of the securities
issued in the form of global securities. DTC's records reflect only the
identity of the direct participants to whose accounts such securities are
credited, which may or may not be the beneficial owners. The participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Although voting with respect to securities issued in the form of global
securities is limited to the holders of record of such securities, in those
instances in which a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to such securities. Under its usual procedures,
DTC would mail an omnibus proxy to the issuer of such securities as soon as
possible after the record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to those direct participants to whose accounts such
securities are credited on the record date, identified in a listing attached to
the omnibus proxy.
Payments in respect of securities issued in the form of global securities
will be made by the issuer of such securities to DTC. DTC's practice is to
credit direct participants' accounts on the relevant payment date in accordance
with their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payments on such payment date. Payments by
participants to beneficial owners will be governed by standing instructions and
customary practices and will be the responsibility of such participant and not
of DTC or Adelphia, subject to any statutory or regulatory requirements as may
be in effect from time to time. Payments to DTC are the responsibility of the
issuer of the applicable securities, disbursement of such payments to direct
participants is the responsibility of DTC, and disbursements of such payments
to the beneficial owners is the responsibility of direct and indirect
participants.
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DTC may discontinue providing its services as depositary with respect to any
securities at any time by giving reasonable notice to the issuer of such
securities. In the event that a successor depositary is not obtained,
individual security certificates representing such securities are required to
be printed and delivered. Adelphia, at its option, may decide to discontinue
use of the system of book-entry transfers through DTC or a successor
depositary.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that Adelphia believe to be accurate, but
Adelphia assumes no responsibility for the accuracy thereof. Adelphia has no
responsibility for the performance by DTC or its Participants of their
respective obligations as described herein or under the rules and procedures
governing their respective operations.
PLAN OF DISTRIBUTION
Any of the securities being offered under this prospectus may be sold in any
one or more of the following ways from time to time:
. through agents;
. to or through underwriters;
. through dealers; and
. directly by Adelphia to purchasers.
The distribution of the securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Securities may also be
offered or sold through depository receipts issued by a depository institution.
Offers to purchase securities may be solicited by agents designated by
Adelphia from time to time. Any agent involved in the offer or sale of the
securities under this prospectus will be named, and any commissions payable by
Adelphia to these agents will be set forth, in a related prospectus supplement.
Unless otherwise indicated in a prospectus supplement, any agent will be acting
on a reasonable best efforts basis for the period of its appointment. Any agent
may be deemed to be an underwriter, as that term is defined in the Securities
Act, of the securities so offered and sold.
If securities are sold by means of an underwritten offering, Adelphia will
execute an underwriting agreement with an underwriter or underwriters at the
time an agreement for such sale is reached, and the names of the specific
managing underwriter or underwriters, as well as any other underwriters, the
respective amounts underwritten and the terms of the transaction, including
commissions, discounts and any other compensation of the underwriters and
dealers, if any, will be set forth in a related prospectus supplement. That
prospectus supplement and this prospectus will be used by the underwriters to
make resales of the securities. If underwriters are used in the sale of any
securities in connection with this prospectus, those securities will be
acquired by the underwriters for their own account and
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may be resold from time to time in one or more transactions, including
negotiated transactions, at fixed public offering prices or at varying prices
determined by the underwriters and Adelphia at the time of sale. Securities may
be offered to the public either through underwriting syndicates represented by
managing underwriters or directly by one or more underwriters. If any
underwriter or underwriters are used in the sale of securities, unless
otherwise indicated in a related prospectus supplement, the underwriting
agreement will provide that the obligations of the underwriters are subject to
some conditions precedent and that the underwriters with respect to a sale of
these securities will be obligated to purchase all such Securities if any are
purchased.
Adelphia may grant to the underwriters options to purchase additional
securities, to cover over-allotments, if any, at the initial public offering
price, with additional underwriting commissions or discounts, as may be set
forth in a related prospectus supplement. If Adelphia grants any over-allotment
option, the terms of that over-allotment option will be set forth in the
prospectus supplement for these securities.
If a dealer is utilized in the sale of the securities in respect of which
this prospectus is delivered, Adelphia will sell these securities to the dealer
as principal. The dealer may then resell such securities to the public at
varying prices to be determined by such dealer at the time of resale. Any such
dealer may be deemed to be an underwriter, as such term is defined in the
Securities Act, of the securities so offered and sold. The name of the dealer
and the terms of the transaction will be set forth in the prospectus supplement
relating to those offers and sales.
Offers to purchase securities may be solicited directly by Adelphia and
those sales may be made by Adelphia directly to institutional investors or
others, who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any resale of those securities. The terms of any
sales of this type will be described in the prospectus supplement.
Securities may also be offered and sold, if so indicated in the related
prospectus supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment in connection with their terms, or
otherwise, by one or more firms "remarketing firms," acting as principals for
their own accounts or as agents for Adelphia. Any remarketing firm will be
identified and the terms of its agreement, if any, with Adelphia and its
compensation will be described in a related prospectus supplement. Remarketing
firms may be deemed to be underwriters, as that term is defined in the
Securities Act, in connection with the securities remarketed by them.
If so indicated in a related prospectus supplement, Adelphia may authorize
agents and underwriters to solicit offers by certain institutions to purchase
securities from Adelphia at the public offering price set forth in a related
prospectus supplement as part of delayed delivery contracts providing for
payment and delivery on the date or dates stated in a related prospectus
supplement. Such delayed delivery contracts will be subject to only those
conditions set forth in a related prospectus supplement. A commission indicated
in a related prospectus supplement will be paid to underwriters and agents
soliciting purchases of securities pursuant to delayed delivery contracts
accepted by Adelphia.
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Agents, underwriters, dealers and remarketing firms may be entitled under
relevant agreements with Adelphia to indemnification by Adelphia against some
liabilities, including liabilities under the Securities Act, or to contribution
with respect to payments which such agents, underwriters, dealers and
remarketing firms may be required to make in respect thereof.
Each series of securities will be a new issue and, other than the Class A
common stock, which is quoted on the Nasdaq National Market, will have no
established trading market. Unless otherwise specified in a related prospectus
supplement, Adelphia will not be obligated to list any series of securities on
an exchange or otherwise. We cannot assure you that there will be any liquidity
in the trading market for any of the securities.
Agents, underwriters, dealers and remarketing firms may be customers of,
engage in transactions with, or perform services for, Adelphia and its
subsidiaries in the ordinary course of business.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, as well as proxy statements
and other information with the SEC. You may read and copy any document we file
with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549 or at its Regional Offices in Chicago, Illinois or New
York, New York. You may obtain further information about the operation of the
Public Reference Room by calling the SEC at 1-800- SEC-0330. Our SEC filings
are also available to the public over the Internet at the SEC's web site at
http://www.sec.gov, which contains reports, proxy statements and other
information regarding registrants like us that file electronically with the
SEC.
This prospectus is part of a registration statement on Form S-3 filed by us
with the SEC under the Securities Act. As permitted by SEC rules, this
prospectus does not contain all of the information included in the registration
statement and the accompanying exhibits filed with the SEC. You may refer to
the registration statement and its exhibits for more information.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with the SEC. This means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus. If we
subsequently file updating or superseding information in a document that is
incorporated by reference into this prospectus, the subsequent information will
also become part of this prospectus and will supersede the earlier information.
We are is incorporating by reference the following documents that we have
filed with the SEC:
. our Annual Report on Form 10-K for the 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
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fiscal year ended December 31, 1997 of Olympus Communications, L.P. and
Olympus Capital Corporation, as amended by Adelphia's Form 10-K/A dated
July 27, 1998;
. our Quarterly Reports on Form 10-Q for the quarters ended June 30, 1998,
September 30, 1998 and December 31, 1998;
. our Current Reports on Form 8-K for the events dated June 29, 1998, July
2, 1998, August 3, 1998, August 18, 1998, September 10, 1998, November
9, 1998, November 12, 1998, December 23, 1998, January 11, 1999,
February 22, 1999, February 23, 1999, March 5, 1999, March 30, 1999,
March 31, 1999, April 9, 1999, April 19, 1999, April 21, 1999, April 23,
1999, and April 28, 1999.
. our definitive proxy statement dated September 11, 1998 with respect to
the Annual Meeting of Stockholders held on October 6, 1998; and
. the description of our Class A common stock contained in our
registration statement filed with the SEC under Section 12 of the
Exchange Act and subsequent amendments and reports filed to update such
description.
We are also incorporating by reference into this prospectus all of our
future filings with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act until this offering has been completed.
You may obtain a copy of any of our filings which are incorporated by
reference, at no cost, by writing to or telephoning us at the following
address:
Adelphia Communications Corporation
Main at Water Street
Coudersport, Pennsylvania 16915
Attention: Investor Relations
Telephone: (814) 274-9830
You should rely only on the information provided in this prospectus or
incorporated by reference. We have not authorized anyone to provide you with
different information. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the first page of
the prospectus. We are not making this offer of securities in any state or
country in which the offer or sale is not permitted.
LEGAL MATTERS
Buchanan Ingersoll Professional Corporation, Pittsburgh, Pennsylvania will
pass upon the validity of the securities. Any required information regarding
ownership of Adelphia's securities by lawyers of such firm will be contained in
the applicable prospectus supplement. If the securities are underwritten, the
applicable prospectus supplement will also set forth whether and to what
extent, if any, a law firm for the underwriters will pass upon the validity of
the securities.
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EXPERTS
The consolidated financial statements 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 Adelphia'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.
The consolidated financial statements of FrontierVision Partners, L.P. and
subsidiaries as of December 31, 1998 and 1997, and for each of the years in the
three year period ended December 31, 1998, have been incorporated by reference
herein and in this registration statement from Adelphia's Current Report on
Form 8-K filed April 19, 1999, in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Harron Communications Corp. and
subsidiaries as of December 31, 1998 and 1997 and for each of the three years
in the period ended December 31, 1998 incorporated in this prospectus by
reference from Adelphia's Current Report on Form 8-K filed April 19, 1999 have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and has been so incorporated
in reliance upon the report of such firm given upon their authority as experts
in accounting and auditing.
The consolidated financial statements of Century Communications Corp. and
subsidiaries as of May 31, 1998 and 1997 and for each of the three years in the
period ended May 31, 1998 incorporated in this prospectus by reference from
Adelphia's Current Report on Form 8-K filed April 19, 1999 have been audited by
Deloitte & Touche LLP, independent auditors as stated in their report, which is
incorporated herein by reference, and has been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
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6,000,000 Shares
Adelphia Communications Corporation
Class A Common Stock
ADELPHIA LOGO
----------------
PROSPECTUS SUPPLEMENT
October 1, 1999
----------------
Salomon Smith Barney
Credit Suisse First Boston
Goldman, Sachs & Co.
Banc of America Securities LLC
Donaldson, Lufkin & Jenrette
Lehman Brothers
Merrill Lynch & Co.
Morgan Stanley Dean Witter
CIBC World Markets
Credit Lyonnais Securities (USA) Inc.
First Union Securities, Inc.
SG Cowen
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