SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _____________ to _____________
Commission File Number 1-5706
METROMEDIA INTERNATIONAL GROUP, INC.
(Exact name of registrant, as specified in its charter)
DELAWARE 58-0971455
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
945 EAST PACES FERRY ROAD, SUITE 2210, ATLANTA, GEORGIA 30326
(Address and zip code of principal executive offices)
(404) 261-6190
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
<S> <C>
Common Stock, $1.00 par value American Stock Exchange
Pacific Stock Exchange
9 1/2 % Subordinated Debentures, due August 1, 1998 New York Stock Exchange
9 7/8 % Senior Subordinated Debentures, due March 15, 1997 New York Stock Exchange
10% Subordinated Debentures, due October 1, 1999 New York Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
None
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K <square>
The aggregate market value of voting stock of the registrant held by non-
affiliates of the Registrant at April 22, 1996 computed by reference to the
last reported sale price of the Common Stock on the composite tape on such date
was $363,130,984. The number of shares of Common Stock outstanding as of April
22, 1996 was 42,658,240.
<PAGE> Page 2
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Certain information concerning the executive officers of Metromedia
International Group, Inc. (the "Company") is set forth in Part I of the
Company's Annual Report on Form 10-K for the year ended December 31, 1995 and
is incorporated by reference herein.
MEMBERS OF THE BOARD OF DIRECTORS
The following is a brief description of the business experience for at
least the past five years of current members of the Board of Directors of the
Company:
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION FOR PAST FIVE YEARS AND AGE CLASS OF DIRECTOR
CERTAIN DIRECTORSHIPS DIRECTORS SINCE
<S> <C> <C> <C>
John P. Imlay, Jr. 59 Class I 1993
Served since 1990 as Chairman of Dun & Bradstreet
Software Services, Inc., an application software
company located in Atlanta, Georgia. Mr. Imlay is
the former Chairman of Management Science America,
a mainframe applications software company.
Management Science America was acquired by Dun &
Bradstreet Software Services, Inc. in 1990.
Mr. Imlay is also a director of the Atlanta
Falcons, a National Football League team, and The
Gartner Group. Mr. Imlay is a member of the Audit
Committee and the Compensation Committee.
John W. Kluge 81 Class I 1995
Chairman of the Board of Directors of the Company
since November 1, 1995. Chairman of the Board and
a director of Orion Pictures Corporation since
1992. Chairman and President of Metromedia Company
and its predecessor-in-interest, Metromedia, Inc.
for over five years. Director of The Bear Stearns
Companies, Inc., WorldCom, Inc., Conair Corporation
and Occidental Petroleum Corporation. Mr. Kluge is
Chairman of the Executive Committee.
Stuart Subotnick 54 Class I 1995
Vice Chairman of the Board of Directors of the
Company since November 1, 1995. Vice Chairman of
the Board and a director of Orion Pictures
Corporation since 1992. Executive Vice President of
Metromedia Company and its predecessor-in-interest,
Metromedia, Inc., for over five years. Director of
Carnival Cruise Lines, Inc. and WorldCom, Inc.
Mr. Subotnick is Chairman of the Audit Committee
and a member of the Executive and Nominating
Committees.
<PAGE> Page 3
John D. Phillips 53 Class II 1994
President and Chief Executive Officer of the
Company since April 19, 1994. Elected to the Board
of Directors of the Company and to the Executive
Committee on the same date. Mr. Phillips served as
Chief Executive Officer of Resurgens Communications
Group, Inc. from May 1989 until Resurgens was
merged with Metromedia Communications Corporation
and LDDS Communications, Inc. (now known as
WorldCom, Inc.) in September 1993. He is a director
of Restor Industries, Inc. and Roadmaster
Industries, Inc. ("Roadmaster")
Richard J. Sherwin 52 Class II 1995
Co-President of the Company's Metromedia
International Telecommunications, Inc. subsidiary
("MITI"). Mr. Sherwin has served as a President
and director of MITI and its predecessor companies
since October 1990. Prior to that, Mr. Sherwin
served as the Chief Operating Officer of Graphic
Scanning Corp., a paging and wireless
telecommunications company.
Leonard White 56 Class II 1992
President and Chief Executive Officer of the
Company's Orion Pictures Corporation subsidiary
("Orion"). Mr. White has served in this capacity
from March 1992 through November 1, 1995. Interim
President and Chief Executive Officer of Orion from
March 1992 until November 1992. Chairman of the
Board and Chief Executive Officer of Orion Home
Entertainment Corporation, a subsidiary of Orion
("OHEC"), from March 1991 until March 1992.
President and Chief Operating Officer of Orion Home
Video division of OHEC from March 1987 until March
1991.
Clark A. Johnson 64 Class III 1990
Director of the Company since April 27, 1990. He
has served as chairman and Chief Executive Officer
of Pier One Imports, Inc., a specialty retailer of
decorative home furnishings, since August 1988.
Mr. Johnson is a director of Albertson's, Inc.,
Anacomp, Inc., Heritage Media Corporation,
InterTAN, Inc. and Pier One Imports, Inc. Mr.
Johnson is a member of the Compensation and Audit
Committees.
Silvia Kessel 45 Class III 1995
Senior Vice President, Chief Financial Officer and
Treasurer of the Company since the November 1,
1995. Executive Vice President and a director of
Orion Pictures Corporation since January 1993.
Senior Vice President of Orion from June 1991 to
November 1992. Senior Vice President of Metromedia
Company since January 1994. President of Kluge &
Company from January 1994. Managing Director of
Kluge & Company (and its predecessor) from April
1990 to January 1994. Director of WorldCom, Inc.
Ms. Kessel is a member of the Nominating Committee.
<PAGE> Page 4
Carl E. Sanders 70 Class III 1967
Engaged in the private practice of law as Chairman
of Troutman Sanders, a law firm located in Atlanta,
Georgia. Director of the Company since 1967, except
for a one-year period from April 1970 to April
1971. Former Governor of the State of Georgia and a
director of Carmike Cinemas, Inc., Norrell
Corporation, Healthdyne, Inc., and Roadmaster
Industries, Inc. Mr. Sanders is Chairman of the
Compensation Committee.
Arnold L. Wadler 52 Class III 1995
Senior Vice President, General Counsel and
Secretary of the Company since November 1, 1995.
Senior Vice President, Secretary and General
Counsel of Metromedia Company and its predecessor-
in-interest, Metromedia, Inc., for over five years.
Director of Orion Pictures Corporation since 1992.
Mr. Wadler is Chairman of the Nominating Committee.
On and after December 11, 1991 (the "Filing Date"), Orion and
certain of Orion's subsidiaries filed voluntary bankruptcy petitions
under Chapter 11 of the United States Bankruptcy Code. The United
States Bankruptcy Court for the Southern District of New York confirmed
Orion's Modified Third Amended Joint Consolidated Plan of Reorganization
(the "Plan") on October 10, 1992 and the Plan was consummated on
November 5, 1992. Each of Silvia Kessel and Leonard White, current
directors of the Company, served as Executive Officers of Orion on the
Filing Date.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who beneficially own more than 10% of
the outstanding Common Stock, to file with the Securities and Exchange
Commission (the "Commission") and the American Stock Exchange initial
reports of ownership and reports of changes in ownership of the Common
Stock. Such officers, directors and greater than 10% beneficial owners
are required by the regulations of the Commission to furnish the Company
with copies of all reports that they file under Section 16(a). To the
Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no
other reports were required, all Section 16(a) filing requirements
applicable to the Company's officers, directors and greater than 10%
beneficial owners were complied with by such persons during the fiscal
year ended December 31, 1995.
<PAGE> Page 5
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth information on
compensation awarded to, earned by or paid to the Chief Executive
Officer and the four other most highly compensated executive officers
during the fiscal years ended December 31, 1995, December 31, 1994 and
December 31, 1993 for services rendered in all capacities to the Company
and its subsidiaries. In addition, the Summary Compensation Table sets
forth similar information for such periods with respect to Frederick B.
Beilstein, III and Walter M. Grant, who would have been among the
Company's four most highly compensated executive officers during 1995
but for the fact that such persons were not serving as executive
officers of the Company at the end of 1995. The persons listed in the
table below are referred to as the "Named Executive Officers."
SUMMARY COMPENSATION
</TABLE>
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------- ------------
NAME AND PRINCIPAL YEAR SALARY ($) BONUS ($) OTHER NUMBER OF ALL OTHER
POSITION ANNUAL SECURITIES COMPENSATION
COMPENSA- UNDERLYING ($)(2)
TION($)(1) STOCK OPTIONS (#)
<S> <C> <C> <C> <C> <C> <C>
John D. Phillips
President and 1995 $624,984 $750,000 - -0- $15,096
Chief Executive 1994(3) $438,289 $438,289 - 300,000 $13,336
Officer 1993(3) - - - - -
Frederick B. Beilstein,
III(4)
Former Senior Vice 1995 $274,992 $137,500 - -0- $ 4,480
President, 1994 $274,992 $165,000 - 95,000 $ 4,435
Treasurer and Chief
Financial Officer 1993 $269,783 $ 41,250 - 19,100 $ 4,390
Walter M. Grant(5)
Former Senior Vice 1995 $237,500 $118,750 - -0- $ 9,757
President, 1994 $237,500 $142,500 - 95,000 $12,623
General Counsel and
Secretary 1993(6) $110,048 $ 16,875 - 20,000 $44,645
W. Tod Chmar 1995 $235,000 $235,000 - -0- $ 4,095
Senior Vice President 1994(3) $164,801 $ 98,881 - 70,000 6,866
1993(3) - - - - -
</TABLE>
_______________
(1) The Company provides perquisites and other personal benefits to
the executive officers of the Company. The value of the
perquisites and benefits provided to each Named Executive
Officer during 1993, 1994 and 1995 did not exceed the lesser of
$50,000 or 10% of such officer's salary plus annual bonus.
(2) The amounts in this column include (i) premiums paid by the
Company on behalf of its executive officers under life
insurance policies providing death benefits to the designated
beneficiaries of the executive officers, including premium
payments of (A) $4,200 in each of 1993, 1994 and 1995 on behalf
of Mr. Beilstein, (B) $1,312 in 1993 and $5,080 in 1994 on
behalf of Mr. Grant, and (C) $2,159 in 1994 and $3,945 in 1995
on behalf of Mr. Chmar; (ii) a payment of $13,336 made by the
Company to Mr. Phillips in 1994 and payments of $15,096 and
$5,080 made by the Company to Mr. Phillips and Mr. Grant,
respectively, in 1995 in lieu of their participation in the
life insurance programs maintained by the Company for its
executive officers; (iii) matching contributions made by the
Company under its Employee Stock Purchase Plan totaling $3,333
in 1993 for the benefit of Mr. Grant, $5,000 and $4,582 in 1994
for the benefit of Messrs. Grant and Chmar, respectively, and
$2,083 in 1995 for the benefit of Mr. Grant; (iv) matching
contributions of $2,310 made by the Company in each of 1994 and
1995 for the benefit of Mr. Grant under a 401(K) savings plan
sponsored by a subsidiary of the Company; and (v) a
<PAGE> Page 6
relocation allowance of $40,000 provided by the Company to Mr. Grant
in 1993. Under the Company's group universal life insurance
program, each of the Company's executive officers is entitled
to own $500,000 of universal life insurance on which the
Company pays the premiums. In addition to the universal life
insurance program, the Company also made premium payments for
term life insurance policies of (i) $190 in 1993, $235 in 1994
and $280 in 1995 on behalf of Mr. Beilstein; (ii) $233 in 1994
and $284 in 1995 on behalf of Mr. Grant; and (iii) $125 in 1994
and $150 in 1995 on behalf of Mr. Chmar.
(3) The amounts shown for 1994 reflect less than a full year of
compensation for Messrs. Phillips and Chmar, both of whom were
employed by the Company on April 19, 1994.
(4) Mr. Beilstein served as Senior Vice President, Treasurer and
Chief Financial Officer of the Company from May 31, 1991 until
November 1, 1995. Following November 1, 1995, Mr. Beilstein
remained as an employee of the Company until January 21, 1996.
The amounts shown in the table for 1995 reflect all
compensation paid to or accrued for Mr. Beilstein during 1995.
Mr. Beilstein served as a consultant to the Company from
January 22, 1996 through March 3, 1996 pursuant to the terms of
a Post-Employment Consulting Agreement between the Company and
Mr. Beilstein. See "-Certain Agreements Regarding
Employment-Post-Employment Consulting Agreements with Walter M.
Grant and Frederick B. Beilstein."
(5) Mr. Grant served as Senior Vice President, General Counsel and
Secretary of the Company from July 6, 1993 until the
consummation of the mergers of the Company, Orion, MITI and
MCEG Sterling Incorporated, which were consummated on November
1, 1995 (the "November 1 Mergers"). Following November 1,
1995, Mr. Grant has remained as an employee of the Company in
order to assist in transition activities relating to the
November 1 Mergers. The amounts shown in the table for 1995
reflect all compensation paid to or accrued for Mr. Grant
during 1995. It is contemplated that Mr Grant will remain as an
employee of the Company until June 15, 1996, after which he
will serve as a consultant to the Company pursuant to the terms
of a Post-Employment Consulting Agreement between the Company
and Mr. Grant. See "-Certain Agreements Regarding
Employment-Post-Employment Consulting Agreements with Walter M.
Grant and Frederick B. Beilstein."
(6) The amounts shown for 1993 reflect less than a full year of
compensation for Mr. Grant, who was employed by the Company on
July 6, 1993.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The Company did not grant any stock options or limited stock appreciation
rights ("SARs") to any of the Named Executive Officers during the fiscal year
ended December 31, 1995. The following table sets forth information concerning
the exercise of options or SARs by the Named Executive Officers during the
last fiscal year and the number of unexercised options and SARs held by such
officers as of the end of the 1995 fiscal year.
FY End Value-$14.00
AGGREGATED OPTION AND SAR EXERCISES IN 1995 AND FISCAL
YEAR-END OPTION AND SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN
VALUE REALIZED OPTIONS/SARS AT FISCAL THE MONEY OPTIONS/SARS AT
SHARES ($)(MARKET PRICE YEAR END(#) FISCAL YEAR END($)
ACQUIRED ON AT EXERCISE LESS ----------------------- --------------------------
NAME EXERCISE(#) EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John D. Phillips -0- -0- 300,000 -0- $2,287,500 -0-
Frederick B. 47,000 $417,000 49,825 52,275 $ 33,425$272,445
Beilstien, III
Walter M. Grant 46,000 $409,430 16,500 52,500 $ 88,914 $296,876
W. Tod Chmar -0- -0- 36,542 36,542 $ 185,938 $185,938
</TABLE>
<PAGE> Page 7
PENSION PLANS
The Company maintains a qualified defined benefit pension plan and a
nonqualified supplemental pension plan for the benefit of eligible
participants, including certain of the Company's executive officers. The
Company's nonqualified supplemental pension plan provides benefits that
would otherwise be denied participants by reason of certain code limitations
on qualified plan benefits and provides certain other supplemental pension
benefits to certain of the Company's executive officers and highly
compensated employees. On December 13, 1995, the Board of Directors of the
Company amended the pension plan and the supplemental pension plan to cease
benefit accruals after December 31, 1995. Accordingly, the only benefits
that will be payable under these plans are those benefits that had accrued
as of December 31, 1995.
A participant's compensation covered by the Company's pension plan and
supplemental pension plan is his or her average annual compensation for the
five consecutive calendar plan years during the last ten years of the
participant's career for which such average is the highest or, in the case
of a participant who has been employed for less than five full calendar years,
the period of his or her employment with the Company and its subsidiaries
("covered compensation"). A participant's covered compensation generally means
the total taxable compensation required to be reported on the participant's
Form W-2 for income tax purposes, except that this amount (excluding bonuses)
is annualized for periods covering less than a full calendar year. Generally,
a participant earns retirement benefits at the rate of 2% of his covered
compensation for the first 20 years of service and 1% for each additional 20
years of service. Participants become vested in their retirement benefits
after completing at least five years of servicing or attaining age 50 or upon
retirement after age 62 with at least one year of service. The estimated
years of service for each Named Executive Officer as of December 31, 1995 was
as follows: Mr. Phillips: 1- 2/3 years; Mr. Beilstein: 4- 1/2 years; Mr.
Grant - 2 1/2 Years; and Mr. Chmar: 1- 2/3 years. Based on these provisions
and the number of years of service completed, the annual vested retirement
benefits as of December 31, 1995 were $42,015 for Mr. Phillips and $24,189 for
Mr. Grant. These benefits are based on a straight line annuity beginning at
age 62. Mr. Beilstein and Mr. Chmar did not have a vested retirement benefit
as of December 31, 1995, the date as of which the Company ceased benefit
accruals under its pension plans. Accordingly, neither Mr. Beilstein nor Mr.
Chmar is entitled to receive pension benefits under such plans upon retirement.
A participant's covered compensation for purposes of the pension plan differs
from compensation reported in the Summary Compensation Table (the "Table") in
that (i) covered compensation includes certain taxable employee benefits not
required to be reported in the Table and (ii) covered compensation includes
all compensation received by the executive during the year (regardless of
when it was earned), whereas the Table includes only compensation earned
during the year.
COMPENSATION OF DIRECTORS
During 1995, each director of the Company who was not employed by the Company
(the "Non-Employee Directors") received a $2,000 monthly retainer plus a
separate attendance fee for each meeting of the Board of Directors or committee
of the Board of Directors in which such director participated. During 1995, the
attendance fees were $1,200 for each meeting of the Board of Directors attended
by a Non-Employee Director in person
<PAGE> Page 8
and $500 for each meeting of the Board of Directors in which a Non-Employee
Director participated by conference telephone call. Members of committees of
the Board of Directors are paid $500 for each meeting attended.
Prior to December 13, 1995, Non-Employee Directors were entitled to receive
options to purchase shares of the Company's Common Stock under the Company's
1991 Non-Employee Director Stock Option Plan (as amended, the "Director Plan").
Under the Director Plan, each Non-Employee Director who was a director of the
Company on August 3, 1992 was granted an option to purchase 10,000 shares of
the Company's Common Stock at an exercise price of $11.875, the closing price
of the Common Stock on the trading day immediately preceding the date of
grant. Options granted to these Non-Employee Directors became fully vested as
to all 10,000 shares upon approval of certain amendments to the Director Plan
at the Company's 1993 Annual Meeting of Stockholders.
The Director Plan further provided that each person who became a Non-Employee
Director of the Company after August 3, 1992 would receive an option to
purchase 10,000 shares of the Company's Common Stock on the day such director
is elected as a director, at an exercise price equal to the closing price of
the Common Stock on the trading day preceding such director's election.
Options granted to these Non-Employee Directors became fully vested and
exercisable as to all 10,000 shares on March 31 in the year after the date the
Non-Employee Director was elected, provided the Company had net income for the
year in which the Non-Employee Director was elected or earnings equal to or
better than budgeted results for such year.
All options granted under the Director Plan had a term of ten years. The
Director Plan had originally been scheduled to terminate on June 27, 2001.
However, at a meeting of the Board of Directors held on December 13, 1995,
the Board of Directors terminated the Director Plan. Options outstanding as
of December 13, 1995 are unaffected by the termination of the Director Plan.
In addition to establishing a stock option plan for its Non-Employee
Directors, the Company implemented, during the first quarter of 1992, a group
medical plan for its Non-Employee Directors (the "Non-Employee Director
Medical Plan") which provided medical coverage at group premium rates to active
Non-Employee Directors electing such coverage and to any Non-Employee Director
who retired from the Board of Directors after attaining age 65 and who either
participated in the plan for the entire period that the individual served as a
director since March 1, 1992 or participated in the plan for the three
consecutive years immediately prior to the individual's retirement as a
director. The medical plan paid for 100% of a Non-Employee Director's single
coverage premium and between 25% and 50% of the dependent coverage premium.
At the meeting of the Board of Directors of the Company held on December 13,
1995, the Company's Board of Directors terminated the Non-Employee Director
Medical Plan.
<PAGE> Page 9
CERTAIN AGREEMENTS REGARDING EMPLOYMENT
PHILLIPS EMPLOYMENT AGREEMENT
Mr. Phillips and the Company are parties to an employment agreement dated as
of April 19, 1994, as amended on November 1, 1995 (the "Phillips Employment
Agreement"), under which the Company has agreed to employ Mr. Phillips as
its President and Chief Executive Officer reporting directly to the Vice
Chairman of the Company. The Phillips Employment Agreement provides that
Mr. Phillips will be entitled to receive a base salary at an annual rate of
$625,000 per year. Mr. Phillips also is entitled to participate in the
Company's Senior Officer Bonus Plan and to receive other benefits provided
by the Company to its senior corporate officers. Both the Company and
Mr. Phillips have the right to terminate the Phillips Employment Agreement
at any time. If the Company terminates the Phillips Employment Agreement
without cause (as defined in the Phillips Employment Agreement) or by request
for resignation by the Chairman of Vice Chairman of the Company or if Mr.
Phillips terminates the Phillips Employment Agreement for good reason (as
defined in the Phillips Employment Agreement), the Company will be required
to continue to pay Mr. Phillips' base salary and other benefits and to provide
Mr. Phillips with an office and a secretary designated by the Company for one
year following such termination. If the Company terminates the Phillips
Employment Agreement with cause or if Mr. Phillips terminates the Phillips
Employment Agreement, Mr. Phillips will be entitled to receive his base
salary and other benefits only through the date of termination.
In connection with his employment, Mr. Phillips also received from the Company
an option (the "Phillips Option") to purchase 300,000 shares of Common Stock at
a price of $6.375 per share. The Phillips Option may be exercised at any time
until the Phillips Option terminates on April 18, 2001. Mr. Phillips has the
right to transfer the Phillips Option in whole or in part at any time. The
Company has entered into a Registration Rights Agreement with Mr. Phillips
pursuant to which the Company has agreed to register with the Commission
any shares purchased upon the exercise of the Option.
POST-EMPLOYMENT AGREEMENTS WITH WALTER M.GRANT AND FREDERICK B. BEILSTEIN
The Company has entered into Post-Employment Consulting Agreements (the
"Post-Employment Agreements") with two former officers, Frederick B. Beilstein,
III, former Senior Vice President and Chief Financial Officer, and Walter M.
Grant, former Senior Vice President and General Counsel. The Post-Employment
Agreements provide that if an executive's employment with the Company is
terminated by the Company (other than for cause) or if the executive's
employment is terminated by the executive for "good reason," then the Company
will retain the executive as a consultant for a period of two years following
the date of termination of his employment. An executive may terminate his
employment for "good reason" in the event of (i) a reduction in his base
salary or benefits other than an across-the-board reduction involving similarly
situated employees; (ii) the relocation of his full-time office to a location
greater than 50 miles from the Company's current corporate office; or (iii) a
reduction in his corporate title. The Post-Employment Agreements provide that
the Company, in exchange for the executive's post-employment consulting
services, will pay a monthly consulting fee to the executive in an amount
equal to the executive's monthly base salary at the time of the termination
of his employment. The Post-Employment
<PAGE> Page 10
Agreements also provide for the continuation of certain medical and other
employee benefits during the two-year consulting period. In connection with
its approval of the November 1 Mergers, the Board of Directors of the Company
agreed that Mr. Beilstein and Mr. Grant would each be permitted to terminate
his employment with the Company and receive the payments and other benefits
due under his Post-Employment Agreement if he did not wish to remain with
the Company following the consummation of the November 1 Mergers.
The Company's Board of Directors has agreed that Mr. Grant can terminate his
employment with the Company at any time on or before June 15, 1996 and
thereafter receive the payments and other benefits due under his Post-
Employment Agreement. The maximum amount payable to Mr. Grant under
his Post-Employment Agreement (including the Company's share of the medical
and other benefits to which Mr. Grant will be entitled) is $485,851. This
amount, however, will be reduced in the event that Mr. Grant has "earned
income" (as defined in his Post-Employment Agreement) during his two year
consulting period. The minimum amount payable to Mr. Grant under
his Post-Employment Agreement is $237,500.
Mr. Beilstein's employment with the Company was terminated on January
21, 1996, and his consulting period under his Post-Employment Agreement
began on that date. Mr. Beilstein's Post-Employment Agreement was
terminated on March 3, 1996 when Mr. Beilstein accepted employment with
another company. The amount paid by the Company to Mr. Beilstein to
satisfy the Company's obligation to Mr. Beilstein under his Post-
Employment Agreement totaled $291,263.44.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to September 15, 1995, the Compensation Committee consisted of John E.
Aderhold, John P. Imlay, Jr., J.M. Darden, III and Richard Nevins. On
September 15, 1995, Clark A. Johnson replaced J.M. Darden, III. After
October 1995, the Compensation Committee consisted of John P. Imlay, Jr.,
Clark A. Johnson and Carl E. Sanders.
Mr. Sanders is Chairman of Troutman Sanders, a law firm which provided legal
services to the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of April 22, 1996, certain information
regarding each person (including any "group" as that term is used in
Section 13(d)(3) of the Exchange Act) known (based solely upon filings with the
Commission prior to such date pursuant to Sections 13(d) or 13(g) of the
Exchange Act) to own beneficially (as such term is defined in Rule 13d-3 under
the Exchange Act) more than 5% of the outstanding Common Stock. In accordance
with the rules promulgated by the Commission, such ownership includes shares
currently owned as well as shares which the named person has the right to
acquire beneficial ownership of within 60 days, including, but not limited to,
shares which the named person
<PAGE> Page 11
has the right to acquire through the exercise of any option, warrant or right,
or through the conversion of a security. Accordingly, more than one person
may be deemed to be a beneficial owner of the same securities.
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES OF COMMON OUTSTANDING COMMON
NAME AND ADDRESS OF BENEFICIAL OWNER STOCK BENEFICIALLY OWNED(1) STOCK
- ------------------------------------ --------------------------- ------------------
<S> <C> <C>
John W. Kluge, Stuart Subotnick and
Metromedia Company 15,252,128(2) 35.8%
One Meadowlands Plaza
E. Rutherford, NJ 07073
Mellon Bank Corporation, Mellon Bank, N.A.,
Franklin Portfolio Associates Trust, Mellon
Capital Management Corporation and The
Dreyfus Corporation 2,130,000(3) 5.22%
c/o Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, PA 15258
</TABLE>
___________
(1) Unless otherwise indicated by footnote, the named individuals have
sole voting and investment power with respect to the shares of
Common Stock beneficially owned.
(2) Metromedia Company, a Delaware general partnership, ("Metromedia
Company") is owned and controlled by John W. Kluge and Stuart
Subotnick, each of whom is a director of the Company. The amount set
forth in the table above includes 2,605,448 and 231,225 shares of Common
Stock owned directly by a trust affiliated with Mr. Kluge and by Mr.
Subotnick, respectively; the balance is owned by Mr. Kluge and Mr.
Subotnick beneficially through Metromedia Company and Met Telcell,
Inc. ("Met Telcell"), a corporation owned and controlled by
Messrs. Kluge and Subotnick.
(3) Based on Schedule 13G dated January 22, 1996 in which Mellon Bank
Corporation reported that its subsidiaries, Mellon Bank, N.A.,
Franklin Portfolio Associates Trust, Mellon Capital Management
Corporation and The Dreyfus Corporation, had sole voting power with
respect to 2,130,000 shares of Common Stock and sole dispositive
power with respect to 241,000 shares of Common Stock.
SECURITIES BENEFICIALLY OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth beneficial ownership of Common Stock as of
April 22, 1996 with respect to (i) each director of the Company, (ii) each
executive officer named in the Summary Compensation Table under "Executive
Compensation" and (iii) all directors and executive officers of the
Company as a group.
<PAGE> Page 12
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON PERCENTAGE
STOCK BENEFICIALLY OF COMMON
NAME OF BENEFICIAL OWNER OWNED(1)(10) STOCK
- ------------------------ -------------------------- ----------
<S> <C> <C>
Frederick B. Beilstein, III - *
W. Tod Chmar 735,542(2)(6)(7) 1.7%
Walter M. Grant 45,832(2)(6) *
John P. Imlay, Jr. 10,000 *
Clark A. Johnson 18,000(2) *
John W. Kluge 15,020,903(3) 35.2%
Silvia Kessel 3,085 *
John D. Phillips 1,000,000(4) 2.3%
Carl E. Sanders 22,097(2)(8) *
Richard J. Sherwin 912,605(11) 2.1%
Stuart Subotnick 12,646,680(5) 29.7%
Arnold L. Wadler 15,416 *
Leonard White - *
All Directors and Executive Officers as a
group (13 persons) 17,289,605(9) 39.5%
------------- -----
</TABLE>
__________
* Holdings do not exceed one percent of the total outstanding shares of
Common Stock.
(1) Unless otherwise indicated by footnote,the named individuals have sole
voting and investment power with respect to the shares of Common Stock
beneficially owned.
(2) Includes shares subject to purchase within the next 60 days under the
Company's 1989 Stock Option Plan and under the Company's 1991 Non-
Employee Director Stock Option Plan.
(3) Represents 12,415,455 shares beneficially owned through Metromedia
Company and Met Telcell and 2,605,448 shares of Common Stock owned
directly by a trust affiliated with Mr. Kluge.
(4) Includes 1,000 shares owned by Mr. Phillips directly, 699,000 shares
owned by Renaissance Partners, a Georgia general partnership in which
Mr. Phillips is a general partner, and 300,000 shares subject to
purchase by Mr. Phillips within the next 60 days pursuant to the
exercise of a stock option. Mr. Phillips disclaims beneficial ownership
of the shares owned by Renaissance Partners except to the extent of his
interest in Renaissance Partners.
(5) Represents 12,415,455 shares beneficially owned through Metromedia
Company and Met Telcell and 231,225 shares owned directly by Mr.
Subotnick.
<PAGE> Page 13
(6) Includes shares allocated to the Named Executive Officer's account
under the Employees Stock Purchase Plan as of the date hereof.
(7) Includes 699,000 shares owned by Renaissance Partners, a Georgia general
partnership in which a corporation owned by Mr. Chmar serves as general
partner. Mr. Chmar disclaims beneficial ownership of the shares owned
by Renaissance Partners except to extent of his interest in Renaissance
Partners.
(8) Includes 600 shares subject to purchase by Mr. Sanders within the next
60 days pursuant to the conversion of the $25,000 face amount (less than
1%) of the Company's 6 1/2 % Convertible Subordinated Debentures due
2002 beneficially owned by Mr. Sanders, which are convertible into
Common Stock at a conversion price of $41 5/8 per share.
(9) The number of shares shown for directors and executive officers
as a group includes an aggregate of 1,103,884 shares which are subject
to purchase within 60 days of the date hereof pursuant to stock options
and other convertible securities.
(10) Does not include options issued under the Metromedia International
Group, Inc. 1996 Incentive Stock Plan as such options are not presently
exercisable and will not become exercisable within 60 days of the date
hereof.
(11) Includes options to purchase 601,892 shares of Common Stock exercisable
within 60 days of the date hereof.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP WITH METROMEDIA COMPANY
The Company is a party to a number of agreements and arrangements with
Metromedia Company and its affiliates, the material terms of which are
summarized below.
HISTORICAL RELATIONSHIP
As described above, Metromedia Company and its affiliates are collectively
the largest single stockholder of the Company and currently own approximately
35.8% of the issued and outstanding shares of Common Stock. Prior to the
November 1 Mergers, Metromedia Company and its affiliates were the principal
stockholders of Orion and MITI, two of the parties to the November 1 Mergers.
In addition, prior to the November 1 Mergers, Orion, MITI and Sterling were
party to a number of material contracts and other arrangements with Metromedia
Company and certain affiliates of Metromedia Company pursuant to which
Metromedia Company and certain of its affiliates made loans or provided
financing to, or paid obligations on behalf of, each of Orion, MITI and
Sterling (collectively, the "Metromedia Obligations"). A condition to
the consummation of the November 1 Mergers was that the Metromedia
Obligations be refinanced, repaid or converted into equity of the Company
in the manner provided in the agreements relating to the November 1 Mergers.
<PAGE> Page 14
A portion of the Metromedia Obligations ($20,400,000 owed by Orion,
$34,076,000 owed by MITI and $524,000 owed by Sterling) was financed
by Metromedia Company through borrowings under a $55 million credit
agreement between the Company (then known as "The Actava Group Inc.")
and Metromedia Company (the "Actava-Metromedia Credit Agreement").
On November 1, 1995, Orion, MITI and Sterling each repaid such amounts
to Metromedia Company and Metromedia Company repaid the amounts owed
by it to the Company under the Actava-Metromedia Credit Agreement
($55 million). Because on November 1, 1995, Orion, Sterling and MITI
had been merged with the Company, there was no net addition to the
assets of the Company as a result of these transactions.
In addition, prior to the November 1 Mergers, Metromedia Company and John W.
Kluge, the Chairman and Chief Executive Officer of Metromedia Company, had
guaranteed (the "Orion Guarantee") certain amounts owed by Orion under its then
existing credit facility and certain amounts owed to Sony Pictures
Entertainment Corp. ("Sony") by Orion. Metromedia Company and Mr. Kluge were
majority stockholders of Orion and issued guarantees in 1991 as part of Orion's
reorganization plan. As consideration for the guarantees and the contribution
to Orion by Metromedia Company and Mr. Kluge of $15 million in cash and certain
rights in a film, Metromedia and Mr. Kluge received a total of 10,020,000
shares of Orion common stock. Pursuant to the Orion Guarantee, Metromedia
Company made payments on behalf of Orion to the banks and to Sony in the amount
of $59,592,446 during 1994 and 1995. Under a Reimbursement Agreement between
Orion and Metromedia Company, Orion was required to reimburse Metromedia
Company in full for all payments made pursuant to the Orion Guarantee by
Metromedia Company on Orion's behalf. Accordingly, at the effective time
of the November 1 Mergers, Orion repaid Metromedia Company $63,296,514
pursuant to the Reimbursement Agreement. Of the payments made by Metromedia
Company on behalf of Orion and repaid by Orion to Metromedia Company
pursuant to the Reimbursement Agreement, $20,400,000 was financed by
borrowings by Metromedia Company under the Actava-Metromedia Credit
Agreement described above.
Prior to the November 1 Mergers, Metromedia Company, through an affiliate,
provided Orion and its affiliates with non-recourse financing (which was
not financed by Metromedia Company pursuant to the Actava-Metromedia Credit
Agreement) to acquire certain theatrical and home video product (the
"MetProductions Indebtedness"). Pursuant to a Contribution Agreement entered
into in connection with the November 1 Mergers, all of the MetProductions
Indebtedness ($10,426,552 at November 1, 1995, including accrued interest)
was converted into 993,005 shares of Common Stock at the effective time of
the November 1 Mergers. In addition, Metromedia Company, through its
affiliates, provided MITI and its affiliates with certain loans (which were
not financed by Metromedia Company pursuant to the Actava-Metromedia Credit
Agreement) to fund MITI's operations and repay certain of its indebtedness
(the "MITI Indebtedness"). Pursuant to the Contribution Agreement, all
of the MITI Indebtedness ($26,641,744 at November 1, 1995, including accrued
interest) was converted into 2,537,309 shares of Common Stock at the effective
time of the November 1 Mergers.
ONGOING RELATIONSHIP WITH THE COMPANY
ORION CREDIT FACILITY. On November 1, 1995, Orion entered into a Credit
Agreement with Chemical Bank ("Chemical") under which Chemical agreed to
provide Orion with a five-
<PAGE> Page 15
year secured credit facility in an aggregate amount
of $185 million, consisting of a term loan of $135 million and a revolving
credit loan of $50 million to finance Orion's development, production,
acquisition and worldwide distribution and exploitation of motion pictures,
video product and made-for-television product. In order to induce Chemical to
provide the revolving credit facility, John W. Kluge and Metromedia Company
agreed to guarantee the due and punctual payment of all funds due under the
revolving credit loan portion of such credit facility, including all related
costs and attorneys' fees. As of December 31, 1995, the amount owed by Orion
under its revolving credit facility was $12 million, plus $9 million reserved
for outstanding letters of credit.
In addition, Metromedia Company guaranteed the payment by Orion to Chemical
of certain fees payable in connection with the execution of the commitment
letter with Chemical for Orion's Credit Facility. All such fees were paid by
Orion on January 2, 1996. Furthermore, Metromedia Company guaranteed the
payment of certain third party accounts receivable owed to Orion so
that the entire face amount of such accounts could be included in the
borrowing base for Orion's credit facility. Neither Mr. Kluge nor Metromedia
Company received any consideration for guaranteeing Orion's obligations under
this credit facility. Their guarantees were, however, a condition to
Chemical's agreeing to provide the revolving credit facility.
MIG CREDIT FACILITY. Mr. Kluge has guaranteed the payment by MIG of the
difference between the amount outstanding under MIG's existing revolving
credit facility (which fluctuates from time to time) and the maximum
available amount permitted to be outstanding under such credit facility,
which is based on a percentage of the market value of the shares of
Roadmaster held by MIG.
MITI BRIDGE LOAN AGREEMENT. Metromedia Company has made available to MITI
up to $15 million of revolving credit in order to satisfy its commitments
and working capital requirements pursuant to a Bridge Loan Agreement dated
as of February 29, 1996 (the "MITI Bridge Loan"). MITI may use the proceeds
of loans under such agreement for general corporate and working capital
purposes. As of March 1, 1996, MITI had not borrowed any monies under the
MITI Bridge Loan.
MANAGEMENT AGREEMENT. The Company is a party to a management agreement with
Metromedia Company dated November 1, 1995 (the "Management Agreement"),
pursuant to which Metromedia Company provides the Company with management
services, including legal, insurance, payroll and financial accounting systems
and cash management, tax and benefit plans. The Management Agreement
terminates on October 31, 1996, and is automatically renewed for successive
one year terms unless either party terminates upon 60 days prior written
notice. The management fee under the Management Agreement is $1.5 million per
year, payable monthly at a rate of $125,000 per month. The Company is also
obligated to reimburse Metromedia Company all its out-of-pocket costs and
expenses incurred and advances paid by Metromedia Company in connection with
the Management Agreement. Pursuant to the Management Agreement, the Company
has agreed to indemnify and hold Metromedia Company harmless from and
against any and all damages, liabilities, losses, claims, actions, suits,
proceedings, fees, costs or expenses (including reasonable attorneys' fees and
other costs and expenses incident to any suit, proceeding or investigation of
any kind) imposed on, incurred by or asserted against Metromedia Company in
connection with
<PAGE> Page 16
the Management Agreement. In fiscal 1995, Metromedia Company
received no money for its out-of-pocket costs and expenses or interest on
advances extended by it to the Company pursuant to the Management
Agreement.
TRADEMARK LICENSE AGREEMENT. The Company is a party to a license
agreement with Metromedia Company (the "Metromedia License Agreement"),
pursuant to which Metromedia Company has granted the Company a non-
exclusive, non-transferable, non-assignable right and license, without
the right to grant sublicenses, to use the trade name, trademark and
corporate name "Metromedia" in the United States and with respect to
MITI, worldwide, royalty-free for a term of 10 years. The Metromedia
License Agreement can be terminated by Metromedia Company upon one month's
prior written notice in the event that (i) Metromedia Company or
its affiliates own less than 20% of the Common Stock; (ii) a Change
in Control of the Company (as defined below) occurs; or (iii) any of the
stock or all or substantially all of the assets of any of the subsidiaries
of the Company are sold or transferred, in which case, the Metromedia
License Agreement shall terminate with respect to such subsidiary. A Change
in Control of the Company is defined as (a) a transaction in which a person
or "group" (within the meaning of Section 13(d)(3) of the Exchange Act) not
in existence at the time of the execution of the Metromedia License Agreement
becomes the beneficial owner of stock entitling such person or group to
exercise 50% or more of the combined voting power of all classes of stock
of the Company; (b) a change in the composition of the Company's Board of
Directors whereby a majority of the members thereof are not directors serving
on the board at the time of the Metromedia License Agreement or any person
succeeding such director who was recommended or elected by such directors;
(c) a reorganization, merger or consolidation whereby following consummation
thereof, Metromedia Company would hold less than 20% of the combined voting
power of all classes of the Company's stock; (d) a sale or other disposition
of all or substantially all of the assets of the Company; or (e) any
transaction the result of which would be that the Common Stock would not be
required to be registered under the Exchange Act and the holders of Common
Stock would not receive common stock of the survivor to the transaction which
is required to be registered under the Exchange Act.
In addition, Metromedia Company has reserved the right to terminate the
Metromedia License Agreement in its entirety immediately upon written notice to
the Company if, in Metromedia Company's sole judgment, the Company's continued
use of "Metromedia" as a trade name would jeopardize or be detrimental to the
good will and reputation of Metromedia Company.
Pursuant to the License Agreement, the Company has agreed to indemnify and
hold harmless Metromedia Company against any and all losses, claims, suits,
actions, proceedings, investigations, judgments, deficiencies, damages,
settlements, liabilities and reasonable legal (and other expenses related
thereto) arising in connection with the Metromedia License Agreement.
The Company believes that the terms of each of the transactions described
above were no less favorable to the Company then could have been obtained
from non-affiliated parties.
IMAGE OUTPUT AGREEMENT. Mr. Kluge beneficially owns more than 10% of the
common stock of Image Investors Co., a Delaware corporation. Image Investors
owns
<PAGE> Page 17
approximately 40% of the common stock of Image Entertainment, Inc.
("Image"). OHEC was a party to an output license agreement with Image which
terminated on December 31, 1992 pursuant to which OHEC granted to Image the
rights to manufacture, market and sell on laserdiscs for private in-home use
certain feature length programs released by Orion on videocassette for a
period of three years from the date of first release by Image on laserdisc
in consideration of a royalty payment payable with respect to each program.
For the year ended December 31, 1995, Image paid to Orion approximately
$719,310 under the agreement. Orion, OHEC and Image have recently entered
into a new output agreement.
WORLDCOM. Orion is a customer of WorldCom, Inc. (formerly known as LDDS
Metromedia Communications ("WorldCom")), which provides lon g distance
telephone services to Orion. Mr. Kluge, the Chairman of the Company, is
Chairman of the Board of WorldCom; Mr. Subotnick, the Vice Chairman of the
Board of the Company, is a Director of WorldCom; and Silvia Kessel, a Senior
Vice President and Director of the Company serves on WorldCom's Board of
Directors. For the fiscal year ended December 31, 1995, Orion paid $164,583
to WorldCom.
MISCELLANEOUS. Orion reimbursed Metromedia Company $95,000 for the services
of Silvia Kessel during 1995, a Senior Vice President of Metromedia Company
who also serves as Executive Vice President of Orion.
Mr. Phillips is the sole stockholder of JDP Aircraft II, Inc., a Georgia
corporation ("JDP Aircraft"). On October 21, 1994, the Company and JDP
Aircraft entered into a lease agreement under which JDP Aircraft provides the
Company with the use of a Citation Jet owned by JDP Aircraft. The lease
agreement can be terminated by either party by giving 30 days' notice to the
other party. The Company paid $298,367 to JDP Aircraft under the lease
agreement for services provided during 1995.
On April 19, 1994, Mr. Phillips was elected President and Chief Executive
Officer of the Company. He was elected to the Board of Directors of the
Company on the same date. At the same time, Renaissance Partners, an investment
partnership in which Mr. Phillips serves as a general partner, purchased
700,000 shares of Common Stock from the Company for $4,462,500, representing
a price of $6.375 per share. This price represents the last sale price of the
Common Stock on the New York Stock Exchange (on which the Common Stock was
traded prior to the November 1 Mergers) on April 11, 1994, the date before
the Company announced that it had received an investment proposal from Mr.
Phillips. The Company has entered into a Registration Rights Agreement with
Renaissance Partners pursuant to which the Company agreed to register with
the Commission the 700,000 shares of Common Stock purchased by Renaissance
Partners. Such shares were registered with the Commission in November
1995.
<PAGE> Page 18
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the registrant has duly caused this report
to be signed on behalf of the undersigned, thereunto duly authorized.
METROMEDIA INTERNATIONAL GROUP, INC.
By: /S/ SILVIA KESSEL
---------------------------
Silvia Kessel
Senior Vice
President, Chief Financial Officer
and Treasurer
Date: April 29, 1996
