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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
September 28, 1999
REGISTRATION NO. 333-81229
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ADELPHIA COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 4841 23-2417713
(State or other jurisdiction of (Primary Standard Industrial Classification (I.R.S. Employer Identification No.)
incorporation or organization) Code Number)
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ONE NORTH MAIN STREET
COUDERSPORT, PENNSYLVANIA 16915
(814) 274-9830
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
COLIN HIGGIN, ESQUIRE
DEPUTY GENERAL COUNSEL
ADELPHIA COMMUNICATIONS CORPORATION
ONE NORTH MAIN STREET
COUDERSPORT, PENNSYLVANIA 16915
(814) 274-9830
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
PLEASE ADDRESS A COPY OF ALL COMMUNICATIONS TO:
CARL E. ROTHENBERGER, JR., ESQUIRE
BUCHANAN INGERSOLL PROFESSIONAL CORPORATION
21ST FLOOR, 301 GRANT STREET
PITTSBURGH, PENNSYLVANIA 15219
(412) 562-8826
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [_]
If any of the securities being registered on this form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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7,000,000 shares Subject to Completion
ADELPHIA COMMUNICATIONS CORPORATION Dated September 28, 1999
Class A common stock
The stockholders of Adelphia Communications Corporation as described under
the caption "Selling Stockholders" on page 21 of this prospectus are offering
and selling up to 7,000,000 shares of Adelphia's Class A common stock under this
prospectus.
The Class A common stock is listed on the Nasdaq National Market. The Class
A common stock's ticker symbol is "ADLAC." On September 27, 1999, the closing
sale price on the Nasdaq National Market of a single share of the Class A common
stock was $59.88.
Our common stock also includes 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 5 for a discussion
of things you should consider when investing in our Class A common stock.
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.
The date of this prospectus is October 1, 1999.
The information in the prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the SEC is effective. This prospectus is not an offer to
sell securities and is not soliciting an offer to buy these securities in any
state where the offer is prohibited.
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TABLE OF CONTENTS
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ADELPHIA................................................................... 1
RISK FACTORS............................................................... 5
DILUTION................................................................... 21
SELLING STOCKHOLDERS....................................................... 21
USE OF PROCEEDS............................................................ 24
PLAN OF DISTRIBUTION....................................................... 24
WHERE YOU CAN FIND MORE INFORMATION........................................ 26
EXPERTS.................................................................... 27
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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
Proposed Common Stock Offering
On September 16, 1999, Adelphia announced that it filed a preliminary
prospectus supplement to its shelf registration statement with the SEC for a
public offering of approximately $400.0 million in shares of Class A common
stock.
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.
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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 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.
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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.
Pending Highland Holdings Purchase of Class B Common Stock
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 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.
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.
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Pending FrontierVision and Other Acquisitions
On February 22, 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. The 7.0 million shares being offered and sold under this
prospectus are the 7.0 million shares being exchanged for the interests in
FrontierVision being acquired by Adelphia. 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, as of September 30, 1999 Adelphia also had pending or had consummated,
agreements for acquisitions covering an aggregate of approximately 102,000
additional 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 in the third quarter of 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.
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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 before you decide to purchase shares of Adelphia Class A common
stock.
High Level Of Indebtedness
As of June 30, 1999, we owed approximately $3.8 billion and as of that
date we would have owed approximately $5.8 billion after the 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.
Adelphia has a substantial amount of debt. We borrowed this money to purchase
and to expand our cable systems and other operations and, to a lesser extent,
for investments and loans to our affiliates. At June 30, 1999, our indebtedness
totaled approximately $3.8 billion. This included approximately:
. $2.4 billion 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 its subsidiaries;
. $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 in the third quarter of 1999.
We may need to refinance significant Century indebtedness that we will
be assuming.
Century and its subsidiaries have substantial indebtedness. At May 31, 1999,
Century and its subsidiaries had long-term debt of approximately $2.0 billion
(exclusive of current maturities of $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.
5
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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 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 refinance significant FrontierVision indebtedness that we
will be assuming.
On February 23, 1999, we announced our proposed acquisition of
FrontierVision. FrontierVision and its subsidiaries have substantial
indebtedness. At June 30, 1999, FrontierVision and its subsidiaries 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.
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We will need to raise significant financing for the Harron
acquisition.
We will need to raise significant funds to pay for the $1.17 billion
acquisition of Harron.
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.
Debt service consumes a substantial portion of the cash we generate. This
could affect our ability to invest in our business in the future as well as to
react to changes in our industry or economic downturns.
Our high level of indebtedness can have important adverse consequences to us
and to you. It requires that we spend a substantial portion of the cash we get
from our business to repay the principal and interest on these debts. Otherwise,
we could use these funds for general corporate purposes or for capital
improvements. Our ability to obtain new 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 outstanding at June 30, 1999 must be repaid by
January 1, 2004 and all of it must be paid by 2009.
Our debt comes due at various times up to the year 2009, including an
aggregate of approximately $1.1 billion as of June 30, 1999, which we must pay
by December 31, 2004.
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.
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Our Business Requires Substantial Additional Financing And If We Do Not
Obtain That Financing We May Not Be Able To Upgrade Our Plant, Offer Services,
Make Payments When Due Or Refinance Existing Debt
Our business requires substantial additional financing on a continuing basis
for capital expenditures and other purposes including:
. 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 Negative Stockholders' Equity And Large Losses And We Expect
This To Continue
The Total Convertible Preferred Stock, Common Stock and Other Stockholders'
Equity at June 30, 1999 was 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 been insufficient to pay for our fixed charges and
preferred stock dividends.
Our earnings could not pay for our combined fixed charges and preferred stock
dividends during these periods by the amounts set forth in the table below,
although combined fixed charges and 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:
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Earnings Non-Cash
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Deficiency Charges
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(in thousands)
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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
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If we cannot refinance our debt including debt incurred in connection
with the pending acquisitions of FrontierVision, Century, Harron and Telesat's
interest in Olympus or obtain new loans, we would likely have to consider
various financing options. We cannot guarantee that any options available to us
would enable us to repay our debt in full.
Historically, the cash we generate from our operating activities and
borrowings has been sufficient to meet our requirements for debt service,
working capital, capital expenditures and investments in and advances to our
affiliates, and we have depended on additional borrowings to meet our liquidity
requirements. Although in the past we have been able both to refinance our debt
and to obtain new debt, there can be no guarantee that we will be able to
continue to do so in the future or that the cost to us or the other terms which
would affect us would be as favorable to us as current loans and credit
agreements. Under these circumstances, we may need to consider various financing
options, such as the sale of additional equity or some of our assets to meet the
principal 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 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.
Competition
The telecommunications services provided by Adelphia are subject to strong
competition and potential competition from various sources.
Our cable television business is subject to strong competition from several
sources which could adversely affect revenue or revenue growth.
Our cable television systems compete with other means of distributing video
to home televisions such as Direct Broadcast Satellite systems, commonly known
as DBS systems, and Multichannel Multipoint Distribution systems commonly known
as wireless cable. 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.
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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 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.
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Hyperion's operations are also subject to risk because Hyperion
competes principally with established local telephone carriers that have
long-standing utility relationships with their customers and pricing
flexibility for local telephone services
In each of the markets served by Hyperion's networks, the competitive local
exchange carrier services offered by Hyperion compete principally with the
services offered by the incumbent local telephone exchange carrier company
serving that area. Local telephone companies have long-standing relationships
with their customers, have the potential to subsidize competitive services from
monopoly service revenues, and benefit from favorable state and federal
regulations. The merger of Bell Atlantic and NYNEX created a very large 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 telephone companies could get regulatory approval to
offer long distance service in competition with Hyperion's significant
customers, some of Hyperion's major customers could lose market share.
The regional Bell operating companies can now obtain regulatory approval to
offer long distance services if they comply with the interconnection
requirements of the federal Telecommunications Act of 1996. To date, the FCC has
denied the requests for approval filed by regional Bell operating companies in
Hyperion's operating areas. However, approval of such a request could result in
decreased market share for the major long distance carriers which are among
Hyperion's significant customers. This could have a material adverse effect on
Hyperion.
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The regional Bell telephone companies continue to seek other regulatory
approvals that could significantly enhance their competitive position against
Hyperion.
Legislation has been introduced in Congress proposing to relieve the regional
Bell operating companies from the resale and unbundling requirements of the
federal Telecommunications Act of 1996 with respect to high-speed data services,
and to otherwise facilitate the deployment of such services. The adoption of
such legislation by Congress could have a material adverse effect on
Hyperion.
Potential competitors to Hyperion's telecommunications services include
the regional Bell telephone companies, AT&T, MCIWorldCom and Sprint, electric
utilities and other companies that have advantages over Hyperion.
Potential competitors for Hyperion include other competitive local exchange
carriers, incumbent local telephone companies which are not subject to regional
Bell operating companies' restrictions on offering long distance service, AT&T,
MCIWorldCom, Sprint and other long distance carriers, cable television
companies, electric utilities, microwave carriers, wireless telecommunications
providers, including cellular and Personal Communication Services (PCS), and
private networks built by large 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.
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We Are Subject To Extensive Regulation
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.
The cable television industry and the provision of 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.
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.
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The federal Telecommunications Act of 1996 may have a significant
impact on our cable television and telephone businesses.
The federal Telecommunications Act of 1996 substantially changed federal, state
and local laws and regulations governing our cable television and
telecommunications businesses. This law could 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 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
telecommunications industry will not have a material adverse effect on Hyperion.
Unequal Voting Rights Of Stockholders
Adelphia has two classes of common stock--Class A 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
directors.
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Control Of Voting Power By The Rigas Family
The Rigas family can control stockholder decisions on very important
matters.
As of September 30, 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 30, 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 shares of Class B
common stock in the Rigas Direct Placement 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.
There Are Potential Conflicts Of Interest Between Adelphia And The Rigas
Family
John J. Rigas and the other executive officers of Adelphia, including other
members of the Rigas 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.
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Holding Company Structure And Potential Impact Of Restrictive Covenants In
Subsidiary Debt Agreements
The Adelphia Parent Company directly owns no significant assets other than
stock, partnership interests and equity and other interests in our 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 Company depends on its subsidiaries and other
companies in which it has investments to fund its cash needs.
The public indentures and the credit agreements for bank and other financial
institution loans of our subsidiaries and other companies in which we have
invested, restrict their ability and the ability of the companies they own to
make payments to the 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 Receive A Return On Your Shares Through The Payment
Of Cash Dividends
Adelphia has never declared or paid cash dividends on any of its common stock
and has no intention of doing so in the foreseeable future. As a result, it is
unlikely that you will receive a return on your shares through the payment of
cash dividends.
Future Sales Of Adelphia Common Stock Could Adversely Affect Its Market
Price
Sales, or availability for sale, of a substantial number of shares of our
common stock, including sales by any pledgees of such shares, could 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 30, 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:
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<PAGE>
. for the Rigas family--up to 11,000,000 shares of Class A common stock,
80,000 shares of Series C cumulative 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;
. for the owners of FrontierVision--7,000,000 shares of Class A common stock
in connection with the pending FrontierVision acquisition and that are being
offered and sold pursuant to this prospectus, 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 issued or
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.
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<PAGE>
The Century Merger May Not Be Completed If The Required Approval Of
Century's Class A Stockholders Is Not Obtained
The Century merger requires approvals from Century's stockholders and our
stockholders. Although the Class B stockholders of Century and the controlling
stockholders of Adelphia have agreed to vote in favor of the merger, the
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 satisfy conditions to completion of the acquisitions
could jeopardize the acquisitions.
Even if Century's stockholders approve the Century merger, one or more of the
pending acquisitions may not close unless several other conditions are met.
These include:
. Receipt of all required consents of governmental authorities have been
received, except where the failure to obtain any 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 Expansion Could Involve Operational And Other Risks
Because we are experiencing a period of rapid expansion through acquisition, the
operating complexity of Adelphia, as well as the 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.
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<PAGE>
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 Stock Will Incur Immediate Dilution
Persons purchasing Class A common stock will incur immediate and substantial
net tangible book value dilution.
Year 2000 Issues Present Risks To Our Business Operations In Several Ways
The year 2000 issue refers to the potential inability of computerized systems
and technologies to properly recognize and process dates beyond 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.
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.
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<PAGE>
Forward-Looking Statements In This Prospectus Are Subject To Risks And
Uncertainties
The statements contained or incorporated by reference in this prospectus that
are not historical facts are "forward-looking statements" 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 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 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.
20
<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 $14.45 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. For example, in the April 28, 1999 Class A common stock
offering, the purchase price of a single share initially sold to the public was
$61.75 and the net tangible book value dilution per share was $82.40 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.
SELLING STOCKHOLDERS
The 7,000,000 shares offered under this prospectus have been issued to
the former owners of FrontierVision Partners, L.P. Adelphia, FrontierVision
Partners, L.P. and others are parties to the FrontierVision purchase agreement
and the related registration rights agreement. Under the purchase agreement and
registration rights agreement, Adelphia agreed prior to the closing of that
transaction to register 7,000,000 shares of Class A common stock for sale under
this prospectus. These 7,000,000 shares were issued as part of the closing of
the FrontierVision acquisition to the owners of FrontierVision as part of the
purchase price paid to them for their interest in FrontierVision Partners,
L.P.
FrontierVision Partners, L.P. is a limited partnership. FrontierVision
Partners, L.P. has a general Partner, FVP GP, L.P., and a number of direct or
indirect limited partners and they and/or their affiliates are, or may also
become, selling stockholders under this prospectus. If required, we would file
an amendment or a prospectus supplement to add additional selling stockholders.
Registration of these shares does not necessarily mean that the selling
stockholders will sell all or any of the shares.
Neither FrontierVision Partners, L.P. nor any of its former owners has
held any positions or office or had any material relationship with us, our
predecessors or affiliates during the past three years. In addition, one or
more of the selling stockholders may donate, pledge or transfer as gifts some or
all of their shares, or may pledge or transfer its or their shares for no value
to other beneficial owners. This prospectus may also be used for resales by
these pledgees, donees or transferees of the selling stockholder listed below or
its distributees and we will identify any of those pledgees, donees or
transferees in a supplement to this prospectus.
The shares listed below represent, as of September 28, 1999, all of the
shares that the selling stockholders beneficially own, the number of shares each
may offer and the number of shares each will own after the offering assuming
each of them sells all of their respective shares.
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The numbers presented under "Class A Common Shares Held After Offering" and
"Percent of Class A Common Shares Held After Offering" in the table below assume
that all of the shares held by the selling stockholders and being offered under
this prospectus are sold, and that the selling stockholders acquire no
additional shares of common stock before the completion of this offering.
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<TABLE>
<CAPTION>
Percent of
Percent of Class Class A Class A
Class A Common A Common Class A Common Common Common
Shares Held Shares Held Shares Shares Held Shares Held
Name Before Offering Before Offering Offered Hereby After Offering After Offering
- ---- --------------- ---------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
J.P. Morgan Capital Corporation 1,633,583 2.9 1,633,583 -- --
60 Wall Street SBIC Fund, L.P. 98,910 * 98,910 -- --
1818 Fund II, L.P. 1,340,008 2.4 1,340,008 -- --
Olympus Growth Fund II, L.P. 891,589 1.6 891,589 -- --
First Union Capital Partners, Inc. 1,085,974 1.9 1,085,974 -- --
Tahosa Investors 87,265 * 87,265 -- --
Kensington Investment Associates 68,435 * 68,435 -- --
Pegasus Partners 87,265 * 87,265 -- --
Prosperity Associates 14,544 * 14,544 -- --
SBF Investments Ltd. 58,176 * 58,176 -- --
L. Philips Runyon III, Nominee 58,176 * 58,176 -- --
Roth Trading Company 29,088 * 29,088 -- --
Washington Partners 14,544 * 14,544 -- --
Duff Ackerman Goodrich, LLC 457 * 457 -- --
Donald F. Bogue and Linda A.
Bogue, Trust, UTA 6/4/96 2,634 * 2,634 -- --
Daniel I. Booker 3,292 * 3,292 -- --
Daniel R. Duff 3,951 * 3,951 -- --
John M. Duff, Jr. 9,934 * 9,934 -- --
R. Thomas Goodrich 7,902 * 7,902 -- --
John M. Noerr 5,334 * 5,334 -- --
William M. Robinson 8,231 * 8,231 -- --
Leonard Schwarz 3,951 * 3,951 -- --
EOS Partners SBIC, L.P. 100,077 * 100,077 -- --
Richard King Mellon Foundation 220,097 * 220,097 -- --
Mellon Family Investment Co., IV 55,025 * 55,025 -- --
J. Cashew Corporation 22,009 * 22,009 -- --
Bertelsen Family Trust 13,756 * 13,756 -- --
John C. Unkovic 13,756 * 13,756 -- --
Roger Ahlbrandt 3,451 * 3,451 -- --
Anne McB Curtis, M.D. 5,116 * 5,116 -- --
Bruce D. Evans 5,503 * 5,503 -- --
Frances C. Hardie 4,127 * 4,127 -- --
Hardie Brothers Company 5,503 * 5,503 -- --
James H. Hardie 1,375 * 1,375 -- --
John D. Margolis Trust 3,451 * 3,451 -- --
Grover Sams 3,451 * 3,451 -- --
Augustus O. Schroeder 5,503 * 5,503 -- --
J.J. Stevenson III 3,451 * 3,451 -- --
John W. Weiser 3,451 * 3,451 -- --
Mallard Investments Limited 33,903 * 33,903 -- --
Partnership
Olympus Executive Fund, L.P. 14,404 * 14,404 -- --
Leslie Abbey 8,624 * 8,624 -- --
Jonathan Abbey 8,624 * 8,624 -- --
Michael Rothbard 8,624 * 8,624 -- --
James C. Vaughn 252,474 * 252,474 -- --
James C. Vaughn 1998 Annuity Trust 30,304 * 30,304 -- --
John S. Koo 145,710 * 145,710 -- --
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C>
John S. Koo 1998 Annuity Trust 9,470 * 9,470 -- --
All Other Selling Stockholders 505,518 * 505,518 -- --
========= ==== =========
Total 7,000,000 12.4% 7,000,000 -- --
--------- ----- ---------
</TABLE>
*Less than one percent
USE OF PROCEEDS
All net proceeds from the sale of the shares will go to the stockholders
who offer and sell them. We will not receive any proceeds from the sale of
shares by the selling stockholders.
PLAN OF DISTRIBUTION
Adelphia is registering the shares on behalf of the selling stockholders.
References in this section to selling stockholders also include any permitted
pledgees, donees or transferees identified in a supplement to this prospectus as
described above. The selling stockholders may offer their shares at various
times in one or more of the following transactions:
. in transactions, which may involve crosses or block transactions, on any
national securities exchange or quotation service on which the shares
may be listed or quoted at the time of sale;
. in the over-the-counter market;
. in private transactions other than in the over-the-counter market or
on an exchange;
. in connection with short sales of shares;
. by pledge to secure debts and other obligations;
. in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions
in standardized or over-the-counter options; or
. in a combination of any of the above transactions.
In addition, pursuant to the registration rights agreement among
Adelphia and the selling stockholders, the selling stockholders are entitled to
demand up to three underwritten offerings on the terms and conditions set forth
in the registration rights agreement. In the event of an underwritten offering
and subject to the terms of the registration rights agreement, Adelphia and the
selling stockholders will enter into an underwriting agreement and other
appropriate agreements with the underwriters participating in the underwritten
offering that will set forth the terms on which the participating underwriters
will effect sales of the shares.
The selling stockholders may sell their shares at market prices at the time
of sale, at prices related to market prices, at negotiated prices or at fixed
prices.
The selling stockholders may use underwriters or broker-dealers to sell
their shares. In effecting such sales, underwriters, brokers or dealers engaged
by the selling stockholders may
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arrange for other underwriters, brokers or dealers to participate.
Underwriters, brokers or dealers may purchase shares as principals for their own
accounts and resell such shares pursuant to this prospectus. If this happens,
the underwriters or broker-dealers will either receive discounts or commissions
from the selling stockholders, or they will receive commissions from purchasers
of shares for whom they acted as agents. The selling stockholders, any
underwriters, brokers, dealers and any other participating brokers or dealers
may be deemed to be "underwriters" within the meaning of the Securities Act of
1933 in connection with these sales, and any profits realized or commissions
received may be deemed underwriting compensation.
The selling stockholders may also enter into hedging transactions with
broker-dealers or other financial institutions. In connection with these
transactions, broker-dealers or other financial institutions may engage in short
sales of Adelphia's Class A common stock in the course of hedging the positions
they assume with selling stockholders. The selling stockholders may also enter
into options or other transactions with broker-dealers or other financial
institutions which require the delivery, to that broker-dealer or other
financial institution, of the shares offered under this prospectus. The shares
that broker-dealers or other financial institutions receive in those types of
transactions may be resold under this prospectus.
Selling stockholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act of
1933, provided they meet the criteria and conform to the requirements of that
Rule.
An affiliate of J.P. Morgan Investment Corporation, one of the selling
stockholders, has agreed to act as "preferred broker" for the selling
stockholders to effect sales and to make and receive certain notices to Adelphia
on behalf of the selling stockholders as required under the registration rights
agreement.
Affiliates of First Union Capital Partners, Inc., a selling stockholder,
have performed certain investment banking and commercial banking services for us
from time to time for which those affiliates of First Union received customary
fees and expenses.
When a particular offering of shares is made, if required, we will
distribute a prospectus supplement. This supplement will set forth the names of
the selling stockholders, the aggregate amount and type of shares being offered,
the number of such securities owned prior to and after the completion of any
such offering, and, to the extent required, the terms of the offering, including
the name or names of any underwriters, broker-dealers or agents, any discounts,
commissions and other terms constituting compensation from the selling
stockholders and any discounts, commissions or concessions allowed or reallowed
or paid to broker-dealers.
To comply with the securities law in some jurisdictions, the shares will be
offered or sold in particular jurisdictions only through registered or licensed
brokers or dealers. In addition, in some jurisdictions the shares may not be
offered or sold unless they have been registered or qualified for sale in that
jurisdictions or an exemption from registration or qualification is available
and is complied with.
To comply with rules and regulations under the Securities Exchange Act of
1934, persons engaged in a distribution of the shares may be limited in their
ability to engage in market
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activities with respect to such shares. In addition and without limiting the
foregoing, each selling stockholder will be subject to applicable provisions of
the Securities Exchange Act of 1934 and the rules and regulations thereunder,
which provisions may limit the timing of purchases and sales of any of the
shares by the selling stockholders. All of these things may affect the
marketability of the shares.
All expenses of the registration of the shares will be paid by Adelphia,
including, without limitation, Commission filing fees and expenses of compliance
with state securities or "blue sky" laws; provided, however, that the selling
stockholders will pay all underwriting discounts and selling commissions, if
any. Subject to some limitations, the selling stockholders will be indemnified
by Adelphia against civil liabilities, including liabilities under the
Securities Act of 1933, or will be entitled to contribution in connection
therewith. Subject to some limitations, Adelphia will be indemnified by the
selling stockholders against civil liabilities, including liabilities under the
Securities Act of 1933, or will be entitled to contribution in connection
therewith.
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 of 1933. 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 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, and Items 7 and 8 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 filed with the
SEC on June 29, 1999;
26
<PAGE>
. our Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1998, March 31, 1999 and June 30, 1999;
. our Current Reports on Form 8-K for the events dated January 11,
February 22, February 23, March 5, March 30, March 31, April 9, April
19, April 21, April 23, April 27, April 28, May 26, June 22, August 11,
September 9, September 16, and September 21, 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; and
. our registration statement on Form S-3 (File No. 333-78027).
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; and
. all of our filings made by us under the Exchange Act after the date the
registration statement to which this prospectus is a part was initially
filed and prior to the effective date of that registration statement.
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 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. No offer of securities is being made in any state or country in
which the offer or sale is not permitted.
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
27
<PAGE>
ended December 31, 1998, all incorporated in this prospectus 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 and in the registration statement 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 incorporated in this prospectus 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 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 by reference in this prospectus from
Adelphia's Current Report on Form 8-K filed June 22, 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 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.
28
<PAGE>
Adelphia Communications Corporation
7,000,000 Shares of Class A Common Stock
PROSPECTUS
We have not authorized any dealer, salesperson or other person to give any
information or represent anything contained in this prospectus. You must not
rely on any unauthorized information. This prospectus does not offer to sell
nor does it solicit to buy any shares of Class A common stock in any
jurisdiction where it is unlawful. The information in this prospectus is current
as of October 1, 1999.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an estimate of the expenses which will be incurred by
Adelphia in connection with the issuance and distribution of the securities
being registered.
<TABLE>
<CAPTION>
AMOUNT
<S> <C>
SEC filing fee.................................................. $ 97,262
Legal fees and expenses......................................... 10,000
Accounting fees and expenses.................................... 5,000
Miscellaneous expenses.......................................... 2,738
--------
Total........................................................... $115,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides in general
that a corporation may indemnify its directors, officers, employees or agents
against expenditures (including judgments, fines, amounts paid in settlement and
attorneys' fees) made by them in connection with certain lawsuits to which they
may be made parties by reason of their being directors, officers, employees or
agents and shall so indemnify such persons against expenses (including
attorneys' fees) if they have been successful on the merits or otherwise. The
bylaws of Adelphia provide for indemnification of the officers and directors of
Adelphia to the full extent permissible under Delaware law.
Adelphia's Certificate of Incorporation also provides, pursuant to Section
102(b)(7) of the Delaware General Corporation Law, that directors of Adelphia
shall not be personally liable to Adelphia or its stockholders for monetary
damages for breach of fiduciary duty as a director for acts or omissions after
July 1, 1986, provided that directors shall nonetheless be liable for breaches
of the duty of loyalty, bad faith, intentional misconduct, knowing violations of
law, unlawful distributions to stockholders, or transactions from which a
director derived an improper personal benefit.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following is a complete list of Exhibits filed as part of this
Registration Statement, which are incorporated herein:
<TABLE>
Exhibit No. Reference
- ----------- ---------
<C> <S> <C>
4.01 Certificate of Incorporation of Adelphia Incorporated herein by
Communications Corporation reference is Exhibit 3.01
to Registrant's Current
Report on Form 8-K dated
July 24, 1997 (File No.
000-16104).
4.02 Certificate of Designations for 5 1/2% Series D Incorporated herein by
Convertible Preferred Stock reference is Exhibit 3.01
to Registrant's Current
Report on Form 8-K for the
event dated April 28, 1999
(File No. 000-16104).
23.01 Consent of Deloitte & Touche LLP with respect to
financial statements of Adelphia and Olympus
23.02 Consent of KPMG LLP with respect to financial Filed herewith.
statements of FrontierVision
23.03 Consent of Deloitte & Touche LLP with respect to Filed herewith.
financial statements of Century
23.04 Consent of Deloitte & Touche LLP with respect to Filed herewith.
financial statements of Harron
24.01 Power of Attorney (included on the signature page of Previously filed.
the registration statement)
</TABLE>
ITEM 17. UNDERTAKINGS
(a) Rule 415 Offering.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the Registration Statement;
II-2
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Request for Acceleration of Effective Date.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant of expenses incurred or paid by
a director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933, as amended, and will be governed by the
final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing this registration statement on Form S-3 and has
duly caused Amendment No. 1 to this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Coudersport, Commonwealth of Pennsylvania, on the 28th day of September,
1999.
ADELPHIA COMMUNICATIONS CORPORATION
By /s/ Timothy J. Rigas
----------------------------------------
Timothy J. Rigas, Executive Vice President
Pursuant to the requirements of the Securities Act, Amendment No. 1 to
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
* Chairman, President and Chief Executive Officer September ___, 1999
- ----------------------------------
JOHN J. RIGAS
* Executive Vice President, Secretary and Director September ____, 1999
- ----------------------------------
MICHAEL J. RIGAS
/s/ Timothy J. Rigas Executive Vice President, Chief Financial September 28, 1999
- ---------------------------------- Officer, Chief Accounting Officer, Treasurer
TIMOTHY J. RIGAS and Director
* Executive Vice President and Director September ____, 1999
- ----------------------------------
JAMES P. RIGAS
* Director September ____, 1999
- ----------------------------------
DANIEL R. MILLIARD
Director September ___, 1999
- ----------------------------------
PERRY S. PATTERSON
Director September ___, 1999
- ----------------------------------
PETE J. METROS
Director September ___, 1999
- ----------------------------------
DENNIS P. COYLE
* /s/ Timothy J. Rigas September 28, 1999
- ----------------------------------
Timothy J. Rigas, attorney-in-fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
Exhibit No. Reference
- ----------- ---------
<C> <S> <C>
4.01 Certificate of Incorporation of Adelphia Incorporated herein by
Communications Corporation reference is Exhibit 3.01 to
Registrant's Current Report on
Form 8-K dated July 24, 1997
(File No. 000-16104).
4.02 Certificate of Designations for 5 1/2% Series D Incorporated herein by
Convertible Preferred Stock reference is Exhibit 3.01 to
Registrant's Current Report on
Form 8-K for the event dated
April 28, 1999 (File No.
000-16104).
23.01 Consent of Deloitte & Touche LLP with respect to Filed herewith.
financial statements of Adelphia and Olympus
23.02 Consent of KPMG LLP with respect to financial Filed herewith.
statements of FrontierVision
23.03 Consent of Deloitte & Touche LLP with respect to Filed herewith.
financial statements of Century
23.04 Consent of Deloitte & Touche LLP with respect to Filed herewith.
financial statements of Harron
24.01 Power of Attorney (included on the signature page Previously filed.
to the registration statement)
</TABLE>
<PAGE>
Exhibit 23.01
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-81229 of Adelphia Communications Corporation on
Form S-3 of our report dated May 17, 1999 and our report dated March 19, 1999 on
the financial statements of Adelphia Communications Corporation and subsidiaries
and of Olympus Communications, L.P. and subsidiaries, respectively, appearing in
and incorporated by reference in the Transition Report on Form 10-K of Adelphia
Communications Corporation for the nine months ended December 31, 1998, and to
the reference to us under the heading "Experts" in the prospectus, which is
part of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
September 28, 1999
<PAGE>
Exhibit 23.02
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-81229 on Form S-3, of Adelphia Communications
Corporation, of our report, dated March 19, 1999, relating to the consolidated
balance sheets of FrontierVision Partners, L.P. and subsidiaries as of December
31, 1998 and 1997, and the related consolidated statements of operations,
partners' deficit and cash flows for each of the years in the three year period
ended December 31, 1998, which report appears in the September 9, 1999 Current
Report on Form 8-K of Adelphia Communications Corporation which is incorporated
by reference herein and to the reference to our firm under the heading "Experts"
in the registration statement.
/s/ KPMG LLP
Denver, Colorado
September 28, 1999
<PAGE>
Exhibit 23.03
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-81229 on Form S-3 of Adelphia Communications
Corporation of our report dated August 4, 1998, with respect to the consolidated
balance sheets of Century Communications Corp. and subsidiaries as of May 31,
1998 and 1997, and the related consolidated statements of operations and cash
flows for each of the three years in the period ended May 31, 1998, included in
the Current Report on Form 8-K, filed June 22, 1999 by Adelphia Communications
Corporation, incorporated by reference in this Registration Statement and to our
report dated July 29, 1999 (August 26, 1999 as to Note 17), with respect to the
consolidated balance sheets of Century Communications Corp. and subsidiaries as
of May 31, 1999 and 1998, and the related consolidated statements of operations
and cash flows for each of the three years in the period ended May 31, 1999,
included in the Current Report on Form 8-K, filed September 9, 1999 by Adelphia
Communications Corporation, incorporated by reference in this Registration
Statement and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Stamford, Connecticut
September 28, 1999
<PAGE>
Exhibit 23.04
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-81229 of Adelphia Communications Corporation on
Form S-3 of our report dated March 19, 1999 (April 12, 1999 as to Note 16), with
respect to the consolidated balance sheets of Harron Communications Corp. and
subsidiaries as of December 31, 1998 and 1997, and the related consolidated
statements of income, stockholders' equity and comprehensive income and cash
flows for each of the three years in the period ended December 31, 1998, which
report appears in Adelphia Communications Corporation's Current Report on Form
8-K dated September 9, 1999. We also consent to the reference to our firm under
the heading "Experts" in the prospectus, which is part of this Registration
Statement.
/s/ DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
September 28, 1999
