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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 24, 1998
METRO-GOLDWYN-MAYER INC.
(Exact Name of Registrant as Specified in its Charter)
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Delaware 1-13481 95-4605850
(State or Other Jurisdiction of (Commission File Number) (IRS Employer Identification
Incorporation) No.)
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2500 Broadway Street 90404
Santa Monica, California (Zip Code)
(Address of Principal Executive Offices)
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Registrant's telephone number, including area code: (310) 449-3000
None
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
On July 24, 1998, Metro-Goldwyn-Mayer Inc. issued the press release
attached hereto as Exhibit 20.1 which is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
The following exhibit is filed with this report on Form 8-K:
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Exhibit No. Description
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20.1 Press Release of Metro-Goldwyn-Mayer Inc., dated July
24, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
METRO-GOLDWYN-MAYER INC.
Dated: July 24, 1998 By: /s/ Daniel Taylor
_______________________________
Daniel Taylor,
Senior Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
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Exhibit No. Description
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20.1 Press Release of Metro-Goldwyn-Mayer Inc., dated July
24, 1998.
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EXHIBIT 20.1
[Letterhead of Metro-Goldwyn-Mayer Inc.]
For immediate release Contact: Craig Parsons
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July 24, 1998 (310) 449-3660
METRO-GOLDWYN-MAYER REPORTS 1998 SECOND QUARTER RESULTS;
PLANS TO RAISE $250 MILLION IN EQUITY CAPITAL
Santa Monica, CA -- Metro-Goldwyn-Mayer Inc. (NYSE:MGM) today reported
results for the second quarter and six months ended June 30, 1998. Prior year
results are not comparable due to the acquisition of Orion Pictures Corporation
and certain of its subsidiaries in July 1997. The Company also announced that
its Board of Directors has approved the raising of $250 million in additional
equity capital and intends to evaluate alternative forms of such financing and
other options while continuing to pursue its previously stated objective of
becoming an integrated global entertainment company. Among these alternatives
is a possible rights offering, pursuant to which its existing stockholders would
receive transferable rights to purchase shares of the Common Stock of the
Company.
MGM's principal stockholders, Tracinda Corporation and Seven Network Ltd,
have advised the Company that they support the equity financing efforts. In
addition, Tracinda has advised the Company that it would subscribe, at a
minimum, for its pro rata share of the $250 million in equity capital. If there
is a rights offering, other shareholders would have the opportunity to
participate on a similar basis, and Tracinda would agree to acquire any shares
not subscribed to by other shareholders. Seven Network has advised that it does
not intend to invest in the equity financing. However, Tracinda and Seven
Network have advised the Company that they have agreed in principle that for a
period of up to one year after completion of the financing, Seven Network will
have the right to acquire from Tracinda, for an amount equal to Tracinda's cost,
a number of shares of Common Stock equal to the number of shares that Seven
Network would have acquired if it had subscribed for its pro rata share of the
$250 million in equity capital. Tracinda and Seven Network currently own 65%
and 25%,
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respectively, of the outstanding Common Stock of the Company.
The Company is seeking this proposed capital infusion as a result of
several factors. First, the Company is making substantial investments that are
more extensive than previously anticipated in connection with new television
production. This new television production consists of additional commitments
from Showtime Networks for 44 new episodes of MGM's Stargate SG-1 for a total
of 88 episodes, 32 new episodes of The Outer Limits for a total of 122 episodes,
and 22 new episodes of Dead Man's Gun for a total of 44 episodes; an additional
13 episodes of The Magnificent Seven for CBS for a total of 23 episodes; two new
seasons (44 episodes) of Flipper: The New Adventures for PAX NET for a total of
88 episodes; and a fourth season (130 episodes) of LAPD: Life on the Beat in
syndication. MGM will have two new animated series in syndication this fall --
The Lionhearts and RoboCop: Alpha Commando.
Secondly, although the Company's Tomorrow Never Dies and The Man In The
Iron Mask have performed better than anticipated, other recent films have been
materially below expectations. While the timing of cash receipts is affected by
these individual performances, the Company expects to realize its planned film
and television revenues in the aggregate from these films. Furthermore, the
Company's recent sales experience in television syndication and home video
markets indicates it will realize cash from these sources more slowly than
originally anticipated.
During the six months ended June 30, 1998, the Company accelerated
production of new films in anticipation of an industry strike since averted. At
June 30, the Company had a total of nine films for which principal photography
was completed or which were scheduled for completion by the end of July.
As a result of the impact of all of these factors, the Company's
outstanding bank debt at June 30 was $1.145 billion under its $1.3 billion
credit facility. The Company is seeking requisite amendments to certain
financial covenants that will become applicable later this year in its principal
credit facility. While the Company believes that it will be able to negotiate
these amendments, no assurances can be given in this regard.
For the 1998 second quarter ended June 30, 1998, EBITDA (earnings before
interest, taxes, depreciation and amortization) reflected a loss of $28.0
million, while the net loss for
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the period was $55.0 million, or $ .84 per share, based on 65.8 million weighted
average shares outstanding. Revenues for the quarter ended June 30, 1998 were
$279.5 million. The company released three new feature films domestically and
one internationally during the period.
EBITDA for the 1998 second quarter reflected a writedown related to certain
feature films in release during the quarter, as well as litigation and other
expenses. These costs were partially offset by profit contributions from
television programming and other businesses.
For the six months ended June 30, 1998, EBITDA was a loss of $20.8 million,
while the net loss was $73.6 million, or $1.12 per share, based on 65.8 million
weighted average shares outstanding. Revenues were $596.0 million for the six-
month 1998 period, during which the Company released eight new feature films
domestically and three new films internationally.
During the six months, the Company continued to invest in creating new
assets, specifically accelerating film production and additional television
programming that aggregated $125 million net of amortization at June 30, 1998.
If the financing takes the form of a rights offering or other public sale
of securities, a registration statement will be filed with the Securities and
Exchange Commission. This press release shall not constitute an offer to sell
or the solicitation of an offer to buy securities of the Company, nor shall
there be any offer, solicitation or sale of such securities in any jurisdiction
in which such offer, solicitation or sale would be unlawful prior to the
registration or qualification of such offer, solicitation or sale under the
securities laws of such jurisdiction. Any public offering of securities will be
made only by means of a prospectus.
Metro-Goldwyn-Mayer Inc. is actively engaged in the worldwide production and
distribution of entertainment product, including motion pictures, television
programming, home video, interactive media, music, licensed merchandise, a
4,000-title film library, a 6,700-title home video library, and a significant
television library. The company's operating units include MGM Pictures, United
Artists Pictures, Orion Pictures, Goldwyn Films, MGM Worldwide Television Group,
MGM Distribution Co., MGM Home Entertainment and Consumer Products Group, MGM
Music, and MGM Interactive,
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among others. For more information on MGM, visit the MGM Online at
http://www.mgm.com.
This news release contains forward-looking statements that are based upon
the company's estimates and expectations concerning future events and are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those reflected in the forward-looking statements. These
risks and uncertainties include, among other things, the successful completion
of the $250 million financing, the receipt of the consent of the Company's
lenders to the requisite amendments to the Company's principal credit facility,
future competitive and market conditions, whether the company's products achieve
customer acceptance, future business decisions, and other factors described in
the company's filings with the Securities and Exchange Commission, all of which
are difficult or impossible to predict accurately and many of which are beyond
the control of MGM. In light of the significant uncertainties inherent in the
forward-looking information herein, the inclusion of such information should not
be regarded as a representation by the company or any other person that the
company's objectives or plans will be realized.
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METRO-GOLDWYN-MAYER INC.
Condensed Consolidated Statement of Operations
(Amounts In Thousands, Except Share Data)
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Quarter Ended June 30, Six Months Ended June 30,
1998 1997 1998 1997
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Revenues:
Feature films $ 217,160 $ 128,249 $ 471,297 $ 296,197
Television programs 47,093 20,134 105,839 47,914
Other 15,281 5,002 18,858 6,903
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Total revenues $ 279,534 $ 153,385 $ 595,994 $ 351,014
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EBITDA:
Feature films $ (14,953) $ 22,540 $ 18,103 $ 48,546
Television programs 4,572 (1,343) 9,417 (3,215)
Other 6,472 (6,533) (1,639) (12,229)
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EBITDA before general
and administration expenses (3,909) 14,664 25,881 33,102
General and
administration expenses (24,081) (14,592) (46,729) (31,904)
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EBITDA (27,990) 72 (20,848) 1,198
Depreciation and non-film
amortization (5,631) (3,547) (10,844) (7,057)
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Operating loss (33,021) (3,475) (31,692) (5,859)
Interest expense, net of
amounts capitalized (20,174) (9,583) (38,428) (20,599)
Interest and other
income(expense), net 1,070 (242) 1,745 1,388
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Loss before provision for
income taxes (52,725) (13,300) (68,375) (25,070)
Income tax provision (2,269) (1,512) (5,262) (3,935)
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Net loss $ (54,994) $ (14,812) $ (73,637) $ (29,005)
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Basic and diluted loss per $(.84) $(.88) $(1.12) $(1.73)
share
Weighted average number of 65,790,698 16,810,509 65,781,329 16,766,426
common shares outstanding
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* Share and per share information has been retroactively restated to give
effect to the conversion of the previously outstanding preferred stock into
common stock and a subsequent stock split, both completed on November 18,
1997.
* Results from operations for the 1998 period include the results of Orion
Pictures Corporation, which was acquired on July 10, 1997.
