PRESS RELEASE Contact Information Karen Chrosniak Ed Babcock Adelphia Business Solutions 814-274-9830 FOR IMMEDIATE RELEASE: - --------------------- ADELPHIA BUSINESS SOLUTIONS, INC ANNOUNCES THIRD QUARTER RESULTS OF OPERATIONS Coudersport, PA - November 9, 2000 John J. Rigas, Chairman of Adelphia Communications Corporation ("Adelphia") (NASDAQ NNM: ADLAC) and Adelphia Business Solutions, Inc. ("the Company") (NASDAQ NNM: ABIZ) reported results of operations for the Company for the third quarter which ended on September 30, 2000. Third quarter results saw record levels of consolidated operating revenues of $93.6 million, and record access line installations of 83,225. Net loss applicable to common shareholders for the third quarter totaled $75.8 million, or $1.08 per share, compared with $53.7 million, or $0.97 per share, for the same period in the prior year. Summarized financial results are included in Tables 1, 2, 3 and 4 below. As presented in Table 1, on a sequential quarterly basis, consolidated revenues increased 16.6% to $93.6 million in the September 2000 quarter, from $80.2 million in the June 2000 quarter and were 115.8% higher than the comparable period in the prior year. Consolidated revenues were comprised of voice revenue (includes local, long-distance and other revenues) of $76.2 million in the September 2000 quarter as compared with $64.5 million in the June 2000 quarter and data revenue (includes internet and dedicated access and data services) of $17.4 million in the September 2000 quarter as compared with $15.7 million in the June 2000 quarter. Average revenue per installed access line in the September quarter was $50 per month, in line with the prior quarter of $51 per month. Consolidated revenues in the September 2000 quarter included $12.6 million of reciprocal compensation revenue, or 13% of revenues, slightly higher than the June 2000 quarter of 10% of revenues. The Company expects similar levels of overall consolidated revenue growth, in percentage terms, during the fourth quarter of 2000 and on a sequential quarterly basis throughout 2001. Consolidated gross margin as a percent of sales was 45.6% in the September 2000 quarter as compared with 48.1% of sales in the June 2000 quarter. Consolidated EBITDA losses for the September 2000 quarter were $25.2 million versus a $24.4 million EBITDA loss for the June 2000 quarter. Consolidated EBITDA losses as a percentage of revenues improved in the current quarter to 26.9% from 30.4% for the June 2000 quarter. Consolidated EBITDA losses were in line with expectations and the Company estimates consolidated EBITDA losses will be in a similar dollar range for the last quarter of calendar 2000. The Company expects consolidated EBITDA losses to decrease to a range of $30 million to $55 million for calendar 2001. As shown in Table 2, the Company's fourteen Class of 1996 markets continue to demonstrate strong financial results with sequential quarterly revenue growth of 14.2% in the September 2000 quarter and gross margin as a percentage of sales of 73.2%. Revenue for these markets has increased 82.7% as compared with the September 1999 quarter, while gross margins have been in excess of 70% of revenues for each of the past five quarters. As such, EBITDA before allocation of corporate overhead has increased from an annualized $58 million for the September 1999 quarter to an annualized $108 million, or almost 90%, for the September 2000 quarter. Furthermore, duringthe same period from the September 1999 quarter to the September 2000 quarter, the eight Class of 1997/1998 markets had a revenue increase of 108%, a grossmargin dollar increase of over 140% and an increase in annualized EBITDA from a negative ($5.4) million to a positive $8.8 million, or 15.6% of revenues. The Company believes these results continue to validate the facilities based integrated communications strategy being deployed by the Company as part of its nationwide expansion efforts. Access lines installed increased by 83,225 in the September 2000 quarter, resulting in an installed access line base of 576,857 as of September 30, 2000. Access lines sold as of September 30, 2000 totaled 612,544, an increase of 103,139 in the quarter. The Company expects additions of installed access lines of 80,000 to 100,000 in the fourth quarter of 2000 and 450,000 to 550,000 for calendar 2001. Furthermore, the Company expects the majority of its access line additions from this point forward to be serviced on the Company's network. The following table summarizes the Company's installed access lines as of September 30, 2000 and for the quarter then ended. For the Three Months Ended September 30, As of 2000 September 30, 2000 ---------------------- ---------------------- Lines Percent Lines Percent ----------- ---------- ---------- ----------- On-Network 20,250 24% 225,259 39% Type II 6,132 8% 55,091 10% Off-Network 56,843 68% 296,507 51% ----------- ---------- ---------- ----------- Totals 83,225 100% 576,857 100% Access lines converted onto the Company's own network through a combination of leased T-1s, unbundled network elements and on-net fiber services totaled 12,120 for the September 2000 quarter, a substantial increase over the June 2000 quarter which had approximately 4,000 lines converted. While the Verizon strike had some impact on the September 2000 quarter conversions and will impact the December 2000 quarter expected results somewhat less, the Company expects to exceed 20,000 lines converted in the December 2000 quarter. During the September 2000 quarter, the Company and its consolidated subsidiaries invested approximately $188.1 million in capital expenditures which was in line with expectations and relates primarily to local market construction and the nationwide network build-out. As of September 30, 2000, total gross property, plant and equipment of the Company and its consolidated subsidiaries was approximately $1.6 billion. The Company's condensed consolidated statements of operations and balance sheets are attached on Table 3 and Table 4, respectively. During the September 2000 quarter, the Company funded a portion of its free cash flow deficit with draws of approximately $253.6 million under a $500 million bank credit commitment. As of September 30, 2000, $349.7 million was drawn on the bank credit facility. The Company expects to fund its projected future deficits through early 2002 through a combination of additional draws under the credit facility, additional bank or institutional indebtedness, the issuance of public equity or equity linked securities in which the Company expects Adelphia Communications would participate, and capital contributions from minority partners (including potential Adelphia contributions) relating to the creation of new partnerships for the development of certain new markets. The Company expects to implement these financing plans in 2000 and the first half of 2001. A summary of the Company's non-financial statistical information as of September 30, 2000 follows: Under Active Development(a) Total ----------- ------------- ---------- Local Route Miles 8,439 2,600 11,049 Fiber Strand Miles 468,026 133,000 601,026 Long-Haul Route Miles 4,497 25,840 30,337 Buildings Connected on-network with owned facilities 3,161 N/A 3,161 Central Offices Connected on-network 282 180 462 Lucent 5ESS Voice Switch 29 9 38 Data Switches 26 10 36 Sales Employees 741 N/A 741 Total Employees 2,594 N/A 2,594 Average Lines per Customer 14 N/A 14 (a) Includes projects in progress and, with respect to Local and Long-Haul Route Miles, also includes fiber under construction or under agreement with third party providers as of September 30, 2000. N/A indicates information is either not applicable or not available. Adelphia Business Solutions is a majority owned subsidiary of Adelphia Communications Corporation that provides integrated communications services to business customers through its state-of-the-art fiber optic communications network. The Company owns 100% of the interests in 76 of its 79 operational markets in which it currently offers communications services, with the remaining three markets operating as 50% owned joint ventures with a local partner. The Company is currently constructing a fully redundant, 33,000-mile nationwide long-haul fiber optic network, which combined with an estimated 15,000 local fiber route miles, will support the Company's full line of communication service offerings, including local and long distance voice services, messaging, high-speed data and internet services. For more information on Adelphia Business Solutions, or to review an electronic version of this press release visit the Company's web site at http://www.adelphia-abs.com. The Company will hold its quarterly conference call with investors on Friday November 10, 2000 at 10:00a.m. Eastern Standard Time (EST). The conference call can be accessed by dialing 1-800-482-5543 (passcode 845285). A telephone replay of the conference call will be available immediately following the call and through Friday, November 17, 2000. To access the replay, please dial 1-800-625-5288 (passcode 845285). In addition, the call will be broadcast live via the Internet on the Company's website at www.adelphia-abs.com. A recording of the conference call will be available on the Company's website from November 10, 2000 through November 24, 2000. The statements in this press release that are not historical facts are forward-looking statements that are subject to material risks and uncertainties. Actual results could differ materially from those stated or implied by such forward-looking statements due to risks and uncertainties associated with the Company's business, which include among others, competitive developments, risks associated with the Company's growth and financings, the cost and availability of capital, the development of the Company's markets, regulatory risks, reliance on vendors, dependence on its customers and their spending patterns, the ability of the Company to design and construct fiber optic networks and related facilities, and other risks which are discussed in the Company's filings with the Securities and Exchange Commission. Additional information regarding factors that may affect the business and financial results of Adelphia Business Solutions can be found in the Company's filings with the Securities and Exchange Commission, including the prospectus and most recent prospectus supplement under Registration Statement File No. 333-11142 (formerly No. 333-88927), under the caption "Risk Factors," and the Company's filings under the Securities Exchange Act of 1934. The Company does not undertake to update any forward looking statements in this press release or with respect to matters described herein. Adelphia Business Solutions,Inc. Table 1 - Unaudited Consolidated and Joint Venture Operating Results Quarter Ended Quarter Ended Quarter Ended September 30, 2000 June 30,2000 September 30, 1999 -------------------------------- ---------------------------------- --------------------------------- Joint Joint Joint Consolidated Venture Total Consolidated Venture Total Consolidated Venture Total (dollars in thousands) Operating Operating Operating Operating Operating Operating Operating Operating Operating Results Results Results Results Results Results Results Results Results -------------------------------- --------------------------------- ---------------------------------- Revenues $ 93,551 $ 17,612 $111,163 $ 80,214 $ 15,777 $ 95,991 $ 43,347 $ 9,501 $ 52,848 Direct Operating Expenses 50,893 4,441 55,334 41,661 4,112 45,773 15,862 2,526 18,388 -------------------------------- --------------------------------- ---------------------------------- Gross Margin 42,658 13,171 55,829 38,553 11,665 50,218 27,485 6,975 34,460 Gross Margin Percentage 45.6% 74.8% 50.2% 48.1% 73.9% 52.3% 63.4% 73.4% 65.2% Sales, General and Administrative Expenses 67,845 7,710 75,555 62,922 7,122 70,044 39,972 4,194 44,166 -------------------------------- --------------------------------- ---------------------------------- EBITDA (a) (25,187) 5,461 (19,726) (24,369) 4,543 (19,826) (12,487) 2,781 (9,706) -------------------------------- --------------------------------- ---------------------------------- EBITDA Percentage of Revenues (26.9%) 31.0% (17.7%) (30.4%) 28.8% (20.7%) (28.8%) 29.3% (18.4%) September 2000 Quarter September 2000 Quarter vs. vs. June 2000, Quarter September 1999 Quarter -------------------------------- --------------------------------- Joint Joint Percent Change Comparison Consolidated Venture Total Consolidated Venture Total Operating Operating Operating Operating Operating Operating Results Results Results Results Results Results -------------------------------- --------------------------------- Revenues 16.6% 11.6% 15.8% 115.8% 85.4% 110.3% Direct Operating Expenses 22.2% 8.0% 20.9% 220.8% 75.8% 200.9% -------------------------------- --------------------------------- Gross Margin 10.7% 12.9% 11.2% 55.2% 88.8% 62.0% Sales, General and Administrative Expenses 7.8% 8.3% 7.9% 69.7% 83.8% 71.1% -------------------------------- --------------------------------- EBITDA (a) (3.4%) 20.2% 0.5% (101.7%) 96.4% (103.2%) -------------------------------- --------------------------------- Table 1 summarizes operating results for (i) Adelphia Business Solutions and its consolidated subsidiaries and (ii) its three non-consolidated joint ventures. (a)Earnings before interest, income taxes, depreciation and amortization, non-cash stock compensation and other income/expense ("EBITDA") and similar measures of cash flow are commonly used in the telecommunications industry to analyze and compare telecommunications companies on the basis of operating performance, leverage, and liquidity. While EBITDA is not an alternative to operating income as an indicator of operating performance or an alternative to cash flows from operating activities as a measure of liquidity as defined by GAAP, and while EBITDA may not be comparable to other similarly titled measures of other companies, management of Adelphia Business Solutions believes that EBITDA is a meaningful measure of performance. Adelphia Business Solutions, Inc. Table 2 - Unaudited Combined Results of Original and Expansion Markets before allocateion of Corporate Overhead (a) Quarter Ended September 30, 2000 Quarter Ended June 30, 2000 ----------------------------------------------- ----------------------------------------------- Original Expansion Original Expansion Markets Markets Markets Markets ------------------ ----------------- ------------------ ----------------- (dollars in Class Class Class Class Total Class Class Class Class Total thousands) of of of of Operating of of of of Operating 1996 1997/98 1999 2000 Results(a) 1996 1997/98 1999 2000 Results(a) -------- -------- -------- -------- ---------- -------- -------- -------- -------- ---------- Revenue $ 78,168 $ 14,061 $ 18,829 $ 105 $ 111,163 $ 68,478 $ 11,931 $ 15,576 $ 6 $ 95,991 Direct Operating Expenses 20,933 6,575 23,986 879 52,373 17,998 5,971 18,997 155 43,121 -------- -------- -------- -------- ---------- -------- -------- -------- -------- ---------- Gross Margin 57,235 7,486 (5,157) (774) 58,790 50,480 5,960 (3,421) (149) 52,870 Gross Margin Percentage 73.2% 53.2% (27.4%) NM 52.9% 73.7% 50.0% (22.0%) NM 55.1% Sales, General and Administrative Expenses 30,171 5,296 21,689 3,519 60,675 31,825 4,980 18,545 1,910 57,260 -------- -------- -------- -------- ---------- -------- -------- -------- -------- ---------- EBITDA before allocation of Corporate Overhead (b) 27,064 2,190 (26,846) (4,293) (1,885) 18,655 980 (21,966) (2,059) (4,390) -------- -------- -------- -------- ---------- -------- -------- -------- -------- ---------- EBITDA as a Percentage of Revenues 34.6% 15.6% (142.6%) NM (1.7%) 27.2% 8.2% (141.0%) NM (4.6%) September 2000 Quarter vs. June 2000 Quarter Percentage Change Comparison ----------------------------------------------- Original Expansion Markets Markets ------------------ ----------------- Percent Change Class Class Class Class Total Comparison of of of of Operating 1996 1997/98 1999 2000 Results(a) -------- -------- -------- -------- ---------- Revenues 14.2% 17.9% 20.9% NM 15.8% Direct Operating Expenses 16.3% 10.1% 26.3% NM 21.5% -------- -------- -------- -------- ---------- Gross Margin 13.4% 25.6% 50.7% NM 11.2% Sales, General and Administrative Expenses (5.2%) 6.3% 17.0% NM 6.0% -------- -------- -------- -------- ---------- EDITDA before allocation of Corporate Overhead (b) 45.1% 123.5% (22.2%) NM 57.1% -------- -------- -------- -------- ---------- <FN> (a) Table 2 summarizes operating results before the allocation of corporate overhead for Adelphia Business Solutions' Original and Expansion Markets, grouped by the year or years in which operations commenced. Operating Results are presented before an allocation of Corporate Overhead for network operating control center, engineering and other administrative support functions totaling $17.1 million in the September 2000 quarter and $15.9 million in the June 2000 quarter. The Expansion Markets include thirty markets in the Class of 1999 and twenty-seven markets in the Class of 2000. (b)Earnings before interest, income taxes, depreciation and amortization, other income/expense and noncash stock compensation ("EBITDA") and similar measures of cashflow are commonly used in the telecommunications industry to analyze and compare telecommunications companies on the basis of operating performance, leverage, and liquidity. While EBITDA is not an alternative indicator of operating performance or an alternative to cash flows from operating activities as a measure of liquidity as defined by GAAP, and while EBITDA may not be comparable to other similarly titled measure of other companies, management of Adelphia Business Solutions believes that EBITDA is a meaningful measure of performance. </FN> Adelphia Business Solutions,Inc. Table 2 (Cont.) - Unaudited Combined Results of Original and Expansion Markets before allocation of Corporate Overhead (a) Quarter Ended September 30, 2000 Quarter Ended September 30, 1999 ----------------------------------------------- ----------------------------------------------- Original Expansion Original Expansion Markets Markets Markets Markets ------------------ ----------------- ------------------ ----------------- (dollars in Class Class Class Class Total Class Class Class Class Total thousands) of of of of Operating of of of of Operating 1996 1997/98 1999 2000 Results(a) 1996 1997/98 1999 2000 Results(a) -------- -------- -------- -------- ---------- -------- -------- -------- -------- ---------- Revenue $ 78,168 $ 14,061 $ 18,829 $ 105 $ 111,163 $ 42,785 $ 6,730 $3,335 $ - $ 52,850 Direct Operating Expenses 20,933 6,575 23,986 879 52,373 10,507 3,616 2,707 (1) 16,829 -------- -------- -------- -------- ---------- -------- -------- -------- -------- ---------- Gross Margin 57,235 7,486 (5,157) (774) 58,790 32,278 3,114 628 1 36,021 Gross Margin Percentage 73.2% 53.2% (27.4%) NM 52.9% 75.4% 46.3% 18.8% NM 68.2% Sales, General and Administrative Expenses 30,171 5,296 21,689 3,519 60,675 17,778 4,460 13,067 87 35,392 -------- -------- -------- -------- ---------- -------- -------- -------- -------- ---------- EBITDA before allocation of Corporate Overhead (b) 27,064 2,190 (26,846) (4,293) (1,885) 14,500 (1,346) (12,439) (86) 629 -------- -------- -------- -------- ---------- -------- -------- -------- -------- ---------- EBITDA Percentage of Revenues 34.6% 15.6% (142.6%) NM (1.7%) 33.9% (20.0%) (373.0%) NM 1.2% September 2000 Quarter vs. September 1999 Quarter Percentage Change Comparison ----------------------------------------------- Original Expansion Markets Markets ------------------ ----------------- Percent Change Class Class Class Class Total Comparison of of of of Operating 1996 1997/98 1999 2000 Results(a) -------- -------- -------- -------- ---------- Revenues 82.7% 108.9% 464.6% NM 110.3% Direct Operating Expenses 99.2% 81.8% 786.1% NM 211.2% -------- -------- -------- -------- ---------- Gross Margin 77.3% 140.4% NM NM 63.2% Sales, General and Administrative Expenses 69.7% 18.7% 66.0% NM 71.4% -------- -------- -------- -------- ---------- EDITDA before allocation of Corporate Overhead (b) 86.6% NM (115.8%) NM NM -------- -------- -------- -------- ---------- <FN> (a)Table 2 summarizes operating results before the allocation of corporate overhead for Adelphia Business Solutions' Original and Expansion Markets, grouped by the year or years in which operations commenced. Operating Results are presented before an allocation of Corporate Overhead for network operating control center, engineering and other administrative support functions totaling $17.1 million in the September 2000 quarter and $10.3 million in the September 1999 quarter. The Expansion Markets include thirty markets in the Class of 1999 and twenty-seven markets in the Class of 2000. (b)Earnings before interest, income taxes, depreciation and amortization, other income/expense and noncash stock compensation ("EBITDA") and similar measures of cash flow are commonly used in the telecommunications industry to analyze and compare telecommunications companies on the basis of operating performance, leverage, and liquidity. While EBITDA is not an alternative indicator of operating performance or an alternative to cash flows from operating activities as a measure of liquidity as defined by GAAP, and while EBITDA may not be comparable to other similarly titled measure of other companies, management of Adelphia Business Solutions believes that EBITDA is a meaningful measure of performance. </FN> ADELPHIA BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES TABLE 3 - CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Amounts in thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, ---------------------- ---------------------- 1999 2000 1999 2000 --------- --------- --------- --------- Revenues .............................. $ 43,347 $ 93,551 $ 99,000 $ 243,066 --------- --------- ---------- ---------- Operating expenses: Network operations .................. 15,862 50,893 36,037 126,286 Selling, general and administrative . 39,269 67,845 92,915 188,814 Noncash stock compensation .......... 703 (640) 703 585 Depreciation and amortization ....... 18,168 27,103 45,289 73,230 --------- --------- ---------- ---------- Total ....................... 74,002 145,201 174,944 388,915 --------- --------- ---------- ---------- Operating loss ........................ (30,655) (51,650) (75,944) (145,849) Other income (expense): Interest income ..................... 2,867 1,247 19,645 2,671 Interest income-affiliate ........... 1,336 --- 6,943 6,282 Interest expense .................... (19,045) (16,748) (56,383) (44,942) --------- --------- ---------- ---------- Loss before income taxes and equity in net (loss)income of joint ventures ... (45,497) (67,151) (105,739) (181,838) Income tax expense .................... --- --- (4) --- --------- --------- ---------- ---------- Loss before equity in net (loss) income of joint ventures .................... (45,497) (67,151) (105,743) (181,838) Equity in net (loss) income of joint ventures ............................. (246) 381 (7,340) (70) --------- --------- ---------- ---------- Net loss .............................. (45,743) (66,770) (113,083) (181,908) Dividend requirements applicable to preferred stock ...................... (7,969) (9,053) (23,168) (26,321) --------- --------- ---------- ---------- Net loss applicable to common stockholders ......................... $(53,712) $(75,823) $(136,251) $(208,229) ========= ========= ========== ========== Basic and diluted net loss per weighted average share of common stock $ (0.97) $ (1.08) $ (2.46) $ (2.98) ========= ========= ========== ========== Weighted average shares of common stock outstanding ............. 55,497 70,531 55,497 69,788 ========= ========= ========== ========== ADELPHIA BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES TABLE 4 - CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands, except per share amounts) December 31, September 30, 1999 2000 ------------ ------------ ASSETS: Current assets: Cash and cash equivalents ......................... $ 2,133 $ 2,466 Due from parent - net ............................. 392,629 -- Due from affiliates - net ......................... 6,230 -- Accounts receivable - net ......................... 68,075 108,755 Other current assets .............................. 9,852 16,489 ------------ ------------ Total current assets ......................... 478,919 127,710 U.S. government securities - pledged ................... 29,899 -- Restricted cash ........................................ -- 66,652 Investments ............................................ 44,066 51,197 Property, plant and equipment - net .................... 943,756 1,384,844 Other assets - net ..................................... 67,063 95,965 ------------ ------------ Total ........................................ $ 1,563,703 $ 1,726,368 ============ ============ LIABILITIES, PREFERRED STOCK, COMMON STOCK AND OTHER STOCKHOLDERS' EQUITY (DEFICIENCY): Current liabilities: Accounts payable ................................. $ 150,151 $ 78,677 Due to affiliates-net ............................ -- 5,106 Accrued interest and other current liabilities ... 27,595 33,575 ------------ ------------ Total current liabilities .................... 177,746 117,358 13% Senior discount notes due 2003 ..................... 253,860 281,764 12 1/4% Senior secured notes due 2004 .................. 250,000 250,000 12% Senior subordinated notes due 2007 ................. 300,000 300,000 Note payable ........................................... -- 349,709 Other debt ............................................. 41,318 54,892 ------------ ------------ Total liabilities ............................ 1,022,924 1,353,723 ------------ ------------ 12 7/8% Senior exchangeable redeemable preferred stock . 260,848 287,584 ------------ ------------ Common stock and other stockholders' equity: Class A common stock, $0.01 par value, 800,000,000 shares authorized, 34,066,587 and 35,749,866 shares outstanding, respectively ......................... 341 357 Class B common stock, $0.01 par value, 400,000,000 shares authorized, 35,371,458 and 35,143,859 shares outstanding, respectively ......................... 354 351 Additional paid in capital ........................... 666,021 652,619 Class B common stock warrants ........................ 2,177 1,370 Unearned stock compensation .......................... (5,715) (4,481) Accumulated deficit .................................. (383,247) (565,155) ------------ ------------ Total common stock and other stockholders' equity ...................................... 279,931 85,061 ------------ ------------ Total ........................................ $ 1,563,703 $ 1,726,368 ============ ============