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, 2000
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: 000-21605
ADELPHIA BUSINESS SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 25-1669404
(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, $0.01 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 $0.01,
held by non-affiliates of the registrant at March 28, 2001 was approximately
$125 million based on the closing sale price as computed by the NASDAQ National
Market system as of that date. For purposes of this calculation only, affiliates
are deemed to be Adelphia Communications Corporation and directors and executive
officers of the registrant.
At March 28, 2001, 47,742,758 shares of Class A Common Stock, par value $0.01,
and 86,603,483 shares of Class B Common Stock, par value $0.01, 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 Form 10-K for the year ended
December 31, 2000 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 BUSINESS SOLUTIONS, INC.
April 30, 2001 By: /s/ Timothy J. Rigas
--------------------
Timothy J. Rigas
Vice Chairman, Treasurer, Chief
Financial Officer and Director
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 are
currently directors.
Directors and Executive Officers
The directors and executive officers of the Company are:
Name Age Position
Executive Officers and Directors
John J. Rigas................... 76 Chairman and Director
James P. Rigas.................. 43 Vice Chairman, Chief Executive
Officer, President and Director
Michael J. Rigas................ 47 Vice Chairman, Secretary and
Director
Timothy J. Rigas................ 44 Vice Chairman, Chief Financial
Officer, Treasurer and Director
Non-Officer Directors
Pete J. Metros.................. 60 Director
James L. Gray................... 66 Director
Peter L. Venetis................ 43 Director
Edward S. Mancini............... 41 Director
Executive Officers
John J. Rigas is the Chairman of the Board of the Company. He also is
the founder, Chairman, Chief Executive Officer and President of Adelphia
Communications Corporation ("Adelphia"). Mr. Rigas has owned and operated cable
television systems since 1952. Among his business and community service
activities, Mr. Rigas is Chairman of the Board of Directors of Citizens Bank
Corp., Inc., Coudersport, Pennsylvania and a member of the Board of Directors
of the Charles Cole Memorial Hospital. He is a director of the National Cable
Television Association and a member of its Pioneer 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 L. Venetis who also
serves as a director of the Company.
James P. Rigas is Vice Chairman, Chief Executive Officer, President and a
Director of the Company, Executive Vice President, Strategic Planning and a
Director of Adelphia and a Vice President and Director of Adelphia's other
subsidiaries. Mr. Rigas currently spends substantially all of his time on
concerns of the Company. Mr. Rigas has been with Adelphia since 1986.
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.
Michael J. Rigas is Vice Chairman, Secretary and a Director of the
Company, Executive Vice President, Operations and a Director of Adelphia and a
Vice President and Director of Adelphia's other subsidiaries. He has been with
Adelphia since 1981. 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 is Vice Chairman, Chief Financial Officer, Treasurer and
a Director of the Company, Executive Vice President, Chief Accounting Officer,
Treasurer and a Director of Adelphia, and a Vice President and Director of
Adelphia's other subsidiaries. He has been with Adelphia since 1979. Mr. Rigas
graduated from the University of Pennsylvania, Wharton School, with a B.S.
degree in Economics (cum laude) in 1978.
Non-Officer Directors
Pete J. Metros became a director of the Company on April 1, 1997. 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 of Manufacturing for
the Large Gas Turbine Division. Mr. Metros is also on the Board of Directors of
Borroughs Corporation of Kalamazoo, Michigan. Mr. Metros has served as a
director of Adelphia Communications Corporation since 1986 and received a BS
degree from the Georgia Institute of Technology in 1962.
James L. Gray became a director of the Company on April 1, 1997. Mr.
Gray is the retired chairman & CEO of PRIMESTAR Partners. Mr. Gray served as
chairman and CEO of PRIMESTAR from 1995 to 1998. Mr. Gray has more than 20
years of experience in the telecommunications, cable and satellite industries.
He joined Warner Cable in 1974, and advanced through several division operating
posts prior to being named president of Warner Cable in 1986. In 1992, after
the merger of Time Inc. and Warner Communications, Mr. Gray was appointed vice
chairman of Time Warner Cable where he served until his retirement in 1993. Mr.
Gray has served on the boards of several telecommunications companies and
associations, including the National Cable Television Association, where he
served as a director from 1986 to 1992, and Turner Broadcasting System, where he
served as a director from 1987 to 1991. He also served as chairman of the
executive committee and director of C-SPAN and as a director of E! Entertainment
Television, Cable in the Classroom and the Walter Kaitz Foundation. Beginning
in 1992, Mr.Gray began serving on PRIMESTAR's board of directors. Since 1995,
Mr. Gray has served as a director of Sea Pines Associates, Inc. Mr. Gray
received a bachelor's degree from Kent State University in Kent, Ohio and a
master's degree in business administration (MBA) from the State University of
New York at Buffalo.
Peter L. Venetis became a director of Adelphia Business Solutions on
October 25, 1999. Mr. Venetis is Managing Partner of Praxis Capital Ventures,
a private equity investment firm providing growth capital to emerging companies
in the telecommunications, digital media and related industries. Praxis Capital
Ventures is a subsidiary of Adelphia. Mr. Venetis was President and Chief
Executive Officer of the Atlantic Bank of New York from March 1992 to April
2000. Prior to this position, Mr. Venetis was a Director in the Leveraged
Finance Group at Salomon Brothers, Inc. where he was employed from 1985 to 1992.
Mr. Venetis is also a board member of Atlantic Bank of New York 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.
Edward S. Mancini became a director of Adelphia Business Solutions on
October 25, 1999. Mr. Mancini is President/Owner of Artistic Stitches, Inc.
From 1989 to 1993, Mr. Mancini was Vice President-Media Lending at Canadian
Imperial Bank of Commerce. From 1986 to 1989, Mr. Mancini was in the corporate
training program at Chase Manhattan Bank. Mr. Mancini received his Maters
of Science, Finance and Accounting from Texas A&M University in 1986.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act requires the Company's
directors, 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, officers and more than ten
percent stockholders filed on a timely basis all reports due under Section 16(a)
for the period from January 1, 2000 through December 31, 2000, except that one
report was filed late by Adelphia and two reports were filed late by Mr.
Mancini.
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 twelve months ended
December 31, 1998 and the years ended December 31, 1999 and 2000 to the
Company's Chief Executive Officer and its three other executive officers:
Annual Long Term
Compensation Compensation
------------ ------------
Restriced Securities
Stock Underlying All Other
Awards Options Compensation
Name and Principal Position(a) Period (b) Salary($) Bonus($) (f)($) (f)(#) (c)(d)($)
- ------------------------------ ---------- --------- ------- --------- ---------- ------------
John J. Rigas..................... 12 months ended 12/00 1,407,763 --- --- --- 466,050
Chairman and Director 12 months ended 12/99 1,354,953 --- 1,575,000 100,000 461,940
12 months ended 12/98 1,367,399 --- --- --- 461,061
James P. Rigas(e)................. 12 months ended 12/00 236,883 --- --- --- 11,669
Vice Chairman, Chief Executive 12 months ended 12/99 223,856 --- 1,575,000 100,000 11,669
Officer, President and Director 12 months ended 12/98 229,385 --- --- --- 11,431
Michael J. Rigas.................. 12 months ended 12/00 244,880 --- --- --- 20,996
Vice Chairman, Secretary and 12 months ended 12/99 223,856 --- 1,575,000 100,000 10,950
Director 12 months ended 12/98 229,866 --- --- --- 10,950
Timothy J. Rigas.................. 12 months ended 12/00 236,883 --- --- --- 19,944
Vice Chairman, Chief Financial 12 months ended 12/99 223,856 --- 1,575,000 100,000 10,950
Officer, Treasurer and Director 12 months ended 12/98 229,866 --- --- --- 10,950
<FN>
(a) John J. Rigas, Michael J. Rigas and Timothy J. Rigas are not employed by the
Company but are compensated by Adelphia for services to the Company pursuant
to employment agreements with Adelphia. The Company does not reimburse
Adelphia directly for the services they provide to the Company, although the
Company does make payments for shared corporate overhead services to Adelphia
pursuant to a Management Services Agreement.
(b) The twelve months ended December 31, 1998 includes three months compensation
from the fiscal year ended March 31, 1998.
(c) Twelve months ended December 31, 1998, 1999 and 2000 amounts include: (i)
life insurance premiums paid during each respective period by Adelphia under
employment agreements with John J. Rigas, James P. Rigas. Michael J. Rigas
and Timothy J. Rigas in premium payment amounts of $200,000, $10,919, $20,246
and $19,194, respectively, during the twelve months ended December 31, 2000,
$200,000, $10,919, $10,200 and $10,200, respectively, during the twelve
months ended December 31, 1999, and $200,000, $10,681, $10,200 and $10,200,
respectively, during the twelve months ended December 31, 1998 on policies
owned by the respective named executive officers; (ii) $212,166, $216,270 and
$227,805 for John J. Rigas which represents the dollar value of the benefit
of the whole-life portion of the premiums paid by Adelphia during the twelve
months ended December 31, 2000, 1999 and 1998, respectively, pursuant to a
split-dollar life insurance arrangement projected on an actuarial basis;
(iii) $53,134, $44,920 and $32,506 for John J. Rigas which represents
payments by Adelphia during the twelve months ended December 31, 2000, 1999
and 1998, respectively, pursuant to a split-dollar life insurance arrangement
that is attributable to term life insurance coverage; and (iv) $750 in
Adelphia matching contributions for each executive officer under the
Company's 401(k) savings plan for the twelve months ended December 31, 2000,
1999 and 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
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.
(d) 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 salary shown in the table.
(e) For the twelve months ended December 31, 1998, James P. Rigas was not
employed by the Company, but was compensated by Adelphia for his services to
the Company pursuant to an employment agreement with Adelphia. During such
periods, the Company did not directly reimburse Adelphia for Mr. Rigas' base
salary, insurance premium payments and other benefits paid by Adelphia.
Effective January 1, 1999, the Company employed Mr. Rigas directly.
(f) The respective amounts set forth represent restrictive stock awards of the
Company's Class A common stock and stock options to purchase the Company's
Class A common stock, which were granted to the named executive officers by
the Company under its 1996 Long-Term Incentive Compensation Plan ("1996
Plan"). The amounts shown represent the aggregate restricted stock awards
held by the named executive officers at December 31, 2000. At that date, the
value of each such award, based on the closing price of the Class A common
stock, was $425,000.
</FN>
Long-Term Incentive Compensation Plan
The Company's 1996 Plan provides for the grant of options which qualify as
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), options which do not so qualify,
share awards (with or without restrictions on vesting), stock appreciation
rights and stock equivalent or phantom units. The number of shares of Class A
common stock available for the issuance of such options, awards, rights and
phantom stock units under the 1996 Plan was initially 5,687,500. Such number is
to increase each year by a number of shares equal to one percent (1%) of
outstanding shares of all classes of common stock, up to a maximum of 8,125,000
shares, which is the current number of shares available under the 1996 Plan.
Options, awards and units may be granted under the 1996 Plan to directors,
officers, employees and consultants. The purposes of the 1996 Plan are to
encourage ownership of Class A common stock by directors, executive officers,
employees and consultants; to induce them to remain employed or involved with
the Company; and to provide additional incentive for such persons to promote the
success of the Company.
Aggregate Option Exercises In Last Fiscal Year
And December 31, 2000 Option Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options at Options at
December 31, December 31,
Shares 2000(#)(a) 2000 ($) (a)
Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized($) Unexercisable Unexercisable
- ---- -------------- ----------- ------------- -------------
John J. Rigas --- --- 0/100,000 0/0
James P. Rigas --- --- 0/100,000 0/0
Michael J. Rigas --- --- 0/100,000 0/0
Timothy J. Rigas --- --- 0/100,000 0/0
- ---------------
(a) All options granted were with respect to the Class A common stock of the
Company, with an exercise price equal to the fair market value of such stock
on the date of grant. These options all vest in three equal, annual amounts
on the third, fourth and fifth anniversaries of the date of grant.
Compensation Committee
James Gray and Pete Metros serve as members of the Compensation Committee
of the Board of Directors. Neither Mr. Gray nor Mr. Metros is or has been an
officer or employee of the Company.
Board of Directors Compensation
Directors who are not also employees of the Company each currently receive
compensation from the Company for services as a director at a rate of $1,000
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 the beneficial ownership of the Company's
Class A common stock and Class B common stock as of March 28, 2001 by (i) each
person known by the Company to be a beneficial owner of more than 5% of either
the Class A common stock or Class B common stock, (ii) the directors and
executive officers and (iii) all directors and executive officers as a group. As
of March 28, 2001, there were 47,742,758 shares of Class A common stock
outstanding and 86,603,483 shares of Class B common stock outstanding. Unless
otherwise indicated, each of the shareholders in the table has sole voting and
investment power with respect to the shares beneficially owned.
Total
Class A Class B Common Stock
Common Stock Common Stock (%)
---------------- -------------- ------------
Adelphia Communications Corporation (a) 19,700,117(b)(c) 85,766,040 78.5
John J. Rigas (a)...................... 649,500 - 0.5
James P. Rigas (a)..................... 642,500 - 0.5
Michael J. Rigas (a)................... 602,500 - 0.4
Timothy J. Rigas (a)................... 592,500 - 0.4
Pete J. Metros......................... 4,000 - -
James L. Gray.......................... 10,000 - -
Peter L. Venetis (d)................... 517,500 - 0.4
Edward Mancini......................... 25,000 - -
All executive officers and directors as
a group (eight persons) (a)............ 20,773,617(e) 85,766,040(e) 79.3
<FN>
(a) The business address of Adelphia Communications Corporation is One North
Main Street, Coudersport, PA 16915. In their capacity as executive officers
of Adelphia, the following persons share or may be deemed to share voting and
dispositive power over the shares of common stock owned by Adelphia, subject
to the discretion of the Board of Directors of Adelphia: John J. Rigas, James
P. Rigas, Michael J. Rigas and Timothy J. Rigas. Share amounts shown for
John J. Rigas, James P. Rigas, Michael J. Rigas and Timothy J. Rigas each
include 492,500 of the same Class A common stock shares held by Rigas family
partnerships in which each of them is a general partner, and 100,000 shares
of Class A common stock represented by a restricted stock award that begins
to vest in 2002.
(b) Each share of Class B common stock is convertible at any time at the option
of the holder into an equal number of shares of Class A common stock. Holders
of Class A common stock are entitled to one vote per share and holders of
Class B common stock are entitled to 10 votes per share on all matters
submitted to a vote of stockholders.
(c) The information presented reflects only shares of Class A common stock held
directly by Adelphia and does not include (i) shares of Class A common stock
into which Class B common stock may be converted or (ii) 708,121 shares of
Class A common stock issuable under warrants held by Adelphia. Assuming the
conversion of all Class B common stock held by Adelphia into Class A common
stock and the exercise of all such warrants, Adelphia would beneficially own
79.1% of the Class A common stock as of such date.
(d) The information presented includes 25,000 shares owned directly by Mr.
Venetis and 492,500 shares deemed to be beneficially owned through Rigas
family partnerships by Ellen K. Rigas, the wife of Mr. Venetis and the
daughter of John J. Rigas.
(e) The information presented includes 19,700,117 shares of Class A common stock
and 85,766,040 shares of Class B common stock held by Adelphia, for which the
following executive officers and directors of the Company share or may be
deemed to share voting and dispositive power over the shares, subject to the
discretion of the Board of Directors of Adelphia: John J. Rigas, James P.
Rigas, Michael J. Rigas and Timothy J. Rigas. The information presented
excludes 708,121 shares of Class A common stock issuable under warrants held
by Adelphia.
</FN>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended December 31, 2000, the Company made demand advances
to Adelphia periodically, for which the Company earned interest, at a rate of
between 5.15% to 6.33%, totaling approximately $6.3 million. During the period
January 1, 2000 to December 31, 2000, the largest amount due from Adelphia at
the end of any quarter was approximately $163.2 million at March 31, 2000.
The Company and Adelphia have entered into a registration rights
agreement, as amended whereby the Company has agreed to provide to Adelphia and
certain permitted transferees, with respect to common stock owned by them, two
demand registration rights per year under certain conditions, including that any
such demand be with respect to shares with a minimum of $10 million in market
value, and with certain piggyback registration rights in future public offerings
of the common stock. Adelphia's demand registration rights terminate at such
time as Adelphia ceases to hold at least $10 million in market value of common
stock.
During the year ended December 31, 2000, the Company incurred charges from
Adelphia of approximately $18.5 million for the provision to the Company of
shared corporate overhead services in areas such as personnel, payroll,
management information services, computer services, shared use of office,
aircraft and network facilities and support equipment. The Company expects that
charges for the provision of similar services by Adelphia to the Company, or by
the Company to Adelphia, will continue to be incurred or charged by the Company
in the future. The transactions related to the provision of these services have
been based on allocation of Adelphia's incremental costs incurred for these
services, and do not necessarily represent the actual costs that would be
incurred if the Company was to secure such services on its own or the costs
which would be charged on a pro-rata allocation of such costs under the
Management Services Agreement between the Company and Adelphia dated April 10,
1998, with respect to shared corporate overhead service. During the year ended
December 31, 2000, the Company (i) paid Adelphia or certain of Adelphia's
affiliates, fiber lease payments of approximately $0.3 million, (ii) received
from Adelphia approximately $8.6 million in revenue for providing switched
services, and (iii) paid to entities owned by members of the Rigas family who
are executive officers of the Company approximately $11.4 million for property,
plant and equipment and services.
During June 2000, Adelphia exercised a warrant to purchase 913,380 shares
of Class A common stock of the Company at a price of $6.15 per share. Adelphia
purchased the warrant in May 1998 from WorldCom in connection with the Company's
IPO. Total proceeds to the Company were approximately $5.6 million.
During December 2000, the Company sold to a subsidiary of Adelphia certain
network and telecommunications assets. The assets sold related to six markets in
Virginia, Colorado, California and Ohio which the Company has decided not to
pursue as part of its revised business plan. The aggregate purchase price for
these transactions was approximately $87.5 million plus the assumption of
certain liabilities. The Company will manage these networks for Adelphia on a
going forward basis.
The Company and certain of Adelphia's other subsidiaries and affiliates
are parties to a joint bank credit facility. As part of their facility, the
Company and its subsidiaries have the ability to borrow up to an aggregate of
$500.0 million which, if borrowed, would be guaranteed by other members of the
borrowing group. As of December 31, 2000, a subsidiary of the Company had
borrowed $500.0 million under this credit facility. In addition, the Company has
agreed to pay a subsidiary of Adelphia $15.0 million as a fee for placing the
credit facility. The interest rate at which the Company has borrowed these funds
is 12 1/2%, a portion of which is payable to a subsidiary of Adelphia. For the
year ended December 31, 2000, the Company recorded $21.9 million for interest
expense relating to the credit facility, $7.0 million of which was payable to a
subsidiary of Adelphia.