These Global Notes (the “Global Notes”) Regarding Debtors’ January 2005
Amended Schedules of Liabilities comprise an integral part of the January 2005
Amended Schedules of Liabilities and should be referred to and considered in
connection with any review of them
.
1.
The January 2005 Supplemental
Schedule of Liabilities of Adelphia Communications Corporation (“Adelphia”) and
its affiliated debtors (the “Bankruptcy Schedules”) in the above-captioned,
jointly administered Chapter 11 cases (collectively, the “Debtors”) have been
prepared pursuant to section 521 of title 11 of the United States Code (the
“Bankruptcy Code”) and Rule 1007 of the Federal Rules of Bankruptcy Procedure
by management of the Debtors and are unaudited.
The
information provided herein is as of the close of business on June 30, 2002 for
all of the Debtors. The financial affairs and
businesses of the Debtors are extremely large and complex. While the Debtors’ management has made every
reasonable effort to ensure that the Bankruptcy Schedules are accurate and
complete, based upon information that was available to them at the time of
preparation, the subsequent receipt of information and/or further review and
analysis of the Debtors’ books and records may result in material changes to financial
data and other information contained in the Bankruptcy Schedules. Inadvertent errors or omissions may exist,
however.
2.
On December 23, 2004, Adelphia
Communications Corporation (“Adelphia”)
filed its Annual Report on Form 10-K for the year ended December 31,
2003 (the “2003 Form 10-K”). The 2003
Form 10-K can be read over the Internet at the Securities and Exchange
Commission’s web site at http://www.sec.gov.
The 2003 Form 10-K includes the audited consolidated financial
statements of Adelphia Communications Corporation and its subsidiaries for the
years ended December 31, 2003, 2002 and 2001 and related financial information.(1)
As further described in the 2003 Form 10-K, the audited financial statements
reflect, among other things, the correction of prior errors in the application
of generally accepted accounting principles contained in publicly filed
documents. The Intercompany Schedule (as
defined below) includes intercompany balances that are a component of the
audited consolidated financial statements, but are not presented as a separate
financial statement line item because the intercompany balances are eliminated
in consolidation.
(1)
The
Debtors had previously announced and disclosed in its periodic filings with the
SEC that they intended to prepare restated consolidated financial statements
for the years ended December 31, 2000 and 1999 and to have these restated financial
statements audited by PricewaterhouseCoopers LLP. However, the Debtors cannot locate
appropriate supporting documentation with respect to certain amounts or account
balances reflected in the consolidated balance sheets for the years ended
December 31, 2000 and 1999. Therefore,
the Debtors have written-off these unsupported amounts or balances to the
consolidated statements of operations for the years ended December 31, 2000 and
1999. The Debtors have determined that they
are unable to present restated consolidated financial statements with respect
to the years ended December 31, 2000 and 1999 because the Debtors cannot
conclude that the restated consolidated financial statements would present, in
all material respects, the Debtors’ financial position as of December 31, 1999
and its results of operations and cash flows for the years ended December 31,
2000 and 1999, in each case in accordance with GAAP, consistently applied. Therefore, the Debtors’ consolidated
financial statements do not contain data with respect to the years ended
December 31, 2000 and 1999.
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3.
Prior to the commencement of
these chapter 11 cases, the Debtors participated in a centralized cash
management system through which payments to third-party creditors generally
were made by Adelphia Cablevision, LLC (“Adelphia Cablevision”) on behalf of the
other Debtors. The payments to third
parties generally were recorded on the books and records of the entity on
behalf of which the payment was made along with the applicable intercompany
payable to Adelphia Cablevision. Cash
receipts generally were collected by Adelphia Cablevision with the applicable
intercompany receivable being recorded on the books and records of the
applicable Debtor. Pursuant to
procedures utilized pre-petition under the centralized cash management system,
unless evidenced by documentation between two Debtors, all intercompany
balances are between a Debtor and Adelphia Cablevision. All such intercompany transfers between a
Debtor on the one hand, and Adelphia Cablevision on the other hand, have been
netted in the Intercompany Schedule, creating either a net payable or
receivable intercompany balance between each such Debtor and Adelphia
Cablevision.
4.
Beginning in 1992, certain of
the Debtors purchased controlling equity interests in certain cable systems
owned by or affiliated with Tele-Media Corporation of Delaware (“TMCD”). The entities, which are Debtors in these
cases, are: Adelphia Company of Western Connecticut (also known as Tele-Media
Company of Western Connecticut), TMC Holdings Corp., CMA Cablevision Associates
VII, L.P., CMA Cablevision Associates XI, L.P., Tele-Media Company Of
Tri-States, L.P., Eastern
Virginia Cablevision, L.P., Eastern Virginia Cablevision Holdings, LLC,
Tele-Media Investment Partnership, L.P., and Tele-Media Company of
Hopewell-Prince George (collectively, the “Tele-Media Debtors”). Pursuant to certain agreements, through the
Petition Date, TMCD provided management and other services to the Tele-Media
Debtors. Neither TMCD nor any of its
affiliates (except for the Tele-Media Debtors) is a Debtor in these cases and
neither TMCD nor any of its affiliates (except for the Tele-Media Debtors) has
filed for relief under the Bankruptcy Code.
As of June 30, 2002, the Tele-Media Debtors did not participate in the
Debtors’ centralized cash management system described above. Rather, the Tele-Media Debtors participated
in a cash management system managed by TMCD and certain of its affiliates. In the ordinary course of business, TMCD paid
the expenses of the Tele-Media Debtors and certain other non-debtor affiliates
of TMCD through a common paymaster account.
The Tele-Media Debtors also received certain disbursements and had
certain obligations to certain of the Debtors, including Adelphia Cablevision. Consequently, the Tele-Media Debtors also
have intercompany account balances with the other Debtors, which are not
included herein.
5.
A list
of each Debtor’s net payable or receivable intercompany balance to or from
Adelphia Cablevision is annexed hereto (the “Intercompany Schedule”). Also included are the net payable or
receivable affiliate balances for certain affiliates of the Debtors, including
certain of the co-borrowing Rigas entities.
Balances with entities that do not consolidate with Adelphia or are
non-co-borrowing Rigas entities are not included in the Intercompany Schedule.
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6.
The intercompany balances can be
characterized in one of four ways: (i)
pari passu
with
all third-party debt, including bank debt; (ii)
pari passu
with trade debt but subordinated to bank debt; (iii) subordinated to all
third-party debt but senior to equity; or (iv) equity. In the Debtors’ Joint Plan of Reorganization,
dated February 25, 2004 (as it may be subsequently amended, the “Plan”), the
Debtors have sought to effect a compromise by treating all intercompany
payables as subordinated to all third-party debt but senior to common
equity. The Debtors reserve all of their
rights with respect to the intercompany balances, including, but not limited
to, the appropriate characterization of the intercompany balances in the Plan.
7.
Prior to the commencement of
these chapter 11 cases, then-current management of the Debtors engaged in
certain inter-Debtor transactions. The Debtors are in the process of
reviewing and analyzing such transactions, which may result in further
revisions to the intercompany balances presented in the Intercompany Schedule.
8.
For administrative convenience
only, without waiving any defense, including, but not limited to defenses
related to substantive consolidation or piercing the corporate veil, the filing
of the Intercompany Schedule in the jointly administered case for Adelphia
Communications Corporation, Case No. 02-41729, shall be deemed to be a filing
of the January 2005 Amended Schedules in each of the Debtors’ cases and an
amendment of previously filed bankruptcy schedules.
9.
The Debtors reserve all rights
to amend without notice the Bankruptcy Schedules in all respects, as may be
necessary or appropriate, including, but not limited to, the right to dispute
or to assert offsets or defenses to any claim reflected on the Bankruptcy
Schedules as to amount, liability or classification, to otherwise subsequently
designate any claim as “disputed,” “contingent” or “unliquidated.” Any failure to designate a claim as
“contingent,” “unliquidated,” or “disputed” does not constitute an admission by
the Debtors that such claim is not “contingent,” “unliquidated,” or “disputed,”
or to reallocate liabilities between the pre-petition and post-petition periods
based on any additional information. Although none of the balances on
the Intercompany Schedule is listed as contingent, disputed or unliquidated,
the Debtors reserve the right to seek alternative treatment of such balances,
including, but not limited to, equitable subordination or disallowance.
10.
Furthermore, nothing contained
in the Bankruptcy Schedules shall constitute a waiver of the Debtors’ rights
with respect to these Chapter 11 cases and specifically with respect to any
issues involving substantive consolidation, equitable subordination and/or
causes of action arising under the provisions of Chapter 5 of the Bankruptcy
Code and other relevant non-bankruptcy laws to recover assets or avoid
transfers.
11.
The preparation of the
Bankruptcy Schedules required the Debtors to make estimates and assumptions
that affect the reported amounts of assets and liabilities. Actual results could differ from those
estimates. The Debtors reserve the right
to make further adjustments to the Intercompany Schedule.
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12.
Given the differences between
the information requested in the Bankruptcy Schedules and the financial
information utilized under generally accepted accounting principles in the
United States (the “GAAP”), the aggregate asset values and claim amounts set
forth in the Bankruptcy Schedules do not reflect the amounts that would be set
forth in a balance sheet prepared in accordance with GAAP. In addition, not all of the direct and
indirect subsidiaries of Adelphia have filed for protection under Chapter
11. Accordingly, combining the assets
and claims set forth in the Bankruptcy Schedules of the Debtors would result in
amounts that may be substantially different from financial information
regarding Adelphia and its subsidiaries that would be prepared on a
consolidated basis under GAAP.
13.
The Debtors and their agents,
attorneys and financial advisors do not guarantee or warrant the accuracy or
completeness of the data that is provided herein and shall not be liable for
any loss or injury arising out of or caused in whole or in part by the acts,
errors or omissions, whether negligent or otherwise, in procuring, compiling,
collecting, interpreting, reporting, communicating or delivering the
information contained herein. While
every effort has been made to provide accurate and complete information herein,
inadvertent errors or omissions may exist.
The Debtors and their agents, attorneys and financial advisors expressly
do not undertake any obligation to update, modify, revise or re-categorize the
information provided herein, or to notify any third party should the
information be updated, modified, revised or re-categorized. In no event shall the Debtors or their agents,
attorneys and financial advisors be liable to any third party for any direct,
indirect, incidental, consequential or special damages (including, but not
limited to, damages arising from the disallowance of a potential claim against
the Debtors or damages to business reputation, lost business or lost profits),
whether foreseeable or not and however caused, even if the Debtors or their
agents, attorneys and financial advisors are advised of the possibility of such
damages.
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