<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES 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
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
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 Identification
of incorporation or organization) No.)
------------------------
ONE MEADOWLANDS PLAZA, EAST RUTHERFORD, NEW JERSEY 07073-2137
(Address and zip code of principal executive offices)
(201) 531-8000
(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
7.25% Cumulative Convertible Preferred Stock American Stock Exchange
Pacific 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. X
The aggregate market value of voting stock of the registrant held by
nonaffiliates of the registrant at March 25, 1999 computed by reference to the
last reported sale price of the Common Stock on the composite tape on such date
was $273,340,000.
The number of shares of Common Stock outstanding as of March 25, 1999 was
69,123,841.
DOCUMENTS INCORPORATED BY REFERENCE
None.
The registrant hereby amends Part III of its Annual Report on Form 10-K for
the year ended December 31, 1998 to include Items 10, 11, 12 and 13.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The directors and executive officers of the Company and their respective ages
and positions are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------- ------- ------------------------------------------------------------
<S> <C> <C>
John W. Kluge 84 Chairman of the Board of Directors
Stuart Subotnick 57 Vice Chairman of the Board of Directors, President and Chief
Executive Officer
Silvia Kessel 48 Executive Vice President, Chief Financial Officer, Treasurer
and Director
Arnold L. Wadler 55 Executive Vice President, General Counsel, Secretary and
Director
Robert A. Maresca 64 Senior Vice President
Vincent D. Sasso, Jr. 40 Vice President
John P. Imlay, Jr. 62 Director
Clark A. Johnson 67 Director
Carl E. Sanders 73 Director
Richard J. Sherwin 55 Director
Leonard White 59 Director
</TABLE>
The following is a biographical summary of the experience of the executive
officers and directors of the Company.
MR. KLUGE has served as Chairman of the Board of Directors of the Company since
November 1, 1995. Chairman of the Board and a director of Orion Pictures
Corporation from 1992 until July 1997. Chairman and President of Metromedia
Company and its predecessor-in-interest, Metromedia, Inc., for over five years.
Director of Metromedia Fiber Network, Inc., Conair Corporation and Occidental
Petroleum Corporation. Mr. Kluge is Chairman of the Executive Committee and a
member of the Nominating Committee.
MR. SUBOTNICK has served as President and Chief Executive Officer of the Company
since December 4, 1996 and 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 from 1992 until July 1997, Executive Vice President
of Metromedia and its predecessor-in-interest, Metromedia, Inc. for over five
years. Director of Metromedia Fiber Network, Inc. and Carnival Cruise Lines,
Inc., and Chairman of Big City Radio, Inc. Mr. Subotnick is a member of the
Executive Committee.
MS. KESSEL has served as Executive Vice President, Chief Financial Officer and
Treasurer of the Company since August 29, 1996 and Senior Vice President, Chief
Financial Officer and Treasurer and Director of the Company since November 1,
1995. Executive Vice President and a director of Orion Pictures Corporation from
January 1993 until June 1997. Senior Vice President of Metromedia since January
1994. President of Kluge & Company for over five years. Director and Executive
Vice President of Metromedia Fiber Network, Inc. and Big City Radio, Inc. Ms.
Kessel is a member of the Nominating Committee.
MR. WADLER has served as Executive Vice President, General Counsel and Secretary
of the Company since August 29, 1996 and Senior Vice President, General Counsel,
Secretary and Director 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,
Executive Vice President, General Counsel and Secretary of Metromedia Fiber
Network, Inc. and Big City Radio, Inc. Director of Orion Pictures Corporation
from 1992 until July 1997. Mr. Wadler is Chairman of the Nominating Committee.
MR. MARESCA has served as a Senior Vice President of the Company since November
1, 1995 and has served as a Senior Vice President-Finance of Metromedia for over
five years.
<PAGE>
MR. SASSO has served as the Company's Vice President of Financial Reporting
since July 1996. Prior to that time, Mr. Sasso served in a number of positions
at KPMG LLP from November 1984 to June 1996, including partner from July 1994 to
June 1996.
MR. IMLAY has served as a Director of the Company since 1993. Served from 1990
until December 1996 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, IMS Health, Inc., World Access, Inc. and The
Gartner Group. Mr. Imlay is a member of the Audit Committee and the Compensation
Committee.
MR. JOHNSON has served as a Director of the Company since 1990. Served as
Chairman and Chief Executive Officer of Pier 1 Imports, Inc., a specialty
retailer of decorative home furnishings, from August 1988 until his
retirement in February 1999. Mr. Johnson is a director of Albertson's, Inc.,
Anacomp, Inc., Heritage Media Corporation, InterTAN, Inc. and Pier 1 Imports,
Inc. Mr. Johnson is a member of the Compensation and Audit Committees.
MR. SANDERS has served as a Director of the Company since 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 World Access, Inc. Gov. Sanders is Chairman of the Compensation Committee.
MR. SHERWIN has served as a Director of the Company since 1995. Has served as
Co-President and director of Metromedia International Telecommunications, Inc.
and its predecessor companies for over five years. Prior to that, Mr. Sherwin
served as the Chief Operating Officer of Graphic Scanning Corp., a paging and
wireless telecommunications company.
MR. WHITE has served as a Director of the Company since 1995. Serves as
President and Chief Executive Officer of Rigel Enterprises, Inc. a management
and private investment firm, since July 1997. Served as President and Chief
Executive Officer of Orion Pictures Corporation from March 1992 until July 1997
and Metromedia Entertainment Group from 1995 until July 1997. 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. Mr. White is a Director of Metromedia Fiber Network, Inc., Big
City Radio, Inc. and American Film Technologies., Inc. Mr. White is Chairman of
the Audit Committee and a member of the Compensation Committee.
The Board of Directors of the Company, which presently consists of nine
members, is divided into three classes. The Class I Directors were elected
for a term expiring at the 1999 annual meeting of stockholders. The Class II
Directors were elected for a term expiring at the annual meeting of
stockholders to be held in 2000, and the Class III Directors were elected for
a term expiring at the annual meeting of stockholders to be held in 2001.
Members of each class hold office until their successors are elected and
qualified. At each succeeding annual meeting of the stockholders of the
Company, the successors of the class of directors whose term expires at that
meeting will be elected by a plurality vote of all votes cast at such meeting
and will hold office for a three-year term. The Class I Directors, whose term
expires at the annual meeting of stockholders to be held in 1999, are John W.
Kluge, Stuart Subotnick and John P. Imlay, Jr. The Class II Directors, whose
term expires at the annual meeting of stockholders to be held in 2000, are
Richard J. Sherwin and Leonard White. The Class III Directors, whose term
expires at the annual meeting of stockholders to be held in 2001, are Silvia
Kessel, Carl E. Sanders, Arnold L. Wadler and Clark A. Johnson.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
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 Commission and the AMEX initial
reports of ownership and reports of changes in ownership of the Common Stock.
Such officers, directors and greater than 10% stockholders 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 year ended
December 31, 1998.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The Company's Chief Executive Officer and its other most highly compensated
executive officers are employed and paid by Metromedia Company, and
Metromedia Company provides the services of such executive officers to the
Company pursuant to the Management Agreement (See "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS MMG's Relationship with Metromedia Company"). A portion
of such management fee has been allocated by the Company to the payment of
the salaries of the Company's Chief Executive Officer and the Company's
executive officers based upon the services provided to the Company by such
officers on behalf of Metromedia Company.
<PAGE>
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 Company's four most highly compensated executive officers other than the
Chief Executive Officer (the "Named Executive Officers") for services
rendered to the Company and its subsidiaries during the years ended December
31, 1998, 1997, and 1996. Messrs. Subotnick, Wadler, Maresca, Sasso and Ms.
Kessel were employed and paid by Metromedia Company and amounts shown below
with respect to each of them reflect the portion of their compensation paid
by the Company to Metromedia Company in respect of such executive's services
to the Company, pursuant to the Management Agreement. The compensation
expensed by the Company and paid to Metromedia Company pursuant to the
Management Agreement includes payment for salary only and does not include
any payment relating to bonus or other compensation. No other amounts were
paid by the Company to such Named Executive Officers during 1998.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
AWARDS
NUMBER OF
NAME AND OTHER SECURITIES ALL OTHER
PRINCIPAL ANNUAL UNDERLYING COMPENS.
POSITION YEAR SALARY($) BONUS($) COMPENSATION($) STOCK OPTIONS ($)
-------- ---- --------- -------- --------------- ------------- ---
<S> <C> <C> <C> <C> <C>
Stuart Subotnick................ 1998 $765,000 _ _ _ _
President and Chief Executive 1997 $750,000 _ _ 1,050,000 _
Officer 1996 $ 55,328(1) _ _ _ _
Silvia Kessel................... 1998 $382,500 _ _ _ _
Executive Vice President and 1997 $375,000 _ _ 250,000 _
Chief Financial Officer and 1996 $350,000 _ _ _ _
Treasurer
Arnold L. Wadler................ 1998 $382,500 _ _ _ _
Executive Vice President, General 1997 $375,000 _ _ 250,000 _
Counsel and Secretary 1996 $350,000 _ _ _ _
Robert A. Maresca............... 1998 $220,000 _ _ _ _
Senior Vice President and Chief 1997 $220,000 _ _ 75,000 _
Accounting Officer 1996 $200,000 _ _ _ _
Vincent D. Sasso, Jr............ 1998 $180,000 _ _ _ _
Vice President of Financial 1997 $175,000 _ _ 75,000 _
Reporting 1996 $ 75,000(2) _ _ _ _
</TABLE>
- -----------
(1) Mr. Subotnick was appointed President and Chief Executive Officer of
MMG on December 4, 1996. The amounts shown for Mr. Subotnick reflect
the portion of the payment made by MMG to Metromedia Company for the
period December 4, 1996 through December 31, 1996.
(2) Mr. Sasso was appointed Vice President of Financial Reporting in July
of 1996. The amount shown for Mr. Sasso reflects the portion of the
payment made by MMG to Metromedia Company from such period through
December 31, 1996.
<PAGE>
AGGREGATED OPTION AND SAR EXERCISES IN 1998
AND FISCAL YEAR-END OPTION AND SAR VALUES
The following table sets forth information concerning the exercise of
options or SARs by the Named Executive Officers during 1998 and the number of
unexercised options and SARs held by such officers at the end of 1998.
FISCAL YEAR END VALUE $5.438
<TABLE>
<CAPTION>
VALUE REALIZED
(MARKET NUMBER OF SECURITIES
SHARES PRICE AT UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED EXERCISE LESS OPTIONS/SAR'S IN THE MONEY OPTIONS/SARS
NAME ON EXERCISE EXERCISE PRICE) AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)
- ---- ----------- --------------- ---------------------- ----------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Stuart Subotnick............. 0 0 430,000 620,000 0 0
Arnold L. Wadler............. 0 0 150,000 100,000 0 0
Silvia Kessel................ 0 0 150,000 100,000 0 0
Robert A. Maresca............ 0 0 45,000 30,000 0 0
Vincent D. Sasso, Jr......... 0 0 30,000 45,000 0 0
</TABLE>
TEN-YEAR OPTION/SAR REPRICINGS
The following table sets forth information concerning the repricing of
stock options held by any executive officer during the last ten years.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES MARKET PRICE OF LENGTH OF
UNDERLYING STOCK AT TIME OF EXERCISE PRICE ORIGINAL OPTION
OPTIONS/SAR'S REPRICING OR AT TIME OF REPRICING NEW EXERCISE TERMINATION AT
NAME REPRICED OR AMENDED AMENDMENT OR AMENDMENT PRICE(1) DATE OF
DATE ($) ($) ($) ($) REPRICING
---- --- --- --- --- ---------
<S> <C> <C> <C> <C> <C> <C>
Stuart Subotnick.............. 3/26/97 50,000 $9.3125 $12.75 $9.31 8years/10months
President and Chief Executive
Officer
Arnold L. Wadler.............. 3/26/97 250,000 $9.3125 $12.75 $9.31 8years/10months
Executive Vice President,
General Counsel and Secretary
Silvia Kessel................. 3/26/97 250,000 $9.3125 $12.75 $9.31 8years/10months
Executive Vice President,
Chief Financial Officer and
Treasurer
Robert A. Maresca............. 3/26/97 75,000 $9.3125 $12.75 $9.31 8years/10months
Senior Vice President and
Chief Accounting Officer
</TABLE>
- -----------
(1) At the time of repricing 40% of the options were vested, the remaining
60% vest ratably over a three year period.
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors (the "Compensation
Committee") consists of Gov. Sanders and Messrs. Imlay, Johnson and White.
The Compensation Committee is comprised entirely of independent directors and
is responsible for developing and making recommendations to the Board with
respect to MMG's executive compensation policies.
COMPENSATION COMMITTEE REPORT ON COMPENSATION
The following report of the Compensation Committee discusses MMG's executive
compensation policies generally and, specifically, the relationship of MMG's
performance in 1998 to the compensation of MMG of its executive officers:
The Company's executive officers are employed and paid by Metromedia
Company, and Metromedia Company provides the services of such
executive officers to MMG pursuant to the Management Agreement. For
the year ended December 31, 1998, the Company paid Metromedia
Company a management fee of $3.5 million pursuant to the Management
Agreement. A portion of such management fee has been allocated by
the Company to the payment of the salaries of certain of the
Company's executive officers based upon the services provided to the
Company by such officers on behalf of Metromedia Company.
BACKGROUND. In general, the Compensation Committee seeks to link the
compensation allocable to the services provided by each executive
officer to the performance of MMG and to the management fee payable
pursuant to the Management Agreement. In addition, the members of
the Compensation Committee constitute all of the members of the
Company's Board of Directors who are not affiliated with Metromedia
Company, and such members are therefore the directors whose approval
is required to authorize the management fee under the Management
Agreement. Within these parameters, the executive compensation
program attempts to provide an overall level of executive
compensation, as a component of the management fee, that is
competitive with companies of comparable size, similar market and
operating characteristics and similar prospects.
During 1996, the Compensation Committee reviewed total officer
compensation against a market comparison group of 12 companies in
the communications industry (the "1996 Comparison Group") to assess
the competitiveness of the compensation of MMG's executive officers.
During 1997, the Compensation Committee reviewed chief executive
officer and chairman compensation against a market comparison group
of 11 companies in the communications industry (the "1997 Comparison
Group") to assess further the competitiveness of the compensation of
MMG's chief executive officer.
In such reviews, the Compensation Committee considered MMG's
executive compensation in view of the Company's size, the number of
operating units, and the role and responsibilities of MMG's
executive officers. In comparing the compensation of its executives
with that of executives of companies in the two Comparison Groups,
the Compensation Committee considered the competitiveness of the
amounts of the management fee allocated to salaries of the Company's
executive officers, assuming that such amounts were paid directly to
such officers, and recognized the fact that such officers performed
duties for Metromedia Company in addition to their duties for MMG, and
received additional compensation therefor. The Compensation Committee
also considered the differences between the business of the Company and
the businesses of the members of the Comparison Groups.
The companies included in the NASDAQ Telecommunications Index for
purposes of analyzing the performance of MMG's Common Stock during
1998 (see "Performance Graph" below) are not identical to the 12
companies in the 1996 Comparison Group or the 11 companies in the
1997 Comparison Group. Nevertheless, MMG believes that the
cross-section of companies included in the NASDAQ Telecommunications
Index and the two Comparison Groups are sufficiently similar and
provide a reasonable basis for the Compensation Committee to develop
justified compensation policies and for an investor to evaluate the
performance of MMG's Common Stock.
STOCK OPTIONS. The Compensation Committee believes that the grant of
stock options will motivate executives to create long-term growth in
shareholder value. Pursuant to the Company's 1996 Stock Option Plan
(the "Stock Option Plan"), options are granted at the discretion of
the Compensation Committee, usually annually. The number
of option shares covered by such grants is determined based upon
assessment of the individual's performance. The Compensation Committee
considers the recommendation of and relies on information provided by
the Chief Executive Officer in determining the number of option shares
to be granted to the non-CEO executive officers. The Compensation
Committee believes that the periodic grant of time-vested stock
options provides an incentive that focuses the executives' attention
on managing the business as owners of an equity stake in the Company.
It further motivates executives to maximize long-term growth and
profitability because value is created in the options only as the
Company's stock price increases after the option is granted.
In March 1997 the Compensation Committee reviewed certain options
previously granted to employees of the Company and the market price
of the Company's common stock during the past year. The Committee
recognized that options issued by the Company are utilized as
compensation and to provide incentives to improve Company
performance and thereby positively influence the market price for
the Company's common stock for the benefit of all shareholders. The
Committee determined that the market price had declined despite the
Company's significant accomplishments, that certain options
previously granted under the Stock Option Plan were at exercise
prices significantly in excess of the then current market prices of
the Company's common stock, and that these outstanding stock
options, if left in place, would not achieve the underlying
objectives discussed above.
Accordingly, on March 26, 1997, replacement stock options were granted
to replace certain previously issued stock options under such plan.
The replacement options did not involve the grant of any options
covering additional shares. The replacement options were granted at an
exercise price of $9.31 per share, the fair market value per share of
shares of the Company's common stock on such date. No other option
repricing or exchange has occurred in the past ten years.
CHIEF EXECUTIVE OFFICER COMPENSATION. The Summary Compensation Table
sets forth amounts of the management fee paid during 1998 to
Metromedia Company and attributable to compensation of Stuart
Subotnick, MMG's President and Chief Executive Officer, by the
Company. The amount of the management fee allocable to Mr.
Subotnick's base salary was established in December 1996 upon the
resignation of the former Chief Executive Officer of the Company,
Mr. John D. Phillips, and was subsequently increased by the
Compensation Committee. The amount of the management fee allocable
to Mr. Subotnick's base salary was determined by analyzing the
compensation of chief executive officers in the Comparison Groups,
along with the amounts previously paid to Mr. Phillips. The
Compensation Committee believes such analysis is reasonable.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m). One of the
factors the Compensation Committee considers in connection with
compensation matters is the anticipated tax treatment to the Company
and to the executives of the compensation arrangements. The
deductibility of certain types of compensation depends upon the
timing of an executive's vesting in, or exercise of, previously
granted rights. Moreover, interpretation of, and changes in, the tax
laws and other factors beyond the Compensation Committee's control
also affect the deductibility of compensation. Accordingly, the
Compensation Committee will not necessarily limit executive
compensation to that deductible under Section 162(m) of the Code.
The Compensation Committee will consider various alternatives to
preserving the deductibility of compensation payments and benefits
to the extent consistent with its other compensation objectives.
The foregoing report of the Compensation Committee shall not be deemed
to be incorporated by reference into any filing of MMG under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except
to the extent that the Company specifically incorporates such information by
reference, and shall not otherwise be deemed filed under such Acts.
Submitted by the Compensation
Committee of MMG's Board of
Directors as of March 29, 1999
John P. Imlay, Jr.
Clark A. Johnson
Carl E. Sanders
Leonard White
<PAGE>
PERFORMANCE GRAPH
The following graph sets forth the Company's total stockholder return as
compared to the Standard & Poor's 500 Index and the NASDAQ Telecommunications
Stock Index for the five year period from January 1, 1993 through December 31,
1998. The total stockholder return assumes $100 invested at the beginning
of the period in the Company's Common Stock, the Standard & Poor's 500 Index
and the NASDAQ Telecommunications Index.
METROMEDIA INTERNATIONAL GROUP, INC. CUMULATIVE TOTAL SHAREHOLDER RETURN
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Metromedia International Group, Inc....... $100 $122 $187 $132 $127 $ 72
S&P 500 Index............................. $100 $101 $139 $170 $227 $291
NASDAQ Telecomm Index..................... $100 $84 $113 $117 $166 $271
</TABLE>
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 30, 1999, 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 the date hereof 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 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>
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES OF PERCENTAGE OF
COMMON STOCK OUTSTANDING
BENEFICIALLY OWNED (1) COMMON STOCK
---------------------- ------------
<S> <C> <C>
John W. Kluge, Stuart Subotnick and Metromedia
Company............................................ 19,197,228(2) 27%
One Meadowlands Plaza
East Rutherford, NJ 07073
Snyder Capital Management, L.P....................... 5,896,092(3) 8.3%
350 California Street, Suite 1460
San Francisco, California 94104-1436
</TABLE>
- -----------
(1) Unless otherwise indicated by footnote, the named persons have sole
voting and investment power with respect to the shares of Common Stock
beneficially owned.
(2) Metromedia Company is a Delaware general partnership owned and
controlled by John W. Kluge and Stuart Subotnick, each of whom is a
director of MMG. The amount set forth in the table above includes
12,415,455 shares beneficially owned by Mr. Kluge and Mr. Subotnick
beneficially through Metromedia Company (7,989,206 shares) and Met
Telcell, Inc. ("Met Telcell") (4,426,249 shares), a corporation owned
and controlled by Messrs. Kluge and Subotnick, and 5,270,548 shares of
Common Stock owned directly by a trust affiliated with Mr. Kluge (the
5,270,548 shares include 200,000 shares of 7.25% cumulative convertible
preferred stock which shares are currently convertible into 666,000
shares of Common Stock), and 231,225 shares of Common Stock owned
directly by Mr. Subotnick. The amount also includes options to acquire
1,280,000 shares exercisable within 60 days of the date hereof.
(3) Pursuant to a report on Schedule 13G filed with the Commission on
February 5, 1999 by Snyder Capital Management, L.P.
The foregoing information is based on a review, as of March 30, 1999, by MMG
of statements filed with the Commission under Sections 13(d) and 13(g) of the
Exchange Act. To the best knowledge of MMG, except as set forth above, no
person owns beneficially more than 5% of the outstanding Common Stock.
<PAGE>
SECURITIES BENEFICIALLY OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership of Common Stock as of
March 30, 1999 with respect to (i) each director and director nominee 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.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF PERCENTAGE OF
COMMON STOCK OUTSTANDING
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) COMMON STOCK
- ------------------------ ---------------------- ------------
<S> <C> <C>
John P. Imlay, Jr............................................... 56,000(2)(3)(4) *
Clark A. Johnson................................................ 136,500(3)(4) *
Silvia Kessel................................................... 203,085(5) *
John W. Kluge................................................... 18,326,003(2)(6)(7) 27%
Robert A. Maresca............................................... 60,000(8) *
Carl E. Sanders................................................. 87,497(2)(3)(4)(9) *
Vincent D. Sasso, Jr............................................ 45,000(10) *
Richard J. Sherwin.............................................. 922,546(11) 1.3%
Stuart Subotnick................................................ 13,286,680(2)(7)(12) 19%
Arnold L. Wadler................................................ 215,415(5) *
Leonard White................................................... 1,000(4)(13) *
All Directors and Executive Officers as a group (11 persons).... 21,610,271 29.9%
</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 options to acquire 40,000 shares of Common Stock issued under
the Metromedia International Group, Inc. 1996 Incentive Stock Plan (the
"1996 Stock Plan"). The 1996 Stock Plan was approved by the Company's
stockholders at the 1996 Annual Meeting of Stockholders of the Company.
(3) Includes options to acquire 15,000 shares of Common Stock under the
1996 Stock Plan.
(4) Includes Options to acquire 1,000 shares of Common Stock under the 1996
Stock Plan.
(5) Includes options to acquire 200,000 shares under the 1996 Stock Plan.
(6) Represents 12,415,455 shares of Common Stock beneficially owned through
Metromedia Company of which Mr. Kluge is a general partner (7,989,206
shares) and Met Telcell (4,426,249 shares), a corporation owned and
controlled by Messrs. Kluge and Subotnick, and 5,270,548 shares of
Common Stock owned directly by a trust affiliated with Mr. Kluge, which
includes 200,000 shares of 7.25% cumulative convertible preferred
stock, which shares are currently convertible into 666,000 shares of
Common Stock.
(7) Includes options to acquire 600,000 shares of Common Stock, exercisable
within 60 days of the date hereof.
(8) Includes options to acquire 60,000 shares of Common Stock under 1996
Stock Plan.
(9) Includes options to acquire 10,000 shares of Common Stock under the
Company's 1991 Non-Employee Director Stock Option Plan.
(10) Includes options to acquire 45,000 shares of Common Stock under the
1996 Stock Plan.
(11) Includes options to acquire 657,908 shares of Common Stock exercisable
within 60 days of the date hereof.
(12) Includes 12,415,455 shares beneficially owned through Metromedia
Company and Met Telcell and 231,225
<PAGE>
shares owned directly by Mr. Subotnick.
(13) Includes options to acquire 20,000 shares of Common Stock under the
1996 Stock Plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MMG'S RELATIONSHIP WITH METROMEDIA COMPANY
Metromedia and its affiliates are collectively the largest single stockholder
of the Company, owning, as of the March 30, 1999, approximately 27% of the
issued and outstanding shares of Common Stock.
MMG is a party to a number of agreements and arrangements with Metromedia
Company ("Metromedia") and its affiliates, the material terms of which are
summarized below.
SNAPPER CREDIT FACILITY. On November 11, 1998, Snapper entered into a credit
agreement (the "Snapper Credit Agreement") with Fleet Capital Corporation
("Fleet") pursuant to which Fleet and certain lenders has agreed to make
available to Snapper a revolving line of credit up to $55 million, upon the
terms and subject to conditions contained in the Snapper Credit Agreement for
a period ending on November 10, 2003, subject to one-year renewal terms. The
Snapper Credit Agreement is guaranteed by the Company in an amount up to
$10.0 million (increasing to $15 million under certain circumstances). The
Snapper Credit Agreement terminates on November 10, 2003, subject to one-year
renewal terms. Interest on the Snapper Credit Agreement is payable at Snapper's
option at a rate equal to prime plus up to 0.5% or LIBOR plus between 2.5% and
3.25%, in each case depending on Snapper's leverage ratio under the Snapper
Credit Agreement. The agreements governing the Snapper Credit Agreement contains
standard representations and warranties, covenants, conditions precedent and
events of default, and provides for the grant of a security interest in
substantially all of Snapper's assets other than real property. At March 31,
1999, $48,065,000 was outstanding under the Snapper Credit Agreement.
MANAGEMENT AGREEMENT. The Company is a party to a management agreement with
Metromedia dated November 1, 1995, as amended (the "Management Agreement"),
pursuant to which Metromedia 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, 1999, and is automatically renewed for successive one year terms
unless either party terminates upon 60 days prior written notice. Pursuant to
an amendment dated as of January 1, 1999, the management fee under the
Management Agreement was increased to $3.75 million per year, payable monthly
at a rate of $312,500 per month. The Company is also obligated to reimburse
Metromedia for all its out-of-pocket costs and expenses incurred and advances
paid by Metromedia in connection with the Management Agreement. Pursuant to the
Management Agreement, the Company has agreed to indemnify and hold Metromedia
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 in connection with the Management Agreement. In 1998 Metromedia
received no money for its out-of-pocket costs and expenses or for interest on
advances extended by it to the Company pursuant to the Management Agreement.
TRADEMARK LICENSE AGREEMENT. The Company is party to a license agreement with
Metromedia (the "Metromedia License Agreement"), dated November 1, 1995 as
amended on June 13, 1996, pursuant to which Metromedia 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 Metromedia International
Telecommunications, Inc. ("MITI"), worldwide, royalty-free for a term of 10
years. The Metromedia License Agreement can be terminated by Metromedia upon one
month's prior written notice in the event (i) of the expiration or termination
of the Management Agreement; (ii) of a "change in control" of the Company (as
defined below); or (iii) any of the stock or all or substantially all of the
assets of any of the subsidiaries of the Company is sold or transferred, in
which case, the Metromedia License Agreement will 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 the consummation thereof, Metromedia would
hold less than 10% 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 of the transaction which is required to be registered
under the Exchange Act.
<PAGE>
In addition, Metromedia has reserved the right to terminate the Metromedia
License Agreement in its entirety immediately upon written notice to the
Company, if, in Metromedia's sole judgment, the Company's continued use of
"Metromedia" as a trade name would jeopardize or be detrimental to the
goodwill and reputation of Metromedia.
Pursuant to the Metromedia License Agreement, the Company has agreed to
indemnify and hold Metromedia harmless 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 than could have been obtained
from non-affiliated parties.
INDEMNIFICATION AGREEMENTS
MMG has entered into indemnification agreements (the "Indemnification
Agreements") with certain officers and directors of MMG. The Indemnification
Agreements provide for indemnification of such directors and officers to the
fullest extent authorized or permitted by law. The Indemnification Agreements
also provide for (i) advancement by MMG of expenses incurred by the director
or officer in defending certain litigation, (ii) the appointment in certain
circumstances of an independent legal counsel to determine whether the
director or officer is entitled to indemnification and (iii) the continued
maintenance by MMG of directors' and officers' liability insurance (which
currently consists of $15 million of primary coverage). These Indemnification
Agreements were approved by the stockholders of MMG at its 1993 Annual
Meeting of Stockholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to
Form 10-K to be signed on its behalf by the undersigned, thereunto duly
authorized.
METROMEDIA INTERNATIONAL GROUP, INC.
BY: /S/ SILVIA KESSEL
-----------------------------------------
Silvia Kessel
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL
OFFICER, TREASURER AND DIRECTOR
Dated: April 26, 1999
We, the undersigned officers and directors of Metromedia International Group,
Inc., hereby severally constitute Arnold L. Wadler, Silvia Kessel, Robert A.
Maresca, and Stuart Subotnick, and each of them singly, our true and lawful
attorneys with full power to them, and each of them singly, to sign for us and
in our names in the capacities indicated below, any and all reports (including
any amendments thereto), with all exhibits thereto and any and all documents in
connection therewith, and generally do all such things in our name and on our
behalf in such capacities to enable Metromedia International Group, Inc. to
comply with the applicable provisions of the Securities and Exchange Act of
1934, as amended, and all requirements of the Securities Exchange Commission,
and we hereby ratify and confirm our signatures as they may be signed by our
said attorneys, or either of them, to any and all such reports (including any
amendments thereto) and other documents in connection therewith.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
/s/ JOHN W. KLUGE Chairman of the Board
- ------------------------------ April 26, 1999
John W. Kluge
Vice Chairman of the Board,
/s/ STUART SUBOTNICK President and Chief
- ------------------------------ Executive Officer April 26, 1999
Stuart Subotnick (Principal Executive
Officer)
Executive Vice President,
/s/ SILVIA KESSEL Chief Financial Officer,
- ------------------------------ Treasurer and Director April 26, 1999
Silvia Kessel (Principal Financial
Officer)
/s/ ARNOLD L. WADLER Executive Vice President,
- ------------------------------ General Counsel, April 26, 1999
Arnold L. Wadler Secretary and Director
/s/ ROBERT A. MARESCA Senior Vice President
- ------------------------------ (Principal Accounting April 26, 1999
Robert A. Maresca Officer)
Director
- ------------------------------
John P. Imlay, Jr.
Director
- ------------------------------
Clark A. Johnson
/s/ RICHARD J. SHERWIN Director
- ------------------------------ April 26, 1999
Richard J. Sherwin
Director
- ------------------------------
Leonard White
Director
- ------------------------------
Carl E. Sanders
