SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment No. 2
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported) June 9, 2002
ARAHOVA COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-16899 23-1844576
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
One North Main Street - Coudersport, PA 16915-1141
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (814) 274-9830
This Form 8-K/A amends and restates in its entirety the Registrant's
Form 8-K filed with the Commission on June 25, 2002 and amended on July 2, 2002.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Arahova Communications, Inc. (the "Registrant") is a wholly-owned
subsidiary of Adelphia Communications Corporation ("Adelphia"). As used
herein, the "Company" refers to Adelphia and its subsidiaries, including the
Registrant.
On June 9, 2002, Adelphia dismissed Deloitte & Touche LLP
("Deloitte"), its former independent accountants. On June 10, 2002, Deloitte
confirmed in writing to Adelphia that the client-auditor relationship between
Deloitte and Adelphia, the Registrant and certain other subsidiaries of Adelphia
had ceased. On June 13, 2002, Adelphia retained PricewaterhouseCoopers LLP
("PwC") as its independent accountants. Under this engagement PwC will serve as
independent accountants of the Registrant and certain other subsidiaries of
Adelphia. The Board of Directors of Adelphia and the Audit Committee of the
Board of Directors approved the decision to change independent accountants. On
June 14, 2002, Deloitte notified Adelphia that it was withdrawing its reports on
the financial statements of Adelphia, the Registrant and certain other
subsidiaries and affiliates of Adelphia.
The Registrant has not yet completed its financial statements or
filed its Annual Report on Form 10-K for the year ended December 31, 2001, nor
has the Registrant filed its Quarterly Report on Form 10-Q for the quarter ended
March 31, 2002. As of the date on which Deloitte was dismissed as the
Registrant's independent public accountants, Deloitte had not completed its
audit nor had it issued its report with respect to the Registrant's financial
statements for the year ended December 31, 2001.
The report of Deloitte on the financial statements of the Registrant
for the year ended December 31, 2000 contained no adverse opinion or disclaimer
of opinion and was not qualified or modified as to uncertainty, audit scope or
accounting principles. During the years ended December 31, 2000 and December 31,
2001, and through the date of this Form 8-K, there were no disagreements with
Deloitte on any matter of accounting principles or practices, financial
statement disclosure or audit scope or procedure that, if not resolved to the
satisfaction of Deloitte, would have caused it to make reference to the subject
matter of such disagreement in its reports on the financial statements; as
stated below, on May 14, 2002, Deloitte suspended its audit of the financial
statements of Adelphia and the Registrant for the year ended December 31, 2001.
Other than to the extent discussed below, there were no reportable events (each,
a "Reportable Event") within the meaning of Item 304(a)(1)(v) of Regulation S-K
for the years ended December 31, 2001 and December 31, 2000 and through the date
of this report. Adelphia's Audit Committee discussed the Reportable Event
referred to below with Deloitte and Adelphia authorized Deloitte to respond
fully to inquiries of PwC concerning that Reportable Event.
In March 2002, Adelphia's Board of Directors appointed a Special
Committee of Independent Directors (the "Special Committee") whose Charter
includes authority to review business relationships between the Company and
affiliates of the Rigas family. As part of that review the Special Committee
identified accounting and disclosure issues, some of which raised questions
about whether Adelphia's management had engaged in improper activities. On May
14, 2002, Deloitte advised Adelphia that it had suspended its audit of the
financial statements of Adelphia and the Registrant for the year ended December
31, 2001 and provided Adelphia with a list of issues that, according to
Deloitte, needed to be resolved before the issuance of Adelphia's and the
Registrant's Annual Reports on Form 10-K. Included in this list were
circumstances that raised questions about whether employees of Adelphia had
falsified accounting records and/or engaged in other conduct in violation of
law. On May 15, 2002, Adelphia's Board of Directors authorized a formal
investigation by counsel to the Special Committee into the nature and propriety
of transactions between the Company and affiliates of the Rigas family, the
integrity of the Company's books and records, the accuracy and completeness of
the Company's financial accounting, the Company's compliance with its
obligations under credit agreements and other debt instruments, and any other
matters related to the Company that the Special Committee decides should be
investigated. On June 9, 2002, following the transmission of (and without
acknowledging receipt of) Adelphia's letter dismissing Deloitte, Adelphia
received a letter from Deloitte in which Deloitte stated that it was still not
prepared to resume its audit. In that letter Deloitte noted that Adelphia
continued to employ executives who might have been involved in inappropriate
conduct related to the Company's financial reporting and stated: "To the extent
that any of those persons have been involved in illegal activities, there is no
way that we would be willing to rely on their representations, and indeed the
mere fact
that they remain in their positions raises additional concerns." In a letter
dated June 13, 2002 to Deloitte, Adelphia responded by noting that since May
25 the Company's accounting and finance staff have been headed by Christopher
Dunstan, Chief Financial Officer and Treasurer, and Steven B. Teuscher, Chief
Accounting Officer. In addition, Adelphia has retained Conway Del Genio,
Gries & Co., LLC for restructuring advice. Neither Messrs. Dunstan or
Teuscher, nor the Conway Del Genio firm, had any connection with the Company
during the time that the potentially improper activities may have occurred.
The members of Adelphia's accounting, finance and bank and investor relations
staff referred to in Deloitte's letter, who may have known about or been
directly implicated in inappropriate conduct, and who are cooperating with
the investigation being conducted by counsel to the Special Committee, have
been transferred to other duties pending completion of the investigation.
In the letter, Adelphia noted that: "The management representations required
in connection with the audit of the Company's financial statements will be
provided by officers who had no involvement in prior management's improper
activities and who will be adequately informed about the issues relating to
the company's financial statements by the findings of the Special Committee
counsel."
The Registrant provided Deloitte with a copy of the disclosures
made in this Form 8-K and requested that Deloitte furnish the Registrant
with a letter addressed to the Commission stating whether or not Deloitte agrees
with the above statements, and if not, stating the respects in which it does not
agree. A copy of such letter is filed herewith as Exhibit 16.1. The Company
believes that this Form 8-K, as amended on July 2, 2002, was not defective or
incomplete. The Company also believes that Deloitte's refusal to resume its
audit was unreasonable. In light of that unreasonable refusal, the Company
determined that it was not appropriate to share with Deloitte any additional
information, including the information Deloitte claims was withheld.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
Not applicable.
(b) Pro forma Financial Statements
Not applicable.
(c) Exhibits
16.1 Letter regarding change in certifying accountant (filed
herewith).
99.1 Press release dated June 14, 2002, relating to the selection
of PwC as Adelphia's independent public accountants
(previously filed).
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SIGNATURE
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.
Date: July 17, 2002
ARAHOVA COMMUNICATIONS, INC.
By: /s/ ERLAND E. KAILBOURNE
------------------------
Erland E. Kailbourne
Acting Chief Executive Officer
and Chairman
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
16.1 Letter regarding change in certifying accountant
(filed herewith).
99.1 Press release dated June 14, 2002, relating to the
selection of PwC as Adelphia's independent public
accountants (previously filed).
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