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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

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(Mark One)

For the quarterly period ended March 31, 2005

or

For the transition period
from                             to

Commission file number: 0-16014

Adelphia Communications Corporation(Exact name of registrant as specified in its charter)

|Delaware(State or other jurisdiction of
incorporation or organization) |  | 23-2417713(I.R.S. Employer
Identification Number)
|---------------------------------------------------------------------- |  | -------------------------------------------------

5619 DTC Parkway
Greenwood Village, CO 80111(Address of principal executive offices, including zip code)

(303) 268-6300(Registrant's telephone number, including area code)

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 reports), and (2) has been subject to such filing requirements for the past
90 days. YES o    NO ý

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act). YES ý    NO o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). YES o    NO ý

Number of shares of Class A common stock outstanding as of September 30, 2005: 228,692,414

Number
of shares of Class B common stock outstanding as of September 30, 2005: 25,055,365



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ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES
(Debtors-In-Possession)
Quarterly Report on Form 10-Q for the period ended March 31, 2005

Table of Contents



|                              |         |                                                                                                               
|----------------------------- | ------- | --------------------------------------------------------------------------------------------------------------
|PART I. FINANCIAL INFORMATION
|                              | Item 1. |                                                                                                               
|                              |         | Condensed Consolidated Balance Sheets as of March 31, 2005 (unaudited) and December 31, 2004                  
|                              |         | Condensed Consolidated Statements of Operations for the three months ended March 31, 2005 and 2004 (unaudited)
|                              |         | Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004 (unaudited)
|                              |         | Notes to Condensed Consolidated Financial Statements (unaudited)                                              
|                              | Item 2. |                                                                                                               
|                              | Item 3. |                                                                                                               
|                              | Item 4. |                                                                                                               
|PART II. OTHER INFORMATION   
|                              | Item 1. |                                                                                                               
|                              | Item 3. |                                                                                                               
|                              | Item 6. |                                                                                                               
|SIGNATURES                   

INTRODUCTORY NOTE

In this Quarterly Report, the "Company," "we," "us" and "our" refer to Adelphia Communications Corporation ("Adelphia"), its consolidated subsidiaries and other
consolidated entities. Certain terms discussed below are defined in the accompanying notes to the condensed consolidated financial statements.

This
Quarterly Report on Form 10-Q is for the quarterly period ended March 31, 2005. This filing reflects our continued efforts to again be current in our
periodic reporting obligations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), after having ceased to be in compliance with those obligations as a result of the alleged
improper actions of certain members of the John J. Rigas family who held all of the senior executive positions at Adelphia and constituted five of the nine members of Adelphia's board of directors
(collectively, "Rigas Management") in the period prior to the commencement of the Chapter 11 bankruptcy proceedings. See "BusinessCertain Business and Other Developments Relating to the
Chapter 11 CasesCertain Events Leading to the Installation of Interim Management and Commencement of the Chapter 11 Cases in 2002" in our Annual Report on Form 10-K for
the fiscal year ended December 31, 2004 filed with the Securities and Exchange Commission (the "SEC") on October 6, 2005 (the "2004 Form 10-K"). This Quarterly Report
should be read in conjunction with the 2004 Form 10-K and all of our other reports, including Current Reports on Form 8-K, filed with or furnished to the SEC
through the date of this report. As disclosed in the 2004 Form 10-K, readers should not rely on Adelphia's periodic and other reports filed with or furnished to the SEC prior to
May 24, 2002.

2

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CAUTIONARY STATEMENTS

This Quarterly Report includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities
Act"), and Section 21E of the Exchange Act. All statements regarding Adelphia and its consolidated subsidiaries' and other consolidated entities' expected future financial position, results of
operations, cash flows, sale of the Company, settlements with the SEC and the United States Attorney's Office for the Southern District of New York (the "U.S. Attorney"), sale of Century/ML Cable
Venture ("Century/ML Cable"), restructuring and financing plans, potential emergence from bankruptcy, business strategy, budgets, projected costs, capital expenditures, network upgrades, products and
services, competitive positions, growth opportunities, plans and objectives of management for future operations, as well as statements that include words such as "anticipate," "if," "believe," "plan,"
"estimate," "expect," "intend," "may," "could," "should," "will" and other similar expressions are forward-looking statements. Such forward-looking statements are inherently uncertain, and readers
must recognize that actual results may differ materially from our expectations. We undertake no duty to update such forward-looking statements. You are advised, however, to consult any future
disclosures we make on related subjects in our reports filed with or furnished to the SEC. Risks, uncertainties and other factors that may cause actual results to differ materially from those in the
forward-looking statements include, but are not limited to, the following:



3

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Many
of these risks, uncertainties and other factors are outside of the Company's control. Readers should consider all of these factors carefully in evaluating the forward-looking
statements contained in this Quarterly Report. We discuss these risks, uncertainties and other factors more fully in other reports filed by us with or furnished to the SEC, including our 2004
Form 10-K.

4

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PART I.    FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES  (Debtors-In-Possession)      CONDENSED CONSOLIDATED BALANCE SHEETS  (amounts in thousands, except share data)

|                                      |                                                   | March 31,
2005                                                                                                                      |                              | December 31,
2004                           |            
|------------------------------------- | ------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------- | ---------------------------- | ------------------------------------------- | -----------
|
|ASSETS                                |                                                   |                                                                                                                                     |                              |                                             |            
|                                      | Current assets:                                   |                                                                                                                                     |                              |                                             |            
|                                      |                                                   | Cash and cash equivalents                                                                                                           |                              | $                                           | 316,747    
|                                      |                                                   | Restricted cash                                                                                                                     |                              |                                             | 28,656     
|                                      |                                                   | Accounts receivable, less allowance for doubtful accounts of $18,571 and $37,954, respectively                                      |                              |                                             | 92,150     
|                                      |                                                   | Other current assets                                                                                                                |                              |                                             | 84,361     
|                                      |                                                   |                                                                                                                                     |                              |                                             |            
|                                      |                                                   |                                                                                                                                     | Total current assets         |                                             |            
|                                      | Noncurrent assets:                                |                                                                                                                                     |                              |                                             |            
|                                      |                                                   | Restricted cash                                                                                                                     |                              |                                             | 3,087      
|                                      |                                                   | Investments in equity affiliates and related receivables                                                                            |                              |                                             | 254,220    
|                                      |                                                   | Property and equipment, net                                                                                                         |                              |                                             | 4,390,211  
|                                      |                                                   | Intangible assets, net (Note 10)                                                                                                    |                              |                                             | 7,614,069  
|                                      |                                                   | Other noncurrent assets, net                                                                                                        |                              |                                             | 168,855    
|                                      |                                                   |                                                                                                                                     |                              |                                             |            
|                                      |                                                   |                                                                                                                                     | Total assets                 |                                             | $          
|                                      |                                                   |                                                                                                                                     |                              |                                             |            
|LIABILITIES AND STOCKHOLDERS' DEFICIT |                                                   |                                                                                                                                     |                              |                                             |            
|                                      | Current liabilities:                              |                                                                                                                                     |                              |                                             |            
|                                      |                                                   | Accounts payable                                                                                                                    |                              | $                                           | 98,404     
|                                      |                                                   | Subscriber advance payments and deposits                                                                                            |                              |                                             | 30,747     
|                                      |                                                   | Accrued liabilities (Note 10)                                                                                                       |                              |                                             | 565,681    
|                                      |                                                   | Deferred revenue                                                                                                                    |                              |                                             | 30,444     
|                                      |                                                   | Parent and subsidiary debt (Note 5)                                                                                                 |                              |                                             | 636,933    
|                                      |                                                   | Amounts due to the Rigas Family and Other Rigas Entities from Rigas Co-Borrowing Entities (Note 4)                                  |                              |                                             | 460,256    
|                                      |                                                   |                                                                                                                                     |                              |                                             |            
|                                      |                                                   |                                                                                                                                     | Total current liabilities    |                                             |            
|                                      |                                                   |                                                                                                                                     |                              |                                             |            
|                                      | Noncurrent liabilities:                           |                                                                                                                                     |                              |                                             |            
|                                      |                                                   | Other liabilities                                                                                                                   |                              |                                             | 34,589     
|                                      |                                                   | Deferred revenue                                                                                                                    |                              |                                             | 79,797     
|                                      |                                                   | Deferred income taxes                                                                                                               |                              |                                             | 753,069    
|                                      |                                                   |                                                                                                                                     |                              |                                             |            
|                                      |                                                   |                                                                                                                                     | Total noncurrent liabilities |                                             |            
|                                      | Liabilities subject to compromise (Notes 2 and 5) |                                                                                                                                     |                              | 18,475,220                                  |            
|                                      |                                                   |                                                                                                                                     |                              |                                             |            
|                                      |                                                   |                                                                                                                                     | Total liabilities            |                                             |            
|                                      |                                                   |                                                                                                                                     |                              |                                             |            
|                                      | Commitments and contingencies (Note 9)            |                                                                                                                                     |                              |                                             |            
|                                      | Minority's interest in equity of subsidiary       |                                                                                                                                     |                              | 78,712                                      |            
|                                      | Stockholders' deficit:                            |                                                                                                                                     |                              |                                             |            
|                                      |                                                   | Series preferred stock                                                                                                              |                              |                                             | 397        
|                                      |                                                   | Class A Common Stock, $.01 par value, 1,200,000,000 shares authorized, 229,787,271 shares issued and 228,692,414 shares outstanding |                              |                                             | 2,297      
|                                      |                                                   | Convertible Class B Common Stock, $.01 par value, 300,000,000 shares authorized, 25,055,365 shares issued and outstanding           |                              |                                             | 251        
|                                      |                                                   | Additional paid-in capital                                                                                                          |                              |                                             | 12,071,165 
|                                      |                                                   | Accumulated other comprehensive loss, net                                                                                           |                              |                                             | (6,493     
|                                      |                                                   | Accumulated deficit                                                                                                                 |                              |                                             | (20,304,433
|                                      |                                                   | Treasury stock, at cost, 1,094,857 shares of Class A Common Stock                                                                   |                              |                                             | (27,937    
|                                      |                                                   |                                                                                                                                     |                              |                                             |            
|                                      |                                                   |                                                                                                                                     | (8,264,753                   | )                                           |            
|                                      |                                                   | Amounts due from the Rigas Family and Other Rigas Entities, net (Note 4)                                                            |                              |                                             | (26,743    
|                                      |                                                   |                                                                                                                                     |                              |                                             |            
|                                      |                                                   |                                                                                                                                     | Total stockholders' deficit  |                                             |            
|                                      |                                                   |                                                                                                                                     |                              |                                             |            
|                                      |                                                   |                                                                                                                                     |                              | Total liabilities and stockholders' deficit |            
|                                      |                                                   |                                                                                                                                     |                              |                                             |            

See accompanying notes to the condensed consolidated financial statements.

5

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ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES  (Debtors-In-Possession)      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (amounts in thousands, except share and per share
amounts)  (unaudited)

|                                                                                                                                                        |                                                                                                                                                                                   | Three months ended March 31,                                                                                                                                                       |                                           
|------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------
|
|Revenue                                                                                                                                                 |                                                                                                                                                                                   | $                                                                                                                                                                                  | 1,069,002                                 
|Costs and expenses:                                                                                                                                     |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           
|                                                                                                                                                        | Direct operating and programming                                                                                                                                                  |                                                                                                                                                                                    |                                           
|                                                                                                                                                        | Selling, general and administrative                                                                                                                                               |                                                                                                                                                                                    |                                           
|                                                                                                                                                        | Investigation, re-audit and sale transaction costs                                                                                                                                |                                                                                                                                                                                    |                                           
|                                                                                                                                                        | Depreciation                                                                                                                                                                      |                                                                                                                                                                                    |                                           
|                                                                                                                                                        | Amortization                                                                                                                                                                      |                                                                                                                                                                                    |                                           
|                                                                                                                                                        | Provision for uncollectible amounts due from the Rigas Family and Other Rigas Entities (Note 4)                                                                                   |                                                                                                                                                                                    |                                           
|                                                                                                                                                        | Gain on disposition of long-lived assets (Note 10)                                                                                                                                |                                                                                                                                                                                    |                                           
|                                                                                                                                                        |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           
|                                                                                                                                                        |                                                                                                                                                                                   | Total costs and expenses                                                                                                                                                           |                                           
|                                                                                                                                                        |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           
|                                                                                                                                                        |                                                                                                                                                                                   | Operating income (loss)                                                                                                                                                            |                                           
|Other income (expense):                                                                                                                                 |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           
|                                                                                                                                                        | Interest expense, net of amounts capitalized (contractual interest was $317,806 and $288,905 during the three months ended March 31, 2005 and 2004, respectively) (Notes 2 and 5) |                                                                                                                                                                                    |                                           
|                                                                                                                                                        | Other income (expense), net (Note 9)                                                                                                                                              |                                                                                                                                                                                    |                                           
|                                                                                                                                                        |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           
|                                                                                                                                                        |                                                                                                                                                                                   | Total other expense, net                                                                                                                                                           |                                           
|                                                                                                                                                        |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           
|                                                                                                                                                        |                                                                                                                                                                                   | Loss before reorganization expenses, income taxes, share of losses of equity affiliates, minority's interest, discontinued operations and cumulative effects of accounting changes |                                           
|Reorganization expenses due to bankruptcy (Note 2)                                                                                                      |                                                                                                                                                                                   |                                                                                                                                                                                    | (14,058                                   
|                                                                                                                                                        |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           
|                                                                                                                                                        |                                                                                                                                                                                   | Loss before income taxes, share of losses of equity affiliates, minority's interest, discontinued operations and cumulative effects of accounting changes                          |                                           
|Income tax (expense) benefit                                                                                                                            |                                                                                                                                                                                   |                                                                                                                                                                                    | (24,132                                   
|Share of losses of equity affiliates, net                                                                                                               |                                                                                                                                                                                   |                                                                                                                                                                                    | (486                                      
|Minority's interest in loss of subsidiary                                                                                                               |                                                                                                                                                                                   |                                                                                                                                                                                    | 430                                       
|                                                                                                                                                        |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           
|                                                                                                                                                        |                                                                                                                                                                                   | Loss from continuing operations before cumulative effects of accounting changes                                                                                                    |                                           
|Gain from discontinued operations                                                                                                                       |                                                                                                                                                                                   |                                                                                                                                                                                    |                                          
|                                                                                                                                                        |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           
|                                                                                                                                                        |                                                                                                                                                                                   | Loss before cumulative effects of accounting changes                                                                                                                               |                                           
|Cumulative effects of accounting changes:                                                                                                               |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           
|                                                                                                                                                        | Due to new accounting pronouncements (Note 3)                                                                                                                                     |                                                                                                                                                                                    |                                           
|                                                                                                                                                        | Due to new method of amortization (Note 10)                                                                                                                                       |                                                                                                                                                                                    |                                           
|                                                                                                                                                        |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           
|                                                                                                                                                        |                                                                                                                                                                                   | Net loss                                                                                                                                                                           |                                           
|Dividend requirements applicable to preferred stock (contractual dividends were $30,031 during each of the three months ended March 31, 2005 and 2004): |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           
|                                                                                                                                                        | Beneficial conversion feature                                                                                                                                                     |                                                                                                                                                                                    |                                           
|                                                                                                                                                        |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           
|                                                                                                                                                        |                                                                                                                                                                                   | Net loss applicable to common stockholders                                                                                                                                         |                                           
|                                                                                                                                                        |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           
|Basic and diluted loss applicable to common stockholders per weighted average share of common stock:                                                    |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           
|                                                                                                                                                        |                                                                                                                                                                                   | From continuing operations before cumulative effects of accounting changes                                                                                                         |                                           
|                                                                                                                                                        |                                                                                                                                                                                   | Cumulative effects of accounting changes                                                                                                                                           |                                           
|                                                                                                                                                        |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           
|                                                                                                                                                        |                                                                                                                                                                                   |                                                                                                                                                                                    | Net loss applicable to common stockholders
|                                                                                                                                                        |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           
|Basic and diluted weighted average shares of common stock outstanding                                                                                   |                                                                                                                                                                                   |                                                                                                                                                                                    | 253,747,779                               
|                                                                                                                                                        |                                                                                                                                                                                   |                                                                                                                                                                                    |                                           

See accompanying notes to the condensed consolidated financial statements.

6

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ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES  (Debtors-In-Possession)      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (amounts in thousands)  (unaudited)

|                                                                                    |                                                                                                                    | Three months ended March 31, |         
|----------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------ | ---------------------------- | --------
|
|Operating activities:                                                               |                                                                                                                    |                              |         
|Net loss                                                                            |                                                                                                                    | $                            | (82,742 
|Adjustments to reconcile net loss to net cash provided by operating activities:     |                                                                                                                    |                              |         
|                                                                                    | Depreciation                                                                                                       |                              |         
|                                                                                    | Amortization                                                                                                       |                              |         
|                                                                                    | Gain on disposition of long-lived assets                                                                           |                              |         
|                                                                                    | Amortization of deferred financing costs                                                                           |                              |         
|                                                                                    | Provision for uncollectible amounts due from the Rigas Family and Other Rigas Entities                             |                              |         
|                                                                                    | Provision for government settlement                                                                                |                              |         
|                                                                                    | Other noncash charges, net                                                                                         |                              |         
|                                                                                    | Reorganization expenses due to bankruptcy                                                                          |                              |         
|                                                                                    | Deferred income tax expense (benefit)                                                                              |                              |         
|                                                                                    | Share of losses of equity affiliates, net                                                                          |                              |         
|                                                                                    | Minority's interest in loss of subsidiary                                                                          |                              |         
|                                                                                    | Depreciation, amortization and other noncash charges related to discontinued operations                            |                              |         
|                                                                                    | Cumulative effects of accounting changes                                                                           |                              |         
|                                                                                    | Change in operating assets and liabilities, net of effects of initial consolidation of Rigas Co-Borrowing Entities |                              |         
|                                                                                    |                                                                                                                    |                              |         
|Net cash provided by operating activities before payment of reorganization expenses |                                                                                                                    |                              | 146,105 
|Reorganization expenses paid during the period                                      |                                                                                                                    |                              | (243    
|                                                                                    |                                                                                                                    |                              |         
|Net cash provided by operating activities                                           |                                                                                                                    |                              | 145,862 
|                                                                                    |                                                                                                                    |                              |         
|Investing activities:                                                               |                                                                                                                    |                              |         
|                                                                                    | Expenditures for property and equipment                                                                            |                              |         
|                                                                                    | Change in restricted cash                                                                                          |                              |         
|                                                                                    | Proceeds from sale of long-lived assets                                                                            |                              |         
|                                                                                    | Other                                                                                                              |                              |         
|                                                                                    |                                                                                                                    |                              |         
|Net cash used in investing activities                                               |                                                                                                                    |                              | (133,823
|                                                                                    |                                                                                                                    |                              |         
|Financing activities:                                                               |                                                                                                                    |                              |         
|                                                                                    | Proceeds from debt                                                                                                 |                              |         
|                                                                                    | Repayments of debt                                                                                                 |                              |         
|                                                                                    | Payments of deferred financing costs                                                                               |                              |         
|                                                                                    |                                                                                                                    |                              |         
|Net cash provided by (used in) financing activities                                 |                                                                                                                    |                              | (34,201 
|                                                                                    |                                                                                                                    |                              |         
|Increase (decrease) in cash and cash equivalents                                    |                                                                                                                    |                              | (22,162 
|Cash and cash equivalents at beginning of period                                    |                                                                                                                    |                              | 338,909 
|                                                                                    |                                                                                                                    |                              |         
|Cash and cash equivalents at end of period                                          |                                                                                                                    | $                            | 316,747 
|                                                                                    |                                                                                                                    |                              |         

See
accompanying notes to the condensed consolidated financial statements.

7

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ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES        (Debtors-In-Possession)        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        (unaudited)

Note 1:    Background and Basis of Presentation

The Company is engaged primarily in the cable television business. The Company's consolidated cable systems are located in 31 states and Brazil. In
June 2002, the Debtors filed voluntary petitions to reorganize (the "Chapter 11 Cases") under Chapter 11 of Title 11 ("Chapter 11") of the United States Code (the "Bankruptcy Code") in the
United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"). Effective January 1, 2004, the Company began consolidating the Rigas Co-Borrowing
Entities. For additional information, see Note 3. The Rigas Co-Borrowing Entities did not file for bankruptcy protection. Effective April 20, 2005, Adelphia entered into
definitive agreements with TW NY and Comcast which provide for the sale of substantially all of the Company's U.S. assets. For additional information, see Note 2.

The
accompanying condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP")
for interim financial information and the rules and regulations of the SEC. Accordingly, certain information and footnote disclosures typically included in the Company's financial statements filed
with its Annual Report on Form 10-K have been condensed or omitted for this Quarterly Report. In the opinion of management, the accompanying condensed consolidated financial
statements include all adjustments, which consist of only normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. These financial statements should be
read in conjunction with the Company's 2004 Form 10-K. Interim results are not necessarily indicative of results for a full year.

These
condensed consolidated financial statements have been prepared on a going concern basis, which assumes continuity of operations, realization of assets and satisfaction of
liabilities in the ordinary course of business, and do not purport to show, reflect or provide for the consequences of the Debtors' Chapter 11 reorganization proceedings. In particular, these
condensed consolidated financial statements do not purport to show: (i) as to assets, the amount that may be realized upon their sale or their availability to satisfy liabilities;
(ii) as to pre-petition liabilities, the amounts at which claims or contingencies may be settled, or the status and priority thereof; (iii) as to stockholders' equity
accounts, the effect of any changes that may be made in the capitalization of the Company; or (iv) as to operations, the effect of any changes that may be made in its business.

In
May 2002, certain Rigas Family members resigned from their positions as directors and executive officers of the Company. In addition, the Rigas Family owned Adelphia $0.01 par
value Class A common stock ("Class A Common Stock") and Adelphia $0.01 par value Class B common stock ("Class B Common Stock") with a majority of the voting power in
Adelphia, and was not able to exercise such voting power since the Debtors filed for protection under the Bankruptcy Code in June 2002. Prior to May 2002, the Company engaged in numerous
transactions that directly or indirectly involved members of the Rigas Family and entities in which members of the Rigas Family directly or indirectly held controlling interests (the "Rigas Family
Entities"). The Rigas Family Entities include the Rigas Co-Borrowing Entities, as well as other Rigas Family entities (the "Other Rigas Entities"). For additional information, see
Note 4. Pursuant to the Consent Order of Forfeiture entered by the United States District Court for the Southern District of New York (the "District Court") on June 8, 2005 (the
"Forfeiture Order"), all right, title and interest of the Rigas Family and Rigas Family Entities in the Rigas Co-Borrowing Entities (other than Coudersport and Bucktail), certain specified
real estate and any securities of the Company were forfeited to the United States on June 8, 2005 and such assets and securities are expected to be conveyed to the Company (subject to
completion of

8

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ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

forfeiture
proceedings before a federal judge to determine if there are any superior claims) pursuant to an agreement between the Company and the U.S. Attorney dated April 25, 2005 (the
"Non-Prosecution Agreement"), as discussed in Note 9.

Although
the Company is operating as a debtor-in-possession in the Chapter 11 Cases, the Company's ability to control the activities and operations of its
subsidiaries that are also Debtors may be limited pursuant to the Bankruptcy Code. However, because the bankruptcy proceedings for the Debtors are consolidated for administrative purposes in the same
Bankruptcy Court and will be overseen by the same judge, the financial statements of Adelphia and its subsidiaries have been presented on a combined basis, which is consistent with condensed
consolidated financial statements (see Note 2). All inter-entity transactions between Adelphia, its subsidiaries and the Rigas Co-Borrowing Entities have been eliminated in
consolidation.

Note 2:    Bankruptcy Proceedings and Sale of Assets of the Company

Overview

On June 25, 2002 ("Petition Date"), the Debtors filed voluntary petitions to reorganize under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. On
June 10, 2002, Century Communications Corporation ("Century"), an indirect wholly-owned subsidiary of Adelphia, filed a voluntary petition to reorganize under Chapter 11. The Debtors, which
include Century, are currently operating their
business as debtors-in-possession under Chapter 11. Included in the accompanying condensed consolidated financial statements are subsidiaries that did not file voluntary
petitions under the Bankruptcy Code, including the Rigas Co-Borrowing Entities. The assets and liabilities of the non-filing subsidiaries, excluding the Rigas
Co-Borrowing Entities, are not considered material to the condensed consolidated financial statements.

On
July 11, 2002, a statutory committee of unsecured creditors (the "Creditors' Committee") was appointed, and on July 31, 2002, a statutory committee of equity holders
(the "Equity Committee" and, together with the Creditors' Committee, the "Committees") was appointed. The Committees have the right to, among other things, review and object to certain business
transactions and may participate in the formulation of the Debtors' plan of reorganization. Under the Bankruptcy Code, the Debtors were provided with specified periods during which only the Debtors
could propose and file a plan of reorganization (the "Exclusive Period") and solicit acceptances thereto (the "Solicitation Period"). The Debtors received several extensions of the Exclusive
Period and the Solicitation Period from the Bankruptcy Court with the latest extension of the Exclusive Period and the Solicitation Period being through February 17, 2004 and April 20,
2004, respectively. The Debtors filed a motion requesting an additional extension of the Exclusive Period and the Solicitation Period. However, the Equity Committee filed a motion to terminate the
Exclusive Period and the Solicitation Period and other objections were filed regarding this request. The Bankruptcy Court has extended the Exclusive Period and the Solicitation Period until the
hearing on the motions is held and a determination by the Bankruptcy Court is made. No hearing has been scheduled.

On
February 25, 2004, the Debtors filed their proposed joint plan of reorganization (the "Stand-Alone Plan"), which contemplated their emergence from bankruptcy as a stand-alone
entity, and related Disclosure Statement with the Bankruptcy Court. On April 22, 2004, Adelphia announced that it intended to pursue a sale of the Company while simultaneously pursuing the
Stand-Alone Plan.

9

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

On
February 4, 2005, the Debtors filed their proposed First Amended Joint Plan of Reorganization and related First Amended Disclosure Statement with the Bankruptcy Court. This
plan contemplated the possibility of either: (i) emergence from bankruptcy as a stand-alone entity; (ii) distribution of proceeds resulting from a sale or other corporate transaction
involving one or more companies in addition to the Debtors; or (iii) emergence from bankruptcy as part of a stand-alone entity after having sold certain clusters of cable systems and
distributed the proceeds of such sales.

On
June 25, 2005, the Debtors filed their proposed Second Amended Joint Plan of Reorganization and related Second Amended Disclosure Statement with the Bankruptcy Court. On
September 28, 2005, the Debtors filed their proposed Third Amended Joint Plan of Reorganization (the "Plan") and related Third Amended Disclosure Statement (the "Disclosure Statement") with the
Bankruptcy Court. The Plan contemplates, among other things, consummation of the Sale Transaction and distribution of the
cash and Class A common stock of TWC (the "TWC Class A Common Stock") received pursuant to the Sale Transaction to the stakeholders of the Debtors in accordance with the Plan. The
Debtors expect to amend the Plan and Disclosure Statement prior to confirmation of the Plan by the Bankruptcy Court.

Sale of Assets

Effective April 20, 2005, Adelphia entered into the Sale Transaction. Upon the closing of the Sale Transaction, Adelphia will receive approximately
$12.7 billion in cash and shares of TWC Class A Common Stock, which are expected to represent 16% of the outstanding equity securities of TWC as of the closing and to be listed on the
New York Stock Exchange. Such percentage assumes the redemption of Comcast's interest in TWC and is subject to adjustment for issuances pursuant to employee stock programs (subject to a cap) and
issuances of securities for fair consideration. The purchase price payable by TW NY and Comcast is subject to certain adjustments. TWC, Comcast and certain of their affiliates have also agreed
to swap certain cable systems and unwind Comcast's investments in TWC and Time Warner Entertainment Company, L.P., a subsidiary of TWC ("TWE"). The Sale Transaction does not include the Company's
interest in Century/ML Cable, a joint venture that owns and operates cable systems in Puerto Rico, which Century and ML Media Partners, L.P. ("ML Media") sold to San Juan Cable, LLC ("San Juan Cable")
effective October 31, 2005. For additional information, see Note 9.

As
part of the Sale Transaction, Adelphia has agreed to transfer to TW NY and Comcast the assets related to the cable systems that are nominally owned by the Rigas
Co-Borrowing Entities and are managed by the Company (such Rigas Co-Borrowing Entities are herein referred to as the "Managed Cable Entities"). Pursuant to the Forfeiture
Order, all right, title and interest of the Rigas Family and Rigas Family Entities in the Rigas Co-Borrowing Entities (other than Coudersport and Bucktail) have been forfeited to the
United States. Pursuant to the Non-Prosecution Agreement, the Company expects to obtain ownership of all of the Rigas Co-Borrowing Entities other than two small entities
(Coudersport and Bucktail) and, accordingly, Adelphia expects to be able to transfer to TW NY and Comcast (subject to completion of forfeiture proceedings before a federal judge to determine if
there are any superior claims) the assets of the Managed Cable Entities (other than Coudersport and Bucktail) as part of the Sale Transaction. If the Company is unable to transfer all of the assets of
the Managed Cable Entities to Comcast and TW NY at the closing of the Sale Transaction, the initial purchase price payable by Comcast and by TW NY would be reduced by an

10

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

aggregate
amount of up to $600,000,000 and $390,000,000, respectively, but would become payable to the extent such assets are transferred to Comcast or TW NY within 15 months of the
closing. Adelphia believes that the failure to transfer the assets of Coudersport and Bucktail to TW NY and Comcast will result in an aggregate purchase price reduction of approximately
$23,000,000, reflecting a reduction to the purchase price payable by TW NY of approximately $15,000,000 and by Comcast of approximately $8,000,000.

Pursuant
to a separate agreement, dated as of April 20, 2005, TWC, among other things, has guaranteed the obligations of TW NY under the asset purchase agreement between TW NY and
Adelphia.

Until
a plan of reorganization is confirmed by the Bankruptcy Court and becomes effective, the Sale Transaction cannot be consummated. The closing of the Sale Transaction is also subject
to the satisfaction or waiver of conditions customary to transactions of this type, including, among others: (i) receipt of applicable regulatory approvals, including the consent of the Federal
Communications Commission (the "FCC") to the transfer of certain licenses and any applicable approvals of local franchising authorities to the change in ownership of the cable systems operated by the
Company to the extent not preempted by section 365 of the Bankruptcy Code; (ii) expiration or termination of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended; (iii) the offer and sale of the shares of TWC Class A Common Stock to be issued in the Sale Transaction having been exempted from
registration pursuant to an order of the Bankruptcy Court confirming the Plan or a no-action letter from the staff of the SEC, or a registration statement covering the offer and sale of
such shares having been declared effective; (iv) the TWC Class A Common Stock to be issued in the Sale Transaction being freely tradable and not subject to resale restrictions, except in
certain circumstances; (v) approval of the shares of TWC Class A Common Stock to be issued in the Sale Transaction for listing on the New York Stock Exchange; (vi) entry by the
Bankruptcy Court of a final order confirming the Plan and, contemporaneously with the closing of the Sale Transaction, consummation of the Plan; (vii) satisfactory settlement by Adelphia of the
claims and causes of action brought by the SEC and the investigations by the United States Department of Justice (the "DoJ"); (viii) the absence of any material adverse effect with respect to
TWC's business and certain significant components of the Company's business (without taking into consideration any loss of subscribers by the Company's business (or results thereof) already reflected
in the projections specified in the asset purchase agreements or the purchase price adjustments); (ix) the number of eligible basic subscribers (as the term is used in the purchase agreements)
served by the Company's cable systems as of a specified date prior to the closing of the Sale Transaction not being below an agreed upon threshold; (x) the absence of an actual change in law,
or proposed change in law that has a reasonable possibility of being enacted, that would adversely affect the tax treatment accorded to the Sale Transaction with respect to TW NY; (xi) a filing
of an election under Section 754 of the Internal Revenue Code of 1986, as amended, by each of Century-TCI California Communications, L.P. ("Century-TCI"), Parnassos
Communications, L.P. ("Parnassos") and Western NY Cablevision L.P. ("Western NY Cablevision"); and (xii) the provision of certain audited and unaudited financial information by Adelphia.

The
closing under each purchase agreement is also conditioned on a contemporaneous closing under the other purchase agreement. However, pursuant to a letter agreement dated as of
April 20, 2005, and the asset purchase agreement between Adelphia and TW NY, TW NY has agreed to purchase the cable operations of Adelphia that Comcast would have acquired if Comcast's purchase

11

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

agreement
is terminated prior to closing as a result of the failure to obtain FCC or applicable antitrust approvals. In such event, and assuming TW NY received such approvals, TW NY will pay the
$3.5 billion purchase price to have been paid by Comcast, less Comcast's allocable share of the liabilities of Century-TCI, Parnassos and Western NY Cablevision, which shall not be
less than $549,000,000 or more than $600,000,000. Consummation of the Sale Transaction, however, is not subject to the consummation of the agreement by TWC, Comcast and certain of their affiliates to
swap certain cable systems and unwind Comcast's investments in TWC and TWE, as described above. There is no assurance that TW NY would be able to obtain the required FCC or applicable antitrust
approvals for the transaction contemplated by the letter agreement.

The
purchase agreements with TW NY and Comcast contain certain termination rights for Adelphia, TW NY and Comcast, and further provide that, upon termination of the purchase agreements
under specified circumstances, Adelphia may be required to pay TW NY a termination fee of approximately $353,000,000 and Comcast a termination fee of $87,500,000.

As
described above, on September 28, 2005, the Debtors filed the Plan and the Disclosure Statement with the Bankruptcy Court that reflects the terms of the Sale Transaction.
Certain fees are due to the Company's financial advisors upon successful completion of a sale, which are calculated as a percentage (0.11% to 0.20%) of the sale value. Additional fees may be payable
depending on the outcome of the sales process. Such fees cannot be determined until the closing of the Sale Transaction.

Confirmation of Plan of Reorganization

For the Plan to be confirmed and become effective, the Debtors must, among other things:



To
complete these steps, the Bankruptcy Court must first hold a hearing to determine if the Disclosure Statement contains adequate information; the hearing to approve the Disclosure
Statement commenced on October 27, 2005 and has been continued until November 8, 2005. Second, the Bankruptcy Court must find that the Disclosure Statement contains adequate information
and the Debtors must solicit the acceptance of the Plan. Third, before it can issue a confirmation order, the Bankruptcy Court must find that either each class of impaired claims or equity interests
has accepted the Plan or the Plan meets the requirements of the Bankruptcy Code to confirm the Plan over the objections of dissenting classes. In addition, the Bankruptcy Court must find that the Plan
meets certain other requirements specified in the Bankruptcy Code. The Debtors expect to amend the Plan and Disclosure Statement prior to confirmation of the Plan by the Bankruptcy Court.

12

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Pre-petition Obligations

Pre-petition and post-petition obligations of the Debtors are treated differently under the Bankruptcy Code. Due to the commencement of
the Chapter 11 Cases and the Debtors' failure to comply with certain financial and other covenants, the Debtors are in default on substantially all of their pre-petition debt obligations.
As a result of the Chapter 11 filing, all actions to collect the payment of pre-petition indebtedness are subject to compromise or other treatment under a plan of reorganization.
Generally, actions to enforce or otherwise effect payment of pre-petition liabilities are stayed against the Debtors. The Bankruptcy Court has approved the Debtors' motions to pay certain
pre-petition obligations including, but not limited to, employee wages, salaries, commissions, incentive compensation and other related benefits. The Debtors have been paying and intend to
continue to pay undisputed post-petition claims in the ordinary course of business. In addition, the Debtors may assume or reject pre-petition executory contracts and unexpired
leases with the approval of the Bankruptcy Court. Any damages resulting from the rejection of executory contracts and unexpired leases are treated as general unsecured claims and will be classified as
liabilities subject to compromise. For additional information concerning liabilities subject to compromise, see below.

The
ultimate amount of the Debtors' liabilities will be determined during the Debtors' claims resolution process. The Bankruptcy Court established a bar date of January 9, 2004
for filing proofs of claim against the Debtors' estates. A bar date is the date by which proofs of claim must be filed if a claimant disagrees with how its claim appears on the Debtors' Schedules of
Liabilities. However, under certain limited circumstances, claimants may file proofs of claims after the bar date. As of the bar date, approximately 17,000 proofs of claim asserting in excess of $3.2
trillion in claims were filed and, as of August 31, 2005, approximately 18,000 proofs of claim asserting approximately $3.8 trillion in claims were filed, in each case including duplicative
claims, but excluding any estimated amounts for unliquidated claims. The aggregate amount of claims filed with the Bankruptcy Court far exceeds the Debtors' estimate of ultimate liability. The Debtors
currently are in the process of reviewing, analyzing and reconciling the scheduled and filed claims. At present, the allowed amounts of such claims are not determinable, and the Debtors expect that
the claims resolution process will take significant time to complete. As the amounts of the allowed claims are determined, adjustments will be recorded in liabilities subject to compromise and
reorganization expenses due to bankruptcy.

The
Debtors have filed several omnibus objections to certain of the claims, seeking to address in excess of $2.7 trillion in claims, consisting primarily of duplicative claims. Certain
claims addressed in such objections were either: (i) reduced and allowed; (ii) disallowed and expunged; or (iii) subordinated by orders of the Bankruptcy Court. Hearings on
certain claims objections are also scheduled for November 15, 2005 and December 6, 2005. Certain other objections have been adjourned to allow the parties to continue to reconcile such
claims. The Debtors have filed an additional omnibus objection which seeks to eliminate, reduce and/or subordinate in excess of $900 billion of claims asserted against the Debtors by Leonard
Tow and Claire Tow (together, the "Tows") and the various trusts that are controlled by the Tows. Simultaneously with the filing of such omnibus objection, the Company and certain other Debtors
commenced an adversary proceeding in the Bankruptcy Court by filing a complaint against Leonard Tow seeking to: (i) avoid and recover certain unauthorized post-petition transfers
and/or fraudulent transfers totaling approximately $14,000,000 (the "Avoidable Transfers"); (ii) disallow Leonard Tow's claims pending the return of Avoidable Transfers; and
(iii) subordinate

13

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Leonard
Tow's claims. Additional omnibus objections may be filed as the claims resolution process continues.

Debtor-in-Possession ("DIP") Credit Facility

In order to provide liquidity following the commencement of the Chapter 11 Cases, the Debtors entered into a $1,500,000,000
debtor-in-possession credit facility (as amended, the "DIP Facility"). On May 10, 2004, the Debtors entered into a $1,000,000,000 extended
debtor-in-possession credit facility (the "First Extended DIP Facility"), which amended and restated the DIP Facility in its entirety. On February 25, 2005, the Debtors
entered into a $1,300,000,000 further extended debtor-in-possession credit facility (the "Second Extended DIP Facility"), which amended and restated the First Extended DIP
Facility in its entirety. For additional information, see Note 5.

Exit Financing Commitment

On February 25, 2004, Adelphia executed a commitment letter and certain related documents pursuant to which a syndicate of financial institutions committed
to provide to the Debtors up to $8,800,000,000 in exit financing. Following the Bankruptcy Court's approval on June 30, 2004 of the exit financing commitment, the Company paid the exit lenders
a nonrefundable fee of $10,000,000 and reimbursed the exit lenders for certain expenses they had incurred through the date of such approval, including certain legal expenses. In light of the
agreements with TW NY and Comcast, on April 25, 2005, the Company informed the exit lenders of its election to terminate the exit financing commitment, which termination became effective on
May 9, 2005. As a result of the termination, the Company recorded a charge of $58,267,000 during the second quarter of 2005, which represents previously unpaid commitment fees of $45,428,000,
the nonrefundable fee of $10,000,000 and certain other expenses. As of March 31, 2005, $52,363,000 of such fees and expenses were included in other noncurrent assets, net.

Going Concern

As a result of the Company's filing of the bankruptcy petition and the other matters described in the following paragraphs, there is substantial doubt about the
Company's ability to continue as a going concern. The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which assumes continuity of operations and
realization of assets and satisfaction of liabilities in the ordinary course of business, and in accordance with Statement of Position 90-7,Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code("SOP 90-7"). The condensed consolidated financial statements do not include any adjustments that might be
required should the Company be unable to continue to operate as a going concern. In accordance with SOP 90-7, all pre-petition liabilities subject to compromise have been
segregated in the condensed consolidated balance sheets and classified as liabilities subject to compromise, at the estimated amount of allowable claims. Interest expense related to
pre-petition liabilities subject to compromise has been reported only to the extent that it will be paid during the Chapter 11 proceedings. In addition, no preferred stock dividends have
been accrued subsequent to the Petition Date. Liabilities not subject to compromise are separately classified as current or noncurrent. Revenue, expenses, realized gains and losses, and provisions for
losses resulting from reorganization are reported separately as reorganization

14

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

expenses
due to bankruptcy. Cash used for reorganization items is disclosed in the condensed consolidated statements of cash flows.

The
ability of the Debtors to continue as a going concern is predicated upon numerous matters, including:



Presentation

For periods subsequent to the Petition Date, the Company has applied the provisions of SOP 90-7. SOP 90-7 requires that
pre-petition liabilities that are subject to compromise be segregated in the condensed consolidated balance sheets as liabilities subject to compromise and that revenue, expenses, realized
gains and losses, and provisions for losses resulting directly from the reorganization due to the bankruptcy be reported separately as reorganization expenses in the condensed consolidated statements

15

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

of
operations. Liabilities subject to compromise are reported at the amounts expected to be allowed, even if they may be settled for lesser amounts. Liabilities subject to compromise consist of the
following (amounts in thousands):

March 31,
2005

December 31,
2004Parent and subsidiary debt

$
11,560,684

$
11,560,684Parent and subsidiary debt under co-borrowing credit facilities


4,576,375


4,576,375Accounts payable


950,352


954,858Accrued liabilities


1,239,015


1,240,237Series B Preferred Stock


148,794


148,794Liabilities subject to compromise

$
18,475,220

$
18,480,948


The
Rigas Co-Borrowing Entities are jointly and severally obligated with certain of the Debtors to the lenders with respect to borrowings under certain
co-borrowing facilities ("Co-Borrowing Facilities"). Borrowings under the Co-Borrowing Facilities have been presented as liabilities subject to compromise in the
accompanying condensed consolidated balance sheets as collection of such borrowings from the Debtors is stayed. Collection of such borrowings from the Rigas Co-Borrowing Entities has not
been stayed and actions may be taken to collect such borrowings from the Rigas Co-Borrowing Entities. However, the Rigas Co-Borrowing Entities would not have sufficient assets
to satisfy claims for all liabilities under the Co-Borrowing Facilities.

Following
is a reconciliation of the changes in liabilities subject to compromise for the period from December 31, 2004 through March 31, 2005 (amounts in thousands):

Balance at December 31, 2004

$
18,480,948Settlements


(5,728
)Balance at March 31, 2005

$
18,475,220


The
amounts presented as liabilities subject to compromise may be subject to future adjustments depending on Bankruptcy Court actions, completion of the reconciliation process with
respect to disputed claims, determinations of the secured status of certain claims, the values of any collateral
securing such claims or other events. Such adjustments may be material to the amounts reported as liabilities subject to compromise.

Amortization
of deferred financing fees related to pre-petition debt obligations was terminated effective on the Petition Date and the unamortized amount at the Petition Date
($134,208,000) has been included as an offset to liabilities subject to compromise as an adjustment of the net carrying value of the related pre-petition debt. Similarly, amortization of
the deferred issuance costs for the Company's redeemable preferred stock was also terminated at the Petition Date. For periods subsequent to the Petition Date, interest expense has been reported only
to the extent that it will be paid during the Chapter 11 proceedings. In addition, no preferred stock dividends have been accrued subsequent to the Petition Date.

16

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Reorganization Expenses Due to Bankruptcy and Investigation, Re-audit and Sale Transaction Costs

Only those fees directly related to the Chapter 11 filings are included in reorganization expenses due to bankruptcy. These expenses are offset by the interest
earned during reorganization. Certain reorganization expenses are contingent upon the approval of a plan of reorganization by the Bankruptcy Court and include cure costs, financing fees and success
fees. The Company is currently aware of certain success fees that potentially could be paid upon the Company's emergence from bankruptcy to third party financial advisors retained by the Company and
the Committees in connection with the Chapter 11 Cases. Currently, these success fees are estimated to be between $6,500,000 and $19,950,000 in the aggregate. In addition, the Chief Executive Officer
("CEO") and the Chief Operating Officer ("COO") of the Company are eligible to receive equity awards of Adelphia stock with a minimum aggregate fair value of $17,000,000 upon the Debtors' emergence
from bankruptcy. The value of such equity awards will be determined based on the average trading price of the post-emergence common stock of Adelphia during the 15 trading days immediately
preceding the 90th day following the date of emergence. These equity awards, which will be subject to vesting and trading restrictions, may be increased up to a maximum aggregate value
of $25,500,000 at the discretion of the board of directors of Adelphia (the "Board"). As no plan of reorganization has been confirmed by the Bankruptcy Court, no accrual for such contingent payments
or equity awards has been recorded in the accompanying condensed consolidated financial statements. See Note 9 for additional information. The following table sets forth certain components of
reorganization expenses for the indicated periods (amounts in thousands):

Three months ended March 31,2005

2004Professional fees

$
22,765

$
20,925Interest earned during reorganization


(2,171
)

(725
)Settlements and other


(6,536
)

(4,852
)Reorganization expenses due to bankruptcy

$
14,058

$
15,348


In
addition to the costs shown above, the Company has incurred certain professional fees and other costs that, although not directly related to the Chapter 11 filing,
relate to the investigation of the actions of the Rigas Family management, related efforts to comply with applicable laws and regulations and the Sale Transaction. These expenses include the
additional audit fees incurred for the year ended December 31, 2001 and prior, as well as legal fees, forensic consultant fees, legal defense costs paid on behalf of the Rigas Family and
employee retention costs. These expenses have been included in investigation, re-audit and sale transaction costs in the accompanying condensed consolidated statements of operations.

17

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Condensed Financial Statements of Debtors

The Debtors' condensed consolidated balance sheets as of the indicated dates are as follows (amounts in thousands):

March 31,
2005

December 31,
2004Assets:Total current assets

$
602,459

$
624,572Property and equipment, net


4,242,577


4,323,142Intangible assets, net


7,117,843


7,174,967Other noncurrent assets


422,041


406,414Total assets

$
12,384,920

$
12,529,095Liabilities and Stockholders' Deficit:Liabilities:Other current liabilities

$
703,301

$
755,512Current portion of parent and subsidiary debt


636,426


667,605Total noncurrent liabilities


861,413


843,274Liabilities subject to compromise


18,475,220


18,480,948Total liabilities


20,676,360


20,747,339Minority's interest


78,712


79,142Stockholders' deficit:Series preferred stock


397


397Common stock


2,548


2,548Additional paid-in capital


9,567,027


9,566,968Accumulated other comprehensive income, net


801


826Accumulated deficit


(17,145,034
)

(17,059,560
)Treasury stock, at cost


(27,937
)

(27,937
)(7,602,198
)

(7,516,758
)Amounts due from the Rigas Family and Other Rigas Entities, net


(767,954
)

(780,628
)Total stockholders' deficit


(8,370,152
)

(8,297,386
)Total liabilities and stockholders' deficit

$
12,384,920

$
12,529,095


18

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The
Debtors' condensed consolidated statements of operations for the indicated periods are as follows (amounts in thousands):

Three months ended March 31,2005

2004Revenue

$
1,013,615

$
957,057Costs and expenses:Direct operating and programming


623,584


622,756Selling, general and administrative


73,447


76,584Investigation, re-audit and sale transaction costs


19,510


18,059Depreciation


203,689


236,487Amortization


32,757


36,698Provision for uncollectible amounts due from the Rigas Family and Other Rigas Entities


2,000


Gain on disposition of long-lived assets


(5,900
)

Total costs and expenses


949,087


990,584Operating income (loss)


64,528


(33,527
)Interest expense, net of amounts capitalized


(113,466
)

(94,150
)Other income (expense), net


1,178


(425,647
)Reorganization expenses due to bankruptcy


(14,058
)

(15,348
)Income tax (expense) benefit


(23,600
)

73,878Share of losses of equity affiliates, net


(486
)

(697
)Minority's interest in loss of subsidiary


430


4,241Loss from continuing operations before cumulative effect of accounting change


(85,474
)

(491,250
)Gain from discontinued operations





499Loss before cumulative effect of accounting change


(85,474
)

(490,751
)Cumulative effect of accounting change





(262,847
)Net loss

$
(85,474
)
$
(753,598
)


Following
is the condensed consolidated cash flow data for the Debtors for the indicated periods (amounts in thousands):

Three months ended March 31,2005

2004Net cash provided by (used in):Operating activities

$
122,051

$
142,073Investing activities

$
(110,900
)
$
(191,725
)Financing activities

$
(34,201
)
$
68,661


19

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 3:    Variable Interest Entities

Financial Accounting Standards Board ("FASB") Interpretation ("FIN") No. 46,Consolidation of Variable Interest
Entities(as subsequently revised in December 2003, "FIN 46-R") requires variable interest entities, as defined by FIN 46-R, to be consolidated
by the primary beneficiary if certain criteria are met. None of the Company's variable interest entities are special purpose entities.

The
Company has concluded that the Rigas Co-Borrowing Entities are variable interest entities for which the Company is the primary beneficiary, as contemplated by FIN
46-R. Accordingly, effective January 1, 2004, the Company began consolidating the Rigas Co-Borrowing Entities on a prospective basis. The assets and liabilities of the
Rigas Co-Borrowing Entities are included in the Company's condensed consolidated financial statements at the Rigas Family's historical cost because these entities first became variable
interest entities and Adelphia became the primary beneficiary when Adelphia and these entities were under the common control of the Rigas Family. As a result of the adoption of FIN 46-R,
the Company recorded a $588,782,000 charge as a cumulative effect of a change in accounting principle as of January 1, 2004. The Company is reporting the operating results of the Rigas
Co-Borrowing Entities in the "cable" segment. See Note 6 for further discussion of the Company's business segments.

The
April 2005 agreements between: (i) Adelphia and the U.S. Attorney; (ii) Adelphia and the Rigas Family; and (iii) the Rigas Family and the U.S. Attorney
(the "Government Settlement Agreements") provide, among other things, for the forfeiture of certain assets by the Rigas Family and Rigas Family Entities. Pursuant to the Forfeiture Order, all right,
title and interest of the Rigas Family and Rigas Family Entities in the Rigas Co-Borrowing Entities (other than Coudersport and Bucktail), certain specified real estate and any securities
of the Company were forfeited to the United States on June 8, 2005 and such assets and securities are expected to be conveyed to the Company (subject to completion of forfeiture proceedings
before a federal judge to determine if there are any superior claims) pursuant to the Non-Prosecution Agreement. See Note 9 for additional information.

As
of June 8, 2005, the Company is no longer the primary beneficiary of Coudersport and Bucktail. Accordingly, the Company will cease to consolidate Coudersport and Bucktail under
FIN 46-R and will record a net charge of $12,964,000 in the second quarter of 2005.

In
addition to the Rigas Co-Borrowing Entities, the Rigas Family owned, prior to forfeiture to the United States on June 8, 2005, at least 16 additional entities in
which the Company held a variable interest. The Company has not applied the provisions of FIN 46-R to the Other Rigas Entities because the Company does not have sufficient financial
information to perform the required evaluations. As a result of the Government Settlement Agreements, as of June 8, 2005, the Company no longer holds a variable interest in these entities.

Note 4:    Transactions with the Rigas Family and Other Rigas Entities

In addition to the Rigas Co-Borrowing Entities discussed in Note 3, prior to May 2002, the Company had significant involvement, directly
or indirectly, with the Rigas Family and Other Rigas

20

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Entities.
The following table shows the amounts due from the Rigas Family and Other Rigas Entities as a result of this involvement, net of the allowance for uncollectible amounts (amounts in
thousands):

March 31,
2005

December 31,
2004Amounts due from the Rigas Family and Other Rigas Entities before allowance for uncollectible amounts

$
2,630,770

$
2,630,770Allowance for uncollectible amounts


(2,604,027
)

(2,602,027
)Amounts due from the Rigas Family and Other Rigas Entities, net

$
26,743

$
28,743


For
purposes of assessing collectibility, the Company considered the amounts due from the Rigas Family and Other Rigas Entities to be collateral-backed loans and used the estimated
values of the underlying debt and equity securities of Adelphia, which were forfeited to the United States on June 8, 2005, to determine expected repayments. Additional impairment of the
estimated collectible amounts of $2,000,000 was recognized by the Company in the accompanying condensed consolidated statement of operations for the three months ended March 31, 2005 due to
further decline in the fair value of the underlying securities. Amounts due from the Rigas Family and Other Rigas Entities, net is presented as an addition to stockholders' deficit in the accompanying
March 31, 2005 and December 31, 2004 condensed consolidated balance sheets because: (i) approximately half of the advances were used by those entities to acquire Adelphia
securities; (ii) these advances occurred frequently; (iii) there were no definitive debt instruments that specified repayment terms or interest rates; and (iv) there was no
demonstrated repayment history.

In
connection with the Government Settlement Agreements, all amounts owed between Adelphia (including the Rigas Co-Borrowing Entities) and the Rigas Family and Other Rigas
Entities will not be collected or paid. As a result, in June 2005, the Company will derecognize the $460,256,000 payable by the Rigas Co-Borrowing Entities to the Rigas Family and
Other Rigas Entities. This liability, which was recorded by the Company in connection with the January 1, 2004 consolidation of the Rigas Co-Borrowing Entities, had no legal right
of set-off against amounts due to the Rigas Co-Borrowing Entities from the Rigas Family and Other Rigas Entities.

In
connection with the Government Settlement Agreements, equity ownership of the Rigas Co-Borrowing Entities (other than Coudersport and Bucktail), the debt and equity
securities of the Company, and certain real estate were forfeited by the Rigas Family and the Rigas Family Entities and are expected to be conveyed to the Company (subject to completion of forfeiture
proceedings before a federal judge to determine if there are any superior claims). In conjunction with the June 2005 forfeiture, the Company will record the settlement proceeds at their fair
value. The Company estimates that the fair value of the debt and equity securities and real estate is $34,629,000 as of June 30, 2005. The Company has determined that the equity interests it
expects to receive in the Rigas Co-Borrowing Entities (other than Coudersport and Bucktail) have nominal value as the liabilities of these entities significantly exceed the fair value of
their assets. As discussed in Note 3, the assets and liabilities of the Rigas Co-Borrowing Entities have been included in the Company's consolidated financial statements since
January 1, 2004.

21

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Also,
in connection with the Government Settlement Agreements, the Company agreed to pay the Rigas Family an additional $11,500,000 for legal defense costs, which was paid by the Company
in
June 2005. The Government Settlement Agreements release the Company from further obligation to provide funding for legal defense costs for the Rigas Family.

During
2004 and 2003, various stipulations and orders were approved by the Bankruptcy Court that caused the Managed Cable Entities to pay approximately $28,000,000 of legal defense costs
on behalf of certain members of the Rigas Family. During the three months ended March 31, 2004, $12,463,000 of such defense costs have been included in investigation, re-audit and
sale transaction costs in the accompanying condensed consolidated statement of operations.

As
of March 31, 2005 and December 31, 2004, the Company had accrued $2,717,000 of severance for John J. Rigas pursuant to the terms of a May 23, 2002 agreement with
John J. Rigas, Timothy J. Rigas, James P. Rigas, and Michael J. Rigas. The Government Settlement Agreements release the Company from this severance obligation. Accordingly, the Company will
derecognize the severance accrual and recognize the benefit of $2,717,000 in June 2005.

The
Company will recognize a net benefit from the settlement with the Rigas Family and Other Rigas Entities in June 2005, as follows (amounts in thousands):

Derecognition of amounts due to the Rigas Family and Other Rigas entities from the Rigas Co-Borrowing Entities

$
460,256Derecognition of amounts due from the Rigas Family and Other Rigas Entities, net *


(15,405
)Estimated fair value of debt and equity securities and real estate to be conveyed to the Company


34,629Deconsolidation of Coudersport and Bucktail, net (Note 3)


(12,964
)Legal defense costs for the Rigas Family


(11,500
)Derecognition of severance accrual for John J. Rigas


2,717Settlement with the Rigas Family and Other Rigas Entities, net

$
457,733


---

Note 5:    Debt

The carrying value of the Company's debt is summarized below for the indicated periods (amounts in thousands). Although the Company has timely paid all interest
due under the DIP facilities, they are

22

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

classified
as a current liability as the Company has received and may require future waivers to prevent or cure certain defaults under the DIP facilities. See Note 2 for additional information.

March 31,
2005

December 31,
2004Parent and subsidiary debt:Secured:Second Extended DIP Facility (a)

$
606,000

$
627,176Capital lease obligations


30,413


39,657Unsecured other subsidiary debt


520


912Parent and subsidiary debt

$
636,933

$
667,745Liabilities subject to compromise:Parent debt  unsecured: (b)Senior notes

$
4,767,565

$
4,767,565Convertible subordinated notes (c)


1,992,022


1,992,022Senior debentures


129,247


129,247Pay-in-kind notes


31,847


31,847Total parent debt


6,920,681


6,920,681Subsidiary debt:SecuredNotes payable to banks


2,240,313


2,240,313UnsecuredSenior notes


1,105,538


1,105,538Senior discount notes


342,830


342,830Zero coupon senior discount notes


755,031


755,031Senior subordinated notes


208,976


208,976Other subsidiary debt


121,523


121,523Total subsidiary debt


4,774,211


4,774,211Deferred financing fees


(134,208
)

(134,208
)Parent and subsidiary debt before Co-Borrowing Facilities (Note 2)

$
11,560,684

$
11,560,684Co-Borrowing Facilities (d) (Note 2)

$
4,576,375

$
4,576,375


(a) Second Extended DIP Facility

In connection with the Chapter 11 filings, Adelphia and certain of its subsidiaries (collectively, the "Loan Parties") entered into the $1,500,000,000 DIP
Facility. On May 10, 2004, the Loan Parties entered into the $1,000,000,000 First Extended DIP Facility, which superseded and replaced in its entirety the DIP Facility. On February 25,
2005, the Loan Parties entered into the $1,300,000,000 Second Extended DIP Facility, which superseded and replaced in its entirety the First Extended DIP Facility. The Second Extended DIP Facility was
approved by the Bankruptcy Court on February 22, 2005 and closed on February 25, 2005.

23

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The
Second Extended DIP Facility matures upon the earlier of March 31, 2006 or the occurrence of certain other events, as described in the Second Extended DIP Facility. The Second
Extended DIP Facility consists of an $800,000,000 Tranche A Loan (including a $500,000,000 letter of credit subfacility) and a $500,000,000 Tranche B Loan. The proceeds from borrowings under the
Second Extended DIP Facility are permitted to be used for general corporate purposes and investments, as defined in the Second Extended DIP Facility. The Second Extended DIP Facility is secured with a
first priority lien on all of the Loan Parties' unencumbered assets, a priming first priority lien on all assets of the Loan Parties securing their pre-petition bank debt and a junior lien
on all other assets of the Loan Parties. The applicable margin on loans extended under the Second Extended DIP Facility is 1.25% per annum in the case of Alternate Base Rate loans and 2.25% per annum
in the case of Adjusted London interbank offered rate ("LIBOR") loans. In addition, under the Second Extended DIP Facility, the commitment fee with respect to the unused portion of the Tranche A Loan
is 0.50% per annum.

In
connection with the closing of the Second Extended DIP Facility, on February 25, 2005, the Loan Parties borrowed an aggregate of $578,000,000 and used all such proceeds and a
portion of available cash and cash equivalents to repay all of the indebtedness outstanding under the First Extended DIP Facility, including accrued and unpaid interest and certain fees and expenses.
In addition, all of the participations in the letters of credit outstanding under the First Extended DIP Facility were transferred to certain lenders under the Second Extended DIP Facility.

The
terms of the Second Extended DIP Facility contain certain restrictive covenants, which include limitations on the ability of the Loan Parties to: (i) incur additional
guarantees, liens and indebtedness; (ii) sell or otherwise dispose of certain assets; and (iii) pay dividends or make other distributions or payments with respect to any shares of
capital stock, subject to certain exceptions set forth in the Second Extended DIP Facility. The Second Extended DIP Facility also requires compliance with certain financial covenants with respect to
operating results and capital expenditures.

From
time to time, the Loan Parties and the DIP lenders entered into certain amendments to the terms of the Second Extended DIP Facility. In addition, from time to time, the Company
received waivers to prevent or cure certain defaults under the Second Extended DIP Facility. These waivers and amendments are effective through the maturity date of the Second Extended DIP Facility.

On
March 9, 2005, certain Loan Parties cash collateralized certain letters of credit outstanding under the Second Extended DIP Facility in connection with the consummation of
certain asset sales. As a result, the total commitment of the entire Second Extended DIP Facility was reduced to $1,276,539,000, with the total commitment of the Tranche A Loan being reduced to
$776,539,000. As of March 31, 2005, $106,000,000 under the Tranche A Loan has been drawn and letters of credit totaling $113,188,000 have been issued under the Tranche A Loan, leaving
availability of $557,351,000 under the Tranche A Loan. Furthermore, as of March 31, 2005, the entire $500,000,000 under the Tranche B Loan has been drawn. During May 2005, certain Loan
Parties made mandatory prepayments of principal on the Second Extended DIP Facility in connection with the consummation of certain assets sales.

24

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

(b) Parent Debt

All debt of Adelphia is structurally subordinated to the debt of its subsidiaries such that the assets of an indebted subsidiary are used to satisfy the
applicable subsidiary debt before being applied to the payment of parent debt.

(c) Convertible Subordinated Notes

At March 31, 2005 and December 31, 2004, the convertible subordinated notes included: (i) $1,029,876,000 aggregate principal amount of 6%
convertible subordinated notes; (ii) $975,000,000 aggregate principal amount of 3.25% convertible subordinated notes; and (iii) unamortized discounts aggregating $12,854,000. Other Rigas
Entities hold $167,376,000 aggregate principal amount of the 6% notes and $400,000,000 aggregate principal amount of the 3.25% notes. The terms of the 6% notes and 3.25% notes provide for the
conversion of such notes into Class A Common Stock (Class B Common Stock in the case of notes held by the Other Rigas Entities) at the option of the holder any time prior to maturity at
an initial conversion price of $55.49 per share and $43.76 per share, respectively.

Pursuant
to the Forfeiture Order, all right, title and interest of the Rigas Family and Rigas Family Entities in any securities of the Company were forfeited to the United States on
June 8, 2005, and such securities are expected to be conveyed to the Company (subject to completion of forfeiture proceedings before a federal judge to determine if there are any superior
claims) pursuant to the Non-Prosecution Agreement. The Company will recognize the benefits of such conveyance when it occurs. For additional information, see Note 9.

(d) Co-Borrowing Facilities

The Co-Borrowing Facilities represent the aggregate amount outstanding pursuant to three separate Co-Borrowing Facilities dated
May 6, 1999, April 14, 2000 and September 28, 2001. Each co-borrower is jointly and severally liable for the entire amount of the indebtedness under the applicable
Co-Borrowing Facility regardless of whether that co-borrower actually borrowed that amount under such Co-Borrowing Facility. All amounts outstanding under
Co-Borrowing Facilities at March 31, 2005 represent pre-petition liabilities of the Debtors and have been classified as liabilities subject to compromise in the
accompanying condensed consolidated balance sheets. Collection of amounts outstanding under the Co-Borrowing Facilities from the Rigas Co-Borrowing Entities has not been stayed
and actions may be taken to collect such borrowings from the Rigas Co-Borrowing Entities.

The
table below sets forth amounts outstanding for the Co-Borrowing Facilities at March 31, 2005 and December 31, 2004 (amounts in thousands):

Co-Borrowing
FacilitiesAttributable to Rigas Co-Borrowing Entities

$
2,846,156Attributable to non-Rigas Co-Borrowing Entities


1,730,219Total included as debt of the Company

$
4,576,375


25

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Other Debt Matters

Due to the commencement of the Chapter 11 proceedings and the Company's failure to comply with certain financial covenants, the Company is in default on
substantially all of its pre-petition debt obligations. Except as otherwise may be determined by the Bankruptcy Court, the automatic stay protection afforded by the Chapter 11 proceedings
prevents any action from being taken against any of the Debtors with regard to any of the defaults under the pre-petition debt obligations. With the exception of the Company's capital
lease obligations and a portion of other subsidiary debt, all of the pre-petition obligations are classified as liabilities subject to compromise in the accompanying condensed consolidated
balance sheets. For additional information, see Note 2.

Interest Rate Derivative Agreements

At the Petition Date, all of the Company's derivative financial instruments had been settled or have since been settled except for one fixed rate swap, one
variable rate swap and one interest rate collar, which remain outstanding at March 31, 2005. As the settlement of the remaining derivative financial instruments will be determined by the
Bankruptcy Court, the $3,486,000 fair value of the liability associated with the derivative financial instruments at the Petition Date has been classified as a liability subject to compromise in the
accompanying condensed consolidated balance sheets.

Note 6:    Segments

The Company's only reportable operating segment is its "cable" segment. The cable segment includes the Company's cable system operations (including consolidated
subsidiaries, equity method investments and variable interest entities) that provide the distribution of analog and digital video programming and high-speed Internet ("HSI") services to
customers, for a monthly fee, through a network of fiber optic and coaxial cables. This segment also includes the Company's media services (advertising
sales) business. The reportable cable segment includes five operating regions that have been combined as one reportable segment because all of such regions have similar economic characteristics. The
Company identifies reportable segments as those consolidated segments that represent 10% or more of the combined revenue, net earnings or loss, or total assets of all of the Company's operating
segments as of and for the period ended on the most recent balance sheet date presented. Operating segments that do not meet this threshold are aggregated for segment reporting purposes within the
"corporate and other" column.

26

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Selected
financial information concerning the Company's current operating segments is presented below for the indicated periods (amounts in thousands):

|                                        |                         | Cable |   | Corporate
and other |   | Eliminations |           | Total |  
|--------------------------------------- | ----------------------- | ----- | - | ------------------- | - | ------------ | --------- | ----- | -
|Operating and Capital Expenditure Data: |                         |       |   |                     |   |              |           |       |  
|Three months ended March 31, 2005       |                         |       |   |                     |   |              |           |       |  
|                                        | Revenue                 |       | $ | 1,061,929           |   | $            | 7,073     |       | $
|                                        | Operating income (loss) |       |   | 78,801              |   |              | (7,248    | )     |  
|                                        | Capital expenditures    |       |   | 144,254             |   |              |          |       |  
|Three months ended March 31, 2004       |                         |       |   |                     |   |              |           |       |  
|                                        | Revenue                 |       | $ | 996,338             |   | $            | 10,992    |       | $
|                                        | Operating loss          |       |   | (18,916             | ) |              | (24,065   | )     |  
|                                        | Capital expenditures    |       |   | 185,230             |   |              | 10,573    |       |  
|Balance Sheet Information:              |                         |       |   |                     |   |              |           |       |  
|Total assets                            |                         |       |   |                     |   |              |           |       |  
|                                        | As of March 31, 2005    |       | $ | 12,566,250          |   | $            | 4,770,070 |       | $
|                                        | As of December 31, 2004 |       |   | 12,584,147          |   |              | 4,889,623 |       |  

The
Company did not derive more than 10% of its revenue from any one customer during the three months ended March 31, 2005 and 2004. The Company's long-lived assets
related to its foreign operations and investments were $7,927,000 and $6,394,000, as of March 31, 2005 and December 31, 2004, respectively. The Company's revenue related to its foreign
operations was $4,291,000 and $3,000,000 during the three months ended March 31, 2005 and 2004, respectively. The Company's assets and revenue related to its foreign operations and investments
were not significant to the Company's financial position or results of operations, respectively, during any of the periods presented.

Note 7:    Comprehensive Loss

The Company's comprehensive loss, net of tax, for the indicated periods was as follows (amounts in thousands):

Three Months Ended
March 312005

2004Net loss

$
(82,742
)
$
(1,354,572
)Other comprehensive income (loss):Foreign currency translation adjustments

$
(5,097
)

320Unrealized gains on securities, net of tax


25


263Other comprehensive income (loss), net of tax


(5,072
)

583Comprehensive loss, net

$
(87,814
)
$
(1,353,989
)


27

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Note 8:    TelCove Settlement and Discontinued Operations

On February 21, 2004, the Debtors and TelCove, Inc. ("TelCove") executed a global settlement agreement (the "Global Settlement") that resolved,
among other things, certain claims put forth by both TelCove and Adelphia. The Global Settlement provided that, on the closing date, the Company would transfer to TelCove certain settlement
consideration, including approximately $60,000,000 in cash plus an additional payment of up to $2,500,000 related to certain outstanding payables, as well as certain vehicles, real property and
intellectual property licenses used in the operation of TelCove's businesses. Additionally, the parties executed various annexes to the Global Settlement (collectively, the "Annex Agreements") that
provided, among other things, for: (i) a five-year business commitment to TelCove for telecommunication services by the Company; (ii) future use by TelCove of certain fiber
capacity in assets owned by the Company; and (iii) the mutual release by the parties from any and all liabilities, claims and causes of action that either party had or may have had against the
other party. Finally, the Global Settlement provided for the transfer by the Company to TelCove of certain competitive local exchange carrier ("CLEC") systems ("CLEC Market Assets") together with the
various licenses, franchises and permits related to the operation and ownership of such assets. On March 23, 2004, the Bankruptcy Court approved the Global Settlement. The Company recorded a
$97,902,000 liability during the fourth quarter of 2003 to provide for the Global Settlement. The Annex Agreements became effective in accordance with their terms on April 7, 2004.

On
April 7, 2004, the Company paid $57,941,000 to TelCove, transferred the economic risks and benefits of the CLEC Market Assets to TelCove pursuant to the terms of the Global
Settlement and entered into a management agreement which provided for the management of the CLEC Market Assets from April 7, 2004 through the date of transfer to TelCove.

On
August 20, 2004, the Company paid TelCove an additional $2,464,000 pursuant to the Global Settlement in connection with the resolution and release of certain claims. On
August 21, 2004, the CLEC Market Assets were transferred to TelCove.

The
Company has presented the transferred CLEC Market Assets as discontinued operations in the accompanying condensed consolidated financial statements for the three months ended
March 31, 2004.

Note 9:    Contingencies

Reorganization Expenses due to Bankruptcy and Professional Fees

The Company is currently aware of certain success fees that potentially could be paid upon the Company's emergence from bankruptcy to third party financial
advisers retained by the Company and Committees in connection with the Chapter 11 Cases. Currently, these success fees are estimated to be between $6,500,000 and $19,950,000 in the aggregate. In
addition, the CEO and the COO of the Company are eligible to receive equity awards of Adelphia stock with a minimum aggregate fair value of $17,000,000 upon the Debtors' emergence from bankruptcy. The
value of such equity awards will be determined based on the average trading price of the post-emergence common stock of Adelphia during the 15 trading days immediately preceding the
90th day following the date of emergence. These equity awards, which will be subject to vesting and trading restrictions, may be increased up to a maximum aggregate value of $25,500,000
at the discretion of the Board. As no plan of reorganization

28

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

has
been confirmed by the Bankruptcy Court, no accrual for such contingent payments or equity awards has been recorded in the accompanying condensed consolidated financial statements.

Letters of Credit

The Company has issued standby letters of credit for the benefit of franchise authorities and other parties, most of which have been issued to an intermediary
surety bonding company. All such letters of credit will expire when the Second Extended DIP Facility expires, unless adequately collateralized. Unless otherwise amended or extended, the Second
Extended DIP Facility will expire no later than March 31, 2006. At March 31, 2005, the aggregate principal amount of letters of credit issued by the Company was $114,078,000 of which
$113,188,000 was issued under the Second Extended DIP Facility and $890,000 was collateralized by cash. Letters of credit issued under the DIP facilities reduce the amount that may be borrowed under
the DIP facilities.

Litigation Matters

General.The Company follows Statement of Financial Accounting Standards ("SFAS") No. 5, Accounting for
Contingencies, in determining its accruals and disclosures with respect to loss contingencies. Accordingly, estimated losses from loss
contingencies are accrued by a charge to income when information available indicates that it is probable that an asset had been impaired or a liability had been incurred and the amount of the loss can
be reasonably estimated. If a loss contingency is not
probable or reasonably estimable, disclosure of the loss contingency is made in the financial statements when it is reasonably possible that a loss may be incurred.

SEC Civil Action and DoJ Investigation.On July 24, 2002, the SEC filed a civil enforcement action (the "SEC Civil
Action") against Adelphia, certain members of the Rigas Family and others, alleging various securities fraud and improper books and records claims arising out of actions allegedly taken or directed by
certain members of the Rigas Family who held all of the senior executive positions at Adelphia and constituted five of the nine members of Adelphia's board of directors (none of whom remain with the
Company).

On
December 3, 2003, the SEC filed a proof of claim in the Chapter 11 Cases against Adelphia for, among other things, penalties, disgorgement and prejudgment interest in an
unspecified amount. The staff of the SEC told the Company's advisors that its asserted claims for disgorgement and civil penalties under various legal theories could amount to billions of dollars. On
July 14, 2004, the Creditors' Committee initiated an adversary proceeding seeking, in effect, to subordinate the SEC's claims based on the SEC Civil Action.

On
April 25, 2005, after extensive negotiations with the SEC and the U.S. Attorney, the Company entered into the Non-Prosecution Agreement pursuant to which the
Company agreed, among other things: (i) to contribute $715,000,000 in value to a fund to be established and administered by the United States Attorney General and the SEC for the benefit of
investors harmed by the activities of prior management (the "Restitution Fund"); (ii) to continue to cooperate with the U.S. Attorney until the later of April 25, 2007, or the date upon
which all prosecutions arising out of the conduct described in the Rigas Criminal Action (as described below) and SEC Civil Action are final; and (iii) not to assert claims against the Rigas
Family except for John J. Rigas, Timothy J. Rigas and Michael J. Rigas (together, the "Excluded Parties"), provided that Michael J. Rigas will cease to be an Excluded Party if

29

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

all
currently pending criminal proceedings against him are resolved without a felony conviction on a charge involving fraud or false statements (other than false statements to the U.S. Attorney or the
SEC).

The
Company's contribution to the Restitution Fund will consist of stock, future proceeds of litigation and, assuming consummation of the Sale Transaction (or another sale generating
cash of at least $10 billion), cash. In the event of a sale generating both stock and at least $10 billion in cash, as contemplated in the Sale Transaction, the components of the
Company's contribution to the Restitution Fund will consist of $600,000,000 in cash and stock (with at least $200,000,000 in cash) and 50% of the first $230,000,000 of future proceeds, if any, from
certain litigation against third parties who injured the Company. If, however, the Sale Transaction (or another sale) is not consummated and instead the Company emerges from bankruptcy as an
independent entity, the $600,000,000 payment by the Company will consist entirely of stock in the reorganized Adelphia. Unless extended on consent of the U.S. Attorney and the SEC, which consent may
not be unreasonably withheld, the Company must make these payments on or before the earlier of: (i) October 15, 2006; (ii) 120 days after confirmation of a
stand-alone plan of reorganization; or (iii) seven days after the first distribution of stock or cash to creditors under any plan of reorganization. The Company recorded charges of $425,000,000
and $175,000,000 during 2004 and 2002, respectively, related to the Non-Prosecution Agreement. The $425,000,000 charge is reflected in other income (expense), net in the accompanying
condensed consolidated statements of operations for the three months ended March 31, 2004.

The
U.S. Attorney agreed: (i) not to prosecute Adelphia or specified subsidiaries of Adelphia for any conduct (other than criminal tax violations) related to the Rigas Criminal
Action (defined below) or the allegations contained in the SEC Civil Action; (ii) not to use information obtained through the Company's cooperation with the U.S. Attorney to criminally
prosecute the Company for tax violations; and (iii) to convey to the Company all of the Rigas Co-Borrowing Entities forfeited by the Rigas Family and Rigas Family Entities, certain
specified real estate forfeited by the Rigas Family and any securities of the Company that were directly or indirectly owned by the Rigas Family prior to forfeiture. The U.S. Attorney agreed with the
Rigas Family not to require forfeiture of Coudersport and Bucktail (which together served approximately 5,000 subscribers (unaudited) in July 2005). A condition precedent to the Company's
obligation to make the contribution to the Restitution Fund described in the preceding paragraph is the Company's receipt of title to the Rigas Co-Borrowing Entities, certain specified
real estate and any securities described above, forfeited by the Rigas Family and Rigas Family Entities, free and clear of all liens, claims, encumbrances, or adverse interests. The forfeited Rigas
Co-Borrowing Entities, anticipated to be conveyed to the Company (subject to completion of forfeiture proceedings before a federal judge to determine if there are any superior claims),
represent the overwhelming majority of the Rigas Co-Borrowing Entities' subscribers and value.

Also
on April 25, 2005, the Company consented to the entry of a final judgment in the SEC Civil Action resolving the SEC's claims against the Company. Pursuant to this agreement,
the Company will be permanently enjoined from violating various provisions of the federal securities laws, and the SEC has agreed that if the Company makes the $715,000,000 contribution to the
Restitution Fund, then the Company will not be required to pay disgorgement or a civil monetary penalty to satisfy the SEC's claims.

Pursuant
to letter agreements with TW NY and Comcast, the U.S. Attorney has agreed, notwithstanding any failure by the Company to comply with the Non-Prosecution Agreement,
that it

30

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will
not criminally prosecute any of the entities or their subsidiaries purchased from the Company by TW NY or Comcast (the "Transferred Joint Venture Entities") pursuant to the Sale Transaction.
Under such letter agreements, each of TW NY and Comcast have agreed that following the closing of the Sale Transaction they will cooperate with the relevant governmental authorities' requests for
information about the Company's operations, finances and corporate governance between 1997 and confirmation of the Plan. The sole and exclusive remedy against TW NY or Comcast for breach of any
obligation in the letter agreements is a civil action for breach of contract seeking specific performance of such obligations. In addition, TW NY and Comcast entered into letter agreements with the
SEC agreeing that upon and after the closing of the Sale Transaction, TW NY, Comcast and their respective affiliates (including the Transferred Joint Venture Entities) will not be subject to, or have
any obligation under, the final judgment consented to by the Company in the SEC Civil Action.

The
Non-Prosecution Agreement was subject to the approval of, and has been approved by, the Bankruptcy Court. Adelphia's consent to the final judgment in the SEC Civil Action
was subject to the approval of, and has been approved by, both the Bankruptcy Court and the District Court. Various parties have challenged and sought appellate review or reconsideration of the orders
of the Bankruptcy Court and the District Court approving these settlements. The order of the District Court approving Adelphia's consent to the final judgment in the SEC Civil Action has not been
appealed. Although appeals of the Bankruptcy Court's order are still pending, the appeals of the District Court's approval of the Government-Rigas Settlement Agreement (defined below) and the creation
of the Restitution Fund have been denied by the United States Court of Appeals for the Second Circuit (the "Second Circuit"). That denial is currently the subject of a pending request for full court
review by the Second Circuit.

Adelphia's Lawsuit Against the Rigas Family.On July 24, 2002, Adelphia filed a complaint in the Bankruptcy Court
against John J. Rigas, Michael J. Rigas, Timothy J. Rigas, James P. Rigas, James Brown, Michael C. Mulcahey, Peter L. Venetis, Doris Rigas, Ellen Rigas Venetis and the Rigas Family Entities (the
"Rigas Civil Action"). This action generally alleged the defendants misappropriated billions of dollars from the Company in breach of their fiduciary duties to Adelphia. On November 15, 2002,
Adelphia filed an amended complaint against the defendants that expanded upon the facts alleged in the original complaint and alleged violations of the Racketeering Influenced and Corrupt
Organizations ("RICO") Act, breach of fiduciary duty, securities fraud, fraudulent concealment, fraudulent misrepresentation, conversion, waste of corporate assets, breach of contract, unjust
enrichment, fraudulent conveyance, constructive trust, inducing breach of fiduciary duty, and a request for an accounting (the "Amended Complaint"). The Amended Complaint sought relief in the form of,
among other things, treble and punitive damages, disgorgement of monies and securities obtained as a consequence of the Rigas Family's improper conduct and attorneys' fees.

On
April 25, 2005, Adelphia and the Rigas Family entered into a settlement agreement with respect to the Rigas Civil Action (the "Adelphia-Rigas Settlement Agreement"), pursuant
to which Adelphia agreed, among other things: (i) to pay $11,500,000 to a legal defense fund for the benefit of the Rigas Family; (ii) to provide management services to Coudersport and
Bucktail for an interim period through and including December 31, 2005 ("Interim Management Services"); (iii) to indemnify Coudersport and Bucktail, and the Rigas Family's (other than
the Excluded Parties') interest therein, against claims asserted by the lenders under the Co-Borrowing Facilities with respect to such indebtedness up to the fair market value of those
entities (without regard to their obligations with

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respect
to such indebtedness); (iv) to provide certain members of the Rigas Family with certain indemnities, reimbursements or other protections in connection with certain third party claims
arising out of Company litigation, and in connection with claims against certain members of the Rigas Family by any of the Tele-Media Joint Ventures or Century/ML Cable; and
(v) within ten business days of the date on which the Forfeiture Order is entered, dismiss the Rigas Civil Action except for claims against the Excluded Parties. The Rigas Family agreed:
(i) to make certain tax elections, under certain circumstances, with respect to the Rigas Co-Borrowing Entities (other than Coudersport and Bucktail); (ii) to pay Adelphia
five percent of the gross operating revenue of Coudersport and Bucktail for the Interim Management Services; and (iii) to offer employment to certain Coudersport and Bucktail employees on terms
and conditions that, in the aggregate, are no less favorable to such employees (other than any employees who were expressly excluded by written notice to Adelphia received by July 1, 2005) than
their terms of employment with the Company.

Pursuant
to the Adelphia-Rigas Settlement Agreement, on June 21, 2005, the Company filed a dismissal with prejudice of all claims in this action except against the Excluded
Parties.

This
settlement was subject to the approval of, and has been approved by, the Bankruptcy Court. Various parties have challenged and sought appellate review or reconsideration of the
order of the Bankruptcy Court approving this settlement. The appeals of the Bankruptcy Court's approval remain pending.

In
connection with the Adelphia-Rigas Settlement Agreement, the Company agreed to pay the Rigas Family an additional $11,500,000 for legal defense costs, which was paid and expensed by
the Company in June 2005. The Adelphia-Rigas Settlement Agreement releases the Company from further obligation to provide funding for legal defense costs for the Rigas Family.

Rigas Criminal Action.In connection with an investigation conducted by the DoJ, on July 24, 2002, certain members of
the Rigas Family and certain alleged co-conspirators were arrested, and on September 23, 2002, were indicted by a grand jury on charges including fraud, securities fraud, bank fraud
and conspiracy to commit fraud (the "Rigas Criminal Action"). On November 14, 2002, one of the Rigas Family's alleged co-conspirators, James Brown, pleaded guilty to one count each
of conspiracy, securities fraud and bank fraud. On January 10, 2003, another of the Rigas Family's alleged co-conspirators, Timothy Werth, who had not been arrested with the others
on July 24, 2002, pleaded guilty to one count each of securities fraud, conspiracy to commit securities fraud, wire fraud and bank fraud. The trial in the Rigas Criminal Action began on
February 23, 2004 in the District Court. On July 8, 2004, the jury returned a partial verdict in the Rigas Criminal Action. John J. Rigas and Timothy J. Rigas were each found guilty of
conspiracy (one count), bank fraud (two counts), and securities fraud (15 counts) and not guilty of wire fraud (five counts). Michael J. Mulcahey was acquitted of all 23 counts against him. The jury
found Michael J. Rigas not guilty of conspiracy and wire fraud, but remained undecided on the securities fraud and bank fraud charges against him. On July 9, 2004, the court declared a mistrial
on the remaining charges against Michael J. Rigas after the jurors were unable to reach a verdict as to those charges. The bank fraud charges against Michael J. Rigas have since been dismissed with
prejudice. The District Court has set January 9, 2006 as the date for the retrial of Michael J. Rigas on the securities fraud charges. On March 17, 2005, the District Court denied the
motion of John J. Rigas and Timothy J. Rigas for a new trial. On June 20, 2005, John J. Rigas and Timothy J. Rigas were convicted and sentenced to 15 years and 20 years in prison,

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respectively.
John J. Rigas and Timothy J. Rigas have appealed their convictions and sentences and remain free on bail pending resolution of their appeals.

The
indictment against the Rigas Family included a request for entry of a money judgment in an amount exceeding $2,500,000,000 and for entry of an order of forfeiture of all interests of
the convicted Rigas defendants in the Rigas Family Entities. On December 10, 2004, the DoJ filed an application for a preliminary order of forfeiture finding John J. Rigas and Timothy J. Rigas
jointly and severally liable for personal money judgments in the amount of $2,533,000,000.

On
April 25, 2005, the Rigas Family and the U.S. Attorney entered into a settlement agreement (the "Government-Rigas Settlement Agreement") pursuant to which the Rigas Family
agreed to forfeit: (i) all of the Rigas Co-Borrowing Entities with the exception of Coudersport and Bucktail; (ii) certain specified real estate; and (iii) all
securities in the Company directly or indirectly owned by the Rigas Family. The U.S. Attorney agreed: (i) not to seek additional monetary penalties from the Rigas Family, including the request
for a money judgment as noted above; (ii) from the proceeds of certain assets forfeited by the Rigas Family, to establish the Restitution Fund for the purpose of providing restitution to
holders of the Company's publicly traded securities; and (iii) to inform the District Court of this agreement at the sentencing of John J. Rigas and Timothy J. Rigas.

Pursuant
to the Forfeiture Order, all right, title and interest of the Rigas Family and Rigas Family Entities in the Rigas Co-Borrowing Entities (other than Coudersport and
Bucktail), certain specified real estate and any securities of the Company were forfeited to the United States on June 8, 2005, and such assets and securities are expected to be conveyed to the
Company (subject to completion of forfeiture proceedings before a federal judge to determine if there are any superior
claims) pursuant to the Non-Prosecution Agreement. On August 19, 2005, the Company filed a petition with the District Court seeking an order conveying title to these assets and
securities to the Company. A status report from the government to the District Court regarding the forfeiture proceedings is due in November 2005. On October 13, 2005, a petition was
filed by a lending bank asserting an interest in one of the Rigas Co-Borrowing Entities for the exclusive purpose, according to the petition, of protecting against the contingency that the
Bankruptcy Court approval of certain settlement agreements is overturned on appeal. A separate previously filed petition, which was referred to in the 2004 Form 10-K, related to
real property that is not the subject of the Company's petition.

The
Company was not a defendant in the Rigas Criminal Action, but was under investigation by the DoJ regarding matters related to alleged wrongdoing by certain members of the Rigas
Family. Upon approval of the Non-Prosecution Agreement, Adelphia and specified subsidiaries are no longer subject to criminal prosecution (other than for criminal tax violations) by the
U.S. Attorney for any conduct related to the Rigas Criminal Action or the allegations contained in the SEC Civil Action, so long as the Company complies with its obligations under the
Non-Prosecution Agreement.

Securities and Derivative Litigation.Certain of the Debtors and certain former officers, directors and advisors have been
named as defendants in a number of lawsuits alleging violations of federal and state securities laws and related claims. These actions generally allege that the defendants made materially misleading
statements understating the Company's liabilities and exaggerating the Company's financial results in violation of securities laws.

In
particular, beginning on April 2, 2002, various groups of plaintiffs filed more than 30 class action complaints, purportedly on behalf of certain of the Company's shareholders
and bondholders or

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classes
thereof in federal court in Pennsylvania. Several non-class action lawsuits were brought on behalf of individuals or small groups of security holders in federal courts in
Pennsylvania, New York, South Carolina and New Jersey, and in state courts in New York, Pennsylvania, California and Texas. Seven derivative suits were also filed in federal and state courts in
Pennsylvania, and four derivative suits were filed in state court in Delaware. On May 6, 2002, a notice and proposed order of dismissal without prejudice was filed by the plaintiff in one of
these four Delaware derivative actions. The remaining three Delaware derivative actions were consolidated on May 22, 2002. On February 10, 2004, the parties stipulated and agreed to the
dismissal of these consolidated actions with prejudice.

The
complaints, which named as defendants the Company, certain former officers and directors of the Company and, in some cases, the Company's former auditors, lawyers, as well as
financial institutions who worked with the Company, generally allege that, among other improper statements and omissions, defendants misled investors regarding the Company's liabilities and earnings
in the Company's public filings. The majority of these actions assert claims under Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5. Certain bondholder actions assert
claims for violation of Section 11
and/or Section 12(a) (2) of the Securities Act of 1933. Certain of the state court actions allege various state law claims.

On
July 23, 2003, the Judicial Panel on Multidistrict Litigation issued an order transferring numerous civil actions to the District Court for consolidated or coordinated
pre-trial proceedings (the "MDL Proceedings").

On
September 15, 2003, proposed lead plaintiffs and proposed co-lead counsel in the consolidated class action were appointed in the MDL Proceedings. On
December 22, 2003, lead plaintiffs filed a consolidated class action complaint. Motions to dismiss have been filed by various defendants. On May 27, 2005 and August 16, 2005, the
District Court granted in part and denied in part some of the pending motions and provided the plaintiffs limited ability to replead the dismissed claims. As a result of the filing of the Chapter 11
Cases and the protections of the automatic stay, the Company is not named as a defendant in the amended complaint, but is a non-party. The consolidated class action complaint seeks
monetary damages of an unspecified amount, rescission and reasonable costs and expenses and such other and future relief as the court may deem just and proper. The individual actions against the
Company also seek damages of an unspecified amount.

Pursuant
to section 362 of the Bankruptcy Code, all of the securities and derivative claims that were filed against the Company before the bankruptcy filings are automatically
stayed and not proceeding as to the Company.

The
Company cannot predict the outcome of the pending legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

Acquisition Actions.After the alleged misconduct of certain members of the Rigas Family was publicly disclosed, three
actions were filed in May and June 2002 against the Company by former shareholders of companies that the Company acquired, in whole or in part, through stock transactions. These actions allege
that the Company improperly induced these former shareholders to enter into these stock transactions through misrepresentations and omissions, and the plaintiffs seek monetary damages and equitable
relief through rescission of the underlying acquisition transactions.

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(unaudited)

Two
of these proceedings have been filed with the American Arbitration Association alleging violations of federal and state securities laws, breaches of representations and warranties
and fraud in the inducement. One of these proceedings seeks rescission, compensatory damages and pre-judgment relief, and the other seeks specific performance. The third action alleges
fraud and seeks rescission, damages and attorneys' fees. This action was originally filed in a Colorado State Court, and subsequently was removed by the Company to the United States District Court for
the District of Colorado. The Colorado State Court action was closed administratively on July 16, 2004, subject to reopening if and when the automatic bankruptcy stay is lifted or for other
good cause shown. These actions have been stayed pursuant to the automatic stay provisions of section 362 of the Bankruptcy Code.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

Equity Committee Shareholder Litigation.Adelphia is a defendant in an adversary proceeding in the Bankruptcy Court
consisting of a declaratory judgment action and a motion for a preliminary injunction brought on January 9, 2003 by the Equity Committee, seeking, among other relief, a declaration as to how
the shares owned by the Rigas Family and Rigas Family Entities would be voted should a consent solicitation to elect members of the Board be undertaken. Adelphia has opposed such requests for relief.

The
claims of the Equity Committee are based on shareholder rights that the Equity Committee asserts should be recognized even in bankruptcy, coupled with continuing claims, as of the
filing of the lawsuit, of historical connections between the Board and the Rigas Family. Motions to dismiss filed by Adelphia and others are fully briefed in this action, but no argument date has been
set. If this action survives these motions to dismiss, resolution of disputed fact issues will occur in two phases pursuant to a schedule set by the Bankruptcy Court. Determinations regarding fact
questions relating to the conduct of the Rigas Family will not occur until, at a minimum, after the resolution of the Rigas Criminal Action.

No
pleadings have been filed in the adversary proceeding since September 2003.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

ML Media Litigation.Adelphia and ML Media have been involved in a longstanding dispute concerning Century/ML Cable's
management, the buy/sell rights of ML Media and various other matters.

In
March 2000, ML Media brought suit against Century, Adelphia and Arahova Communications Inc. ("Arahova"), a direct subsidiary of Adelphia and Century's immediate parent,
in the Supreme Court of the State of New York, seeking, among other things: (i) the dissolution of Century/ML Cable and the appointment of a receiver to sell Century/ML Cable's assets;
(ii) if no receiver was appointed, an order authorizing ML Media to conduct an auction for the sale of Century/ML Cable's assets to an unrelated third party and enjoining Adelphia from
interfering with or participating in that process; (iii) an order directing the defendants to comply with the Century/ML Cable joint venture agreement with respect to provisions relating to
governance matters and the budget process; and (iv) compensatory and punitive damages. The parties negotiated a consent order that

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ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

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(unaudited)

imposed
various consultative and reporting requirements on Adelphia and Century as well as restrictions on Century's ability to make capital expenditures without ML Media's approval. Adelphia and
Century were held in contempt of that order in early 2001.

In
connection with the December 13, 2001 settlement of the above dispute, Adelphia, Century/ML Cable, ML Media and Highland Holdings ("Highland"), a general partnership then owned
and controlled by members of the Rigas Family, entered into a Leveraged Recapitalization Agreement (the "Recap Agreement"), pursuant to which Century/ML Cable agreed to redeem ML Media's 50% interest
in Century/ML Cable (the "Redemption") on or before September 30, 2002 for a purchase price between $275,000,000 and $279,800,000 depending on the timing of the Redemption, plus interest. Among
other things, the Recap Agreement provided that: (i) Highland would arrange debt financing for the Redemption; (ii) Highland, Adelphia and Century would jointly and severally guarantee
debt service on debt financing for the Redemption on and after the closing of the Redemption; and (iii) Highland and Century would own 60% and 40% interests, respectively, in the recapitalized
Century/ML Cable. Under the terms of the Recap Agreement, Century's 50% interest in Century/ML Cable was pledged to ML Media as collateral for the Company's obligations.

On
September 30, 2002, Century/ML Cable filed a voluntary petition to reorganize under Chapter 11 in the Bankruptcy Court. Century/ML Cable is operating its business as a
debtor-in-possession.

By
an order of the Bankruptcy Court dated September 17, 2003, Adelphia and Century rejected the Recap Agreement, effective as of such date. If the Recap Agreement is enforceable,
the effect of the rejection of the Recap Agreement is the same as a pre-petition breach of the Recap Agreement. Therefore, Adelphia and Century are potentially exposed to "rejection
damages," which may include the revival of ML Media's claims under the state court actions described above.

Adelphia,
Century, Highland, Century/ML Cable and ML Media are engaged in litigation regarding the enforceability of the Recap Agreement. On April 15, 2004, the Bankruptcy Court
indicated that it would dismiss all counts of Adelphia's challenge to the enforceability of the Recap Agreement except for its allegation that ML Media aided and abetted a breach of fiduciary duty in
connection with the execution of the Recap Agreement. The Bankruptcy Court also indicated that it would allow Century/ML Cable's action to avoid the Recap Agreement as a fraudulent conveyance to
proceed.

ML
Media has alleged that it is entitled to elect recovery of either $279,800,000, plus costs and interest in exchange for its interest in Century/ML Cable, or up to the difference
between $279,800,000 and the fair market value of its interest in Century/ML Cable, plus costs, interest and revival of the state court claims described above. Adelphia, Century and Century/ML Cable
have disputed ML Media's claims, and the Plan contemplates that ML Media will receive no distribution until such dispute is resolved.

On
June 3, 2005, Century and ML Media entered into an interest acquisition agreement ("IAA") to sell their interests in Century/ML Cable for $520,000,000 (subject to potential
purchase price adjustments as defined in the IAA) to San Juan Cable. On August 9, 2005, Century/ML Cable filed its plan of reorganization (the "Century/ML Plan") and its related disclosure
statement (the "Century/ML Disclosure Statement") with the Bankruptcy Court. On August 18, 2005, the Bankruptcy Court approved the Century/ML Disclosure Statement. On September 7, 2005,
the Bankruptcy Court confirmed the Century/ML Plan, which is designed to satisfy the conditions of the IAA with San Juan

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(unaudited)

Cable
and provides that all third party claims will either be paid in full or assumed by San Juan Cable under the terms set forth in the IAA. On October 31, 2005, the sale of Century/ML Cable
to San Juan Cable was consummated and the Century/ML Plan became effective. Neither the sale of Century/ML Cable to San Juan Cable nor the effectiveness of the Century/ML Plan resolves the pending
litigation among Adelphia, Century, Highland, Century/ML Cable and ML Media.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

The X Clause Litigation.On December 29, 2003, the Ad Hoc Committee of holders of Adelphia's 6% and 3.25% subordinated
notes (collectively, the "Subordinated Notes"), together with the Bank of New York, the indenture trustee for the Subordinated Notes (collectively, the "X Clause Plaintiffs"), commenced an adversary
proceeding against Adelphia in the Bankruptcy Court. The X Clause Plaintiffs' complaint sought a judgment declaring that the subordination provisions in the indentures for the Subordinated Notes were
not applicable to an Adelphia plan of reorganization in which constituents receive common stock of Adelphia and that the Subordinated Notes are entitled to sharepari
passuin the distribution of any common stock of Adelphia given to holders of senior notes of Adelphia. Recently, the X Clause Plaintiffs have asserted that the subordination
provisions in the indentures for the Subordinated Notes also are not applicable to an Adelphia plan of reorganization in which constituents receive TWC Class A Common Stock and that the
Subordinated Notes would therefore be entitled to sharepari passuin the distribution of any such TWC Class A Common Stock given to holders of
senior notes of Adelphia. The Debtors dispute this position and have agreed to present the issue to the Bankruptcy Court prior to confirmation of a plan of reorganization.

The
basis for the X Clause Plaintiffs' claim is a provision in the applicable indentures, commonly known as the "X Clause," which provides that any distributions under a plan of
reorganization comprised solely of "Permitted Junior Securities" are not subject to the subordination provision of the
Subordinated Notes indenture. The X Clause Plaintiffs asserted that, under their interpretation of the applicable indentures, a distribution of a single class of new common stock of Adelphia would
meet the definition of "Permitted Junior Securities" set forth in the indentures, and therefore be exempt from subordination.

On
February 6, 2004, Adelphia filed its answer to the complaint, denying all of its substantive allegations. Thereafter, both the X Clause Plaintiffs and Adelphia cross-moved for
summary judgment with both parties arguing that their interpretation of the X Clause was correct as a matter of law. The indenture trustee for the Adelphia senior notes also intervened in the action
and, like Adelphia, moved for summary judgment, arguing that the X Clause Plaintiffs were subordinated to holders of senior notes with respect to any distribution of common stock under a plan. In
addition, the Creditors' Committee also moved to intervene and, thereafter, moved to dismiss the X Clause Plaintiffs' complaint on the grounds, among others, that it did not present a justiciable case
or controversy and therefore was not ripe for adjudication. In a written decision, dated April 12, 2004, the Bankruptcy Court granted the Creditors' Committee's motion to dismiss without ruling
on the merits of the various cross-motions for summary judgment. The Bankruptcy Court's dismissal of the action was without prejudice to the X Clause Plaintiffs' right to bring the action at a later
date, if appropriate.

Verizon Franchise Transfer Litigation.On March 20, 2002, the Company commenced an action (the "California Cablevision
Action") in the United States District Court for the Central District of

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California,
Western Division, seeking, among other things, declaratory and injunctive relief precluding the City of Thousand Oaks, California (the "City") from denying permits on the grounds that the
Company failed to seek the City's prior approval of an asset purchase agreement (the "Asset Purchase Agreement"), dated December 17, 2001, between the Company and Verizon Media
Ventures, Inc. d/b/a Verizon Americast ("Verizon Media Ventures"). Pursuant to the Asset Purchase Agreement, the Company acquired certain Verizon Media Ventures cable equipment and network
system assets (the "Verizon Cable Assets") located in the City for use in the operation of the Company's cable business in the City.

On
March 25, 2002, the City and Ventura County (the "County") commenced an action (the "Thousand Oaks Action") against the Company and Verizon Media Ventures in California State
Court alleging that Verizon Media Ventures' entry into the Asset Purchase Agreement and conveyance of the Verizon Cable Assets constituted a breach of Verizon Media Ventures' cable franchises and that
the Company's participation in the transaction amounted to actionable tortious interference with those franchises. The City and the County sought injunctive relief to halt the sale and transfer of the
Verizon Cable Assets pursuant to the Asset Purchase Agreement and to compel the Company to treat the Verizon Cable Assets as a separate cable system.

On
March 27, 2002, the Company and Verizon Media Ventures removed the Thousand Oaks Action to the United States District Court for the Central District of California, where it was
consolidated with the California Cablevision Action.

On
April 12, 2002, the district court conducted a hearing on the City's and County's application for a preliminary injunction and, on April 15, 2002, the district court
issued a temporary restraining order in part, pending entry of a further order. On May 14, 2002, the district court issued a preliminary injunction and entered findings of fact and conclusions
of law in support thereof (the "May 14, 2002 Order"). The May 14, 2002 Order, among other things: (i) enjoined the Company from integrating the Company's and Verizon Media
Ventures' system assets serving subscribers in the City and the County; (ii) required the Company to return "ownership" of the Verizon Cable Assets to Verizon Media Ventures except that the
Company was permitted to continue to "manage" the assets as Verizon Media Ventures' agent to the extent necessary to avoid disruption in services until Verizon Media Ventures chose to reenter the
market or sell the assets; (iii) prohibited the Company from eliminating any programming options that had previously been selected by Verizon Media Ventures or from raising the rates charged by
Verizon Media Ventures; and (iv) required the Company and Verizon Media Ventures to grant the City and/or the County access to system records, contracts, personnel and facilities for the
purpose of conducting an inspection of the then-current "state of the Verizon Media Ventures and the Company systems" in the City and the County. The Company appealed the May 14,
2002 Order and, on April 1, 2003, the U.S. Court of Appeals for the Ninth Circuit reversed the May 14, 2002 Order, thus removing any restrictions that had been imposed by the district
court against the Company's integration of the Verizon Cable Assets, and remanded the actions back to the district court for further proceedings.

In
September 2003, the City began refusing to grant the Company's construction permit requests, claiming that the Company could not integrate the acquired Verizon Cable Assets
with the Company's existing cable system assets because the City had not approved the transaction between the Company and Verizon Media Ventures, as allegedly required under the City's cable
ordinance.

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(unaudited)

Accordingly, on October 2, 2003, the Company filed a motion for a preliminary injunction in the district court seeking to enjoin the City from refusing to
grant the Company's construction permit requests. On November 3, 2003, the district court granted the Company's motion for a preliminary injunction, finding that the Company had demonstrated "a
strong likelihood of success on the merits." Thereafter, the parties agreed to informally stay the litigation pending negotiations between the Company and the City for the Company's renewal of its
cable franchise, with the intent that such negotiations would also lead
to a settlement of the pending litigation. However, on September 16, 2004, at the City's request, the court set certain procedural dates, including a trial date of July 12, 2005, which
has effectively re-opened the case to active litigation. Subsequently, the July 12, 2005 trial date was vacated pursuant to a stipulation and order. On July 11, 2005, the
district court referred the matter to a United States magistrate judge for settlement discussions. A settlement conference was held on October 20, 2005, before the magistrate judge. The parties
continue to engage in settlement discussions in an effort to resolve the dispute.

The
Company cannot predict the outcome of these actions or estimate the possible effects on the financial condition or results of operations of the Company.

Dibbern Adversary Proceeding.On or about August 30, 2002, Gerald Dibbern, individually and purportedly on behalf of a
class of similarly situated subscribers nationwide, commenced an adversary proceeding in the Bankruptcy Court against Adelphia asserting claims for violation of the Pennsylvania Consumer Protection
Law, breach of contract, fraud, unjust enrichment, constructive trust, and an accounting. This complaint alleges that Adelphia charged, and continues to charge, subscribers for cable
set-top box equipment, including set-top boxes and remote controls, that is unnecessary for subscribers that receive only basic cable service and have cable-ready televisions.
The complaint further alleges that Adelphia failed to adequately notify affected subscribers that they no longer needed to rent this equipment. The complaint seeks a number of remedies including
treble money damages under the Pennsylvania Consumer Protection Law, declaratory and injunctive relief, imposition of a constructive trust on Adelphia's assets, and punitive damages, together with
costs and attorneys' fees.

On
or about December 13, 2002, Adelphia moved to dismiss the adversary proceeding on several bases, including that the complaint fails to state a claim for which relief can be
granted and that the matters alleged therein should be resolved in the claims process. The Bankruptcy Court granted Adelphia's motion to dismiss and dismissed the adversary proceeding on May 3,
2005. In the Bankruptcy Court, Mr. Dibbern has also objected to the provisional disallowance of his proofs of claim which comprised a portion of the Bankruptcy Court's May 3, 2005 order.
Mr. Dibbern appealed the May 3, 2005 order dismissing his claims to the District Court. In an August 30, 2005 decision, the District Court affirmed the dismissal of
Mr. Dibbern's claims for violation of the Pennsylvania Consumer Protection Law, a constructive trust and an accounting, but reversed the dismissal of Mr. Dibbern's breach of contract,
fraud and unjust enrichment claims. These three claims will proceed in the Bankruptcy Court and Adelphia filed an answer on October 14, 2005.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

Tele-Media Examiner Motion.By motion filed in the Bankruptcy Court on August 5, 2004,
Tele-Media Corporation of Delaware ("TMCD") and certain of its affiliates sought the appointment of an examiner for the following Debtors: Tele-Media Company of
Tri-States, L.P., CMA Cablevision

39

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ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Associates
VII, L.P., CMA Cablevision Associates XI, L.P., TMC Holdings Corporation, Adelphia Company of Western Connecticut, TMC Holdings, LLC, Tele-Media Investment Limited Partnership,
L.P., Eastern Virginia Cablevision, L.P., Tele-Media Company of Hopewell Prince George, and Eastern Virginia Cablevision Holdings, LLC (collectively, the "Tele-Media JV
Entities"). Among other things, TMCD alleged that management and the Board breached their fiduciary obligations to the creditors and equity holders of those entities. Consequently, TMCD sought the
appointment of an examiner to investigate and make recommendations to the Bankruptcy Court regarding various issues related to such entities.

On
April 14, 2005, the Debtors filed a motion with the Bankruptcy Court seeking approval of a global settlement agreement (the "Tele-Media Settlement Agreement") by
and among the Debtors and TMCD and certain of its affiliates (the "Tele-Media Parties") which, among other things: (i) transfers the Tele-Media Parties' ownership
interests in the Tele-Media JV Entities to the Debtors, leaving the Debtors 100% ownership of the Tele-Media JV Entities; (ii) requires the Debtors to make a settlement
payment to the Tele-Media Parties of $21,650,000; (iii) resolves the above-mentioned examiner motion; (iv) settles two pending avoidance actions brought by the Debtors
against certain of the Tele-Media Parties; (v) reconciles 691 separate proofs of claim filed by the Tele-Media Parties, thereby allowing claims worth approximately
$5,500,000 and disallowing approximately $1.9 billion of claims; (vi) requires the Tele-Media Parties to make a $912,500 payment to the Debtors related to workers'
compensation policies; and (vii) effectuates mutual releases between the Debtors and the Tele-Media Parties. The Tele-Media Settlement Agreement was approved by an order
of the Bankruptcy Court dated May 11, 2005 and closed on May 26, 2005.

Creditors' Committee Lawsuit Against Pre-Petition Banks.Pursuant to the Bankruptcy Court order approving the DIP
Facility (the "Final DIP Order"), the Company made certain acknowledgments (the "Acknowledgments") with respect to the extent of its indebtedness under the pre-petition credit facilities,
as well as the validity and extent of the liens and claims of the lenders under such facilities. However, given the circumstances surrounding the filing of the Chapter 11 Cases, the Final DIP Order
preserved the Debtors' right to prosecute, among other things, avoidance actions and claims against the pre-petition lenders and to bring litigation against the pre-petition
lenders based on any wrongful conduct. The Final DIP Order also provided that any official committee appointed in the Chapter 11 Cases would have the right to request that it be granted standing by
the Bankruptcy Court to challenge the Acknowledgments and to bring claims belonging to the Company and its estates against the pre-petition lenders.

Pursuant
to a stipulation among the Company, the Creditors' Committee and the Equity Committee, which is being challenged by certain pre-petition lenders, the Bankruptcy
Court granted the Creditors' Committee leave and standing to file and prosecute claims against the
pre-petition lenders on behalf of the Company, and granted the Equity Committee leave to seek to intervene in any such action. This stipulation also preserves the Company's ability to
compromise and settle the claims against the pre-petition lenders. By motion dated July 6, 2003, the Creditors' Committee moved for Bankruptcy Court approval of this stipulation and
simultaneously filed a complaint (the "Bank Complaint") against the agents and lenders under certain pre-petition credit facilities, and related entities, asserting, among other things,
that these entities knew of, and participated in, the alleged improper actions by certain members of the Rigas Family and Rigas Family Entities (the "Pre-petition Lender Litigation"). The
Debtors are nominal plaintiffs in this action.

40

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

The
Bank Complaint contains 52 claims for relief to redress the claimed wrongs and abuse committed by the agents, lenders and other entities. The Bank Complaint seeks to, among other
things: (i) recover as fraudulent transfers the principal and interest paid by the Company to the defendants; (ii) avoid as fraudulent obligations the Company's obligations, if any, to
repay the defendants; (iii) recover damages for breaches of fiduciary duties to the Company and for aiding and abetting fraud and breaches of fiduciary duties by the Rigas Family;
(iv) equitably disallow, subordinate or recharacterize each of the defendants' claims in the Chapter 11 Cases; (v) avoid and recover certain allegedly preferential transfers made to
certain defendants; and (vi) recover damages for violations of the Bank Holding Company Act.

Numerous
motions seeking to defeat the Pre-petition Lender Litigation were filed by the defendants and the Bankruptcy Court held a hearing on such issues. The Equity
Committee has filed a motion seeking authority to bring additional claims against the pre-petition lenders pursuant to the RICO Act. The Bankruptcy Court heard oral argument on these
motions on December 20 and December 21, 2004. The Bankruptcy Court has not yet ruled on the motions to dismiss. In a memorandum decision dated August 30, 2005, the Bankruptcy
Court granted the motions of both the Creditors' Committee and the Equity Committee for standing to prosecute these claims.

Under
the Plan, the Debtors may seek to compromise and settle, in part, the Pre-petition Lender Litigation, including through the dismissal of certain claims and the release
of certain defendants.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

Non-Agent Banks' Declaratory Judgment.On September 30, 2005, certain non-agent prepetition
lenders of the Debtors filed a declaratory judgment action against the Debtors in the Bankruptcy Court seeking, among other things, the enforcement of asserted
indemnification rights and rights to fees and expenses. No responses have been filed regarding this complaint.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

Devon Mobile Claim.Pursuant to the Agreement of Limited Partnership of Devon Mobile Communications, L.P., a Delaware limited
partnership ("Devon Mobile"), dated as of November 3, 1995, the Company owned a 49.9% limited partnership interest in Devon Mobile, which, through its subsidiaries, held licenses to operate
regional wireless telephone businesses in several states. Devon Mobile had certain business and contractual relationships with the Company and with former subsidiaries or divisions of the Company,
which were spun off as TelCove in January 2002.

In
late May 2002, the Company notified Devon G.P., Inc. ("Devon G.P."), the general partner of Devon Mobile, that it would likely terminate certain discretionary
operational funding to Devon Mobile. On August 19, 2002, Devon Mobile and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code with the
United States Bankruptcy Court for the District of Delaware (the "Devon Mobile Bankruptcy Court").

On
January 17, 2003, the Company filed proofs of claim and interest against Devon Mobile and its subsidiaries for approximately $129,000,000 in debt and equity claims, as well as
an additional claim of approximately $35,000,000 relating to the Company's guarantee of certain Devon Mobile obligations (collectively, the "Company Claims"). By order dated October 1, 2003,
the Devon Mobile Bankruptcy

41

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Court
confirmed Devon Mobile's First Amended Joint Plan of Liquidation (the "Devon Plan"). The Devon Plan became effective on October 17, 2003, at which time the Company's limited partnership
interest in Devon Mobile was extinguished.

On
or about January 8, 2004, Devon Mobile filed proofs of claim in the Chapter 11 Cases seeking, in the aggregate, approximately $100,000,000 in respect of, among other things,
certain cash transfers alleged to be either preferential or fraudulent and claims for deepening insolvency, alter ego liability and breach of an alleged duty to fund Devon Mobile operations, all of
which arose prior to the commencement of the Chapter 11 Cases (the "Devon Claims"). On June 21, 2004, Devon Mobile commenced an adversary proceeding in the Chapter 11 Cases (the "Devon
Adversary Proceeding") through the filing of a complaint (the "Devon Complaint") which incorporates the Devon Claims. On August 20, 2004, the Company filed an answer and counterclaim in
response to the Devon Complaint denying the allegations made in the Devon Complaint and asserting various counterclaims against Devon Mobile, which encompassed the Company Claims. On
November 22, 2004, the Company filed a motion for leave (the "Motion for Leave") to file a third party complaint for contribution and indemnification against Devon G.P. and
Lisa-Gaye Shearing Mead, the sole owner and President of Devon G.P. By endorsed order entered January 12, 2005, Judge Robert E. Gerber, the
judge presiding over the Chapter 11 Cases and the Devon Adversary Proceeding, granted a recusal request made by counsel to Devon G.P. On January 21, 2005, the Devon Adversary Proceeding was
reassigned from Judge Gerber to Judge Cecelia G. Morris. By an order dated April 5, 2005, Judge Morris denied the Motion for Leave and a subsequent motion for reconsideration. On May 13,
2005, the court entered an Amended Pretrial Scheduling Order extending the time for discovery and scheduled a pretrial conference for March 1, 2006, with a five day trial to be scheduled
thereafter. Discovery is ongoing.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

NFHLP Claim.On January 13, 2003, Niagara Frontier Hockey, L.P., a Delaware limited partnership owned by the Rigas
Family ("NFHLP") and certain of its subsidiaries (the "NFHLP Debtors") filed voluntary petitions to reorganize under Chapter 11 in the United States Bankruptcy Court of the Western District of New
York (the "NFHLP Bankruptcy Court") seeking protection under the U. S. bankruptcy laws. Certain of the NFHLP Debtors entered into an agreement dated March 13, 2003 for the sale of certain
assets, including the Buffalo Sabres National Hockey League team, and the assumption of certain liabilities. On October 3, 2003, the NFHLP Bankruptcy Court approved the NFHLP joint plan of
liquidation. The NFHLP Debtors filed a complaint, dated November 4, 2003, against, among others, Adelphia and the Creditors' Committee seeking to enforce certain prior stipulations and orders
of the NFHLP Bankruptcy Court against Adelphia and the Creditors' Committee related to the waiver of Adelphia's right to participate in certain sale proceeds resulting from the sale of assets. Certain
of the NFHLP Debtors' pre-petition lenders, which are also defendants in the adversary proceeding, have filed cross-complaints against Adelphia and the Creditors' Committee asking the
NFHLP Bankruptcy Court to enjoin Adelphia and the Creditors' Committee from prosecuting their claims against those pre-petition lenders. Proceedings as to the complaint itself have been
suspended. With respect to the cross-complaints, motion practice and discovery are proceeding concurrently; no hearing on dispositive motions has been scheduled.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

42

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Preferred Shareholder Litigation.On August 11, 2003, Adelphia initiated an adversary proceeding in the Bankruptcy
Court against the holders of Adelphia's preferred stock (the "Preferred Stockholders"), seeking, among other things, to enjoin the Preferred Stockholders from exercising certain purported rights to
elect directors to the Board due to Adelphia's failure to pay dividends and alleged breaches of covenants contained in the certificates of designations relating to Adelphia's preferred stock. On
August 13, 2003, certain of the Preferred Stockholders filed an action against Adelphia in the Delaware Chancery Court seeking a declaratory judgment of their purported right to appoint two
directors to the Board (the "Delaware Action"). On August 13, 2003, the Bankruptcy Court granted Adelphia a
temporary restraining order, which, among other things, stayed the Delaware Action and temporarily enjoined the Preferred Stockholders from exercising their purported rights to elect directors to the
Board. Thereafter, the Delaware Action was withdrawn.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

Adelphia's Lawsuit Against Deloitte.On November 6, 2002, Adelphia sued Deloitte & Touche LLC ("Deloitte"),
Adelphia's former independent auditors, in the Court of Common Pleas for Philadelphia County. The lawsuit seeks damages against Deloitte based on Deloitte's alleged failure to conduct an audit in
compliance with generally accepted auditing standards, and for providing an opinion that Adelphia's financial statements conformed with GAAP when Deloitte allegedly knew or should have known that they
did not conform. The complaint further alleges that Deloitte knew or should have known of alleged misconduct and misappropriation by the Rigas Family, and other alleged acts of
self-dealing, but failed to report these alleged misdeeds to the Board or others who could have and would have stopped the Rigas Family's misconduct. The complaint raises claims of
professional negligence, breach of contract, aiding and abetting breach of fiduciary duty, fraud, negligent misrepresentation and contribution.

Deloitte
filed preliminary objections seeking to dismiss the complaint, which were overruled by the court by order dated June 11, 2003. On September 15, 2003, Deloitte
filed an answer, a new matter and various counterclaims in response to the complaint. In its counterclaims, Deloitte asserted causes of action against Adelphia for breach of contract, fraud, negligent
misrepresentation and contribution. Also on September 15, 2003, Deloitte filed a related complaint naming as additional defendants John J. Rigas, Timothy J. Rigas, Michael J. Rigas, and James
P. Rigas. In this complaint, Deloitte alleges causes of action for fraud, negligent misrepresentation and contribution. The Rigas defendants, in turn, have claimed a right to contribution and/or
indemnity from Adelphia for any damages Deloitte may recover against the Rigas defendants. On January 9, 2004, Adelphia answered Deloitte's counterclaims. Deloitte moved to stay discovery in
this action until completion of the Rigas Criminal Action, which Adelphia opposed. Following the motion, discovery was effectively stayed for 60 days but has now commenced. Deloitte and
Adelphia have exchanged documents and have begun substantive discovery. On June 9, 2005, the court entered a case management order stating that all discovery shall be completed by
December 5, 2005 and that the case be ready for trial by April 3, 2006.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

Series E and F Preferred Stock Conversion Postponements.On October 29, 2004, Adelphia filed a motion to
postpone the conversion of Adelphia's 7.5% Series E Mandatory Convertible Preferred Stock

43

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

("Series E
Preferred Stock") into shares of Class A Common Stock from November 15, 2004 to February 1, 2005, to the extent such conversion was not already stayed by the
Debtors' bankruptcy filing, in order to protect the Debtors' net operating loss carryovers. On November 18, 2004, the Bankruptcy Court entered an order approving the postponement effective
November 14, 2004.

Adelphia
has subsequently entered into several stipulations further postponing, to the extent applicable, the conversion date of the Series E Preferred Stock. Adelphia has also
entered into several stipulations postponing, to the extent applicable, the conversion date of the Adelphia 7.5% Series F Mandatory Convertible Preferred Stock, which was initially convertible
into shares of Class A Common Stock on February 1, 2005.

EPA Self Disclosure and Audit.On June 2, 2004, the Company orally self-disclosed potential violations of
environmental laws to the United States Environmental Protection Agency ("EPA") pursuant to EPA's Audit Policy, and notified EPA that it intended to conduct an audit of its operations to identify and
correct any such violations. The potential violations primarily concern reporting and recordkeeping requirements arising from the Company's storage and use of petroleum and batteries to provide backup
power for its cable operations. This matter is at an early stage, but based on current facts, the Company does not anticipate that this matter will have a material adverse effect on the Company's
results of operations or financial condition.

Other.The Company is subject to various other legal proceedings and claims which arise in the ordinary course of business.
Management believes, based on information currently available, that the amount of ultimate liability, if any, with respect to any of these other actions will not materially affect the Company's
financial position or results of operations.

Note 10:    Other Financial Information

Supplemental Cash Flow Information

The table below sets forth the Company's supplemental cash flow information (amounts in thousands):

Three months ended March 31,2005

2004Cash paid for interest

$
103,803

$
92,969Capitalized interest

$
(1,848
)
$
(2,600
)


Stock-Based Compensation

The Company applies the intrinsic value-based method of accounting prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees("APB Opinion No. 25"), and related interpretations to account for the Company's fixed plan stock
options. Under this method, compensation expense for stock options or awards that are fixed is required to be recognized over the vesting period only if the current market price of the underlying
stock exceeds the exercise price on the date of grant. SFAS No. 123,Accounting for Stock-Based Compensation("SFAS No. 123"), established
accounting for stock-based employee compensation plans. As allowed by SFAS No. 123, the Company has elected to continue to apply the intrinsic value-based method of accounting prescribed by APB

44

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Opinion
No. 25, and has adopted the disclosure requirements of SFAS No. 123, as amended by SFAS No. 148,Accounting for Stock-Based
CompensationTransition and Disclosurean Amendment of FASB Statement No. 123and by SFAS No. 123-R, Share-Based Payment. The following table illustrates the
effects on net loss and loss per common share as if the Company had applied the fair value
recognition provisions of SFAS No. 123 to stock-based employee compensation (amounts in thousands, except per share amounts):

Three months ended March 31,2005

2004Net lossas reported

$
(82,742
)
$
(1,354,572
)Deduct compensation expense determined under fair value method, net of taxes of $0 for all periods


(31
)

(45
)Pro forma net loss

$
(82,773
)
$
(1,354,617
)Loss per share:Basic and dilutedas reported

$
(0.33
)
$
(5.35
)Basic and dilutedpro forma

$
(0.33
)
$
(5.35
)


Recent Accounting Pronouncement

In March 2005, the FASB issued FIN 47,Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement
No. 143("FIN 47"), which addresses the financial accounting and reporting obligations associated with the conditional retirement of tangible long-lived
assets and the associated asset retirement costs. FIN 47 requires that, where there is an unconditional obligation to perform asset retirement activity even though there is uncertainty as to the
timing and/or the method of settlement may be conditional on a future event, companies must recognize a liability for the fair value of the conditional asset retirement if the fair value of the
liability can be reasonably estimated. The requirements of FIN 47 are effective for fiscal periods ending after December 15, 2005. The Company is currently evaluating the impact of the adoption
of FIN 47.

Earnings (Loss) Per Common Share ("EPS")

The weighted average number of shares used for computing basic and diluted loss per share was 253,747,779 for the three months ended March 31, 2005 and
2004. Potential common shares were not
included in the computation of diluted EPS because their inclusion would be anti-dilutive. At March 31, 2005, and 2004, the number of potential common shares was 87,065,766 and
87,080,354, respectively. The potential common shares consist of stock options to acquire shares of Class A Common Stock and preferred securities and debt instruments that were convertible into
shares of Class A Common Stock at March 31, 2005 and 2004, respectively. The foregoing potential common share amounts do not take into account the assumed number of shares that might be
repurchased by the Company upon the exercise of stock options.

45

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

Intangible Assets

Summarized below are the carrying value and accumulated amortization of intangible assets (amounts in thousands):

|                                 |  | March 31, 2005 |           | December 31, 2004
|-------------------------------- |  | -------------- | --------- | -----------------
|
|Customer relationships and other |  | $              | 1,622,903 |                  
|Franchise rights                 |  |                |           |                  
|Goodwill                         |  |                |           |                  
|                                 |  |                |           |                  
|                                 |  |                |           |                  
|                                 |  |                |           |                  

Goodwill
and franchise rights are not amortized as their lives have been determined to be indefinite. Customer relationships represent the value attributed to customer relationships
acquired in business combinations and are amortized over a 10-year period. Beginning in 2004, the Company began amortizing its customer relationships using the double declining balance
method. The new method of amortization was adopted to better recognize the attrition patterns of our customer relationships and has been applied to customer relationships acquired prior to 2004. The
application of the new amortization method to customer relationships acquired prior to 2004 resulted in an additional charge of $262,847,000 which has been reflected as a cumulative effect of a change
in accounting principle in the accompanying condensed consolidated statements of operations. Amortization of intangible assets aggregated $29,866,000 and $36,529,000 for the three months ended
March 31, 2005 and 2004, respectively.

The
decrease in the goodwill balance at March 31, 2005 as compared to December 31, 2004 reflects the Company's sale of its security monitoring business in Pennsylvania,
Florida and New York, as discussed below.

Accrued Liabilities

The details of accrued liabilities are set forth below (amounts in thousands):

March 31,
2005

December 31,
2004Programming costs

$
133,271

$
106,511Interest


82,176


67,671Payroll


75,799


62,591Franchise fees


48,160


58,178Other


226,275


240,973Total

$
565,681

$
535,924


Tax Matters

During 2004, the Company re-evaluated the impact on its valuation allowance due to the timing of its reversing temporary differences, including its
policy of netting the effect of reversing temporary

46

---



ADELPHIA COMMUNICATIONS CORPORATION AND SUBSIDIARIES

(Debtors-In-Possession)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(unaudited)

differences
associated with customer relationship intangible assets with intangible assets that have indefinite lives. As a result of this evaluation, the Company changed the expectations for
scheduling the expected reversal of its deferred tax liabilities associated with these intangible assets and included in its income tax benefit for 2004 a $166,000,000 reduction in the valuation
allowances on deferred tax assets related to current expectations for the reversal of its deferred tax liabilities.

Transactions With Other Officers and Directors

In a letter agreement between Adelphia and FPL Group, Inc. ("FPL Group") dated January 21, 1999, Adelphia agreed to (i) repurchase 20,000
shares of 81/8% Series C Cumulative Preferred Stock ("Series C Preferred Stock") and 1,091,524 shares of Class A Common Stock owned by Telesat
Cablevision, Inc., a subsidiary of FPL Group ("Telesat") and (ii) transfer all of the outstanding common stock of West Boca Security, Inc. ("WB Security"), a subsidiary of Olympus
Communications, L.P. ("Olympus"), to FPL Group in exchange for FPL Group's 50% voting interest and 1/3 economic interest in Olympus. The Company owned the economic and voting interests
in Olympus that were not then owned by FPL Group. At the time this agreement was entered into, Dennis Coyle, then a member of the Adelphia Board of Directors, was the General Counsel and Secretary of
FPL Group. WB Security was a
subsidiary of Olympus and WB Security's sole asset was a $108,000,000 note receivable (the "WB Note") from a subsidiary of Olympus that was secured by the FPL Group's ownership interest in Olympus and
due September 1, 2004. On January 29, 1999, Adelphia purchased all of the aforementioned shares of Series C Preferred Stock and Class A Common Stock described above from
Telesat for aggregate cash consideration of $149,213,000, and on October 1, 1999, the Company acquired FPL Group's interest in Olympus in exchange for all of the outstanding common stock of WB
Security. The acquired shares of Class A Common Stock are presented as treasury stock in the accompanying condensed consolidated balance sheets. The acquired shares of Series C Preferred
Stock were returned to their original status of authorized but unissued. On June 24, 2004, the Creditors' Committee filed an adversary proceeding in the Bankruptcy Court, among other things, to
avoid, recover and preserve the cash paid by Adelphia pursuant to the repurchase of its Series C Preferred Stock and Class A Common Stock together with all interest paid with respect to
such repurchase. A hearing date relating to such adversary proceeding has not yet been set. Interest on the WB Note is calculated at a rate of 6% per annum (or after default at a variable rate of
LIBOR plus 5%). FPL Group has the right, upon at least 60 days prior written notice, to require repayment of the principal and accrued interest on the WB Note on or after July 1, 2002.
As of March 31, 2005 and December 31, 2004, the aggregate principal and interest due to the FPL Group pursuant to the WB Note was $127,537,000. The Company has not accrued interest on
the WB Note for periods subsequent to the Petition Date. To date, the Company has not yet received a notice from FPL Group requiring the repayment of the WB Note.

Sale of Security Monitoring Business

In November 2004, the Company entered into an asset purchase agreement to sell its security monitoring business in Pennsylvania, Florida and New York. Such
sale was approved by the Bankruptcy Court on January 28, 2005. On February 28, 2005, the transaction closed based on a preliminary adjusted purchase price of $40,200,000. The Company
recognized a $5,900,000 gain on this transaction during the three months ended March 31, 2005.

47

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ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

General

We are the fifth largest operator of cable systems in the United States. Our operations primarily consist of providing analog and digital cable services, HSI
services and other advanced services over our cable systems. These services are generally provided to residential subscribers. At March 31, 2005, our consolidated cable operations served
approximately 5,033,000 basic cable subscribers, of which approximately 1,958,000 also received digital cable service. Our consolidated cable systems also provided HSI services to approximately
1,482,000 subscribers at March 31, 2005. With the exception of approximately 53,000 basic cable subscribers that were located in Brazil, all of our consolidated basic cable subscribers at
March 31, 2005 were located in the United States. Our domestic consolidated cable operations are located in 31 states, with large clusters in Los Angeles, New England, Western New York, West
Palm Beach, Cleveland, Western Pennsylvania, Northern Virginia and Colorado Springs.

Our
only reportable operating segment is our "cable" segment. The cable segment includes our cable system operations (including consolidated subsidiaries, equity method investments and
variable interest entities) that provide video services, HSI services and media services. Operating segments that are not included in the cable segment are aggregated together in the "corporate and
other" segment. For additional information, see Note 6, "Segments," to the accompanying condensed consolidated financial statements.

Bankruptcy Proceedings

In June 2002, the Debtors filed voluntary petitions to reorganize under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The Debtors are
operating their business as debtors-in-possession under Chapter 11. The rights and claims of the Debtors' various creditors and security holders will be determined by a plan of
reorganization that is ultimately subject to confirmation by the Bankruptcy Court.

On
September 28, 2005, the Debtors filed their proposed Plan and related Disclosure Statement with the Bankruptcy Court. The Plan contemplates, among other things,
(i) consummation of the Sale Transaction and (ii) distribution of the cash and common stock of TWC received pursuant to the Sale Transaction to the holders of claims against and equity
interests in the Debtors in accordance with the Plan. For additional information, see Note 2, "Bankruptcy Proceedings and Sale of Assets of the Company," to the accompanying condensed
consolidated financial statements.

In
order to provide liquidity, on August 26, 2002 the Debtors entered into the DIP Facility. On May 10, 2004, the Debtors entered into the First Extended DIP Facility. On
February 25, 2005, the Debtors entered into the Second Extended DIP Facility. For additional information, see Note 5, "Debt," to the accompanying condensed consolidated financial
statements.

Sale of Assets

Effective April 20, 2005, we entered into the Sale Transaction. Under the terms of the Sale Transaction, TW NY and Comcast will purchase substantially all
of our U.S. assets and assume certain of our liabilities. Upon the closing of the Sale Transaction, Adelphia will receive approximately $12.7 billion in cash and shares of TWC Class A
Common Stock, which are expected to represent 16% of the outstanding equity securities of TWC as of the closing and are to be listed on the New York Stock Exchange. Such percentage assumes the
redemption of Comcast's interest in TWC and is subject to adjustment for issuances pursuant to employee stock programs (subject to a cap) and issuances of securities for fair consideration. The
purchase price payable by TW NY and Comcast is subject to

48

---



certain
adjustments. TWC, Comcast and certain of their affiliates have also agreed to swap certain cable systems and unwind Comcast's investments in TWC and TWE. Certain fees are due to our financial
advisors upon successful completion of a sale, which are calculated as a percentage (0.11% to 0.20%) of the sale value. Additional fees may be payable depending on the outcome of the sales process.
Such fees cannot be determined until the closing of the Sale Transaction. The Sale Transaction does not include our interest in our cable system joint venture in Puerto Rico, which Century and ML
Media sold to San Juan Cable effective Ocbober 31, 2005. For additional information regarding the Sale Transaction, see Note 2, "Bankruptcy Proceedings and Sale of Assets of the
Company," to the accompanying condensed consolidated financial statements.

Government Settlement Agreements

On April 25, 2005, after extensive negotiations with the SEC and the U.S. Attorney, we entered into the Non-Prosecution Agreement with the U.S.
Attorney, pursuant to which we agreed, among other things: (i) to contribute $715 million in value to the Restitution Fund; (ii) to continue to cooperate with the U.S. Attorney
until the later of April 25, 2007, or the date upon which all prosecutions arising out of the conduct described in the Rigas Criminal Action and SEC Civil Action are final; and (iii) not
to assert claims against the Rigas Family except for the Excluded Parties. We recorded a charge of $425 million during 2004 related to the Non-Prosecution Agreement. Such amount is
reflected in other income (expense), net in the accompanying condensed consolidated statements of operations. We previously recorded a charge of $175 million related to the
Non-Prosecution Agreement in 2002. The remaining amount will be paid from future proceeds, if any, from certain litigation against third parties who injured the Company.

Also
on April 25, 2005, we consented to an entry of a final judgment in the SEC Civil Action resolving the SEC's claims against us. Pursuant to this agreement, we will be
permanently enjoined from violating various provisions of federal securities laws, and the SEC has agreed that, if we make the $715 million payment to the Restitution Fund, we will not be
required to pay disgorgement or a civil monetary penalty to satisfy the SEC's claims.

On
April 25, 2005, Adelphia and the Rigas Family entered into an agreement to settle the lawsuit against the Rigas Family. The Adelphia-Rigas Settlement Agreement includes, among
other things, agreements to pay $11.5 million to a legal defense fund for the benefit of the Rigas Family, which was expensed by the Company in June 2005, and to provide management
services to Coudersport and Bucktail for an interim period through and including December 31, 2005.

In
connection with the Government Settlement Agreements, all amounts owed between Adelphia (including the Rigas Co-Borrowing Entities) and the Rigas Family and Other Rigas
Entities will not be collected or paid. As a result, in June 2005, we will derecognize the $460 million payable by the Rigas Co-Borrowing Entities to the Rigas Family and
Other Rigas Entities. This liability, which we recorded in connection with the January 1, 2004 consolidation of the Rigas Co-Borrowing Entities, had no legal right of
set-off against amounts due to the Rigas Co-Borrowing Entities from the Rigas Family and Other Rigas Entities.

In
connection with the Government Settlement Agreements, equity ownership of the Rigas Co-Borrowing Entities (other than Coudersport and Bucktail), the debt and equity
securities of the Company, and certain real estate were forfeited by the Rigas Family and Rigas Family Entities and are expected to be conveyed to Company (subject to completion of forfeiture
proceedings before a federal judge to determine if there are any superior claims). In conjunction with the June 2005 forfeiture, we will record the settlement proceeds at their fair value. We
estimate that the fair value of the debt and equity securities and real estate is $34.6 million as of June 30, 2005. We have determined that the equity interests we expect to receive in
the Rigas Co-Borrowing Entities (other than Coudersport and

49

---



Bucktail)
have nominal value as the liabilities of these entities significantly exceed the fair value of their assets.

Also,
in connection with the Government Settlement Agreements, we agreed to pay the Rigas Family an additional $11.5 million for legal defense costs, which will be paid in
June 2005. The Government Settlement Agreements release us from further obligation to provide funding for legal defense costs for the Rigas Family.

As
of March 31, 2005 and December 31, 2004, we had accrued $2.7 million of severance for John J. Rigas pursuant to the terms of a May 23, 2002 agreement with
John J. Rigas, Timothy J. Rigas, James P. Rigas, and Michael J. Rigas. The Government Settlement Agreements release us from this severance obligation. Accordingly, we will derecognize the severance
accrual and recognize the benefit of $2.7 million in June 2005.

We
will recognize a net benefit from the settlement with the Rigas Family and Other Rigas Entities in June 2005, as follows (amounts in thousands):

Derecognition of amounts due to the Rigas Family and Other Rigas Entities from the Rigas Co-Borrowing Entities

$
460,256Derecognition of amounts due from Rigas Family and Other Rigas Entities, net*


(15,405
)Estimated fair value of debt and equity securities and real estate to be conveyed to the Company


34,629Deconsolidation of Coudersport and Bucktail, net (Note 3)


(12,964
)Legal defense costs for the Rigas Family


(11,500
)Derecognition of severance accrual for John J. Rigas


2,717Settlement with the Rigas Family and Other Rigas Entities, net

$
457,733


---

For
additional information about the Government Settlement Agreements, see Note 4, "Transactions with the Rigas Family and Other Rigas Entities," and Note 9,
"Contingencies," to the accompanying condensed consolidated financial statements.

Trends

The following table summarizes our subscribers at March 31, 2005 and 2004, respectively (amounts in thousands):

March 31,%
Increase
(decrease)2005

2004Basic

5,033

5,272

(4.5
)%Digital

1,958

1,888

3.7HSI

1,482

1,141

29.9


We
face increasing competition for our video services primarily from direct broadcast satellite operators and for our HSI services from local telephone companies. Competition has put
downward pressure on the number of basic subscribers and pricing for certain services. Basic cable subscribers decreased 4.5% at March 31, 2005 as compared to the same period in 2004 and have
continued to

50

---



decline
through the first half of 2005. In an effort to address the trend of basic subscriber losses, we are increasing our subscriber retention efforts and our emphasis on enhancing and
differentiating our video products and services with video on demand, high definition television and digital video recorders. Despite these efforts, we may continue to experience a loss of basic cable
subscribers.

Digital
cable subscribers increased 3.7% at March 31, 2005 when compared to the same period in 2004. Growth of digital cable subscribers has moderated from that of prior periods.
Future growth of our digital cable business is dependent upon our ability to retain our basic subscribers and to successfully market our digital cable services.

HSI
subscribers increased 29.9% at March 31, 2005 when compared to the same period in 2004. We anticipate continued demand for our HSI services. However, as the existing HSI
subscriber base grows, we expect the rate of growth will continue to decline.

We
use ARPU as a measure of performance for our business. ARPU represents total revenue for the related period, divided by the number of months in the period, divided by an average of
the number of monthly subscribers for the related period.

The
following table summarizes ARPU for selected revenue components:

Three months ended March 31,Increase (decrease)2005

2004ARPU:Video revenue (including digital cable and media services), per basic subscriber

$
58.90

$
55.10

$
3.80HSI revenue, per HSI subscriber

$
39.21

$
37.68

$
1.53Total revenue, per basic subscriber

$
70.66

$
63.43

$
7.23


ARPU
for video revenue increased $3.80, or 7%, during the three months ended March 31, 2005 as compared to the same period in 2004. ARPU for HSI revenue increased $1.53, or 4%,
during the three months ended March 31, 2005 as compared to the same period in 2004. ARPU for total revenue increased $7.23, or 11%, during the three months ended March 31, 2005 as
compared to the same period in 2004. Historically, ARPU for total revenue has been increasing and we expect this trend to continue through 2006.

Programming
costs increased 2% during the three months ended March 31, 2005 compared to the same period in 2004. Programming costs are expected to continue to rise during the next
several years, primarily due to the expansion of service offerings and industry-wide programming cost increases (particularly with respect to sports programming), reflecting both
inflation-indexed and negotiated license fee increases. To offset these increased costs, we expect to continue to review and adjust, as necessary, the pricing for our services and to create
efficiencies in our operations. However, any cost increases that we are not able to pass on to our subscribers through service rate increases would reduce our operating margins unless offset by
improved operational efficiencies.

51

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RESULTS OF OPERATIONS

Three Months Ended March 31, 2005 Compared to Three Months Ended March 31, 2004

The following table summarizes the results of operations for the periods presented (dollars in thousands):

|                                          |                                                                                        | Three months ended March 31,                                                                                                                                                       |          
|----------------------------------------- | -------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------
|
|
|Revenue                                   |                                                                                        | $                                                                                                                                                                                  | 1,069,002
|Costs and expenses:                       |                                                                                        |                                                                                                                                                                                    |          
|                                          | Direct operating and programming                                                       |                                                                                                                                                                                    |          
|                                          | Selling, general and administrative                                                    |                                                                                                                                                                                    |          
|                                          | Investigation, re-audit and sale transaction costs                                     |                                                                                                                                                                                    |          
|                                          | Depreciation                                                                           |                                                                                                                                                                                    |          
|                                          | Amortization                                                                           |                                                                                                                                                                                    |          
|                                          | Provision for uncollectible amounts due from the Rigas Family and Other Rigas Entities |                                                                                                                                                                                    |          
|                                          | Gain on disposition of long-lived assets                                               |                                                                                                                                                                                    |          
|                                          |                                                                                        |                                                                                                                                                                                    |          
|                                          |                                                                                        | Total costs and expenses                                                                                                                                                           |          
|                                          |                                                                                        |                                                                                                                                                                                    |          
|                                          |                                                                                        | Operating income (loss)                                                                                                                                                            |          
|                                          |                                                                                        |                                                                                                                                                                                    |          
|Other income (expense), net:              |                                                                                        |                                                                                                                                                                                    |          
|                                          | Interest expense, net of amounts capitalized                                           |                                                                                                                                                                                    |          
|                                          | Other income (expense), net                                                            |                                                                                                                                                                                    |          
|                                          |                                                                                        |                                                                                                                                                                                    |          
|                                          |                                                                                        | Total other expense, net                                                                                                                                                           |          
|                                          |                                                                                        |                                                                                                                                                                                    |          
|                                          |                                                                                        | Loss before reorganization expenses, income taxes, share of losses of equity affiliates, minority's interest, discontinued operations and cumulative effects of accounting changes |          
|Reorganization expenses due to bankruptcy |                                                                                        |                                                                                                                                                                                    | (14,058  
|Income tax (expense) benefit              |                                                                                        |                                                                                                                                                                                    | (24,132  
|Share of losses of equity affiliates, net |                                                                                        |                                                                                                                                                                                    | (486     
|Minority's interest in loss of subsidiary |                                                                                        |                                                                                                                                                                                    | 430      
|                                          |                                                                                        |                                                                                                                                                                                    |          
|                                          |                                                                                        | Loss from continuing operations before cumulative effects of accounting changes                                                                                                    |          
|Gain from discontinued operations         |                                                                                        |                                                                                                                                                                                    |         
|Cumulative effects of accounting changes  |                                                                                        |                                                                                                                                                                                    |         
|                                          |                                                                                        |                                                                                                                                                                                    |          
|                                          |                                                                                        | Net loss                                                                                                                                                                           |          
|                                          |                                                                                        |                                                                                                                                                                                    |          

52

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Revenue

Revenue increased $62 million, or 6%, during the three months ended March 31, 2005 as compared to the same period in 2004. The following table
summarizes revenue for the periods indicated (dollars in thousands, except ARPU amounts):

|                    |                           | Three months ended March 31, |       |         |           |    |    
|------------------- | ------------------------- | ---------------------------- | ----- | ------- | --------- | -- | ---
|
|
|Cable:              |                           |                              |       |         |           |    |    
|                    | Video (including digital) |                              | $     | 837,774 |           | 78 | %  
|                    | High-speed Internet       |                              |       | 168,728 |           | 16 |    
|                    | Media services            |                              |       | 55,427  |           | 5  |    
|                    |                           |                              |       |         |           |    |    
|                    |                           | Total cable                  |       |         | 1,061,929 |    | 99 
|Corporate and other |                           |                              | 7,073 |         | 1         |    |    
|                    |                           |                              |       |         |           |    |    
|                    |                           | Total                        |       | $       | 1,069,002 |    | 100
|                    |                           |                              |       |         |           |    |    
|ARPU                |                           | $                            | 70.66 |         |           |    | $  
|                    |                           |                              |       |         |           |    |    

Cable
revenue increased $66 million, or 7%, during the three months ended March 31, 2005 as compared to the same period in 2004. The increase in cable revenue was primarily
attributable to increased revenue from HSI services, higher rates for basic and expanded basic service tiers, new product offerings and media services. An increase in HSI subscribers accounted for
most of the increase in HSI revenue. The positive impact of higher rates for basic and expanded basic service tiers was partially offset by a decrease in our basic subscriber base. The increase in
media services revenue was attributable to our ability to increase both the average rate received and the volume of advertising sold as a result of an industry wide trend of viewers switching from
broadcast to cable, thereby increasing viewership and the advertising population. Subscribers increased 29.9% for HSI services and 3.7% for digital cable, but decreased 4.5% for basic cable, when
comparing subscriber counts at March 31, 2005 to the same period in 2004.

Corporate
and other revenue includes revenue from our security monitoring business, our sports programming network (Empire Sports Network) and our long-distance telephone
resale business. Corporate and other revenue decreased primarily due to decreases in revenue related to our security monitoring business and the Empire Sports Network. In February 2005, we sold
substantially all of our security monitoring business. The decrease in revenue from the Empire Sports Network resulted from the cancellation of the 2004-2005 National Hockey League season.

53

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Direct operating and programming costs

Direct operating and programming costs were relatively flat during the three months ended March 31, 2005 as compared to the same period in 2004. The
following table summarizes direct operating and programming costs for the periods indicated (dollars in thousands):

|                    |                   | Three months ended March 31, |       |         |         |        |        
|------------------- | ----------------- | ---------------------------- | ----- | ------- | ------- | ------ | -------
|
|
|Cable:              |                   |                              |       |         |         |        |        
|                    | Programming costs |                              | $     | 296,005 |         | $      | 289,844
|                    | Other cable       |                              |       | 353,316 |         |        | 351,567
|                    |                   |                              |       |         |         |        |        
|                    |                   | Total cable                  |       |         | 649,321 |        |        
|Corporate and other |                   |                              | 5,009 |         |         | 10,621 |        
|                    |                   |                              |       |         |         |        |        
|                    |                   | Total                        |       | $       | 654,330 |        | $      
|                    |                   |                              |       |         |         |        |        

Programming
costs consist primarily of costs paid to programmers for the provision of analog, premium and digital channels and pay-per-view programs. Programming
costs increased $6 million, or 2%, primarily due to an increase in the rates paid to programming providers and an increase in the number of programming services offered, offset by declines tied
to the drop in basic cable subscribers.

Other
cable operating costs consist of labor and other costs associated with the provision of cable services to subscribers and the operation and maintenance of our cable systems.

Our
corporate and other operating costs include costs associated with our sports programming network, our security monitoring business and long-distance telephone resale
business. Corporate and other costs decreased $6 million when comparing the three months ended March 31, 2005 to the same period in 2004. The decline was primarily due to a drop in
Empire Sports Network fees resulting from the cancellation of the 2004-2005 National Hockey League season and a decrease in costs associated with our security monitoring business. In
February 2005, we sold substantially all of our security monitoring business.

Total
direct operating and programming costs, expressed as a percentage of revenue, decreased to 61% for the three months ended March 31, 2005 from 65% for the three months ended
March 31, 2004. This decrease reflects the higher incremental operating margin from increased cable revenue, as described above, and improved operating efficiencies.

Selling, general and administrative expenses ("SG&A")

SG&A expenses decreased $2 million, or 3%, during the three months ended March 31, 2005 as compared to the same period in 2004. The following table
summarizes certain components of SG&A expenses for the indicated periods (dollars in thousands):

|                    |       | Three months ended March 31, |        |        |   |        |       
|------------------- | ----- | ---------------------------- | ------ | ------ | - | ------ | ------
|
|
|Cable               |       | $                            | 31,167 |        | $ | 29,134 |       
|Corporate and other |       |                              | 47,898 |        |   | 52,227 |       
|                    |       |                              |        |        |   |        |       
|                    | Total |                              | $      | 79,065 |   | $      | 81,361
|                    |       |                              |        |        |   |        |       

Cable
SG&A expenses consist of salaries and benefits, marketing expenses, professional fees, insurance and other general and administrative expenses related to our operations. Such SG&A
expenses increased $2 million when comparing the three months ended March 31, 2005 to the same

54

---



period
in 2004 primarily due to increased marketing expenses. The increased marketing expenses were the result of a shift from certain corporate-wide marketing efforts to regional
marketing programs within our cable segment.

Corporate
and other SG&A expenses include those expenses associated with our corporate functions, our sports programming network, our security monitoring business and our
long-distance telephone resale business. Corporate and other SG&A expenses decreased $4 million primarily due to a decline in various corporate general and administrative expenses
and, as described above, a shift from certain corporate-wide marketing efforts to regional marketing programs within our cable segment during the three months ended March 31, 2005
as compared to the same period in 2004.

Investigation, re-audit and sale transaction costs

We have incurred costs that, although not directly related to the Chapter 11 filing, are related to the investigation of the alleged actions of Rigas Management,
efforts to comply with applicable laws and regulations and the Sale Transaction. These expenses include re-audit, legal and forensic consulting fees and employee retention costs, and
aggregated $20 million and $31 million for the three months ending March 31, 2005 and 2004, respectively. The $11 million decrease in these fees for the three months ended
March 31, 2005 as compared to the same period in 2004, was primarily due to $12 million of legal defense costs recorded in 2004 for the Rigas Family.

Depreciation

Depreciation expense decreased by $35 million, or 14%, for the three months ended March 31, 2005 as compared to the same period in 2004. The
following table summarizes certain components of depreciation expense for the indicated periods (dollars in thousands):

|                    |       | Three months ended March 31, |         |         |   |         |        
|------------------- | ----- | ---------------------------- | ------- | ------- | - | ------- | -------
|
|
|Cable               |       | $                            | 206,708 |         | $ | 229,970 |        
|Corporate and other |       |                              | 6,397   |         |   | 17,801  |        
|                    |       |                              |         |         |   |         |        
|                    | Total |                              | $       | 213,105 |   | $       | 247,771
|                    |       |                              |         |         |   |         |        

Cable
depreciation expense decreased $23 million for the three months ended March 31, 2005 as compared to March 31, 2004. The decrease reflects the net effect of a
decrease in depreciation expense associated with an increase in property and equipment that has become fully depreciated or was retired, partially offset by an increase in expense due to capital
expenditures. The increase in fully depreciated property and equipment was primarily attributable to the 2004 reduction of the useful life used to depreciate standard definition digital
set-top boxes.

Corporate
and other depreciation expense decreased $11 million primarily due to the write-off of abandoned assets in 2004.

Amortization

Amortization expense decreased by 11% to $34 million for the three months ended March 31, 2005 as compared to $39 million for the same period
in 2004. Beginning in 2004, we began amortizing our customer relationships using the double declining balance method and this amortization method resulted in a decrease in amortization expense for the
three months ended March 31, 2005 as compared to 2004. This decrease was partially offset by an increase due to the amortization of internally developed software costs.

55

---



Provision for uncollectible amounts due from the Rigas Family and Other Rigas Entities

We recorded a $2 million provision for uncollectible amounts due from the Rigas Family and Other Rigas Entities due to further decline in the fair value of
underlying securities. For additional information, see Note 4, "Transactions with the Rigas Family and Other Rigas Entities," to the accompanying condensed consolidated financial statements.

Gain on disposition of long-lived assets

We sold our security monitoring business in February 2005. We recorded a gain of $6 million on the sale during the three months ended
March 31, 2005.

Interest expense, net of amounts capitalized

Interest expense, net of amounts capitalized, was $117 million for the three months ended March 31, 2005 as compared to $97 million for the
same period in 2004. The increase relates primarily to higher average monthly outstanding debt balances and higher average interest rates. Partially offsetting these increases was a $6 million
decrease in amortization of deferred financing costs in the first three months of 2005 as compared to the same period in 2004. Since the Petition Date, we have been paying or accruing interest only on
amounts outstanding under the DIP facilities and the pre-petition credit agreements, including the entire principal balance outstanding under the Co-Borrowing Facilities.

Other income (expense), net

Other income, net was $1 million during the three months ended March 31, 2005 as compared to $425 million of other expense, net for the three
months ended March 31, 2004. In the first quarter of 2004, we recorded a $425 million charge related to the Non-Prosecution Agreement. See Note 9, "Contingencies," to
the accompanying condensed consolidated financial statements for additional information.

Reorganization expenses due to bankruptcy

Certain expenses directly related to the Chapter 11 filing are expensed and included in reorganization expenses due to bankruptcy. Such expenses aggregated
$14 million and $15 million for the three months ended March 31, 2005 and 2004, respectively. We will continue to incur significant reorganization expenses until we emerge from
bankruptcy. For additional information, see Note 2, "Bankruptcy Proceedings and Sale of Assets of the Company," to the accompanying condensed consolidated financial statements.

Income tax (expense) benefit

We recorded income tax expense of $24 million and an income tax benefit of $74 million for the three months ended March 31, 2005 and 2004,
respectively. Such amounts differ from the amounts that would have resulted from the application of statutory tax rates due primarily to increases in the valuation allowances provided against our net
operating loss carryforwards and other deferred tax assets during 2005 and 2004. During 2004, we re-evaluated the impact on our valuation allowance due to the timing of our reversing
temporary differences, including our policy of netting the effect of reversing temporary differences associated with customer relationship intangible assets with intangible assets that have indefinite
lives. As a result of this evaluation, we changed the expectations for scheduling the expected reversal of our deferred tax liabilities associated with these intangible assets and included in our
income tax benefit for 2004 a $166 million reduction in the valuation allowances on deferred tax assets related to current expectations for the reversal of our deferred tax liabilities.

56

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Minority's interest in loss of subsidiary

Minority's interest in loss of subsidiary was $430,000 for the three months ended March 31, 2005 as compared to $4 million for the same period in
2004. Minority's interest in loss of subsidiary represents the minority interest owner's share of the loss of our majority-owned subsidiary, Century-TCI.

Gain from discontinued operations

As discussed in Note 8, "TelCove Settlement and Discontinued Operations," to the accompanying condensed consolidated financial statements, the transfer of
economic risks and benefits of the CLEC Market Assets to TelCove pursuant to the Global Settlement occurred on April 7, 2004. The $499,000 gain from discontinued operations for the first three
months of 2004 included $9.2 million of revenue and $8.7 million of costs and expenses.

Cumulative effects of accounting changes

As a result of the adoption of FIN 46-R and the consolidation of the Rigas Co-Borrowing Entities, we recorded a charge of
$589 million as a cumulative effect of an accounting change on January 1, 2004. See Note 3, "Variable Interest Entities," to the accompanying condensed consolidated financial
statements for additional information. In addition, beginning in 2004, we began amortizing our customer relationships using the double declining balance method. Customer relationships were amortized
using the straight-line method prior to 2004. The application of the new amortization method to customer relationships acquired prior to 2004 resulted in an additional charge of
$263 million which has been reflected as a cumulative effect of a change in accounting principle. See Note 10, "Other Financial Information," to the accompanying condensed consolidated
financial statements, for additional information.

Net loss

Our net loss was $83 million and $1,355 million for the three months ended March 31, 2005 and 2004, respectively. As described above, during
the three months ending March 31, 2004, we recorded charges of $852 million for the cumulative effects of accounting changes and a $425 million charge related to the
Non-Prosecution Agreement.

We
are attempting to improve our operating results by increasing revenue while containing, and wherever possible, reducing expenses and capital expenditures. Future increases in revenue
are dependent on our ability to: (i) increase the penetration of our digital and HSI services; (ii) launch new service offerings; (iii) implement rate increases; and
(iv) curtail the loss of basic cable subscribers. We expect to focus on available opportunities to reduce or contain costs for the foreseeable future. Our ability to increase revenue and reduce
or contain expenses and capital expenditures may be adversely affected by unfavorable developments in the Chapter 11 proceedings, by the Sale Transaction and by competitive, regulatory, technological
and other factors outside of our control. Accordingly, no assurance can be given that we will be able to improve our operating results in future periods.

57

---



LIQUIDITY AND CAPITAL RESOURCES

Historical Sources and Uses of Cash

The following table summarizes net cash provided by (used in) our operating, investing and financing activities during the indicated periods (amounts in
thousands):

Three months ended March 31,2005

2004Operating activities

$
145,862

$
147,065Investing activities:Capital expenditures

$
(144,254
)
$
(195,803
)Other investing activities


10,431


(493
)Total investing activities

$
(133,823
)
$
(196,296
)Financing activities

$
(34,201
)
$
68,661


Operating activities.Net cash provided by operating activities remained relatively consistent for the three months ended
March 31, 2005 and 2004.

Investing activities.Net cash used in investing activities decreased to $134 million for the three months ended
March 31, 2005 from $196 million for the comparable period of the prior year. In both periods, we continued to make significant capital expenditures to upgrade and rebuild our cable
systems and to support the launch of new services. Such expenditures decreased 26% to $144 million for the three months ended March 31, 2005 from $196 million for the same period
of the prior year. Net cash received from the sale of our security monitoring business of $36 million offset by an increase in restricted cash of $22 million in the first quarter of 2005
also contributed to the 2005 decrease in net cash used in investing activities.

Financing activities.Net cash used in financing activities was $34 million in the first quarter of 2005 as compared
to net cash provided by financing activities of $69 million in the first quarter of 2004. This $103 million change was primarily due to increased repayments of debt as a result of
certain asset sales in 2005 and decreased borrowing under the DIP facilities due to a decrease in capital expenditures discussed above.

CURRENT AND FUTURE SOURCES OF LIQUIDITY

General

Since the Petition Date, we have utilized cash provided by operating activities and borrowings under our DIP facilities to fund capital expenditures and other
liquidity requirements. As discussed in greater detail below, our restricted cash balances do not represent sources of short-term liquidity.

Second Extended DIP Facility

On February 25, 2005, the Loan Parties entered into the $1,300 million, Second Extended DIP Facility, which supersedes and replaces in its entirety
the First Extended DIP Facility. The Second Extended DIP Facility was approved by the Bankruptcy Court on February 22, 2005 and closed on February 25, 2005.

The
Second Extended DIP Facility matures upon the earlier of March 31, 2006 or the occurrence of certain other events, as described in the Second Extended DIP Facility. The Second
Extended DIP Facility is comprised of an $800 million Tranche A Loan (including a $500 million letter of credit

58

---



subfacility)
and a $500 million Tranche B Loan. The proceeds from borrowings under the Second Extended DIP Facility are permitted to be used for general corporate purposes and investments, as
defined in the Second Extended DIP Facility. The Second Extended DIP Facility is secured with a first priority lien on all of the Loan Parties' unencumbered assets, a priming first priority lien on
all assets of the Loan Parties securing their pre-petition bank debt and a junior lien on all other assets of the Loan Parties. The applicable margin on loans extended under the Second
Extended DIP Facility is 1.25% per annum in the case of Alternate Base Rate loans and 2.25% per annum in the case of Adjusted LIBOR rate loans. In addition, under the Second Extended DIP Facility, the
commitment fee with respect to the unused portion of the Tranche A Loan is 0.50% per annum.

In
connection with the closing of the Second Extended DIP Facility, on February 25, 2005, the Loan Parties borrowed an aggregate of $578 million thereunder, and used all
such proceeds and a portion of available cash and cash equivalents to repay all of the indebtedness, including accrued and unpaid
interest and certain fees and expenses, outstanding under the First Extended DIP Facility. In addition, all of the participations in the letters of credit outstanding under the First Extended DIP
Facility were transferred to certain lenders under the Second Extended DIP Facility.

The
terms of the Second Extended DIP Facility contain certain restrictive covenants, which include limitations on the ability of the Loan Parties to (i) incur additional
guarantees, liens and indebtedness, (ii) sell or otherwise dispose of certain assets and (iii) pay dividends or make other distributions or payments with respect to any shares of capital
stock, subject to certain exceptions set forth in the Second Extended DIP Facility. The Second Extended DIP Facility also requires compliance with certain financial covenants with respect to operating
results and capital expenditures.

From
time to time, the Loan Parties and the DIP lenders entered into certain amendments to the terms of the Second Extended DIP Facility. In addition, from time to time, the Company
received waivers to prevent or cure certain defaults under the Second Extended DIP Facility. These waivers and amendments are effective through the maturity date of the Second Extended DIP Facility.

On
March 9, 2005, certain Loan Parties cash collateralized certain letters of credit outstanding under the Second Extended DIP Facility in connection with the consummation of
certain asset sales. On May 27, 2005, certain Loan Parties made mandatory prepayments of principal on the Second Extended DIP Facility in connection with the consummation of certain asset
sales. As a result, the total commitment of the entire Second Extended DIP Facility was reduced to $1,276 million, with the total commitment of the Tranche A Loan being reduced to
$776 million. As of June 30, 2005, $202 million under the Tranche A Loan has been drawn and letters of credit totaling $86 million have been issued under the Tranche A
Loan, leaving availability of $488 million under the Tranche A Loan. Furthermore, as of June 30, 2005, the entire $500 million under the Tranche B Loan has been drawn.

Cash Provided by Operating Activities

Consistent with our historical experience, we expect that net cash provided by operating activities will continue to represent an important source of liquidity
for us in future periods. We consider both traditional GAAP and alternative measures of cash generated by our operations when evaluating this source of liquidity. Free cash flow is an important
alternative indicator we use to measure our ability to service debt. Free cash flow, which is defined by us as net cash provided by operating activities less capital expenditures, is used by us as a
measure of liquidity. Our definition of free cash flow may differ from similar cash flow measurements used by other public companies, including other public companies offering similar services. We
believe that free cash flow provides a useful means of evaluating our liquidity by enabling us to focus on our ability to service debt and make strategic investments, after giving effect to capital
expenditures, which is a significant and ongoing obligation for us. See "Current and Future Uses of LiquidityCapital Expenditures" below. However, free cash flow is not intended to
replace or supersede any information presented in accordance with GAAP. The following table presents

59

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the
non-GAAP measure, free cash flow (deficit), together with a reconciliation of such alternative measure to the corresponding GAAP measure, net cash provided by operating activities, for
the indicated periods (amounts in thousands):

Three months ended March 31,2005

2004Free cash flow (deficit)

$
1,608

$
(48,738
)Adjustments to reconcile free cash flow to net cash provided by operating activities:Capital expenditures


144,254


195,803Net cash provided by operating activities

$
145,862

$
147,065


Net
cash provided by operating activities is largely a function of the revenue generated and cash expenses incurred during the period. Accordingly, the future reliability of net cash
provided by operating activities is dependent on our ability to maintain or increase our revenue while controlling the corresponding cash expenses. Future increases in revenue are dependent on our
ability to increase the penetration of our digital and HSI services, launch new service offerings, implement rate increases and curtail the loss of basic cable subscribers. Although we believe that we
can continue to increase our revenue and control our cash expenses, factors outside of our control such as adverse changes in the competitive, regulatory, economic, technological, or political
environment, or in consumer trends and/or demographics could adversely affect our ability to do so. Although we have generated free cash flow deficits in recent years, we achieved positive free cash
flow for the three months ended March 31, 2005. However, due to uncertainties relating to the timing of our emergence from bankruptcy and other matters, we cannot predict when, or if, we will
again achieve positive free cash flow. For additional information concerning our planned capital expenditures, see "Current and Future Uses of LiquidityCapital Expenditures" below.

Adequacy of Current Sources of Liquidity

Second Extended DIP Facility.Although no assurance can be given, we believe that cash provided by operating activities,
along with the financing provided by the Second Extended DIP Facility, should provide us with sufficient liquidity to fund our operations through the expiration date of the Second Extended DIP
Facility. As noted above, the Second Extended DIP Facility expires on March 31, 2006 or earlier upon the occurrence of certain events. If it appears likely that the Second Extended DIP Facility
will expire prior to the effective date of a plan of reorganization, we expect to request an amendment of the Second Extended DIP Facility to postpone the expiration thereof to a date that would allow
sufficient time for a plan of reorganization to become effective. It is uncertain whether the Second Extended DIP Facility lenders would agree to such an amendment and what terms might be imposed by
such lenders in connection with such an amendment. If we were not successful in postponing the expiration of the Second Extended DIP Facility, we would seek alternative
debtor-in-possession financing. No assurance can be given that alternative debtor-in-possession financing would be available on terms acceptable to us,
if at all.

Our
ability to obtain sufficient liquidity to fund our operations during the term of the Second Extended DIP Facility is dependent upon our ability to maintain compliance with the
covenants under the Second Extended DIP Facility and upon our ability to generate sufficient cash from operating activities and financing activities to meet our obligations as they become due.

Termination of Exit Financing Commitment.On February 25, 2004, Adelphia executed a commitment letter and certain
related documents pursuant to which a syndicate of financial institutions committed to provide to the Debtors up to $8,800 million in exit financing. Following the Bankruptcy

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Court's
approval on June 30, 2004 of the exit financing commitment, the Company paid the exit lenders a nonrefundable fee of $10 million and reimbursed the exit lenders for certain
expenses they had incurred through the date of such approval, including certain legal expenses. In light of the agreements with TW NY and Comcast, on April 25, 2005, the Company informed the
exit lenders of its election to terminate the exit financing commitment, which termination became effective on May 9, 2005. As a result of the termination, the Company recorded a charge of
$58,267,000 during the second quarter of 2005, which represents previously unpaid commitment fees of $45,428,000, the nonrefundable fee of $10,000,000 and certain other expenses.

Current and Future Uses of Liquidity

Contractual Obligations.Future payments due under the Debtors' pre-petition obligations are subject to
adjustment depending on Bankruptcy Court actions, further developments with respect to disputed claims, determinations of the secured status of certain claims, the value of any collateral securing
such claims, or other events. Such adjustments may be material. There have been no material changes from the 2004 Form 10-K related to contractual obligations.

Off-Balance Sheet Arrangements.We have issued standby letters of credit for the benefit of franchise authorities
and other parties, most of which have been issued to an intermediary surety bonding company. The letters of credit are collateralized by either cash or the undrawn portion of the Second Extended DIP
Facility. At March 31, 2005, the aggregate principal amount of letters of credit issued by us was $114 million, of which $113 million was issued under the Second Extended DIP
Facility and $1 million was collateralized by cash. Letters of credit issued under the DIP facilities reduce the amount that may be borrowed under the DIP facilities. We do not have any other
off-balance sheet arrangements.

Capital Expenditures.The cable television industry is capital intensive and our ability to offer new services and increase
revenue in future periods is largely dependent on our ability to maintain and improve the technical capabilities of our cable systems. We deploy capital to: (i) support the launch of new
services; (ii) extend our services to new and existing residential development; and (iii) improve or maintain the quality of our cable distribution systems in order to retain subscribers
and reduce the costs associated with service calls and maintenance activities. In general, our deployment of capital is designed to maximize the return on capital while taking into account relevant
factors such as: (i) available sources of liquidity; (ii) debt covenants; (iii) franchise requirements; and (iv) availability of skilled labor.

Our
total capital expenditures for the first three months of 2005 were $144 million as compared to $196 million for the same period in 2004. In recent years, we have
devoted significant capital to the rebuild and upgrade of our cable systems and substantially all of our cable networks have been rebuilt to a bandwidth of 550 Megahertz or greater with
two-way capability. Nevertheless, subject to the availability of sufficient financial resources and to possible future changes in our business plan in response to the Sale Transaction, or
competitive, technological, regulatory and other external developments, capital expenditures during the next several years following 2005 are not expected to decrease significantly from the 2005 level
as we migrate our expenditures from the rebuild program to customer premise equipment and scaleable infrastructure associated with new services and technologies such as video on demand. The Sale
Transaction also requires us to use commercially reasonable efforts to maintain capital expenditures in accordance with our long range plan.

Liquidation of Debt and Other Liabilities.At March 31, 2005, our liabilities totaled $21,165 million,
including $18,475 million representing pre-petition liabilities that are subject to compromise. We currently cannot predict the amount of cash that will be required to settle
pre-petition liabilities subject to compromise, as the rights and claims of the Debtors' various creditors will be

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determined
by a plan of reorganization that is ultimately subject to confirmation by the Bankruptcy Court.

CRITICAL ACCOUNTING POLICIES

The Company's critical accounting policies have not changed from those reported in Management's Discussion and Analysis of Financial Condition and Results of
Operations in the 2004 Form 10-K.

NEW ACCOUNTING PRONOUNCEMENTS

In March 2005, the FASB issued FIN 47, which addresses the financial accounting and reporting obligations associated with the conditional retirement of
tangible long-lived assets and the associated asset retirement costs. FIN 47 requires that, where there is an unconditional obligation to perform asset retirement activity even though
there is uncertainty as to the timing and/or the method of settlement may be conditional on a future event, companies must recognize a liability for the fair value of the conditional asset retirement
if the fair value of the liability can be reasonably estimated. The requirements of FIN 47 are effective for fiscal periods ending after December 15, 2005. We are currently evaluating the
impact of the adoption of FIN 47.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes from the 2004 Form 10-K related to our exposure to market risk from interest rates.

ITEM 4.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the
Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include controls and procedures designed
to ensure that such information is accumulated and communicated to our management, including our CEO, Chief Financial Officer ("CFO") and Chief Accounting Officer ("CAO"), as appropriate, to allow
timely decisions regarding required financial disclosure.

Our
management, under the supervision and with the participation of our CEO, CFO and CAO, has completed an evaluation of the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the quarter ended March 31, 2005. Based on our evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures, which included consideration of certain material weaknesses disclosed in our 2004 Form 10-K and our inability
to file this Quarterly Report on Form 10-Q within the statutory time period, our management, including our CEO, CFO and CAO, concluded that as of March 31, 2005, the
Company's disclosure controls and procedures were not effective. In light of the material weaknesses, in 2004, we implemented additional analyses and procedures to ensure that financial statements we
issue are prepared in accordance with GAAP and are fairly presented in all material respects. The Company has performed the additional analyses and procedures with respect to this Quarterly Report on
Form 10-Q. Accordingly, we believe that the condensed consolidated financial statements (unaudited) included in this Quarterly Report on Form 10-Q fairly present,
in all material respects, the Company's financial position, results of operations and cash flows for the periods presented.

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Changes in Internal Control Over Financial Reporting

In connection with our evaluation of the effectiveness of the Company's internal control over financial reporting as of March 31, 2005, we have taken a
number of steps that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

During
the first quarter of 2005, we continued our efforts to remediate internal control deficiencies identified as part of management's assessment of the Company's internal control over
financial reporting for 2004, including the three material weaknesses identified in our 2004 Form 10-K. As of the filing of this Quarterly Report, we have successfully remediated a
portion of these control deficiencies. Following is a discussion of specific changes that we have made to the Company's internal control over financial reporting relating to these three material
weaknesses.

As
of March 31, 2005, with respect to the access to the financial applications and data material weakness, we were continuing our remediation efforts. As of the filing of this
Quarterly Report, we have completed the implementation of policies and procedures that govern security and access to our IT systems, programs and data, including those supporting our financial data
relating to property and equipment and our general ledger and financial reporting applications. In addition, employees are required to complete training and acknowledge an understanding of the
Company's Code of Business Conduct and Ethics, which addresses proper use of Company assets, including requirements for security/access controls.

As
of March 31, 2005, with respect to the property and equipment accounting material weakness, we were continuing our remediation efforts. During the first quarter, we have
implemented policies and procedures to improve controls over capital projects specifically related to the commencement of depreciation expense for capital assets placed in service and controls over
the appropriate review and approval for contractor labor and materials used in connection with capital projects. As of the filing of this Quarterly Report, we completed two accurate physical
inventories of our construction materials, repair and maintenance supplies and customer premise equipment.

As
of March 31, 2005, with respect to the period-end financial reporting process material weakness, we were continuing our remediation efforts. During the first
quarter of 2005, controls were implemented to ensure that journal entries recorded in the Company's general ledger have adequate supporting documentation and are appropriately reviewed and approved
prior to being recorded in the general ledger. As of the filing of this Quarterly Report, we have implemented controls that require general ledger accounts to be assigned to specific accounting
personnel who are accountable for
ensuring that the general ledger accounts are reconciled and reviewed on a timely basis and that adequate supporting documentation is maintained for general ledger accounts. In addition, we are in the
process of completing an inventory of spreadsheets used in our financial reporting process and implementing internal controls over spreadsheets, including requiring data integrity, version controls
and restricted access.

We
continue to dedicate substantial resources to the remediation efforts described in the paragraphs above and believe that we have made considerable progress in establishing effective
internal control over financial reporting. However, our management is unable to provide assurance as to when we and our independent registered public accountants will be able to determine that the
Company's internal control over financial reporting is effective.

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PART II.    OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

Bankruptcy Proceedings.On June 25, 2002, Adelphia and substantially all of its wholly-owned, domestic subsidiaries
filed voluntary petitions to reorganize under Chapter 11 in the Bankruptcy Court. Previously, on June 10, 2002, Century filed a voluntary petition to reorganize under Chapter 11,
seeking protection under the U.S. bankruptcy laws. These cases are being jointly administered under the caption "In re: Adelphia Communications Corporation, et al., Case
No. 02-41729." We are currently operating as debtors-in-possession.

Under
the Bankruptcy Code, actions to collect pre-petition indebtedness, as well as most other pending litigation, are stayed and other contractual obligations against the
Company generally may not be enforced. Absent an order of the Bankruptcy Court, substantially all pre-petition contractual liabilities can only be settled under a plan of reorganization to
be voted upon by holders of claims and equity interests and approved by the Bankruptcy Court.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

SEC Civil Action and DoJ Investigation.On July 24, 2002, the SEC filed a civil enforcement action (the "SEC Civil
Action") against Adelphia, certain members of the Rigas Family and others, alleging various securities fraud and improper books and records claims arising out of actions allegedly taken or directed by
certain members of the Rigas Family who held all of the senior executive positions at Adelphia and constituted five of the nine members of Adelphia's board of directors (none of whom remain with the
Company).

On
December 3, 2003, the SEC filed a proof of claim in the Chapter 11 Cases against Adelphia for, among other things, penalties, disgorgement and prejudgment interest in an
unspecified amount. The staff of the SEC told the Company's advisors that its asserted claims for disgorgement and civil penalties under various legal theories could amount to billions of dollars. On
July 14, 2004, the Creditors' Committee initiated an adversary proceeding seeking, in effect, to subordinate the SEC's claims based on the SEC Civil Action.

On
April 25, 2005, after extensive negotiations with the SEC and the U.S. Attorney, the Company entered into the Non-Prosecution Agreement pursuant to which the
Company agreed, among other things: (i) to contribute $715,000,000 in value to a fund to be established and administered by the United States Attorney General and the SEC for the benefit of
investors harmed by the activities of prior management (the "Restitution Fund"); (ii) to continue to cooperate with the U.S. Attorney until the later of April 25, 2007, or the date upon
which all prosecutions arising out of the conduct described in the Rigas Criminal Action (as described below) and SEC Civil Action are final; and (iii) not to assert claims against the Rigas
Family except for John J. Rigas, Timothy J. Rigas and Michael J. Rigas (together, the "Excluded Parties"), provided that Michael J. Rigas will cease to be an Excluded Party
if all currently pending criminal proceedings against him are resolved without a felony conviction on a charge involving fraud or false statements (other than false statements to the U.S. Attorney or
the SEC).

The
Company's contribution to the Restitution Fund will consist of stock, future proceeds of litigation and, assuming consummation of the Sale Transaction (or another sale generating
cash of at least $10 billion), cash. In the event of a sale generating both stock and at least $10 billion in cash, as contemplated in the Sale Transaction, the components of the
Company's contribution to the Restitution Fund will consist of $600,000,000 in cash and stock (with at least $200,000,000 in cash) and 50% of the first $230,000,000 of future proceeds, if any, from
certain litigation against third parties who injured the Company. If, however, the Sale Transaction (or another sale) is not consummated and instead the Company emerges from bankruptcy as an
independent entity, the $600,000,000 payment by the

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Company
will consist entirely of stock in the reorganized Adelphia. Unless extended on consent of the U.S. Attorney and the SEC, which consent may not be unreasonably withheld, the Company must make
these payments on or before the earlier of: (i) October 15, 2006; (ii) 120 days after confirmation of a stand-alone plan of reorganization; or (iii) seven days after the
first distribution of stock or cash to creditors under any plan of reorganization. The Company recorded charges of $425,000,000 and $175,000,000 during 2004 and 2002, respectively, related to the
Non-Prosecution Agreement. The $425,000,000 charge is reflected in other income (expense), net in the accompanying condensed consolidated statements of operations for the three months
ended March 31, 2004.

The
U.S. Attorney agreed: (i) not to prosecute Adelphia or specified subsidiaries of Adelphia for any conduct (other than criminal tax violations) related to the Rigas Criminal
Action (defined below) or the allegations contained in the SEC Civil Action; (ii) not to use information obtained through the Company's cooperation with the U.S. Attorney to criminally
prosecute the Company for tax violations; and (iii) to convey to the Company all of the Rigas Co-Borrowing Entities forfeited by the Rigas Family and Rigas Family Entities, certain
specified real estate forfeited by the Rigas Family
and any securities of the Company that were directly or indirectly owned by the Rigas Family prior to forfeiture. The U.S. Attorney agreed with the Rigas Family not to require forfeiture of
Coudersport and Bucktail (which together served approximately 5,000 subscribers (unaudited) in July 2005). A condition precedent to the Company's obligation to make the contribution to the
Restitution Fund described in the preceding paragraph is the Company's receipt of title to the Rigas Co-Borrowing Entities, certain specified real estate and any securities described
above, forfeited by the Rigas Family and Rigas Family Entities, free and clear of all liens, claims, encumbrances, or adverse interests. The forfeited Rigas Co-Borrowing Entities,
anticipated to be conveyed to the Company (subject to completion of forfeiture proceedings before a federal judge to determine if there are any superior claims), represent the overwhelming majority of
the Rigas Co-Borrowing Entities' subscribers and value.

Also
on April 25, 2005, the Company consented to the entry of a final judgment in the SEC Civil Action resolving the SEC's claims against the Company. Pursuant to this agreement,
the Company will be permanently enjoined from violating various provisions of the federal securities laws, and the SEC has agreed that if the Company makes the $715,000,000 contribution to the
Restitution Fund, then the Company will not be required to pay disgorgement or a civil monetary penalty to satisfy the SEC's claims.

Pursuant
to letter agreements with TW NY and Comcast, the U.S. Attorney has agreed, notwithstanding any failure by the Company to comply with the Non-Prosecution
Agreement, that it will not criminally prosecute any of the entities or their subsidiaries purchased from the Company by TW NY or Comcast (the "Transferred Joint Venture Entities") pursuant to
the Sale Transaction. Under such letter agreements, each of TW NY and Comcast have agreed that following the closing of the Sale Transaction they will cooperate with the relevant governmental
authorities' requests for information about the Company's operations, finances and corporate governance between 1997 and confirmation of the Plan. The sole and exclusive remedy against TW NY or
Comcast for breach of any obligation in the letter agreements is a civil action for breach of contract seeking specific performance of such obligations. In addition, TW NY and Comcast entered
into letter agreements with the SEC agreeing that upon and after the closing of the Sale Transaction, TW NY, Comcast and their respective affiliates (including the Transferred Joint Venture
Entities) will not be subject to, or have any obligation under, the final judgment consented to by the Company in the SEC Civil Action.

The
Non-Prosecution Agreement was subject to the approval of, and has been approved by, the Bankruptcy Court. Adelphia's consent to the final judgment in the SEC Civil Action
was subject to the approval of, and has been approved by, both the Bankruptcy Court and the District Court. Various parties have challenged and sought appellate review or reconsideration of the orders
of the Bankruptcy Court and the District Court approving these settlements. The order of the District Court approving Adelphia's consent to the final judgment in the SEC Civil Action has not been
appealed. Although

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appeals
of the Bankruptcy Court's order are still pending, the appeals of the District Court's approval of the Government-Rigas Settlement Agreement (defined below) and the creation of the Restitution
Fund have been denied by the United States Court of Appeals for the Second Circuit (the "Second Circuit"). That denial is currently the subject of a pending request for full court review by the Second
Circuit.

Adelphia's Lawsuit Against the Rigas Family.On July 24, 2002, Adelphia filed a complaint in the Bankruptcy Court
against John J. Rigas, Michael J. Rigas, Timothy J. Rigas, James P. Rigas, James Brown, Michael C. Mulcahey, Peter L. Venetis, Doris Rigas, Ellen Rigas
Venetis and the Rigas Family Entities (the "Rigas Civil Action"). This action generally alleged the defendants misappropriated billions of dollars from the Company in breach of their fiduciary duties
to Adelphia. On November 15, 2002, Adelphia filed an amended complaint against the defendants that expanded upon the facts alleged in the original complaint and alleged violations of the
Racketeering Influenced and Corrupt Organizations ("RICO") Act, breach of fiduciary duty, securities fraud, fraudulent concealment, fraudulent misrepresentation, conversion, waste of corporate assets,
breach of contract, unjust enrichment, fraudulent conveyance, constructive trust, inducing breach of fiduciary duty, and a request for an accounting (the "Amended Complaint"). The Amended Complaint
sought relief in the form of, among other things, treble and punitive damages, disgorgement of monies and securities obtained as a consequence of the Rigas Family's improper conduct and attorneys'
fees.

On
April 25, 2005, Adelphia and the Rigas Family entered into a settlement agreement with respect to the Rigas Civil Action (the "Adelphia-Rigas Settlement Agreement"), pursuant
to which Adelphia agreed, among other things: (i) to pay $11,500,000 to a legal defense fund for the benefit of the Rigas Family; (ii) to provide management services to Coudersport and
Bucktail for an interim period through and including December 31, 2005 ("Interim Management Services"); (iii) to indemnify Coudersport and Bucktail, and the Rigas Family's (other than
the Excluded Parties') interest therein, against claims asserted by the lenders under the Co-Borrowing Facilities with respect to such indebtedness up to the fair market value of those
entities (without regard to their obligations with respect to such indebtedness); (iv) to provide certain members of the Rigas Family with certain indemnities, reimbursements or other
protections in connection with certain third party claims arising out of Company litigation, and in connection with claims against certain members of the Rigas Family by any of the
Tele-Media Joint Ventures or Century/ML Cable; and (v) within ten business days of the date on which the Forfeiture Order is entered, dismiss the Rigas Civil Action except for
claims against the Excluded Parties. The Rigas Family agreed: (i) to make certain tax elections, under certain circumstances, with respect to the Rigas Co-Borrowing Entities (other
than Coudersport and Bucktail); (ii) to pay Adelphia five percent of the gross operating revenue of Coudersport and Bucktail for the Interim Management Services; and (iii) to offer
employment to certain Coudersport and Bucktail employees on terms and conditions that, in the aggregate, are no less
favorable to such employees (other than any employees who were expressly excluded by written notice to Adelphia received by July 1, 2005) than their terms of employment with the Company.

Pursuant
to the Adelphia-Rigas Settlement Agreement, on June 21, 2005, the Company filed a dismissal with prejudice of all claims in this action except against the Excluded
Parties.

This
settlement was subject to the approval of, and has been approved by, the Bankruptcy Court. Various parties have challenged and sought appellate review or reconsideration of the
order of the Bankruptcy Court approving this settlement. The appeals of the Bankruptcy Court's approval remain pending.

In
connection with the Adelphia-Rigas Settlement Agreement, the Company agreed to pay the Rigas Family an additional $11,500,000 for legal defense costs, which was paid and expensed by
the Company in June 2005. The Adelphia-Rigas Settlement Agreement releases the Company from further obligation to provide funding for legal defense costs for the Rigas Family.

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Rigas Criminal Action.In connection with an investigation conducted by the DoJ, on July 24, 2002, certain members of
the Rigas Family and certain alleged co-conspirators were arrested, and on September 23, 2002, were indicted by a grand jury on charges including fraud, securities fraud, bank fraud
and conspiracy to commit fraud (the "Rigas Criminal Action"). On November 14, 2002, one of the Rigas Family's alleged co-conspirators, James Brown, pleaded guilty to one count each
of conspiracy, securities fraud and bank fraud. On January 10, 2003, another of the Rigas Family's alleged co-conspirators, Timothy Werth, who had not been arrested with the others
on July 24, 2002, pleaded guilty to one count each of securities fraud, conspiracy to commit securities fraud, wire fraud and bank fraud. The trial in the Rigas Criminal Action began on
February 23, 2004 in the District Court. On July 8, 2004, the jury returned a partial verdict in the Rigas Criminal Action. John J. Rigas and Timothy J. Rigas were each
found guilty of conspiracy (one count), bank fraud (two counts), and securities fraud (15 counts) and not guilty of wire fraud (five counts). Michael J. Mulcahey was acquitted of all 23 counts
against him. The jury found Michael J. Rigas not guilty of conspiracy and wire fraud, but remained undecided on the securities fraud and bank fraud charges against him. On July 9, 2004,
the court declared a mistrial on the remaining charges against Michael J. Rigas after the jurors were unable to reach a verdict as to those charges. The bank fraud charges against
Michael J. Rigas have since been dismissed with prejudice. The District Court has set January 9, 2006 as the date for the retrial of Michael J. Rigas on the securities fraud
charges. On March 17, 2005, the District Court denied the motion of John J. Rigas and Timothy J. Rigas for a new trial. On June 20, 2005, John J. Rigas and
Timothy J. Rigas were convicted and sentenced to 15 years and 20 years in prison, respectively. John J. Rigas and Timothy J. Rigas have appealed their convictions
and sentences and remain free on bail pending resolution of their appeals.

The
indictment against the Rigas Family included a request for entry of a money judgment in an amount exceeding $2,500,000,000 and for entry of an order of forfeiture of all interests of
the convicted Rigas defendants in the Rigas Family Entities. On December 10, 2004, the DoJ filed an application for a preliminary order of forfeiture finding John J. Rigas and
Timothy J. Rigas jointly and severally liable for personal money judgments in the amount of $2,533,000,000.

On
April 25, 2005, the Rigas Family and the U.S. Attorney entered into a settlement agreement (the "Government-Rigas Settlement Agreement") pursuant to which the Rigas Family
agreed to forfeit: (i) all of the Rigas Co-Borrowing Entities with the exception of Coudersport and Bucktail; (ii) certain specified real estate; and (iii) all
securities in the Company directly or indirectly owned by the Rigas Family. The U.S. Attorney agreed: (i) not to seek additional monetary penalties from the Rigas Family, including the request
for a money judgment as noted above; (ii) from the proceeds of certain assets forfeited by the Rigas Family, to establish the Restitution Fund for the purpose of providing restitution to
holders of the Company's publicly traded securities; and (iii) to inform the District Court of this agreement at the sentencing of John J. Rigas and Timothy J. Rigas.

Pursuant
to the Forfeiture Order, all right, title and interest of the Rigas Family and Rigas Family Entities in the Rigas Co-Borrowing Entities (other than Coudersport and
Bucktail), certain specified real estate and any securities of the Company were forfeited to the United States on June 8, 2005, and such assets and securities are expected to be conveyed to the
Company (subject to completion of forfeiture proceedings before a federal judge to determine if there are any superior claims) pursuant to the Non-Prosecution Agreement. On
August 19, 2005, the Company filed a petition with the District Court seeking an order conveying title to these assets and securities to the Company. A status report from the government to the
District Court regarding the forfeiture proceedings is due in November 2005. On October 13, 2005, a petition was filed by a lending bank asserting an interest in one of the Rigas
Co-Borrowing Entities for the exclusive purpose, according to the petition, of protecting against the contingency that the Bankruptcy Court approval of certain settlement agreements is
overturned on appeal. A separate previously filed petition, which was referred to in the 2004 Form 10-K, related to real property that is not the subject of the Company's petition.

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The
Company was not a defendant in the Rigas Criminal Action, but was under investigation by the DoJ regarding matters related to alleged wrongdoing by certain members of the Rigas
Family. Upon approval of the Non-Prosecution Agreement, Adelphia and specified subsidiaries are no longer subject to criminal prosecution (other than for criminal tax violations) by the
U.S. Attorney for any conduct related to the Rigas Criminal Action or the allegations contained in the SEC Civil Action, so long as the Company complies with its obligations under the
Non-Prosecution Agreement.

Securities and Derivative Litigation.Certain of the Debtors and certain former officers, directors and advisors have been
named as defendants in a number of lawsuits alleging violations of federal and state securities laws and related claims. These actions generally allege that the defendants made materially misleading
statements understating the Company's liabilities and exaggerating the Company's financial results in violation of securities laws.

In
particular, beginning on April 2, 2002, various groups of plaintiffs filed more than 30 class action complaints, purportedly on behalf of certain of the Company's shareholders
and bondholders or classes thereof in federal court in Pennsylvania. Several non-class action lawsuits were brought on behalf of individuals or small groups of security holders in federal
courts in Pennsylvania, New York, South Carolina and New Jersey, and in state courts in New York, Pennsylvania, California and Texas. Seven derivative suits were also filed in federal and state courts
in Pennsylvania, and four derivative suits were filed in state court in Delaware. On May 6, 2002, a notice and proposed order of dismissal without prejudice was filed by the plaintiff in one of
these four Delaware derivative actions. The remaining three Delaware derivative actions were consolidated on May 22, 2002. On February 10, 2004, the parties stipulated and agreed to the
dismissal of these consolidated actions with prejudice.

The
complaints, which named as defendants the Company, certain former officers and directors of the Company and, in some cases, the Company's former auditors, lawyers, as well as
financial institutions who worked with the Company, generally allege that, among other improper statements and omissions, defendants misled investors regarding the Company's liabilities and earnings
in the Company's public filings. The majority of these actions assert claims under Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5. Certain bondholder actions
assert claims for violation of Section 11 and/or Section 12(a) (2) of the Securities Act of 1933. Certain of the state court actions allege various state law claims.

On
July 23, 2003, the Judicial Panel on Multidistrict Litigation issued an order transferring numerous civil actions to the District Court for consolidated or coordinated
pre-trial proceedings (the "MDL Proceedings").

On
September 15, 2003, proposed lead plaintiffs and proposed co-lead counsel in the consolidated class action were appointed in the MDL Proceedings. On
December 22, 2003, lead plaintiffs filed a consolidated class action complaint. Motions to dismiss have been filed by various defendants. On May 27, 2005 and August 16, 2005, the
District Court granted in part and denied in part some of the pending motions and provided the plaintiffs limited ability to replead the dismissed claims. As a result of the filing of the
Chapter 11 Cases and the protections of the automatic stay, the Company is not named as a defendant in the amended complaint, but is a non-party. The consolidated class action
complaint seeks monetary damages of an unspecified amount, rescission and reasonable costs and expenses and such other and future relief as the court may deem just and proper. The individual actions
against the Company also seek damages of an unspecified amount.

Pursuant
to section 362 of the Bankruptcy Code, all of the securities and derivative claims that were filed against the Company before the bankruptcy filings are automatically
stayed and not proceeding as to the Company.

The
Company cannot predict the outcome of the pending legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

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Acquisition Actions.After the alleged misconduct of certain members of the Rigas Family was publicly disclosed, three
actions were filed in May and June 2002 against the Company by former shareholders of companies that the Company acquired, in whole or in part, through stock transactions. These actions allege
that the Company improperly induced these former shareholders to enter into these stock transactions through misrepresentations and omissions, and the plaintiffs seek monetary damages and equitable
relief through rescission of the underlying acquisition transactions.

Two
of these proceedings have been filed with the American Arbitration Association alleging violations of federal and state securities laws, breaches of representations and warranties
and fraud in the inducement. One of these proceedings seeks rescission, compensatory damages and pre-judgment relief, and the other seeks specific performance. The third action alleges
fraud and seeks rescission, damages and attorneys' fees. This action was originally filed in a Colorado State Court, and subsequently was removed by the Company to the United States District Court for
the District of Colorado. The Colorado State Court action was closed administratively on July 16, 2004, subject to reopening if and when the automatic bankruptcy stay is lifted or for other
good cause shown. These actions have been stayed pursuant to the automatic stay provisions of section 362 of the Bankruptcy Code.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

Equity Committee Shareholder Litigation.Adelphia is a defendant in an adversary proceeding in the Bankruptcy Court
consisting of a declaratory judgment action and a motion for a preliminary injunction brought on January 9, 2003 by the Equity Committee, seeking, among other relief, a declaration as to how
the shares owned by the Rigas Family and Rigas Family Entities would be voted should a consent solicitation to elect members of the Board be undertaken. Adelphia has opposed such requests for relief.

The
claims of the Equity Committee are based on shareholder rights that the Equity Committee asserts should be recognized even in bankruptcy, coupled with continuing claims, as of the
filing of the lawsuit, of historical connections between the Board and the Rigas Family. Motions to dismiss filed by Adelphia and others are fully briefed in this action, but no argument date has been
set. If this action survives these motions to dismiss, resolution of disputed fact issues will occur in two phases pursuant to a
schedule set by the Bankruptcy Court. Determinations regarding fact questions relating to the conduct of the Rigas Family will not occur until, at a minimum, after the resolution of the Rigas Criminal
Action.

No
pleadings have been filed in the adversary proceeding since September 2003.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

ML Media Litigation.Adelphia and ML Media have been involved in a longstanding dispute concerning Century/ML Cable's
management, the buy/sell rights of ML Media and various other matters.

In
March 2000, ML Media brought suit against Century, Adelphia and Arahova Communications Inc. ("Arahova"), a direct subsidiary of Adelphia and Century's immediate parent,
in the Supreme Court of the State of New York, seeking, among other things: (i) the dissolution of Century/ML Cable and the appointment of a receiver to sell Century/ML Cable's assets;
(ii) if no receiver was appointed, an order authorizing ML Media to conduct an auction for the sale of Century/ML Cable's assets to an unrelated third party and enjoining Adelphia from
interfering with or participating in that process; (iii) an order directing the defendants to comply with the Century/ML Cable joint venture agreement with respect to provisions relating to
governance matters and the budget process; and (iv) compensatory and punitive damages. The parties negotiated a consent order that

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imposed
various consultative and reporting requirements on Adelphia and Century as well as restrictions on Century's ability to make capital expenditures without ML Media's approval. Adelphia and
Century were held in contempt of that order in early 2001.

In
connection with the December 13, 2001 settlement of the above dispute, Adelphia, Century/ML Cable, ML Media and Highland Holdings ("Highland"), a general partnership then owned
and controlled by members of the Rigas Family, entered into a Leveraged Recapitalization Agreement (the "Recap Agreement"), pursuant to which Century/ML Cable agreed to redeem ML Media's 50% interest
in Century/ML Cable (the "Redemption") on or before September 30, 2002 for a purchase price between $275,000,000 and $279,800,000 depending on the timing of the Redemption, plus interest. Among
other things, the Recap Agreement provided that: (i) Highland would arrange debt financing for the Redemption; (ii) Highland, Adelphia and Century would jointly and severally guarantee
debt service on debt financing for the Redemption on and after the closing of the Redemption; and (iii) Highland and Century would own 60% and 40% interests, respectively, in the recapitalized
Century/ML Cable. Under the terms of the Recap Agreement, Century's 50% interest in Century/ML Cable was pledged to ML Media as collateral for the Company's obligations.

On
September 30, 2002, Century/ML Cable filed a voluntary petition to reorganize under Chapter 11 in the Bankruptcy Court. Century/ML Cable is operating its business as a
debtor-in-possession.

By
an order of the Bankruptcy Court dated September 17, 2003, Adelphia and Century rejected the Recap Agreement, effective as of such date. If the Recap Agreement is enforceable,
the effect of the rejection of the Recap Agreement is the same as a pre-petition breach of the Recap Agreement. Therefore, Adelphia and Century are potentially exposed to "rejection
damages," which may include the revival of ML Media's claims under the state court actions described above.

Adelphia,
Century, Highland, Century/ML Cable and ML Media are engaged in litigation regarding the enforceability of the Recap Agreement. On April 15, 2004, the Bankruptcy Court
indicated that it would dismiss all counts of Adelphia's challenge to the enforceability of the Recap Agreement except for its allegation that ML Media aided and abetted a breach of fiduciary duty in
connection with the execution of the Recap Agreement. The Bankruptcy Court also indicated that it would allow Century/ML Cable's action to avoid the Recap Agreement as a fraudulent conveyance to
proceed.

ML
Media has alleged that it is entitled to elect recovery of either $279,800,000, plus costs and interest in exchange for its interest in Century/ML Cable, or up to the difference
between $279,800,000 and the fair market value of its interest in Century/ML Cable, plus costs, interest and revival of the state court claims described above. Adelphia, Century and Century/ML Cable
have disputed ML Media's claims, and the Plan contemplates that ML Media will receive no distribution until such dispute is resolved.

On
June 3, 2005, Century and ML Media entered into an interest acquisition agreement ("IAA") to sell their interests in Century/ML Cable for $520,000,000 (subject to potential
purchase price adjustments as defined in the IAA) to San Juan Cable. On August 9, 2005, Century/ML Cable filed its plan of reorganization (the "Century/ML Plan") and its related disclosure
statement (the "Century/ML Disclosure Statement") with the Bankruptcy Court. On August 18, 2005, the Bankruptcy Court approved the Century/ML Disclosure Statement. On September 7, 2005,
the Bankruptcy Court confirmed the Century/ML Plan, which is designed to satisfy the conditions of the IAA with San Juan Cable and provides that all third party claims will either be paid in full or
assumed by San Juan Cable under the terms set forth in the IAA. On October 31, 2005, the sale of Century/ML Cable to San Juan Cable was consummated and the Century/ML Plan became effective.
Neither the sale of Century/ML Cable to San Juan Cable nor the effectiveness of the Century/ML Plan resolves the pending litigation among Adelphia, Century, Highland, Century/ML Cable and ML Media.

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The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

The X Clause Litigation.On December 29, 2003, the Ad Hoc Committee of holders of Adelphia's 6% and 3.25% subordinated
notes (collectively, the "Subordinated Notes"), together with the Bank of New York, the indenture trustee for the Subordinated Notes (collectively, the "X Clause Plaintiffs"), commenced an adversary
proceeding against Adelphia in the Bankruptcy Court. The X Clause Plaintiffs' complaint sought a judgment declaring that the subordination provisions in the indentures for the Subordinated Notes were
not applicable to an Adelphia plan of reorganization in which constituents receive common stock of Adelphia and that the Subordinated Notes are entitled to sharepari
passuin the distribution of any common stock of Adelphia given to holders of senior notes of Adelphia. Recently, the X Clause Plaintiffs have asserted that the subordination
provisions in the indentures for the Subordinated Notes also are not applicable to an Adelphia plan of reorganization in which constituents receive TWC Class A Common Stock and that the
Subordinated Notes would therefore be entitled to sharepari passuin the distribution of any such TWC Class A Common Stock given to holders of
senior notes of Adelphia. The Debtors dispute this position and have agreed to present the issue to the Bankruptcy Court prior to confirmation of a plan of reorganization.

The
basis for the X Clause Plaintiffs' claim is a provision in the applicable indentures, commonly known as the "X Clause," which provides that any distributions under a plan of
reorganization comprised solely of "Permitted Junior Securities" are not subject to the subordination provision of the Subordinated Notes indenture. The X Clause Plaintiffs asserted that, under their
interpretation of the applicable indentures, a distribution of a single class of new common stock of Adelphia would meet the definition of "Permitted Junior Securities" set forth in the indentures,
and therefore be exempt from subordination.

On
February 6, 2004, Adelphia filed its answer to the complaint, denying all of its substantive allegations. Thereafter, both the X Clause Plaintiffs and Adelphia cross-moved for
summary judgment with both parties arguing that their interpretation of the X Clause was correct as a matter of law. The indenture trustee for the Adelphia senior notes also intervened in the action
and, like Adelphia, moved for summary judgment, arguing that the X Clause Plaintiffs were subordinated to holders of senior notes with respect to any distribution of common stock under a plan. In
addition, the Creditors' Committee also moved to intervene and, thereafter, moved to dismiss the X Clause Plaintiffs' complaint on the grounds, among others, that it did not present a justiciable case
or controversy and therefore was not ripe for adjudication. In a written decision, dated April 12, 2004, the Bankruptcy Court granted the Creditors' Committee's motion to dismiss without ruling
on the merits of the various cross-motions for summary judgment. The Bankruptcy Court's dismissal of the action was without prejudice to the X Clause Plaintiffs' right to bring the action at a later
date, if appropriate.

Verizon Franchise Transfer Litigation.On March 20, 2002, the Company commenced an action (the "California Cablevision
Action") in the United States District Court for the Central District of California, Western Division, seeking, among other things, declaratory and injunctive relief precluding the City of Thousand
Oaks, California (the "City") from denying permits on the grounds that the Company failed to seek the City's prior approval of an asset purchase agreement (the "Asset Purchase Agreement"), dated
December 17, 2001, between the Company and Verizon Media Ventures, Inc. d/b/a Verizon Americast ("Verizon Media Ventures"). Pursuant to the Asset Purchase Agreement, the Company acquired
certain Verizon Media Ventures cable equipment and network system assets (the "Verizon Cable Assets") located in the City for use in the operation of the Company's cable business in the City.

On
March 25, 2002, the City and Ventura County (the "County") commenced an action (the "Thousand Oaks Action") against the Company and Verizon Media Ventures in California State
Court alleging that Verizon Media Ventures' entry into the Asset Purchase Agreement and conveyance of the

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Verizon
Cable Assets constituted a breach of Verizon Media Ventures' cable franchises and that the Company's participation in the transaction amounted to actionable tortious interference with those
franchises. The City and the County sought injunctive relief to halt the sale and transfer of the Verizon Cable Assets pursuant to the Asset Purchase Agreement and to compel the Company to treat the
Verizon Cable Assets as a separate cable system.

On
March 27, 2002, the Company and Verizon Media Ventures removed the Thousand Oaks Action to the United States District Court for the Central District of California, where it was
consolidated with the California Cablevision Action.

On
April 12, 2002, the district court conducted a hearing on the City's and County's application for a preliminary injunction and, on April 15, 2002, the district court
issued a temporary restraining order in part, pending entry of a further order. On May 14, 2002, the district court issued a preliminary injunction and entered findings of fact and conclusions
of law in support thereof (the "May 14, 2002 Order"). The May 14, 2002 Order, among other things: (i) enjoined the Company from integrating the Company's and Verizon Media
Ventures' system assets serving subscribers in the City and the County; (ii) required the Company to return "ownership" of the Verizon Cable Assets to Verizon Media Ventures except that the
Company was permitted to continue to "manage" the assets as Verizon Media Ventures' agent to the extent necessary to avoid disruption in services until Verizon Media Ventures chose to reenter the
market or sell the assets; (iii) prohibited the Company from eliminating any programming options that had previously been selected by Verizon Media Ventures or from raising the rates charged by
Verizon Media Ventures; and (iv) required the Company and Verizon Media Ventures to grant the City and/or the County access to system records, contracts, personnel and facilities for the
purpose of conducting an inspection of the then-current "state of the Verizon Media Ventures and the Company systems" in the City and the County. The Company appealed the May 14,
2002 Order and, on April 1, 2003, the U.S. Court of Appeals for the Ninth Circuit reversed the May 14, 2002 Order, thus removing any restrictions that had been imposed by the district
court against the Company's integration of the Verizon Cable Assets, and remanded the actions back to the district court for further proceedings.

In
September 2003, the City began refusing to grant the Company's construction permit requests, claiming that the Company could not integrate the acquired Verizon Cable Assets
with the Company's existing cable system assets because the City had not approved the transaction between the Company and Verizon Media Ventures, as allegedly required under the City's cable
ordinance.

Accordingly,
on October 2, 2003, the Company filed a motion for a preliminary injunction in the district court seeking to enjoin the City from refusing to grant the Company's
construction permit requests. On
November 3, 2003, the district court granted the Company's motion for a preliminary injunction, finding that the Company had demonstrated "a strong likelihood of success on the merits."
Thereafter, the parties agreed to informally stay the litigation pending negotiations between the Company and the City for the Company's renewal of its cable franchise, with the intent that such
negotiations would also lead to a settlement of the pending litigation. However, on September 16, 2004, at the City's request, the court set certain procedural dates, including a trial date of
July 12, 2005, which has effectively re-opened the case to active litigation. Subsequently, the July 12, 2005 trial date was vacated pursuant to a stipulation and order. On
July 11, 2005, the district court referred the matter to a United States magistrate judge for settlement discussions. A settlement conference was held on October 20, 2005, before the
magistrate judge. The parties continue to engage in settlement discussions in an effort to resolve the dispute.

The
Company cannot predict the outcome of these actions or estimate the possible effects on the financial condition or results of operations of the Company.

Dibbern Adversary Proceeding.On or about August 30, 2002, Gerald Dibbern, individually and purportedly on behalf of a
class of similarly situated subscribers nationwide, commenced an adversary

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proceeding
in the Bankruptcy Court against Adelphia asserting claims for violation of the Pennsylvania Consumer Protection Law, breach of contract, fraud, unjust enrichment, constructive trust, and an
accounting. This complaint alleges that Adelphia charged, and continues to charge, subscribers for cable set-top box equipment, including set-top boxes and remote controls,
that is unnecessary for subscribers that receive only basic cable service and have cable-ready televisions. The complaint further alleges that Adelphia failed to adequately notify affected subscribers
that they no longer needed to rent this equipment. The complaint seeks a number of remedies including treble money damages under the Pennsylvania Consumer Protection Law, declaratory and injunctive
relief, imposition of a constructive trust on Adelphia's assets, and punitive damages, together with costs and attorneys' fees.

On
or about December 13, 2002, Adelphia moved to dismiss the adversary proceeding on several bases, including that the complaint fails to state a claim for which relief can be
granted and that the matters alleged therein should be resolved in the claims process. The Bankruptcy Court granted Adelphia's motion to dismiss and dismissed the adversary proceeding on May 3,
2005. In the Bankruptcy Court, Mr. Dibbern has also objected to the provisional disallowance of his proofs of claim which comprised a portion of the Bankruptcy Court's May 3, 2005 order.
Mr. Dibbern appealed the May 3, 2005 order dismissing his claims to the District Court. In an August 30, 2005 decision, the District Court affirmed the dismissal of
Mr. Dibbern's claims for violation of the Pennsylvania Consumer Protection Law, a constructive trust and an accounting, but reversed the dismissal of Mr. Dibbern's breach of contract,
fraud and unjust enrichment claims. These three claims will proceed in the Bankruptcy Court and Adelphia filed an answer on October 14, 2005.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

Tele-Media Examiner Motion.By motion filed in the Bankruptcy Court on August 5, 2004,
Tele-Media Corporation of Delaware ("TMCD") and certain of its affiliates sought the appointment of an examiner for the following Debtors: Tele-Media Company of
Tri-States, L.P., CMA Cablevision Associates VII, L.P., CMA Cablevision Associates XI, L.P., TMC Holdings Corporation, Adelphia Company of Western Connecticut, TMC Holdings,
LLC, Tele-Media Investment Limited Partnership, L. P., Eastern Virginia Cablevision, L.P., Tele-Media Company of Hopewell Prince George, and Eastern Virginia Cablevision
Holdings, LLC (collectively, the "Tele-Media JV Entities"). Among other things, TMCD alleged that management and the Board breached their fiduciary obligations to the creditors and equity
holders of those entities. Consequently, TMCD sought the appointment of an examiner to investigate and make recommendations to the Bankruptcy Court regarding various issues related to such entities.

On
April 14, 2005, the Debtors filed a motion with the Bankruptcy Court seeking approval of a global settlement agreement (the "Tele-Media Settlement Agreement") by
and among the Debtors and TMCD and certain of its affiliates (the "Tele-Media Parties") which, among other things: (i) transfers the Tele-Media Parties' ownership
interests in the Tele-Media JV Entities to the Debtors, leaving the Debtors 100% ownership of the Tele-Media JV Entities; (ii) requires the Debtors to make a settlement
payment to the Tele-Media Parties of $21,650,000; (iii) resolves the above-mentioned examiner motion; (iv) settles two pending avoidance actions brought by the Debtors
against certain of the Tele-Media Parties; (v) reconciles 691 separate proofs of claim filed by the Tele-Media Parties, thereby allowing claims worth approximately
$5,500,000 and disallowing approximately $1.9 billion of claims; (vi) requires the Tele-Media Parties to make a $912,500 payment to the Debtors related to workers'
compensation policies; and (vii) effectuates mutual releases between the Debtors and the Tele-Media Parties. The Tele-Media Settlement Agreement was approved by an order
of the Bankruptcy Court dated May 11, 2005 and closed on May 26, 2005.

Creditors' Committee Lawsuit Against Pre-Petition Banks.Pursuant to the Bankruptcy Court order approving the DIP
Facility (the "Final DIP Order"), the Company made certain acknowledgments (the

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"Acknowledgments")
with respect to the extent of its indebtedness under the pre-petition credit facilities, as well as the validity and extent of the liens and claims of the lenders under
such facilities. However, given the circumstances surrounding the filing of the Chapter 11 Cases, the Final DIP Order preserved the Debtors' right to prosecute, among other things, avoidance
actions and claims against the pre-petition lenders and to bring litigation against the pre-petition lenders based on any wrongful conduct. The Final DIP Order also provided
that any official committee appointed in the Chapter 11 Cases would have the right to request that it be granted standing by the Bankruptcy Court to challenge the Acknowledgments and to bring
claims belonging to the Company and its estates against the pre-petition lenders.

Pursuant
to a stipulation among the Company, the Creditors' Committee and the Equity Committee, which is being challenged by certain pre-petition lenders, the Bankruptcy
Court granted the Creditors' Committee leave and standing to file and prosecute claims against the pre-petition lenders on behalf of the Company, and granted the Equity Committee leave to
seek to intervene in any such action. This stipulation also preserves the Company's ability to compromise and settle the claims against the pre-petition lenders. By motion dated
July 6, 2003, the Creditors' Committee moved for Bankruptcy Court approval of this stipulation and simultaneously filed a complaint (the "Bank Complaint") against the agents and lenders under
certain pre-petition credit facilities, and related entities, asserting, among other things, that these entities knew of, and participated in, the alleged improper actions by certain
members of the Rigas Family and Rigas Family Entities (the "Pre-petition Lender Litigation"). The Debtors are nominal plaintiffs in this action.

The
Bank Complaint contains 52 claims for relief to redress the claimed wrongs and abuse committed by the agents, lenders and other entities. The Bank Complaint seeks to, among other
things: (i) recover as fraudulent transfers the principal and interest paid by the Company to the defendants; (ii) avoid as fraudulent obligations the Company's obligations, if any, to
repay the defendants; (iii) recover damages for breaches of fiduciary duties to the Company and for aiding and abetting fraud and breaches of fiduciary duties by the Rigas Family;
(iv) equitably disallow, subordinate or recharacterize each of the defendants' claims in the Chapter 11 Cases; (v) avoid and recover certain allegedly preferential transfers made
to certain defendants; and (vi) recover damages for violations of the Bank Holding Company Act.

Numerous
motions seeking to defeat the Pre-petition Lender Litigation were filed by the defendants and the Bankruptcy Court held a hearing on such issues. The Equity
Committee has filed a motion seeking authority to bring additional claims against the pre-petition lenders pursuant to the RICO Act. The Bankruptcy Court heard oral argument on these
motions on December 20 and December 21, 2004. The Bankruptcy Court has not yet ruled on the motions to dismiss. In a memorandum decision dated August 30, 2005, the Bankruptcy
Court granted the motions of both the Creditors' Committee and the Equity Committee for standing to prosecute these claims.

Under
the Plan, the Debtors may seek to compromise and settle, in part, the Pre-petition Lender Litigation, including through the dismissal of certain claims and the release
of certain defendants.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

Non-Agent Banks' Declaratory Judgment.On September 30, 2005, certain non-agent prepetition
lenders of the Debtors filed a declaratory judgment action against the Debtors in the Bankruptcy Court seeking, among other things, the enforcement of asserted indemnification rights and rights to
fees and expenses. No responses have been filed regarding this complaint.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

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Devon Mobile Claim.Pursuant to the Agreement of Limited Partnership of Devon Mobile Communications, L.P., a Delaware limited
partnership ("Devon Mobile"), dated as of November 3, 1995, the Company owned a 49.9% limited partnership interest in Devon Mobile, which, through its subsidiaries, held licenses to operate
regional wireless telephone businesses in several states. Devon Mobile had certain business and contractual relationships with the Company and with former subsidiaries or divisions of the Company,
which were spun off as TelCove in January 2002.

In
late May 2002, the Company notified Devon G.P., Inc. ("Devon G.P."), the general partner of Devon Mobile, that it would likely terminate certain discretionary
operational funding to Devon Mobile. On August 19, 2002, Devon Mobile and certain of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code with
the United States Bankruptcy Court for the District of Delaware (the "Devon Mobile Bankruptcy Court").

On
January 17, 2003, the Company filed proofs of claim and interest against Devon Mobile and its subsidiaries for approximately $129,000,000 in debt and equity claims, as well as
an additional claim of approximately $35,000,000 relating to the Company's guarantee of certain Devon Mobile obligations (collectively, the "Company Claims"). By order dated October 1, 2003,
the Devon Mobile Bankruptcy Court confirmed Devon Mobile's First Amended Joint Plan of Liquidation (the "Devon Plan"). The Devon Plan became effective on October 17, 2003, at which time the
Company's limited partnership interest in Devon Mobile was extinguished.

On
or about January 8, 2004, Devon Mobile filed proofs of claim in the Chapter 11 Cases seeking, in the aggregate, approximately $100,000,000 in respect of, among other things,
certain cash transfers alleged to be either preferential or fraudulent and claims for deepening insolvency, alter ego liability and breach of an alleged duty to fund Devon Mobile operations, all of
which arose prior to the commencement of the Chapter 11 Cases (the "Devon Claims"). On June 21, 2004, Devon Mobile commenced an adversary proceeding in the Chapter 11 Cases (the
"Devon Adversary Proceeding") through the filing of a complaint (the "Devon Complaint") which incorporates the Devon Claims. On August 20, 2004, the Company filed an answer and counterclaim in
response to the Devon Complaint denying the allegations made in the Devon Complaint and asserting various counterclaims against Devon Mobile, which encompassed the Company Claims. On
November 22, 2004, the Company filed a motion for leave (the "Motion for Leave") to file a third party complaint for contribution and indemnification against Devon G.P. and
Lisa-Gaye Shearing Mead, the sole owner and President of Devon G.P. By endorsed order entered January 12, 2005, Judge Robert E. Gerber, the judge presiding over the
Chapter 11 Cases and the Devon Adversary Proceeding, granted a recusal request made by counsel to Devon G.P. On January 21, 2005, the Devon Adversary Proceeding was reassigned
from Judge Gerber to Judge Cecelia G. Morris. By an order dated April 5, 2005, Judge Morris denied the Motion for Leave and a subsequent motion for reconsideration. On May 13,
2005, the court entered an Amended Pretrial Scheduling Order extending the time for discovery and scheduled a pretrial conference for March 1, 2006, with a five day trial to be scheduled
thereafter. Discovery is ongoing.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

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NFHLP Claim.On January 13, 2003, Niagara Frontier Hockey, L.P., a Delaware limited partnership owned by the Rigas
Family ("NFHLP") and certain of its subsidiaries (the "NFHLP Debtors") filed voluntary petitions to reorganize under Chapter 11 in the United States Bankruptcy Court of the Western District of
New York (the "NFHLP Bankruptcy Court") seeking protection under the U. S. bankruptcy laws. Certain of the NFHLP Debtors entered into an agreement dated March 13, 2003 for the sale of certain
assets, including the Buffalo Sabres National Hockey League team, and the assumption of certain liabilities. On October 3, 2003, the NFHLP Bankruptcy Court approved the NFHLP joint plan of
liquidation. The NFHLP Debtors filed a complaint, dated November 4, 2003, against, among others, Adelphia and the Creditors' Committee seeking to enforce certain prior stipulations and orders
of the NFHLP Bankruptcy Court against Adelphia and the Creditors' Committee related to the waiver of Adelphia's right to participate in certain sale proceeds resulting from the sale of assets. Certain
of the NFHLP Debtors' pre-petition lenders, which are also defendants in the adversary proceeding, have filed cross-complaints against Adelphia and the Creditors' Committee asking the
NFHLP Bankruptcy Court to enjoin Adelphia and the Creditors' Committee from prosecuting their claims against those pre-petition lenders. Proceedings as to the complaint itself have been
suspended. With respect to the cross-complaints, motion practice and discovery are proceeding concurrently; no hearing on dispositive motions has been scheduled.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

Preferred Shareholder Litigation.On August 11, 2003, Adelphia initiated an adversary proceeding in the Bankruptcy
Court against the holders of Adelphia's preferred stock (the "Preferred Stockholders"), seeking, among other things, to enjoin the Preferred Stockholders from exercising certain purported rights to
elect directors to the Board due to Adelphia's failure to pay dividends and alleged breaches of covenants contained in the certificates of designations relating to Adelphia's preferred stock. On
August 13, 2003, certain of the Preferred Stockholders filed an action against Adelphia in the Delaware Chancery Court seeking a declaratory judgment of their purported right to appoint two
directors to the Board (the "Delaware Action"). On August 13, 2003, the Bankruptcy Court granted Adelphia a temporary restraining order, which, among other things, stayed the Delaware Action
and temporarily enjoined the Preferred Stockholders from exercising their purported rights to elect directors to the Board. Thereafter, the Delaware Action was withdrawn.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

Adelphia's Lawsuit Against Deloitte.On November 6, 2002, Adelphia sued Deloitte & Touche LLC ("Deloitte"),
Adelphia's former independent auditors, in the Court of Common Pleas for Philadelphia
County. The lawsuit seeks damages against Deloitte based on Deloitte's alleged failure to conduct an audit in compliance with generally accepted auditing standards, and for providing an opinion that
Adelphia's financial statements conformed with GAAP when Deloitte allegedly knew or should have known that they did not conform. The complaint further alleges that Deloitte knew or should have known
of alleged misconduct and misappropriation by the Rigas Family, and other alleged acts of self-dealing, but failed to report these alleged misdeeds to the Board or others who could have
and would have stopped the Rigas Family's misconduct. The complaint raises claims of professional negligence, breach of contract, aiding and abetting breach of fiduciary duty, fraud, negligent
misrepresentation and contribution.

Deloitte
filed preliminary objections seeking to dismiss the complaint, which were overruled by the court by order dated June 11, 2003. On September 15, 2003, Deloitte
filed an answer, a new matter and various counterclaims in response to the complaint. In its counterclaims, Deloitte asserted causes of action against Adelphia for breach of contract, fraud, negligent
misrepresentation and contribution. Also on September 15, 2003, Deloitte filed a related complaint naming as additional defendants John J.

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Rigas,
Timothy J. Rigas, Michael J. Rigas, and James P. Rigas. In this complaint, Deloitte alleges causes of action for fraud, negligent misrepresentation and contribution. The
Rigas defendants, in turn, have claimed a right to contribution and/or indemnity from Adelphia for any damages Deloitte may recover against the Rigas defendants. On January 9, 2004, Adelphia
answered Deloitte's counterclaims. Deloitte moved to stay discovery in this action until completion of the Rigas Criminal Action, which Adelphia opposed. Following the motion, discovery was
effectively stayed for 60 days but has now commenced. Deloitte and Adelphia have exchanged documents and have begun substantive discovery. On June 9, 2005, the court entered a case
management order stating that all discovery shall be completed by December 5, 2005 and that the case be ready for trial by April 3, 2006.

The
Company cannot predict the outcome of these legal proceedings or estimate the possible effects on the financial condition or results of operations of the Company.

Series E and F Preferred Stock Conversion Postponements.On October 29, 2004, Adelphia filed a motion to
postpone the conversion of Adelphia's 7.5% Series E Mandatory Convertible Preferred Stock ("Series E Preferred Stock") into shares of Class A Common Stock from November 15,
2004 to February 1, 2005, to the extent such conversion was not already stayed by the Debtors' bankruptcy filing, in order to protect the Debtors' net operating loss carryovers. On
November 18, 2004, the Bankruptcy Court entered an order approving the postponement effective November 14, 2004.

Adelphia
has subsequently entered into several stipulations further postponing, to the extent applicable, the conversion date of the Series E Preferred Stock. Adelphia has also
entered into several stipulations postponing, to the extent applicable, the conversion date of the Adelphia 7.5% Series F Mandatory Convertible Preferred Stock, which was initially convertible
into shares of Class A Common Stock on February 1, 2005.

EPA Self Disclosure and Audit.On June 2, 2004, the Company orally self-disclosed potential violations of
environmental laws to the United States Environmental Protection Agency ("EPA") pursuant to EPA's Audit Policy, and notified EPA that it intended to conduct an audit of its operations to identify and
correct any such violations. The potential violations primarily concern reporting and recordkeeping requirements arising from the Company's storage and use of petroleum and batteries to provide backup
power for its cable operations. This matter is at an early stage, but based on current facts, the Company does not anticipate that this matter will have a material adverse effect on the Company's
results of operations or financial condition.

Other.The Company is subject to various other legal proceedings and claims which arise in the ordinary course of business.
Management believes, based on information currently available, that the amount of ultimate liability, if any, with respect to any of these other actions will not materially affect the Company's
financial position or results of operations.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

(b) See Note 13, "Stockholders' Deficit," to the notes to the consolidated financial statements contained in the Company's 2004 Form 10-K.

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ITEM 6.    EXHIBITS

|Exhibit
Number |  | Description                                                                                                                                                                                                                                                                                             
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.01           |  | Debtors' Third Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code, dated September 28, 2005 (subject to Bankruptcy Court approval) (Incorporated herein by reference to Exhibit 2.1
to the Company's Current Report on Form 8-K filed on October 3, 2005) (File No. 0-16014). 
|2.02           |  | Plan of Reorganization Under Chapter 11 of the Bankruptcy Code Filed by Century/ML Cable Venture, dated August 9, 2005 (Incorporated herein by reference to Exhibit 2.03 to the Company's Annual Report on Form 10-K filed on
October 6, 2005) (File No. 0-16014).                                      
|2.03.1         |  | Asset Purchase Agreement, dated as of April 20, 2005, between Adelphia Communications Corporation and Time Warner NY Cable LLC (Incorporated herein by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on
April 25, 2005) (File No. 0-16014).                                
|2.03.2         |  | Amendment No. 1, dated June 24, 2005, to Asset Purchase Agreement Between Adelphia Communications Corporation and Time Warner NY Cable LLC (Incorporated herein by reference to Exhibit C to Exhibit 2.2 to the Company's Current
Report on Form 8-K filed on June 27, 2005) (File No. 0-16014).        
|2.03.3         |  | Letter Agreement, dated June 24, 2005, between Time Warner NY Cable LLC, Adelphia Communications Corporation and Comcast Corporation (Incorporated herein by reference to Exhibit C to Exhibit 2.2 to the Company's Current Report on
Form 8-K filed on June 27, 2005) (File No. 0-16014).              
|2.03.4         |  | Asset Purchase Agreement, dated as of April 20, 2005, between Adelphia Communications Corporation and Comcast Corporation (Incorporated herein by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K filed on
April 25, 2005) (File No. 0-16014).                                     
|2.03.5         |  | Amendment No. 1, dated June 24, 2005, to Asset Purchase Agreement Between Adelphia Communications Corporation and Comcast Corporation (Incorporated herein by reference to Exhibit D to Exhibit 2.2 to the Company's Current Report on
Form 8-K filed on June 27, 2005) (File No. 0-16014).             
|2.03.6         |  | Letter Agreement, dated June 24, 2005, between Comcast Corporation, Adelphia Communications Corporation and Time Warner NY Cable LLC (Incorporated herein by reference to Exhibit D to Exhibit 2.2 to the Company's Current Report on
Form 8-K filed on June 27, 2005) (File No. 0-16014).              
|2.03.7         |  | Parent Agreement, dated as of April 20, 2005, among Time Warner Cable Inc., Time Warner NY Cable LLC and Adelphia Communications Corporation (Incorporated herein by reference to Exhibit 2.3 to the Company's Current Report on
Form 8-K filed on April 25, 2005) (File No. 0-16014).                  
|2.03.8         |  | Expanded Transaction Letter Agreement, dated as of April 20, 2005, among Comcast Corporation, Time Warner NY Cable LLC and Adelphia Communications Corporation (Incorporated herein by reference to Exhibit 2.4 to the Company's Current Report
on Form 8-K filed on April 25, 2005) (File No. 0-16014).
|3.01           |  | Certificate of Incorporation of Adelphia Communications Corporation, as amended (Incorporated herein by reference to Exhibit 3.01 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999) (File
No. 0-16014).                                                          

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|3.02   |  | Amended and Restated Bylaws of Adelphia Communications Corporation, as amended through January 23, 2003 (Incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on March 5, 2003) (File
No. 0-16014).                                      
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.01   |  | Certificate of Designations for 13% Series A and Series B Cumulative Exchangeable Preferred Stock (Incorporated herein by reference to Exhibit 4.01 to the Company's Current Report on Form 8-K filed on July 24, 1997) (File
No. 0-16014).                                           
|4.02   |  | Certificate of Designations with respect to the Company's 51/2% Series D Convertible Preferred Stock (Incorporated by reference herein to Exhibit 3.01 to the Company's Current Report on Form 8-K filed on
April 30, 1999) (File No. 0-16014).                                       
|4.03.1 |  | Certificate of Designations with respect to the Company's 7.5% Series E Mandatory Convertible Preferred Stock (Incorporated herein by reference to Exhibit 3.01 to the Company's Current Report on Form 8-K filed on November 16,
2001) (File No. 0-16014).                           
|4.03.2 |  | Certificate of Amendment of Certificate of Designations with respect to the Company's 7.5% Series E Mandatory Convertible Preferred Stock (Incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K
filed on November 18, 2004) (File No. 0-16014).
|4.03.3 |  | Certificate of Amendment of Certificate of Designations with respect to the Company's 7.5% Series E Mandatory Convertible Preferred Stock (Incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K
filed on February 25, 2005) (File No. 0-16014).
|4.03.4 |  | Certificate of Amendment of Certificate of Designations with respect to the Company's 7.5% Series E Mandatory Convertible Preferred Stock (Incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K
filed on March 4, 2005) (File No. 0-16014).    
|4.03.5 |  | Certificate of Amendment of Certificate of Designations with respect to the Company's 7.5% Series E Mandatory Convertible Preferred Stock (Incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K
filed on April 11, 2005) (File No. 0-16014).   
|4.03.6 |  | Certificate of Amendment of Certificate of Designations with respect to the Company's 7.5% Series E Mandatory Convertible Preferred Stock (Incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K
filed on May 18, 2005) (File No. 0-16014).     
|4.03.7 |  | Certificate of Amendment of Certificate of Designations with respect to the Company's 7.5% Series E Mandatory Convertible Preferred Stock (Incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K
filed on June 29, 2005) (File No. 0-16014).    
|4.04.1 |  | Certificate of Designations with respect to the Company's 7.5% Series F Mandatory Convertible Preferred Stock (Incorporated herein by reference to Exhibit 3.01 to the Company's Current Report on Form 8-K filed on February 1, 2002)
(File No. 0-16014).                            
|4.04.2 |  | Certificate of Amendment of Certificate of Designations with respect to the Company's 7.5% Series F Mandatory Convertible Preferred Stock (Incorporated herein by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K
filed on February 25, 2005) (File No. 0-16014).

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|4.04.3  |  | Certificate of Amendment of Certificate of Designations with respect to the Company's 7.5% Series E Mandatory Convertible Preferred Stock (Incorporated herein by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K
filed on March 4, 2005) (File No. 0-16014).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.04.4  |  | Certificate of Amendment of Certificate of Designations with respect to the Company's 7.5% Series F Mandatory Convertible Preferred Stock (Incorporated herein by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K
filed on April 11, 2005) (File No. 0-16014).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|4.04.5  |  | Certificate of Amendment of Certificate of Designations with respect to the Company's 7.5% Series F Mandatory Convertible Preferred Stock (Incorporated herein by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K
filed on May 18, 2005) (File No. 0-16014).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|4.04.6  |  | Certificate of Amendment of Certificate of Designations with respect to the Company's 7.5% Series F Mandatory Convertible Preferred Stock (Incorporated herein by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K
filed on June 29, 2005) (File No. 0-16014).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|10.01.1 |  | Form of Amended and Restated Adelphia Communications Corporation Performance Retention Plan Award Letter for 2005 (Incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on January 24, 2005)
(File No. 0-16014).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.01.2 |  | Adelphia Communications Corporation 2004 Short-Term Incentive Plan Summary (Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on January 24, 2005) (File No. 0-16014).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.01.3 |  | Amended Adelphia Communications Corporation 2005 Short-Term Incentive Plan (Incorporated herein by reference to Exhibit 10.15.17 to the Company's Annual Report on Form 10-K filed on October 6, 2005) (File No. 0-16014).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|10.01.4 |  | Form of 2005 STIP Participant Notice (Incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on January 26, 2005) (File No. 0-16014).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.02.1 |  | Third Amended and Restated Credit and Guaranty Agreement (the "Third Amended and Restated DIP Credit Agreement"), dated as of February 25, 2005, by and among UCA LLC, Century Cable Holdings, LLC, Century-TCI California, L.P., Olympus Cable
Holdings, LLC, Parnassos, L.P., FrontierVision Operating Partners, L.P., ACC Investment Holdings, Inc., Arahova Communications, Inc., Adelphia California Cablevision, LLC, as borrowers, Adelphia Communications Corporation and certain of its
other direct and indirect subsidiaries named therein, as guarantors, JPMorgan Chase Bank, N.A., as Administrative Agent, Citigroup Global Markets Inc., as Syndication Agent, J.P. Morgan Securities Inc. and Citigroup Global
Markets Inc., as Joint Bookrunners and Co-Lead Arrangers, Citicorp North America, Inc., as Collateral Agent, Wachovia Bank, N.A., as Co-Syndication Agent, The Bank of Nova Scotia, Bank of America, N.A. and General Electric Capital
Corporation, as Co-Documentation Agents, and the other lenders named therein (Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 25, 2005) (File No. 0-16014).
|10.02.2 |  | Amendment No. 1 and Waiver, dated as of April 8, 2005, to the Third Amended and Restated DIP Credit Agreement (Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on April 13,
2005) (File No. 0-16014).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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|10.02.3 |  | Amendment No. 3 and Waiver, dated as of May 20, 2005, to Third Amended and Restated Credit and Guaranty Agreement (Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 25,
2005) (File No. 0-16014).                                                                                                                                                                                                                                                                               
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.02.4 |  | Amendment No. 4 and Waiver, dated as of August 24, 2005, to Third Amended and Restated Credit and Guaranty Agreement, dated as February 25, 2005 (Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on
Form 8-K filed on August 25, 2005) (File No. 0-16014).                                                                                                                                                                                                                                             
|31.1    |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended                                                                                                                                                                                                                                                                                                                                                                                                      
|31.2    |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended                                                                                                                                                                                                                                                                                                                                                                                                      
|32.1    |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                           
|32.2    |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                           
|99.01   |  | Amendment No. 3 of Amended and Restated Commitment Letter, dated March 9, 2005, among Adelphia Communications Corporation, JPMorgan Chase Bank, N.A., J.P. Morgan Securities Inc., Credit Suisse First Boston, acting through its
Cayman Islands Branch, Citicorp North America, Inc., Citigroup Global Markets Inc., Deutsche Bank AG Cayman Islands Branch and Deutsche Bank Securities Inc. (Incorporated herein by reference to Exhibit 99.1 to the Company's
Current Report on Form 8-K filed on March 11, 2005) (File No. 0-16014).

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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
(Registrant)
|---------------------- |  | ------------------------------------------------
|Date: November 4, 2005 |  | By:                                             
|Date: November 4, 2005 |  | By:                                             

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