UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
X Annual Report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the year ended December 31, 1999
____ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _____ to ______
Commission File Number: 0-16014
ADELPHIA COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 23-2417713
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One North Main Street
Coudersport, PA 16915
(Address of principal executive offices) (Zip code)
814-274-9830
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act: None. Securities
registered pursuant to Section 12(g) of the Act: Class A common stock, $.01 par
value.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ____
-------
Aggregate market value of outstanding Class A common stock par value $.01 per
share, held by non-affiliates of the registrant at March 29, 2000 was $4.64
billion based on the closing sale price as computed by the NASDAQ National
Market system a of that date. For purposes of this calculation only, affiliates
are deemed to be directors and executive officers of the registrant.
At March 29, 2000, 113,051,118 shares of Class A common stock, par value $0.01
per share, and 16,735,998 shares of Class B common stock, par value $0.01 per
share, of the registrant were outstanding.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or any amendment to the
Form 10-K.
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-K for the
year ended December 31, 1999 as set forth in the pages attached hereto:
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ADELPHIA COMMUNICATIONS CORPORATION
May 1, 2000 By: /s/ Timothy J. Rigas
---------------------
Timothy J. Rigas
Executive Vice President, Chief
Financial Officer, Chief Accounting
Officer, Treasurer and Director
<PAGE>
Item 10. Directors and Executive Officers of the Registrant
The information set forth in Part I under the caption "Executive
Officers of the Registrant" is incorporated herein by reference. All of the
following directors were first elected or appointed as directors in 1986 except
for Mr. Dennis Coyle, Mr. Leslie J. Gelber, Mr. Peter L. Venetis and Mr. Erland
E. Kailbourne. Mr. Coyle was first elected as a director of the Company in 1995
and Mr. Gelber, Mr. Venetis and Mr. Kailbourne were first elected as directors
of the Company in 1999.
Perry S. Patterson
Age 82
Perry S. Patterson became a director of Adelphia Communications
Corporation ("Adelphia" or the "Company") on September 9, 1986. Since 1977, Mr.
Patterson has practiced law in Coudersport, Pennsylvania. From 1975 to 1977, Mr.
Patterson served as President Judge of the Court of Common Pleas of the 55th
Judicial District in Potter County, Pennsylvania. He was a partner of the law
firm of Kirkland & Ellis, in Chicago, Illinois and Washington, D.C. from 1950 to
1973. Mr. Patterson attended Georgetown University and graduated from
Northwestern University Law School in 1941.
John J. Rigas
Age 75
John J. Rigas is the founder, Chairman, President and Chief Executive
Officer of Adelphia and is President of its subsidiaries. He is also Chairman
and a director of Adelphia Business Solutions, Inc. ("Adelphia Business
Solutions"). Mr. Rigas has served as President or general partner of most of the
constituent entities which became wholly-owned subsidiaries of Adelphia upon its
formation in 1986, as well as the cable television operating companies acquired
by the Company which were wholly or partially owned by members of the John J.
Rigas family or entities controlled by them ("the Rigas Family"). Mr. Rigas has
owned and operated cable television systems since 1952. Among business and
community service activities, Mr. Rigas is Chairman of the Board of Directors of
Citizens Bancorp., Inc., Coudersport, Pennsylvania, and a member of the Board of
Directors of Charles Cole Memorial Hospital. He is a director of the National
Cable Television Association and a past President of the Pennsylvania Cable
Television Association. He is also a member of the Board of Directors of C-SPAN
and the Cable Advertising Bureau, and is a Trustee of St. Bonaventure
University. He graduated from Rensselaer Polytechnic Institute with a B.S. in
Management Engineering in 1950.
John J. Rigas is the father of Michael J. Rigas, Timothy J. Rigas and
James P. Rigas, each of whom currently serves as a director and executive
officer of the Company, and is the father-in-law of Peter Venetis who also
serves as a director of the Company.
<PAGE>
Michael J. Rigas
Age 46
Michael J. Rigas is Executive Vice President, Operations and Secretary
of Adelphia and is a Vice President of its subsidiaries. He is also Vice
Chairman, Secretary and a director of Adelphia Business Solutions. Since 1981,
Mr. Rigas has served as a Senior Vice President, Vice President, general partner
or other officer of the constituent entities which became wholly-owned
subsidiaries of Adelphia upon its formation in 1986, as well as the cable
television operating companies acquired by the Company which were wholly or
partially owned by members of the Rigas Family. From 1979 to 1981, he worked for
Webster, Chamberlain & Bean, a Washington, D.C. law firm. Mr. Rigas graduated
from Harvard University (magna cum laude) in 1976 and received his Juris Doctor
degree from Harvard Law School in 1979.
Timothy J. Rigas
Age 43
Timothy J. Rigas is Executive Vice President, Chief Financial Officer,
Chief Accounting Officer and Treasurer of Adelphia and its subsidiaries. He is
also Vice Chairman, Chief Financial Officer and Treasurer and a director of
Adelphia Business Solutions. Since 1979, Mr. Rigas has served as Senior Vice
President, Vice President, general partner or other officer of the constituent
entities which became wholly-owned subsidiaries of Adelphia upon its formation
in 1986, as well as the cable television operating companies acquired by the
Company which were wholly or partially owned by members of the Rigas Family. Mr.
Rigas graduated from the University of Pennsylvania, Wharton School, with a B.S.
degree in Economics (cum laude) in 1978.
James P. Rigas
Age 42
James P. Rigas is Executive Vice President, Strategic Planning of
Adelphia and is a Vice President of its subsidiaries. He also serves as Vice
Chairman, President, Chief Executive Officer and Chief Operating Officer and a
director of Adelphia Business Solutions. Since February 1986, Mr. Rigas has
served as a Senior Vice President, Vice President or other officer of the
constituent entities which became wholly-owned subsidiaries of Adelphia upon its
formation in 1986, as well as the cable television operating companies acquired
by the Company which were wholly or partially owned by members of the Rigas
Family. Among his business activities, Mr. Rigas is a member of the Board of
Directors of Cable Labs. Mr. Rigas graduated from Harvard University (magna cum
laude) in 1980 and received a Juris Doctor degree and an M.A. degree in
Economics from Stanford University in 1984. From June 1984 to February 1986, he
was a consultant with Bain & Co., a management consulting firm.
<PAGE>
Pete J. Metros
Age 59
Pete J. Metros became a director of Adelphia on November 4, 1986. Mr.
Metros has been President and a member of the Board of Directors of Rapistan
Demag Corporation, a subsidiary of Mannesmann AG, since December 1991. From
August 1987 to December 1991, he was President of Rapistan Corp., the
predecessor of Rapistan Demag Corporation, and of Truck Products Corp., both of
which were major subsidiaries of Lear Siegler Holdings Corp. From 1980 to August
1987, Mr. Metros was President of the Steam Turbine, Motor & Generator Division
of Dresser-Rand Company. From 1964 to 1980, he held various positions at the
General Electric Company, the last of which was Manager Manufacturing for the
Large Gas Turbine Division. Mr. Metros is also on the Board of Directors of
Adelphia Business Solutions, and Borroughs Corporation of Kalamazoo, Michigan.
Mr. Metros received a BS degree from the Georgia Institute of Technology in
1962.
Dennis P. Coyle
Age 61
Dennis P. Coyle is General Counsel and Secretary of FPL Group, Inc. and
Florida Power & Light Company. Mr. Coyle was named General Counsel of FPL Group,
Inc. and Florida Power & Light Company in 1989, and assumed the additional title
and responsibilities of Secretary of such companies in 1991. He graduated from
Dartmouth College in 1960 and received his law degree from Columbia University
in 1965. In an investment agreement with respect to Olympus Communications, L.P.
("Olympus," a subsidiary of the Company), John, Michael, Timothy and James Rigas
had agreed to vote a sufficient number of shares of the Company's Class A common
stock to elect to the Board a nominee of Telesat Cablevision, Inc., which was
the Company's joint venture partner in Olympus. This agreement terminated on
January 29, 1999 when Telesat sold all of its Adelphia stock to the Company.
Prior to such termination, Mr. Coyle was the nominee of Telesat Cablevision,
Inc., which is an indirect, wholly-owned subsidiary of FPL Group, Inc.
Leslie J. Gelber
Age 43
Leslie J. Gelber has been President and Chief Operating Officer of
Caithness Corporation since January 1, 1999. Prior to this position, Mr. Gelber
was President of Cogen Technologies, Inc. from July 1998 until December 1998.
From 1993 until July 1998, Mr. Gelber was the President of ESI Energy, Inc., a
former subsidiary of FPL Group, Inc. Prior to joining ESI, Mr. Gelber was the
Director of Corporate Development for FPL Group and was Chairman of FPL Group's
cable television subsidiary and President of its information services
subsidiary. Mr. Gelber received a B.A. degree from Alfred University in 1977 and
a Master's degree in business administration from the University of Miami in
1978.
Peter L. Venetis
Age 42
Peter L. Venetis is President and Chief Executive Officer of the
Atlantic Bank of New York. Mr. Venetis also serves as a member of Atlantic
Bank's Board of Directors and as Chairman of the Executive Committee of the
Board. Mr. Venetis joined Atlantic Bank as its Chief Executive Officer in 1992.
From 1986 to 1992, Mr. Venetis was a Director in the Leveraged Finance Group at
Salomon Brothers, Inc. in New York. Mr. Venetis is also a board member of the NY
Metro Chapter of the Young President's Organization and is a Trustee of the
Churchill School and Center in Manhattan. Mr. Venetis graduated from Columbia
University (cum laude) in 1979 and received his MBA in Finance and International
Business from the Columbia University Graduate School of Business in 1981.
Erland E. Kailbourne
Age 58
Erland E. Kailbourne is the retired Chairman and Chief Executive
Officer of Fleet National Bank. He served with the Fleet organization or its
predecessors for 37 years prior to his retirement on December 31, 1998. Mr.
Kailbourne is currently Vice Chairman of the State University of New York Board
of Trustees, Chairman of the Jon R. Oishei Foundation, a director of the New
York ISO Utilities Board, a director of Albany International Corporation, Bush
Industries, Inc. Jaran Aerospace Corporation, Rand Capital Corporation and
Statewide Zone Capital Corporation and is a member of the Trooper Foundation. He
is a past director of the New York Business Development Corporation, the
Business Council of New York State, Inc., Fleet National Bank, Security New York
State Corp., Fleet Trust Company, Robert Morris Associates, the Buffalo and
Rochester Chambers of Commerce, the SUNY Albany Foundation, the SUNY Buffalo
Foundation, WXXI-Public Television, WNED-Public Television, WMHT-Public
Television and a member of the Advisory Board of Chautauqua Airlines. Mr.
Kailbourne graduated with a degree in business administration from Alfred
State College in 1961.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act requires the Company's
directors, executive officers and persons who beneficially own more than ten
percent of a class of the Company's registered equity securities to file with
the Securities and Exchange Commission and deliver to the Company initial
reports of ownership and reports of changes in ownership of such registered
equity securities.
To the Company's knowledge, based solely on a review of the copies
of such reports furnished to the Company or written representations that no
other reports were required, the Company's directors, executive officers and
more than ten percent stockholders filed on a timely basis all reports due under
Section 16(a) for the year ended December 31, 1999, except that an initial
report of ownership was filed late by Mr. Gelber, Mr. Kailbourne and Mr.
Venetis, and one report was filed late by Mr. Patterson.
<PAGE>
Item 11. Executive Compensation
Summary Compensation Table
The following table sets forth certain information regarding
compensation paid by the Company for services rendered during the Company's
twelve months ended December 31, 1999 and 1998, nine months ended December 31,
1998 and the fiscal year ended March 31, 1998 to the Company's Chief Executive
Officer and the four most highly compensated executive officers whose
compensation exceeded $100,000 in salary and bonus during the twelve months
ended December 31, 1999:
<TABLE>
<CAPTION>
Annual Compensation
Long-Term Compensation
Restricted Securities All Other
Compensation($) Stock Underlying Compensation (b)
Name and Principal Position Period Ended (a) Awards (d) ($)Options (d) (#) (c) ($)
- --------------------------- ---------------- ----------------------------- -------
Salary Bonus
<S> <C> <C> <C> <C> <C> <C>
John J. Rigas 12 months ended 12/99 1,354,953 - 1,575,000 100,000 461,940
Chairman, President and 12 months ended 12/98 1,367,399 - - - 461,061
Chief Executive Officer 9 months ended 12/98 1,018,789 - - - 200,750
12 months ended 3/98 1,271,939 - - - 461,378
Michael J. Rigas 12 months ended 12/99 223,856 - 1,575,000 100,000 10,950
Executive Vice President, 12 months ended 12/98 229,866 - - - 10,950
Operations and Secretary 9 months ended 12/98 171,484 - - - 10,950
12 months ended 3/98 213,011 - - - 10,950
Timothy J. Rigas 12 months ended 12/99 223,856 - 1,575,000 100,000 10,950
Executive Vice President, Chief 12 months ended 12/98 229,866 - - - 10,950
Financial Officer, Chief 9 months ended 12/98 171,484 - - - 10,950
Accounting Officer and Treasurer 12 months ended 3/98 213,089 - - - 10,950
James P. Rigas 12 months ended 12/99 223,856 - 1,575,000 100,000 11,669
Executive Vice President, 12 months ended 12/98 229,385 - - - 11,431
Strategic Planning 9 months ended 12/98 171,003 - - - 11,431
12 months ended 3/98 213,011 - - - 11,410
Daniel R. Milliard (e) 12 months ended 12/99 235,364 - - 81,250 5,340
Senior Vice President and 12 months ended 12/98 238,191 - 760,500 - 5,340
Secretary 9 months ended 12/98 176,438 - 760,500 - 5,340
12 months ended 3/98 229,810 - 27,000 - 5,340
<FN>
(a) On March 30, 1999, the Company changed its fiscal year end from March 31 to
December 31. The twelve months ended December 31, 1998 includes three months of
compensation from the fiscal year ended March 31, 1998.
(b) Twelve months ended December 31, 1999 and 1998, nine months ended December
31, 1998 and fiscal year ended March 31, 1998 amounts include: (i) life
insurance premiums paid during each respective period by the Company under
employment agreements with John J. Rigas, Michael J. Rigas, Timothy J. Rigas,
James P. Rigas and Daniel R. Milliard, in premium payment amounts of $200,000,
$10,200, $10,200, $10,919 and $4,590, respectively, during the twelve months
ended December 31, 1999, $200,000, $10,200, $10,200, $10,681 and $4,590,
respectively, during the nine and twelve months ended December 31, 1998,
$200,000, $10,200, $10,200, $10,660 and $4,590, respectively, during the fiscal
year ended March 31, 1998 on policies owned by the respective named executive
officers; (ii) $216,270, $227,805, $0 and $230,746 for John J. Rigas which
represents the dollar value of the benefit of the whole-life portion of the
premiums paid by the Company during the twelve months ended December 31, 1999
and 1998, respectively, the nine months ended December 31, 1999 and the fiscal
year ended March 31, 1998, respectively, pursuant to a split-dollar life
insurance arrangement projected on an actuarial basis; (iii) $44,920, $32,506,
$0 and $29,882 for John J. Rigas which represents payments by the Company during
the twelve months ended December 31, 1999 and 1998, respectively, the nine
months ended December 31, 1998 and the fiscal year ended March 31, 1998,
respectively, pursuant to a split-dollar life insurance arrangement that is
attributable to term life insurance coverage; and (iv) $750 in Company matching
contributions for each executive officer under the Company's 401(k) savings plan
for the twelve months ended December 31, 1999 and 1998, the nine months ended
December 31, 1998 and the fiscal year ended March 31, 1998, respectively. The
amounts shown above do not include transactions between the Company and certain
executive officers or certain entities which are privately owned in whole or in
part by the executive officers named in the table. See "Item 13, Certain
Relationships and Related Transactions."
In accordance with an agreement related to the split-dollar life insurance
arrangement referred to above, the Company will be reimbursed for all premiums
paid related to such arrangement upon the earlier of death of both the insured
and his spouse or termination of the insurance policies related to such
arrangement.
(c) Does not include the value of certain non-cash compensation to each
respective named individual which did not exceed the lesser of $50,000 or 10% of
such individual's total annual salary shown in the table.
(d) The respective amounts set forth represent restrictive stock awards of
Adelphia Business Solutions Class A common stock, and stock options to purchase
Adelphia Business Solutions Class A common stock, which were granted to the
named executive officers by Adelphia Business Solutions under its 1996 Long-Term
Incentive Compensation Plan ("1996 Plan").
(e) Mr. Milliard served in the indicated positions for Adelphia, and as
President, Vice Chairman and Secretary of Adelphia Business Solutions pursuant
to an employment agreement with Adelphia Business Solutions, until September
1999 when he resigned his positions with both companies. Amounts shown for Mr.
Milliard represent amounts paid under his employment agreement, including (i)
restricted stock bonus awards under the 1996 Plan of 58,500 and 58,500 shares of
Adelphia Business Solutions Class A common stock which had a value of
approximately $27,000 and $760,500 as of April 1, 1997 and April 1, 1998 (the
dates of grant), respectively, and an option to purchase 81,250 shares of
Adelphia Business Solutions Class A common stock granted April 1, 1999. The
117,000 restricted stock award shares are not subject to vesting and will fully
participate in dividends and distributions.
</FN>
</TABLE>
All of the executive officers are eligible to receive stock options or stock
bonuses of Class A common stock under the Company's 1998 Long-Term Incentive
Compensation Plan ("1998 Plan"), to be awarded or granted at the discretion of
the Plan Administrator (as defined therein), subject to certain limitations on
the number of shares that may be awarded to each executive officer under the
1998 Plan. No awards were made to executive officers under the 1998 Plan during
the twelve months ended December 31, 1999.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants
-------------------------------------------------------------------------
Number of
Securities % of Total
Underlying Options Options Granted Exercise or Grant Date
Granted (1) (#) in Fiscal Year Base Price Expiration Date Present
Name ($/share) Value (2) ($)
- ---- --------- -------------
<S> <C> <C> <C> <C> <C>
John J. Rigas 100,000 16.7% 16.00 8/9/2009 809,000
Michael J. Rigas 100,000 16.7% 16.00 8/9/2009 809,000
Timothy J. Rigas 100,000 16.7% 16.00 8/9/2009 809,000
James P. Rigas 100,000 16.7% 16.00 8/9/2009 809,000
Daniel R. Milliard 81,250 13.6% 12.125 9/20/2000 891,313
<FN>
(1) All options granted were with respect to the Class A common stock of
Adelphia Business Solutions, with an exercise price equal to the fair market
value of such stock on the date of grant. These options, other than those for
Mr. Millard, all vest in three equal, annual amounts on the third, fourth and
fifth anniversaries of the date of grant.
(2) The grant date present value of each option was calculated using the
Black-Scholes option pricing model using the following assumptions: expected
dividend yield - 0%; risk free interest rate - 6.93%; and expected volatility -
50%. The expected life used in the calculation of the Black-Scholes option
pricing model for the options relating to John J. Rigas, James P. Rigas, Michael
J. Rigas, Timothy J. Rigas and Daniel R. Milliard were as follows: 10 years, 10
years, 10 years, 10 years and 1.47 years, respectively.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Aggregate Option Exercises In Last Fiscal Year
and December 31, 1999 Option Values
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Options at December 31, at
1999 December 31, 1999
Shares Acquired Value Realized (#) (1) Exercisable/ Exercisable/
Name on Exercise (#) ($) Unexercisable Unexercisable ($) (1)
- ---- --------------- --- ------------- ---------------------
<S> <C> <C> <C> <C>
John J. Rigas 0 0 0/100,000 0/3,200,000
Michael J. Rigas 0 0 0/100,000 0/3,200,000
Timothy J. Rigas 0 0 0/100,000 0/3,200,000
James P. Rigas 0 0 0/100,000 0/3,200,000
Daniel R. Milliard 0 0 81,250/0 2,914,843/0
<FN>
(1) All options granted were with respect to the Class A common stock of
Adelphia Business Solutions, with an exercise price equal to the fair market
value of such stock on the date of grant. These options, other than those for
Mr. Milliard, all vest in three equal, annual amounts on the third, fourth and
fifth anniversaries of the date of grant.
</FN>
</TABLE>
Employment Contracts and Termination of Employment
During the year ended December 31, 1999, each of the named executive
officers (except for Mr. Milliard) had an employment agreement with the Company
which is automatically renewable each year unless one party gives the other
prior notice and which provides among other things for compensation review by
the Compensation Committee, the insurance premium payments listed in note (a)(i)
to the Summary Compensation Table above, and benefits. In addition, under such
employment agreements, upon termination of such employment for any reason other
than "for cause," each of the executive officers will be entitled to receive
severance pay equal to three months of his salary plus the amount of insurance
premiums payable under such officer's employment agreement which, as of January
1, 2000, in the aggregate in the case of John J. Rigas would be approximately
$334,137.
The Company pays the annual premiums related to a split-dollar life
insurance arrangement for joint and survivor life insurance coverage for John J.
Rigas and his spouse. Upon the earlier of the death of Mr. Rigas and the death
of his spouse or the termination of the arrangement, the Company will recover
all of the premiums previously paid by the Company. The compensation related to
such arrangement is derived as described in notes (b)(ii) and (iii) to the
Summary Compensation Table above.
Mr. Milliard served as President and Vice Chairman of Adelphia Business
Solutions. Mr. Milliard's employment agreement with Adelphia Business Solutions
provided for base salary, annual cash bonuses based on achievement, stock
options and stock bonuses, certain employee benefits and certain
change-in-control and other provisions, and was set to expire on March 31, 2001.
Mr. Milliard resigned as senior vice president and secretary of the Company and
as President and Secretary of Adelphia Business Solutions effective as of
September 20, 1999 although he continued to serve as a director of both
companies until the 1999 annual stockholders meeting on October 25, 1999. Mr.
Milliard will continue to receive payments under his employment agreement
through March 31, 2001 at the rate of his base salary at the time of his
resignation, which will total approximately $282,000 from January 1, 2000
through March 31, 2001, and will receive an option to purchase 81,250 shares of
Adelphia Business Solutions Class A common stock at fair market value on April
1, 2000. Certain other matters under Mr. Milliard's employment agreement remain
under discussion and negotiation by Mr. Milliard and Adelphia Business
Solutions.
Compensation Committee Interlocks and Insider Participation
Perry S. Patterson and Pete J. Metros serve as members of the
Compensation Committee of the Board of Directors. Neither Mr. Patterson nor Mr.
Metros has been an officer or employee of the Company.
Board of Directors Compensation
Directors who are not also employees of the Company each receive
compensation from the Company for services as a director at a rate of $750 plus
reimbursement of expenses for each Board and committee meeting attended.
Directors who are employees of the Company do not receive any compensation for
services as a director or as a member of Board committees.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, based on information available to the
Company as of March 29, 2000, certain information with respect to the beneficial
ownership of Class A common stock and Class B common stock by each director or
nominee for director, all executive officers and directors of Adelphia as a
group, and each person known to Adelphia to own beneficially more than 5% of
either class of common stock, based on 113,051,118 shares of Class A common
stock and 16,735,998 shares of Class B common stock outstanding, respectively,
as of such date. Unless otherwise noted, each of the shareholders in the table
has sole voting and investment power. The business address of each 5% beneficial
owner named below, unless otherwise noted, is One North Main Street,
Coudersport, Pennsylvania 16915.
<PAGE>
<TABLE>
<CAPTION>
Shares of Percent of Shares of Percent of
Class A Class A Class B Class B
Common Common Common Common
Name Stock Stock Stock Stock
- ---- ----- ----- ----- -----
<S> <C> <C> <C> <C>
John J. Rigas.......................... (a) (b) 11,818,658(c) 70.6%
Michael J. Rigas....................... (a) (b) 7,633,442(c) 45.6%
Timothy J. Rigas....................... (a) (b) 7,633,442(c) 45.6%
James P. Rigas......................... (a) (b) 7,069,106(c) 42.2%
Perry S. Patterson...................... 1,250 (d) - -
Pete J. Metros.......................... 500 (d) - -
Dennis P. Coyle......................... 1,000 (d) - -
Leslie J. Gelber........................ 3,000 (d) - -
Erland E. Kailbourne.................... 500 (d) - -
Peter L. Venetis (d).................... (e) (e) 6,163,760(c) 36.8%
All executive officers and directors
as a group (ten persons)............. 41,706,829(a)(c) (b) 16,735,998(c) 100.0%
Ellen K. Rigas......................... (f) (g) 6,163,760(c) 36.8%
Doris Holdings, L.P. (h)............... 2,398,151 2.1% - -
Highland Holdings II (i)................ 4,000,000 3.5% - -
Highland Communications, - -
L.L.C.(i)............................. 9,056,268 8.0%
Highland Preferred - -
Communications, L.L.C. (i)............ 9,433,962 7.7%
Highland Holdings (i).................. 18,490,230 15.1% - -
Highland 2000, L.P. (j) (j) 5,901,522(c) 35.3%
Leonard Tow............................. 26,185,510 (k) 23.2% - -
50 Locust Avenue
New Canaan, CT 06840
Claire L. Tow........................... 26,185,510 (1) 23.2% - -
50 Locust Avenue
New Canaan, CT 06840
David Z. Rosensweig..................... 21,021,298 (m) 18.6% - -
162 Brite Avenue
Scarsdale, NY 10583
<FN>
(a) The holders of Class B common stock are deemed to be beneficial owners of an
equal number of shares of Class A common stock because Class B common stock is
convertible into Class A common stock on a one-to-one basis. See note (c) below.
In addition, the following persons own or have the power to direct the voting of
shares of Class A common stock in the following amounts: John J. Rigas, 431,800
shares - 71,700 shares directly and 360,100 shares through Doris Holdings, L.P.
("Doris"); Michael J. Rigas, 193,500 shares - 200 shares directly and 193,300
shares through Doris; Timothy J. Rigas, 193,500 shares - 200 shares directly and
193,300 shares through Doris; James P. Rigas, 193,300 shares through Doris. John
J. Rigas shares voting power with his spouse with respect to 106,300 of such
shares held through Doris. Each of John J. Rigas, Michael J. Rigas, Timothy J.
Rigas and James P. Rigas also shares voting and dispositive power with respect
to the 5,901,522 shares of Class B common stock owned by Highland 2000, L.P.,
the 18,490,230 shares of Class A common beneficially owned by Highland Holdings
and subsidiaries ("Highland"), the 4,000,000 shares of Class A common held by
Highland Holdings II ("Highland II") and the other 1,458,151 shares of Class A
common held by Doris. See notes (h) and (i).
(b) After giving effect to the conversion solely by each individual holder of
all of his Class B common stock into Class A common stock and including all
shares of Class A common stock, and the conversion into Class A common stock of
Series C Cumulative Convertible Preferred Stock, currently held by such
individual holder or over which such individual holder has or shares voting or
investment power as disclosed in notes (a) above or (h) and (i) below, the
percentage of Class A common stock owned by John J. Rigas, Michael J. Rigas,
Timothy J. Rigas and James P. Rigas would be 27.4%, 25.1%, 25.1% and 24.7%,
respectively. Further, after giving effect to an additional 4,919,340 shares of
Class A common stock of which John J. Rigas has the right to direct the voting
in the election of directors pursuant to a Class B Stockholders Agreement (and
assuming the parties to such agreement converted their Class B common stock into
Class A common stock), as to all of which additional shares John J. Rigas
disclaims beneficial ownership, the percentage of Class A common stock owned by
John J. Rigas would be 30.0%.
(c) The respective amounts shown include 97,949 of the same shares of Class B
common stock which are owned of record by Dorellenic, a general partnership in
which the five named individual Rigas family members are general partners and
5,901,522 of the same shares of Class B common stock which are owned by Highland
2000, L.P., a limited partnership in which the five named individual Rigas
family members are limited partners, and such shares are only included once for
"all executive officers and directors as a group." The named Rigas individuals
have shared voting and investment power with respect to these shares. The shares
of Class B common stock shown for Peter L. Venetis represent the shares
beneficially owned by his wife, Ellen K. Rigas. The amounts shown do not include
any of the 2,500,000 shares of Class B common stock that Highland has agreed to
purchase from Adelphia on or before July 2, 2000, pursuant to an agreement
between Adelphia and Highland dated October 1, 1999.
(d) Less than 1%.
(e) Peter L. Venetis is the husband of Ellen K. Rigas. As a result, he is deemed
to beneficially own indirectly the shares beneficially owned by Ellen K. Rigas.
Based upon 2,500 shares of Class A common stock owned directly by Mr. Venetis
and the shares of Class A common stock owned or deemed to be owned beneficially
by Ellen K. Rigas, the percentage of Class A common stock owned or deemed to be
beneficially owned by Mr. Venetis would be 22.3%. See notes (c), (f), (g) and
(i).
(f) As a holder of Class B common stock, Ellen K. Rigas is deemed to be the
beneficial owner of an equal number of shares of Class A common stock because
Class B common stock is convertible into Class A common stock on a one-to-one
basis. In addition, Ellen K. Rigas owns 1,600 shares of Class A common stock
directly and shares voting and investment power with respect to 18,490,230
shares of Class A common stock held by Highland and 4,000,000 shares of Class A
common stock held by Highland II. See also notes (c) and (i). Ellen K. Rigas is
the daughter of John J. Rigas.
(g) After giving effect to the conversion of all of Ellen K. Rigas' Class B
common stock into shares of Class A common stock and including all shares of
Class A common stock, and the conversion into Class A common stock of Series C
Cumulative Convertible Preferred Stock held by Ellen K. Rigas or over which
Ellen K. Rigas has or shares voting or investment power as discussed in note (i)
below, the percentage of Class A common stock owned by Ellen K. Rigas would be
22.3%.
(h) Doris and Eleni Acquisition, Inc., the general partner of Doris, are
affiliates of John J. Rigas, Michael J. Rigas, Timothy J. Rigas and James P.
Rigas, each of whom has shared voting and investment power with respect to the
shares held by Doris. In addition, through irrevocable proxies, each of the
above-named individuals shares with Doris the power to vote or direct the vote
of such number of shares of Class A common stock held as is described in note
(a).
(i) Each of Highland and Highland II is a general partnership, the general
partners of which are John J. Rigas, Michael J. Rigas, Timothy J. Rigas, James
P. Rigas and Ellen K. Rigas. These Rigas family members may be deemed to share
voting and investment power with respect to the shares held by Highland's wholly
owned subsidiaries, Highland Communications, L.L.C. and Highland Preferred
Communications, L.L.C., and also with respect to the shares held by Highland II.
The amount shown for Highland Preferred Communications, L.L.C. includes, and the
percentage shown reflects, 9,433,962 shares of Class A common stock into which
the 80,000 shares of Adelphia's Series C Cumulative Convertible preferred stock
held by Highland Preferred Communications, L.L.C. is convertible. The amount
shown for Highland Communications, L.L.C. includes 9,006,268 shares of Class A
common stock held directly by it and 50,000 shares of Class A common stock held
by Bucktail Broadcasting Corporation, another subsidiary of Highland.
(j) After giving effect to the conversion of all of Highland 2000, L.P.'s Class
B common stock into shares of Class A common stock, the percentage of Class A
common stock owned by Highland 2000, L.P. would be 4.96%.
(k) Includes 6,328,804 shares as to which Mr. Tow has sole voting and investment
power. Also includes 19,729,016 shares held by trusts and foundations
(17,307,308 of which are held by the Claire Tow Trust, 50 Locust Avenue, New
Canaan, CT 06840) as to which he shares voting and investment power with his
wife, Claire L. Tow, and David Z. Rosensweig. Also includes 127,690 shares
described in note (l) as to which Mrs. Tow has sole voting and investment power,
as to which shares Mr. Tow disclaims beneficial ownership.
(l) Includes 127,690 shares as to which Mrs. Tow has sole voting and investment
power, comprised of 16,046 shares of which she is the record and beneficial
owner and 111,644 shares that she has the right to acquire pursuant to stock
options. Also includes the 19,729,016 shares described in note (k) as to which
she shares voting and investment power with Mr. Tow and Mr. Rosensweig. Also
includes the 6,328,804 shares described in note (k) as to which Mr. Tow has sole
voting and investment power, as to which shares Mrs. Tow disclaims beneficial
ownership.
(m) Includes 15,000 shares as to which Mr. Rosensweig has sole voting and
investment power. Also includes the 19,729,016 shares described in note (k) as
to which he shares voting and investment power with Mr. and Mrs. Tow and
1,277,282 shares held in trust over which he is the sole trustee, as to all of
which shares he disclaims beneficial ownership.
</FN>
</TABLE>
John J. Rigas, Michael J. Rigas, Timothy J. Rigas, James P. Rigas,
Ellen K. Rigas, Dorellenic and the Company are parties to a Class B Stockholders
Agreement providing that such stockholders shall vote their shares of common
stock for the election of directors designated by a majority of voting power (as
defined in the Agreement) of the shares of common stock held by them. The Class
B Stockholders Agreement also provides that, in the absence of the consent of
the holders of a majority of the voting power of the shares of common stock
owned by the parties to the Agreement, (i) none of the stockholder parties may
sell, assign or transfer all or any part of their shares of common stock in a
public sale (as defined in the Agreement) without first offering the shares to
the other parties to the Agreement and (ii) no stockholder party may accept a
bona fide offer from a third party to purchase shares of such stockholder
without first offering the shares to the Company and then to the other parties
to the Class B Stockholders Agreement. In addition, each party has certain
rights to acquire the shares of common stock of the others under certain
conditions.
Item 13. Certain Relationships and Related Transactions
Management Services
During the year ended December 31, 1999, the Company provided
management services for certain cable television systems not owned by the
Company, including managed partnerships ("Managed Partnerships") in which John
J. Rigas, Michael J. Rigas, Timothy J. Rigas, James P. Rigas and Ellen K. Rigas
had varied ownership interests. These services included supervision of technical
and business operations, accounting, marketing, programming, purchasing, field
engineering and other technical and administrative nonfield services. During
this period, the Managed Partnerships paid the Company up to five percent of
system revenues for such services. Other fees were charged by the Company to the
Managed Partnerships during this period for goods and services including
mark-ups on the Company's pay programming, placement fees associated with
pending acquisitions, and other goods and services. In addition, the Managed
Partnerships charged the Company for system and corporate costs during this
period. The net fees and expenses charged by the Company to Managed Partnerships
amounted to $5,136,000 for the year ended December 31, 1999. In addition, the
Company paid $11,227,000 to other entities owned by members of the Rigas family,
primarily for property, plant and equipment and services.
Loans to and from Affiliates
Certain loans to and from the Company by or to affiliates as of
December 31, 1999 are summarized below. Interest is charged on such loans to
affiliates at rates which ranged from 9.00% to 11.31% for the year ended
December 31, 1999.
Total interest income on loans to managed affiliates aggregated
$10,781,000 for the year ended December 31, 1999.
Net receivables due from the Managed Partnerships for advances made by
the Company for the construction and acquisition of cable television systems and
for working capital purposes, including accrued interest thereon, were
$144,217,000 at December 31, 1999.
During the year ended December 31, 1999 the Company made net advances
of $5,042,000 to Dorellenic. At December 31, 1999, net receivables from
Dorellenic (including accrued interest) were $34,360,000. Amounts advanced to
Dorellenic were primarily used for working capital purposes.
During fiscal 1990 and 1991, the Company loaned an aggregate $255,000
to Daniel R. Milliard, a former officer and director, and an unaffiliated third
party, pursuant to several revolving term and term notes, for capital
expenditures and working capital purposes. As of December 31, 1999, the
outstanding amount of these loans was $152,500 including accrued interest.
On an end-of-quarter basis, the largest aggregate amount of net
outstanding loans and advances receivable from affiliates (directors, executive
officers and five-percent shareholders) or entities they control, including John
J. Rigas, Michael J. Rigas, Timothy J. Rigas, James P. Rigas, Ellen K. Rigas,
Dorellenic and/or the Managed Partnerships during the year ended December 31,
1999 was $178,577,000. No related party advances are collateralized.
As of December 31, 1999, the Company had capital funding notes with
Niagara Frontier Hockey, L.P. ("NFHLP") of approximately $47,533,000. These
amounts represent advances to NFHLP plus accrued return of 14.0%. The return on
these capital funding notes amounted to approximately $3,800,000 for the year
ended December 31, 1999. The Rigas family is an affiliate of NFHLP and has
entered into an agreement to acquire all the voting interests of NFHLP.
Co-Borrowing Agreements
On March 29, 1996, a subsidiary of the Company entered into a
$200,000,000 loan agreement with a Managed Partnership and an Olympus
subsidiary, as co-borrowers, which agreement remained in effect during the year
ended December 31, 1999.
On May 6, 1999, certain subsidiaries and affiliates of Adelphia and
Olympus, including Hilton Head Communications, L.P., a Rigas family partnership,
closed on an $850,000,000 credit facility with several banks. The credit
facility consists of a $600,000,000 8 1/2 year reducing revolving credit loan
and a $250,000,000 9 year term loan, and remained in effect during the year
ended December 31, 1999.
Business Opportunities
The Company's executive officers are parties to a Business Opportunity
Agreement, dated July 1, 1986 (the "Business Opportunity Agreement"), under
which they have agreed not to acquire an interest (except that such persons may,
individually for their own account, engage in regular portfolio trading of
publicly traded securities of companies in the cable television industry) in any
cable television system except: cable television systems which they or their
affiliates (excluding the Company) owned, in whole or in part, operated or had
agreed to acquire as of July 1, 1986; any expansions of such systems within the
same county or an adjacent county (except for systems which are also contiguous
to Company-owned systems); and systems which the Company elects not to acquire
under its right of first refusal described below and any expansions of such
systems within the same county or an adjacent county (except for systems which
are also contiguous to Company-owned systems). Otherwise, the executive officers
will first offer to the Company the opportunity to acquire or invest in any
cable television system or franchise therefor or interest therein that is
offered or available to them. If a majority of the Company's Board of Directors,
including a majority of the independent directors, rejects such offer, the
executive officers may acquire or invest in all of such cable television systems
or franchises therefor or interest therein or with others on terms no more
favorable to them than those offered to the Company.
The Company's executive officers may from time to time evaluate and,
subject to the Company's rights and covenants in the Company's loan agreements
and indentures, may acquire cable television systems or interests therein for
their own accounts separately or along with the Company and/or other joint
venture parties.
Except for the limitations on the ownership of cable television systems
as described herein, the executive officers of Adelphia and their affiliates are
not subject to limitations with respect to their other business activities and
may engage in other businesses related to cable television or other
telecommunications media. The executive officers will devote as much of their
time to the business of the Company as is reasonably required to fulfill the
duties of their offices.
In the event that any executive officer (or his affiliate) decides to
offer for sale (other than to another executive officer or his or another
executive officer's family member, trust or family controlled entity) for his
account, his ownership interest in any cable television system or franchise, he
or it will (subject to the rights of third parties existing at such time) first
offer such interests to the Company. Such selling person or entity has a
unilateral option to elect to require that, if the Company accepts such offer,
up to one half of the consideration for his or its interest would consist of
shares of Class B common stock, which shares will be valued at the prevailing
market price of the Class A common stock, and the remainder would consist of
shares of Class A common stock and/or cash. If a majority of the Company's
independent directors rejects such offer, the executive officer (or his
affiliate) may sell such interest to third parties on terms no more favorable to
such third parties than those offered to the Company.
Registration Rights, Stock Purchase and Other Matters
Pursuant to a Registration Rights Agreement, as amended, between the
Company and the holders of Class B common stock, John J. Rigas has the right,
subject to certain limitations, to require the Company to register shares of the
Company's common stock owned by him for sale to the public and pay the expenses
(except for Mr. Rigas' counsel fees) of such registration on five occasions
selected by him (subject to certain limitations intended to prevent undue
interference with the Company's ability to distribute its securities) during a
fourteen-year period which began in December 1986. The other holders of Class B
common stock have the right to participate, at the option of John J. Rigas, as
selling stockholders in any such registration initiated by John J. Rigas. The
holders of Class B common stock also have unlimited rights to participate as
selling stockholders in any registered public offering initiated by the Company
and require the Company to pay their expenses (except counsel fees). Such rights
of participation are subject to limitation at the discretion of the managing
underwriter of such offering.
In addition, substantially all of the Class A common stock and Series C
Cumulative Convertible preferred stock owned by the Rigas family or entities
they own or control has been registered by the Company on shelf registration
statements which remain in effect.
On January 14, 1999, Adelphia completed offerings totaling 8,600,000
shares of Class A common stock. In those offerings, Adelphia sold 4,600,000
newly issued shares, 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 at
$43.25 per share to Highland Holdings II, an entity controlled by members of the
Rigas family.
On January 29, 1999, Adelphia purchased from Telesat Cablevision, Inc.,
("Telesat") a subsidiary of FPL Group, Inc., shares of Adelphia stock owned by
Telesat for a price of $149,213,000. In the transaction, Adelphia purchased
1,091,524 shares of its Class A common stock and 20,000 shares of its 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 Class A common stock on a fully converted basis. On October 1, 1999,
the redemption of Telesat's interests in Olympus Communications, L.P. was
completed. The redemption was made for non-cash assets of Olympus of
approximately $100,000,000 pursuant to a January 1999 redemption agreement.
Prior to these transactions, Mr. Dennis Coyle was the nominee of Telesat to
Adelphia's Board of Directors.
On March 2, 1999, Adelphia Business Solutions issued $300,000,000 of
12% Senior Subordinated Notes due 2007. Highland Holdings, an entity controlled
by members of the Rigas family, purchased $100,000,000 of the $300,000,000 of
Senior Subordinated Notes directly from Adelphia Business Solutions at a price
equal to the aggregate principal amount less the discount to the initial
purchasers of the other $200,000,000 of Senior Subordinated Notes.
On April 9, 1999, Adelphia entered into a stock purchase agreement with
Highland Holdings in which Adelphia agreed to sell to Highland Holdings, and
Highland Holdings agreed to purchase $375,000,000 of Adelphia Class B common
stock. The purchase price per share for the Class B common stock was equal to
$60.76 (the public offering price in Adelphia's April 28, 1999 public offering,
less the underwriting discount), plus an interest factor. This transaction
closed on January 21, 2000. In addition, the Rigas family waived their rights
under the Business Opportunity Agreement to acquire certain basic subscribers in
the Philadelphia area in connection with Adelphia's acquisition, on October 1,
1999, of the cable television systems owned by Harron Communications Corp.
On October 1, 1999, Adelphia entered into a stock purchase agreement
with Highland Holdings in which Adelphia agreed to sell to Highland Holdings and
Highland Holdings agreed to purchase $137,500,000 of Adelphia's Class B common
stock. The purchase price for the Class B common stock will be $55.00 per share,
which is equal to the public offering price less the underwriting discount in
the October 6, 1999 public offering of Class A common stock, plus an interest
factor. Closing under this stock purchase agreement is to occur by July 2, 2000
as determined by Highland Holdings at its discretion.
The Company and Adelphia Business Solutions and members of or entities
controlled by the Rigas family have entered into various registration rights
agreements regarding the common stock and Senior Subordinated Notes owned by the
Rigas family.
From time to time, the Company makes announcements regarding proposed
transactions that may involve affiliates of the Company. No assurance can be
given that these transactions will be consummated.
