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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 29, 1999
REGISTRATION NO. 333-69819
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
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 (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
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MAIN AT WATER STREET
COUDERSPORT, PENNSYLVANIA 16915
(814) 274-9830
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
COLIN HIGGIN, ESQUIRE
DEPUTY GENERAL COUNSEL
ADELPHIA COMMUNICATIONS CORPORATION
MAIN AT WATER STREET
COUDERSPORT, PENNSYLVANIA 16915
(814) 274-9830
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
PLEASE ADDRESS A COPY OF ALL COMMUNICATIONS TO:
CARL E. ROTHENBERGER, JR., ESQUIRE
BUCHANAN INGERSOLL PROFESSIONAL CORPORATION
21ST FLOOR, 301 GRANT STREET
PITTSBURGH, PENNSYLVANIA 15219
(412) 562-8826
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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SUBJECT TO COMPLETION
January 29, 1999
2,561,024 shares
ADELPHIA COMMUNICATIONS CORPORATION
Class A common stock
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The stockholders of Adelphia Communications You should carefully review "Risk Factors"
Corporation listed on page 15 of this beginning on page 3 for a discussion of things
prospectus are offering and selling up to you should consider when investing in Class A
2,561,024 shares of Adelphia's Class A common stock.
common stock under this prospectus.
The Class A common stock is listed on the Neither the SEC nor any state securities
Nasdaq National Market. The Class A common commission has approved or disapproved of
stock's ticker symbol is "ADLAC." On these securities or passed upon the adequacy
January 26, 1999, the closing sale price on or accuracy of this prospectus. Any
the Nasdaq National Market of a single share representation to the contrary is a criminal
of the Class A common stock was $55.50. offense.
Our common stock also includes Class B common The information in this prospectus is not
stock. The rights of holders of the Class A complete and may be changed. The selling
common stock and Class B common stock differ stockholders may not sell these securities
with respect to certain aspects of until the registration statement filed with
dividends, liquidations and voting. The the SEC is effective. This prospectus is not
Class A common stock has preferential rights an offer to sell these securities and it is
with respect to cash dividends and not soliciting an offer to buy these
distributions upon the liquidation of securities in any state where the offer or
Adelphia. Holders of Class B common stock sale is prohibited.
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.
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The date of this prospectus is ____________ ___, 1999.
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TABLE OF CONTENTS
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ADELPHIA.................................................................. 1
RISK FACTORS.............................................................. 3
DILUTION.................................................................. 13
SELLING STOCKHOLDERS...................................................... 13
USE OF PROCEEDS........................................................... 14
PLAN OF DISTRIBUTION...................................................... 14
WHERE YOU CAN FIND MORE INFORMATION....................................... 16
EXPERTS................................................................... 17
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ADELPHIA
Adelphia is a leader in the telecommunications industry with cable television
operations and competitive local exchange telephone operations. As of September
30, 1998, we owned or managed cable television systems that passed 3,237,689
homes and served 2,298,516 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 Coastal New Jersey. These systems are located
primarily in suburban areas of large and medium-sized cities within the 50
largest television markets. As of September 30, 1998, these systems passed
2,124,473 homes and served 1,530,699 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 September 30, 1998, cable systems owned by these Rigas
family partnerships and corporations passed 284,716 homes and served 216,229
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 September 30,
1998, this system passed 828,500 homes and served 551,588 basic subscribers.
Through our subsidiary, Hyperion Telecommunications, Inc., we own and operate
a large competitive local exchange carrier in the eastern United States.
Hyperion is a company that 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 September 30, 1998, Hyperion
managed and operated 22 telecommunications networks, including two under
construction, serving 46 cities. Hyperion's Class A common stock is listed on
the Nasdaq National Market under the symbol "HYPT."
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. Our executive offices are located at Main at Water Street,
Coudersport, Pennsylvania 16915, and our telephone number is (814) 274-9830.
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Recent Developments
On January 28, 1999, Adelphia announced that it agreed to purchase from
Telesat Cablevision, Inc., a subsidiary of FPL Group, Inc. shares of Adelphia's
stock owned by Telesat. In the transaction, Adelphia is purchasing 1,091,524
shares of Class A common stock and the 20,000 shares of Series C Cumulative
Convertible preferred stock which are convertible into an additional 2,358,490
shares of Class A common stock. These shares represent 3,450,014 shares of
common stock on a fully converted basis. Adelphia and Telesat also agreed to a
redemption of Telesat's interests in Olympus by July 11, 1999. The redemption
transaction is subject to applicable approvals of third parties or governmental
authorities. The aggregate purchase price for these transactions will be
approximately $257,200,000.
On January 21, 1999, Adelphia acquired Verto Communications, Inc. pursuant to
a merger agreement between Adelphia, a wholly owned subsidiary of Adelphia,
Verto and Verto's shareholders. As of December 21, 1998, Verto provided cable
television services to approximately 56,000 subscribers in the greater Scranton,
Pennsylvania area. In connection with the Verto acquisition, Adelphia issued or
will issue 2,561,024 shares of its Class A common stock to the former owners of
Verto. It is these shares that are being offered and sold pursuant to this
prospectus.
On January 14, 1999, Adelphia completed offerings totaling 8,600,000 shares
of its Class A common stock. In those offerings, Adelphia sold 4,600,000 newly
issued shares of Class A common stock, including an overallotment option for
600,000 shares to Goldman, Sachs & Co. at $43.25 per share and it also sold
4,000,000 shares of its Class A common stock at $43.25 per share to the Rigas
family. Adelphia used the proceeds of about $372 million from these offerings
to repay subsidiary bank debt, which may be reborrowed and used for general
corporate purposes.
On January 13, 1999, Adelphia completed offerings of $100,000,000 of 7 1/2%
Senior Notes due 2004 and $300,000,000 of 7 3/4% Senior Notes due 2009. Net
proceeds from these offerings, after deducting offering expenses, were
approximately $393,700,000. Of this amount, Adelphia will use at least
$160,000,000 to purchase, redeem or otherwise retire a portion of its 9 1/2%
Senior Pay-In-Kind Notes due 2004. Adelphia used the remainder to repay
borrowings under revolving credit facilities of its subsidiaries which may be
reborrowed and used for general corporate purposes. The terms of these notes
are similar to those of Adelphia's existing publicly held senior debt.
On December 30, 1998, Adelphia's 66.7% owned joint venture limited
partnership with Tele-Communications, Inc., which has operations in the Western
New York region, closed on a $700,000,000, eight and one-half year credit
facility. The credit facility consists of a $350,000,000 reducing revolving
credit portion and a $350,000,000 term loan portion. The partnership used
proceeds from initial borrowings to repay indebtedness owed to Adelphia.
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RISK FACTORS
Before you invest in Adelphia's Class A common stock, 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 shares of Adelphia's
Class A common stock.
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High Level of Adelphia has a substantial amount of debt. We borrowed this money to
Indebtedness purchase and to expand our cable systems and other operations and, to a
We owe approximately lesser extent, for investments and loans to our affiliates. At
$3.0 billion. September 30, 1998, our indebtedness totaled approximately
$3,029,580,000. This included approximately:
. $1,660,013,000 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;
. $906,443,000 of debt owed by our subsidiaries to banks, other
financial institutions and other persons; and
. $463,124,000 of public debt owed by Hyperion.
Debt service consumes a Our high level of indebtedness can have important adverse consequences
substantial portion of to us and to you. It requires that we spend a substantial portion of
the cash we generate. the cash we get from our business to repay the principal and interest
This could affect our on these debts. Otherwise, we could use these funds for general
ability to invest in corporate purposes or for capital improvements. Our ability to obtain
our business in the new loans for working capital, capital expenditures, acquisitions or
future as well as to capital improvements may be limited by our current level of debt. In
react to changes in addition, having such a high level of debt could limit our ability to
our industry or react to changes in our industry and to economic conditions generally.
economic downturns. At September 30, 1998, the Adelphia Parent Company also had
approximately $148,148,000 and Hyperion had approximately $221,251,000
of redeemable exchangeable preferred stock which is similar to our
indebtedness in these respects.
Approximately 35% of Our debt comes due at various times up to the year 2008, including an
this debt must be paid aggregate of approximately $1,046,711,000 which, as of September 30,
by April 1, 2003 and 1998, we must pay by April 1, 2003. We have incurred long-term debt
all of it must be directly from the public. Different groups of our subsidiaries borrow
paid by 2008. from banks, insurance companies and other private lenders. Adelphia
Parent Company debt is not guaranteed by
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our subsidiaries. The agreements for the loans made to our various groups of subsidiaries differ in many
respects including when they are due to be paid and the covenants or promises made by the group such as
the ability of the group to borrow more money and when a default by that group on other borrowings
constitutes an event of default. Olympus also has a substantial amount of debt.
Need for Additional Our business requires substantial additional financing on a continuing
Financing 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, and
. refinancing existing debt.
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.
Large Losses and The Total Convertible Preferred Stock, Common Stock and Other
Negative Stockholders' Stockholders' Equity (Deficiency) at September 30, 1998 was a deficit
Equity of approximately $977,994,000. Our continuing net losses, which 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:
We have had large net . fiscal year ended March 31, 1996 - $119,894,000;
losses for many years . fiscal year ended March 31, 1997 - $130,642,000;
and expect this to . fiscal year ended March 31, 1998 - $192,729,000; and
continue. . six months ended September 30, 1998 - $91,354,000.
We expect to continue to incur large net losses for the next several
years.
Our earnings have been Our earnings could not pay for our combined fixed charges and preferred
insufficient to pay stock dividends during these periods by the amounts set forth in the
for our fixed charges table below, although combined fixed changes and preferred stock
and preferred stock dividends included substantial non-cash charges for depreciation,
dividends. amortization and non-cash interest expense on some of
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our debts and the non-cash expense of Hyperion's preferred stock dividends:
Earnings Non-Cash
Deficiency Charges
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. fiscal year ended March 31, 1997 $ 61,848,000 $165,426,000
. fiscal year ended March 31, 1998
. six months ended September 30, 1998 $113,941,000 $195,153,000
$ 74,222,000 $114,557,000
If we are unable to Historically, the cash we generate from our operating activities and
borrow new funds to borrowings has been sufficient to meet our requirements for debt
meet our future cash service, working capital, capital expenditures, and investments in and
needs, we may have to advances to our affiliates, and we have depended on getting additional
sell assets, borrowings to meet our liquidity requirements. Although in the past we
renegotiate loans or have been able both to refinance our debt and to obtain new debt, there
explore other can be no guarantee that we will be able to continue to do so in the
alternatives. future or that the cost to us or the other terms which would affect us
would be as favorable to us as our current loans and credit agreements.
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
limit our ability to borrow more money. If we could not refinance our
debt or obtain new loans, we would likely have to consider various
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 can not guarantee that any options available to us
would enable us to repay our debt in full.
Competition The telecommunications services provided by Adelphia are subject to
strong competition and potential competition from various sources. Our
cable television systems compete with other means of distributing video
The cable television to home televisions such as Direct Broadcast Satellite systems,
industry currently commonly known as DBS systems, and Multichannel Multipoint Distribution
competes with several systems. Some of the regional Bell telephone operating companies and
other providers using other local telephone companies are in the process of entering the
other means of video-to-home business and several have expressed their intention to
distributing video to enter the video-to-home
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home televisions. 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
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 competes with In each of the markets served by Hyperion's networks, the competitive
local telephone local exchange carrier services offered by Hyperion compete principally
carriers, including with the services offered by the incumbent local telephone exchange
Bell Atlantic and carrier company serving that area. Local telephone companies have
NYNEX, for telephone long-standing relationships with their customers, have the potential to
services. subsidize competitive services from monopoly service revenues, and
benefit from favorable state and federal regulations. The merger of
Bell Atlantic and NYNEX created a 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.
Actions by regulators We expect that the federal Telecommunications Act of 1996 will result
could improve the in federal and state regulatory authorities adopting initiatives to
ability of our provide increased business opportunities to competitive local exchange
competitors to compete. carriers such as Hyperion. However, we also think 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
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incumbent local telephone company's networks.
The regional Bell The regional Bell operating companies can now obtain regulatory
telephone companies approval to offer long distance services if they comply with the
could get regulatory interconnection requirements of the federal Telecommunications Act of
approval to offer long 1996. Regional Bell operating companies in Hyperion's operating
distance service in territories have filed applications with the FCC claiming that they
competition with have complied with the interconnection requirements and are thus
Hyperion's significant entitled to receive authority to provide long distance services. Each
customers. of these requests has been denied by the FCC. However, an approval of
such a regional Bell operating company's request could result in
decreased market share for the major long distance carriers which are
among Hyperion's significant customers. Such a result could have an
adverse effect on Hyperion. In addition, if regional Bell operating
companies are permitted to provide long distance services, they will
ultimately be in a position to offer single source service for local
and long distance communications and subsidize the price of their long
distance services with charges on local service. Regional Bell
operating companies have also recently filed petitions with the FCC
requesting a waiver of certain obligations imposed on incumbent local
exchange carriers under the Telecommunications Act of 1996. Regional
Bell operating companies have sought, with some degree of success, to
provide high-speed data services free of the obligations to unbundle
and offer for resale such services. Regional Bell operating companies
are also seeking to provide such services on a long distance basis
without complying with the interconnection requirements of the federal
Telecommunications Act of 1996. In addition, regional Bell operating
companies have sought an FCC determination that they need not
compensate competitive local exchange carriers for traffic terminated
to Internet Service Providers who are customers of competitive local
exchange carriers. If the FCC grants the regional Bell operating
companies petitions, this could have a material adverse effect on
Hyperion.
Potential competitors for Hyperion include other competitive local
Potential competitors exchange carriers, incumbent local telephone companies which are not
to Hyperion's subject to regional Bell operating companies' restrictions on offering
telecommunications long distance service, AT&T, MCIWorldCom, Sprint and other long
services include the distance carriers, cable television companies, electric utilities,
regional Bell microwave carriers, wireless telecommunications providers and private
telephone companies, networks built by large end users. Both AT&T and MCIWorldCom have
AT&T, MCIWorldCom and announced that they have begun to offer local telephone services in
Sprint, and electric some areas of the country, and AT&T recently
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utilities. announced a new wireless technology for providing local telephone service.
AT&T and Tele-Communications, Inc. also recently announced that they
will merge. 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.
Extensive Regulation The cable television industry and the provision of local telephone
The cable television exchange services are subject to extensive regulation at the federal,
and telecommunications state and local levels, and many aspects of such regulation are
industries are heavily currently the subject of judicial proceedings and administrative or
regulated. legislative proposals. In particular, the FCC adopted regulations that
limit our ability to set and increase rates for our basic and cable
programming service packages 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
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.
The federal The federal Telecommunications Act of 1996 substantially changed
Telecom-munications federal, state and local laws and regulations governing our cable
Act of 1996 may have a television and telecommunications businesses. This law could
significant impact on materially affect the growth and operation of the cable television
the cable television industry and the cable services we provide. Although this legislation
business and may lessen regulatory burdens, the cable television industry may be
telecommunications subject to new competition as a result. There are numerous rulemakings
industries. 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
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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.
The federal Although the federal law discussed above eliminates many legal barriers
Telecommunications Act to telephone companies entering the cable industry and cable companies
of 1996 may also have entering the telephone industry, we cannot guarantee that rules adopted
a large impact on by the FCC or state regulators or other legislative or judicial
Hyperion's initiatives relating to the telecommunications industry will not have a
telecommunications material adverse effect on Hyperion. In addition, the new law removes
business. entry barriers for all companies and could increase substantially the
number of competitors offering comparable services in our markets or
potential markets.
Unequal Voting Rights Adelphia has two classes of common stock -- Class A which carries one
of Stockholders and vote per share and Class B which carries ten votes per share. The
Control by the Rigas public holds a majority of the outstanding Class A shares, although the
family Rigas family also owns about 35% of it as of January 22, 1999. The
Rigas family owns about 99% of Adelphia's Class B shares. As of
January 22, 1999, the Rigas family beneficially owned shares
representing about 48% of the total number of outstanding shares of
both classes of Adelphia's common stock and about 81% of the total
voting power of Adelphia's shares. The Rigas family also owns shares
of Adelphia's 8% Series C Cumulative Convertible preferred stock which,
if converted, would increase its 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 our Certificate of Incorporation and
Bylaws, and mergers or other fundamental corporate transactions.
Potential Conflicts of John J. Rigas and the other executive officers of Adelphia, including
Interest other members of the Rigas family, own the certain 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
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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 significant assets other
Structure and than stock, partnership interests, equity and other interests in our
Potential Impact of subsidiaries and in other companies. This creates risks regarding our
Restrictive Covenants ability to provide cash to the Adelphia Parent Company to repay the
in Subsidiary Debt interest and principal which it owes, our ability to pay cash
Agreements 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 bank and other
Company depends on its financial institution loans of our subsidiaries and other companies
subsidiaries and other restrict their ability and the ability of the companies they own to
companies in which it make payments to the Adelphia Parent Company. These agreements also
has investments to place other restrictions on the borrower's ability to borrow new funds and
provide cash for it. include requirements for the borrowers to remain in 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.
No Dividends Paid or Adelphia has never declared or paid cash dividends on any of its
Planned to be Paid in common stock and has no intention of doing so in the foreseeable future.
the Foreseeable Future
Shares Eligible for Sales of a substantial number of shares of Class A common stock or
Future Sale Class B common stock, including sales by any pledgees of such shares,
could adversely affect the market price of our Class A common stock and
could impair our ability in the future to raise capital through stock
offerings.
Pursuant to various registration rights agreements or arrangements, as
of January 26, 1999, the Rigas family has the right,
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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; and
. for the selling stockholders -- 2,561,024 shares of Class A Common
for offer and sale pursuant to this prospectus; and
. in connection with the January 14, 1999 equity offerings, Adelphia
agreed to register with the SEC for public resale the 4,000,000 shares
of Class A common stock purchased by the Rigas family.
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.
Dilution Persons purchasing Class A common stock will incur immediate and
substantial net tangible book value dilution.
Year 2000 Issues The year 2000 issue refers to the inability of computerized systems and
technologies to recognize and process dates beyond December 31, 1999.
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.
</TABLE>
-11-
<PAGE>
<TABLE>
<S> <C>
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.
Forward-Looking The statements contained or incorporated by reference in this
Statements 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 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, acquisitions
and divestitures, government and regulatory policies, the pricing and
availability of equipment, materials, inventories and programming,
technological developments and changes in the competitive environment
in which 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
</TABLE>
-12-
<PAGE>
<TABLE>
<S> <C>
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.
</TABLE>
DILUTION
The net tangible book value of Adelphia's common stock as of September 30,
1998 was a deficit of approximately ($2,025,282,000) or ($48.11) 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 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 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.
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 selling stockholders acquired or will acquire their shares of Class A
common stock from us in exchange for their equity interests in Verto. Adelphia,
Verto and each of the selling stockholders is a party to the Verto merger
agreement and the related registration rights. Under the registration rights
agreement, Adelphia has agreed to register all shares of Class A common stock
issued in the Verto merger to the Verto shareholders. Registration of these
shares does not necessarily mean that the selling stockholders will sell all or
any of the shares.
No selling stockholder 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. The selling
stockholders will cause Adelphia to include these donees or transferees as
selling stockholders in a prospectus supplement if the donees or transferees
wish to use this prospectus to re-offer the shares.
The shares listed below represent, as of January 27, 1999, all of the shares
that each of the selling stockholders beneficially owns, the number of shares
each of them may offer and the number of shares each of them will own after the
offering assuming they sell all of the shares. 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.
-13-
<PAGE>
<TABLE>
<CAPTION>
Percent of
Class A Class A
Class A Common Percent of Class A Class A Common Common Common
Shares Held Common Shares Held Shares Shares Held Shares Held
Name Before Offering Before Offering Offered Hereby After Offering After Offering
- ---- ------------------ --------------------- ------------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Louis Pagnotti, Inc. 1,157,182 2.73% 1,157,182 __ __
The Ithaka Company 442,464 1.04 442,464 __ __
Tedesco Corporation 442,464 1.04 442,464 __ __
Brynfan Associates 518,914 1.22 518,914 __ __
--------- ---- --------- --- ---
TOTAL 2,561,024 6.03% 2,561,024 __ __%
========= ===== ========= === ===
</TABLE>
- ------------------------
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.
"Selling stockholders," as used in this section, includes donees and pledgees
selling shares received from a named selling stockholder after the date of this
prospectus. 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.
-14-
<PAGE>
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 broker-dealers to sell their shares. If
this happens, 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 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.
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.
When a particular offering of shares is made, if required, we will distribute
to you 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 Exchange Act, persons engaged
in a distribution of the shares may be limited in their ability to engage in
market activities with respect to such shares. In addition and without limiting
the foregoing, each selling stockholder will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, which provisions
may limit the timing of purchases and sales of any of the shares by the selling
stockholders. All of 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. The selling stockholders will be indemnified by Adelphia against certain
civil liabilities, including certain liabilities under the Securities Act, or
will be entitled to contribution in connection therewith. Adelphia will be
indemnified by the selling stockholders against certain civil liabilities,
including certain liabilities under the Securities Act, or will be entitled to
contribution in connection therewith.
-15-
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Adelphia files annual, quarterly and special reports, as well as proxy
statements and other information with the SEC. You may read and copy any
document Adelphia files 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. Adelphia's 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 Adelphia that
file electronically with the SEC.
This prospectus is part of a registration statement on Form S-3 filed by
Adelphia 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 Adelphia to "incorporate by reference" into this prospectus
the information it files with the SEC. This means that Adelphia 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 Adelphia subsequently files 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.
Adelphia is incorporating by reference the following documents that it has
filed with the SEC:
. its 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 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;
. its Quarterly Reports on Form 10-Q for the quarters ended June 30, 1998 and
September 30, 1998;
. its 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 and January 11, 1999;
. its definitive proxy statement dated September 11, 1998 with respect to the
Annual Meeting of Stockholders held on October 6, 1998; and
. the description of its Class A common stock contained in
. Adelphia's registration statement filed with the SEC under Section 12 of
the Exchange Act and subsequent amendments and reports filed to update
such description and
-16-
<PAGE>
. Adelphia's registration statement on Form S-3 (File No. 333-58749).
Adelphia is also incorporating by reference into this prospectus all of its
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. Adelphia is not making this offer of securities 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, 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.
-17-
<PAGE>
Adelphia Communications Corporation
2,561,024 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 ________________, 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....................................... $34,661
Legal fees and expenses.............................. $22,000
Accounting fees and expenses......................... $ 8,000
Miscellaneous expenses............................... $ 3,339
-------
Total................................................ $68,000
=======
</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>
<CAPTION>
Exhibit No. Reference
- ----------- ---------
<C> <S> <C>
4.01 The Certificate of Incorporation of Adelphia Communications Incorporated herein by reference
Corporation is Exhibit 3.01 to Registrant's
Current Report on Form 8-K dated
July 24, 1997 (File No.
000-16104).
23.01 Consent of Deloitte & Touche LLP Filed herewith.
24.01 Power of Attorney Previously filed.
</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;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
II-2
<PAGE>
(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, this 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 this Amendment No. 2 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 January, 1999.
ADELPHIA COMMUNICATIONS CORPORATION
By /s/ Timothy J. Rigas
----------------------
Timothy J. Rigas, Executive Vice President
Pursuant to the requirements of the Securities Act, this Amendment No. 2 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 January 28, 1999
- ----------------------------------
JOHN J. RIGAS
* Executive Vice President and Director January 28, 1999
- ----------------------------------
MICHAEL J. RIGAS
/s/ Timothy J. Rigas Executive Vice President, Chief Financial January 28, 1999
- ---------------------------------- Officer, Chief Accounting Officer, Treasurer
TIMOTHY J. RIGAS and Director
* Executive Vice President and Director January 28, 1999
- ----------------------------------
JAMES P. RIGAS
* Senior Vice President, Secretary and Director January 28, 1999
- ----------------------------------
DANIEL R. MILLIARD
Director January __, 1999
- ----------------------------------
PERRY S. PATTERSON
Director January __, 1999
- ----------------------------------
PETE J. METROS
Director January __, 1999
- ----------------------------------
DENNIS P. COYLE
* /s/ Timothy J. Rigas
- ----------------------------------
TIMOTHY J. RIGAS, attorney-in-fact
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Reference
- ----------- ---------
<C> <S> <C>
4.01 The Certificate of Incorporation of Adelphia Communications Incorporated herein by reference is
Corporation Exhibit 3.01 to Registrant's Current
Report on Form 8-K dated July 24,
1997 (File No. 000-16104).
23.01 Consent of Deloitte & Touche LLP Filed herewith.
24.01 Power of Attorney Previously filed.
</TABLE>
<PAGE>
Exhibit 23.01
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 2 to
Registration Statement No. 333-69819 of Adelphia Communications Corporation on
Form S-3 of our report dated June 10, 1998 and our report dated March 6, 1998 on
our audits of the financial statements of Adelphia Communications Corporation
and subsidiaries and of Olympus Communications, L.P. and subsidiaries,
respectively, appearing in and incorporated by reference in the Annual Report on
Form 10-K of Adelphia Communications Corporation for the year ended March 31,
1998, and to the reference to us under the heading "Experts" in the
prospectus, which is part of such Registration Statement.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
January 29, 1999
