UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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(Mark One)
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-12252
PATHE COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-2624802
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
C/O THE LAW OFFICES OF FREDRIC S. NEWMAN
10 EAST 40TH STREET
NEW YORK, NEW YORK 10016
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(Address of principal executive offices)
(Zip Code)
(212) 545-1900
(Registrant's telephone number, including area code)
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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
As of August 10, 1995 there were 116,746,810 shares of common stock,
par value $.01 per share, of the registrant outstanding.
PATHE COMMUNICATIONS CORPORATION
INDEX
PAGE NO.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets . . . . . . . . . . . . . . . 3
Condensed Statements of Operations . . . . . . . . . . 4
Condensed Statements of Cash Flows . . . . . . . . . . 5
Notes to Condensed Financial Statements . . . . . . . 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . 14
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . 14
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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PATHE COMMUNICATIONS CORPORATION
CONDENSED BALANCE SHEETS
(in thousands)
<CAPTION>
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June 30, Dec. 31,
1995 1994
(unaudited)
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ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . $ 1,415 $ 44
Accounts and notes receivable . . . . . . . . . . . . . . . . . . - 2,556
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 535 581
$ 1,950 $ 3,181
LIABILITIES AND STOCKHOLDERS' DEFICIT:
LIABILITIES:
Accounts payable and accrued
liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 71,382 $ 62,346
Matured debt payable . . . . . . . . . . . . . . . . . . . . . . 14,599 14,599
Bank and other debt . . . . . . . . . . . . . . . . . . . . . . . 179,206 179,206
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . 559 560
Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . 31,014 30,811
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 296,760 287,522
STOCKHOLDERS' DEFICIT:
Preferred stock - $.01 par value, authorized 200,000,000 shares,
none outstanding . . . . . . . . . . . . . . . . . . . . . . . .
- -
Common stock - $.01 par value, authorized 200,000,000 shares;
issued and outstanding,
116,746,810 shares in 1994 and
1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,167 1,167
Additional paid-in capital . . . . . . . . . . . . . . . . . . . 906,808 906,808
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . (1,202,785) (1,192,316)
Total stockholders' deficit . . . . . . . . . . . . . . . . . . (294,810) (284,341)
$ 1,950 $ 3,181
The accompanying Notes to Condensed Financial Statements are an integral part of these statements.
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PATHE COMMUNICATIONS CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
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Qtr. Ended June 30,
1995 1994
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General corporate administration
expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 122 $ 376
Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (122) (376)
Other income (expenses):
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,958) (4,825)
Interest and other income
(expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 -
Loss before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,065) (5,201)
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . - -
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(5,065) $(5,201)
Net loss per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.04) $ (0.05)
The accompanying Notes to Condensed Financial Statements are an integral part of these statements.
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PATHE COMMUNICATIONS CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
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Six Months Ended June 30,
1995 1994
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General corporate administration expenses . . . . . . . . . . . . $ 684 $ 914
Operating Loss . . . . . . . . . . . . . . . . . . . . . . . . . (684) (914)
Other income (expenses):
Interest expense . . . . . . . . . . . . . . . . . . . . . . . (9,808) (8,976)
Interest and other income (expense), net . . . . . . . . . . . 23 -
Loss before income taxes . . . . . . . . . . . . . . . . . . . . (10,469) (9,891)
Provision for income taxes . . . . . . . . . . . . . . . . . . . - -
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (10,469) $ (9,891)
Net loss per common share . . . . . . . . . . . . . . . . . . . . $ (0.09) $ (0.08)
The accompanying Notes to Condensed Financial Statements are an integral part of these statements.
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PATHE COMMUNICATIONS CORPORATION
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CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
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Six Months Ended March 31,
1995 1994
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Net cash provided by (used in)
operating activities . . . . . . . . . . . . . . . . . . . . . . $1,371 $ (2,367)
Financing activities:
Net additions to borrowed funds . . . . . . . . . . . . . . . . - 2,132
Cash provided by financing
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . - 2,132
Increase (decrease) in cash
from operating and financing
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,371 (235)
Beginning balance - cash and
cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . 44 343
Ending balance - cash and cash equivalents . . . . . . . . . . .
$1,415 $ 108
The accompanying Notes to Condensed Financial Statements are an integral part of these statements.
PATHE COMMUNICATIONS CORPORATION
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NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Pathe Communications Corporation ("Pathe" or the "Company") has no
operating assets or sources of income and is currently dependent on Credit
Lyonnais Bank Nederland N.V. ("CLBN") to fund its ongoing cash
requirements. CLBN controls the voting rights with respect to
approximately 97% of the Company's common stock. On May 7, 1992, CLBN
foreclosed on 59,100,000 shares constituting 98.5% of the common stock of
Metro-Goldwyn-Mayer, Inc. ("MGM"), which shares constituted substantially
all of the assets of the Company. The accompanying unaudited condensed
financial statements should be read in conjunction with the audited
financial statements included in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994.
NOTE 2 - MARKET FOR THE COMPANY'S COMMON STOCK
On August 28, 1992, the Securities and Exchange Commission, in response to
the application by the New York Stock Exchange (the "Exchange"), issued an
order removing the Company's common stock from listing and registration on
the Exchange. At this time the Company has no knowledge of the existence
of any established public trading market for the Company's common stock.
The Company does not have any present plans that would result in the
repurchase or redemption of its common stock or in the admission for
trading of such stock on other exchanges or markets.
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NOTE 3 - BANK AND OTHER DEBT
The Company's bank and other debt are summarized as follows (in thousands):
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June 30, December 31,
1995 1994
(unaudited)
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Credit facilities . . . . . . . . . . . . . . . . . . . . . . . . $ 29,206 $ 29,206
Sealion note payable . . . . . . . . . . . . . . . . . . . . . . 150,000 150,000
$179,206 $179,206
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CREDIT FACILITIES. The Company has an arrangement with CLBN upon which the
Company's borrowings are made under the form of demand promissory notes,
with interest accruing quarterly at LIBOR plus two percent. Any future
advances are at the absolute discretion of CLBN. CLBN has made no
commitment to the Company that it will fund any future interest or
principal payments on the Company's outstanding subordinated debt, or any
other obligations, and the Company currently has no other source of
funding.
SEALION NOTE PAYABLE. In November 1990, the Company borrowed $150,000,000
from Sealion Corporation N.V. ("Sealion"), a company affiliated with SASEA
Holding, S.A. (SASEA), which is affiliated with prior management of the
Company, and lent the proceeds to Melia International N.V. ("Melia"), the
Company's major stockholder. Sealion assigned, as collateral security, its
receivable from the Company to Credit Lyonnais S.A., the parent of CLBN.
The obligation is guaranteed by Melia and collateralized by approximately
51 percent of the Company's outstanding stock. The obligation bears
interest at LIBOR plus 2 percent payable monthly and, as amended, calls for
principal payments of $30,000,000 a month beginning in January 1992. None
of these interest or principal payments have been made by the Company, and
this facility is currently in default.
NOTE 4 - RELATED PARTY TRANSACTIONS
The Company has a credit arrangement with CLBN (See Note 3.). Interest of
approximately $725,000 and $1,322,000 was charged on such facility in the
quarter and six months ended June 30, 1995 respectively.
In connection with the foreclosure by CLBN on the shares of MGM common
stock owned by the Company, the Company acquired, by right of subrogation,
a claim against Melia in the amount of $343,125,754. This claim
represented the amount of Melia debt owed to CLBN, which amount was secured
by the pledge of the Company's MGM common stock, and which was bid-in at
the foreclosure auction on May 7, 1992. On April 16, 1993, the Company
filed a bankruptcy petition against Melia with the Bankruptcy Chamber of
the Amsterdam District Court. Subsequent to this petition, which was
joined by CLBN and other creditors, Melia was declared bankrupt on April
27, 1993 (See Note 5.).
NOTE 5 - COMMITMENTS AND CONTINGENCIES
LITIGATION. The Company is subject to a consent decree (the "Consent
Decree") entered in the United States District Court for the Central
District of California in a Securities and Exchange Commission civil action
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commenced against the Company on November 19, 1987, entitled Securities and
Exchange Commission v. The Cannon Group, Inc. et al., Case No. 87-07590.
This proceeding against the Company and certain of its former directors and
officers alleged, among other things, violations or aiding and abetting of
violations of the antifraud, reporting, proxy, record keeping and internal
controls provisions of the federal securities laws. Without admitting or
denying the allegations in the Commission's complaint, the Company and
certain individuals settled the action and consented to the entry of a
final judgment enjoining them from violating the aforementioned provisions
of the federal securities laws.
The Consent Decree required the Company to appoint an independent person to
examine transactions between the Company and related parties for the period
January 1, 1984 through December 31, 1986. The independent person is
required to deliver a report to the Company's Board of Directors regarding
such transactions together with recommendations regarding what action the
Board should take as a result of the examination. The Company appointed a
law firm as the independent person. In November 1991, the independent
person resigned without having delivered a report to the Board of
Directors. In its resignation letter, the independent person stated it had
been unable to complete their examination because of the Company's failure
to pay the independent person's fees and because certain members of the
former management of the Company had failed to cooperate in the
examination.
Current management also believes that the Company under prior management
may have violated other provisions of the Consent Decree. Violations of
the Consent Decree could result in further proceedings by the Commission.
If the Company were found to have violated the Consent Decree, the Company
could be held in contempt of court and could be subjected to substantial
penalties. The Company has informed the Commission of its concerns
regarding compliance with the Consent Decree and is cooperating with the
Commission in its review of this matter. While no assurances can be given,
management believes that any punitive measures which may be imposed as a
result of violations of the Consent Decree would be imposed upon those
persons responsible for such violations (as opposed to the Company's
current management) and would not have a material adverse effect upon the
Company.
The Commission is currently conducting an investigation into certain
transactions effected by prior management of the Company. The Company is
cooperating fully with the Commission in its investigation. The Company
cannot presently determine what, if any, action the Commission might take
as a result of its investigation. Finally, the Consent Decree imposed upon
the Company certain current disclosure requirements, including an updated
report of transactions with Video Medien Pool Productions and Vertriebs
GmbH. The Company's current management has no knowledge of these
transactions and, to the extent that current reporting is still required,
the Company may be in default of its obligations under the Consent Decree.
This matter has also been discussed with the Commission staff.
On January 22, 1991, Century West Financial Corporation ("Century West")
filed a complaint in Los Angeles Superior Court against the Company, Renta
Properties, Inc. and others for breach of contract, breach of third party
beneficiary contract, bad faith denial of contract, breach of the implied
covenant of good faith and fair dealing, and tortious interference with
prospective economic advantage. Century West alleges that it acted as
broker for the sale of 6420 Wilshire Boulevard and is owed a commission.
Century West seeks compensatory damages in the amount of $470,000, interest
thereon and punitive damages. A Third Amended Complaint was filed in this
action on January 14, 1994. A motion for summary judgment filed by Pathe
is set for hearing by the Court on August 16, 1995. Cross-complaints have
been filed against the Company seeking damages in excess of $1,000,000 plus
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unspecified punitive damages. The Court sustained a demurrer by the
company to the cross-complaint without leave to amend. The Company has
also filed a cross-claim. In addition, the Company has been advancing
defense costs to a former employee and will indemnify him subject to an
undertaking for reimbursement under certain circumstances. No trial date
is currently set. The Company intends vigorously to defend this action.
On June 18, 1991, a complaint was filed in the United States District Court
for the Central District of California against the Company, MGM, Messrs.
Parretti, Fiorini, Globus and Aurelio Germes and Maria Cecconi (Mr.
Parretti's wife) on behalf of a purported class which acquired MGM's 13%
Subordinated Debentures due 1996. On October 10, 1991, J. Phillip
Williams, on behalf of a group of MGM bondholders, filed a complaint in the
United States District Court for the Central District of California against
the Company, MGM, CLBN and Mr. Parretti which alleges that the defendants
violated U.S. securities laws, and conspired to deceive plaintiffs about
MGM's financial condition, markets, and business prospects, thereby
artificially inflating the price of MGM's securities. The complaint seeks
unspecified damages. The Company answered the complaint on November 5,
1991. Limited discovery was conducted regarding class certification. On
March 23, 1992, the court heard and denied Williams' motion for class
certification. On May 18, 1992, the court denied Williams' motion for
reconsideration. On July 22, 1992, another bondholder, Herbert Eisen,
moved to intervene in the lawsuit. After limited discovery was conducted
regarding intervention, the court granted Mr. Eisen's motion to intervene.
On December 15, 1992, Mr. Eisen filed a complaint-in-intervention that
mirrors the allegations in the Williams' complaint. The Company and MGM
answered Eisen's complaint-in-intervention on December 29, 1992. On
October 26, 1993, the parties entered into a Stipulation of Settlement
which would dispose of this matter subject to Court approval. The
settlement, if approved, would create a fund of $4,500,000 against which
injured class members may make a claim. Any unclaimed portion of the fund
will be returned to the contributing defendants. The Company has accrued
$2,250,000 to fund the settlement.
On September 25, 1991, Century Insurance Ltd. ("Century") filed a complaint
in Superior Court against the Company, MGM, Melia, Comfinance S.A.
("Comfinance"), CLBN and Mr. Parretti alleging, among other things, breach
of contract, fraud, constructive fraud, conversion and conspiracy. The
claims arise out of certain defendants' failure to pay a purported $1.75
million premium in connection with plaintiff's purported issuance of a
completion guarantee bond in connection with the financing of the
acquisition of MGM by the Company in 1990 and alleged unpaid premiums in
connection therewith. The plaintiff seeks $34,200,000 in alleged management
fees on three purported insurance investment bonds and declaratory relief.
MGM was voluntarily dismissed from the action on January 3, 1992. The
plaintiff served a second amended complaint on February 3, 1992. In
addition, on December 6, 1991, this case was consolidated with an earlier
declaratory relief suit filed by CLBN against Century. The Company was not
a party to this earlier suit. On February 3, 1993, the court dismissed
with prejudice Century's complaint against the Company and all of the other
defendants, for failure to comply with discovery orders. On July 14, 1993,
Century moved to vacate the judgment in the Company's and other defendants'
favor, which motion was denied. Century has filed a notice of appeal of
denial of its motion to vacate. The parties have not completed the appeal
briefing and no date has been set for the hearing of the appeal. The
Company intends vigorously to defend this action.
On January 27, 1992, Linda Carter filed an application for award for
employer violation of Section 132(a) of the Labor Code before the Workers'
Compensation Appeals Board of the State of California against the Company
and MGM seeking reinstatement of employment, back wages at approximately
$21,000 per year plus benefits, and costs of suit. The application alleges
<PAGE>
Ms. Carter was laid off on March 4, 1991, in retaliation for filing a
workers' compensation claim. The Company is vigorously defending this
action.
On May 6, 1992, Robert Solomon filed a complaint in Delaware Chancery Court
against the Company, CLBN, Dennis Stanfill, Alan Ladd, Jr., Charles Meeker,
Kenneth Meyer, Jay Kanter, William Jones, Thomas Carson, Rene Claude
Jouannet, Bahman Naraghi, Guy Etienne Dufour, G. Goirand and Jacques
Bertholier for breach of defendants' duties of fair dealing and breach of
fiduciary duties to the public stockholders of the Company in connection
with the Foreclosure and CLBN's Tender Offer for the Company's stock at a
price of $1.50 per share. Plaintiff filed the action on his own behalf and
as a class action on behalf of a purported class of public stockholders of
the Company. On March 15, 1994, Solomon filed an amended class action
complaint against the Company, CLBN and certain of the previously named
individuals. Defendants' motion to dismiss the complaint was granted, and
plaintiffs are seeking leave to amend. The Company plans vigorously to
defend the action.
On April 16, 1993, the Company filed a bankruptcy petition against Melia
with the Bankruptcy Chamber of the Amsterdam District Court. This petition
was joined by the Dutch tax authorities, Scotti International N.V., Cannon
Cinema B.V. and CLBN. At a hearing on April 27, 1993, the Court found that
Melia had ceased to pay its debts and declared Melia officially bankrupt.
The Court appointed Mr. R.W. De Ruuk as official receiver in the
bankruptcy. The appeal period under the governing Dutch Bankruptcy Code
has lapsed. Mr. De Ruuk has deposited three public reports with the Dutch
authorities. It appears to the Company from such reports that no material
recovery benefitting it will be forthcoming.
On March 30, 1994, Giancarlo Parretti, Valentina Parretti, Maria Cecconi
and Comfinance, S.A. filed suit in Los Angeles Superior Court against the
Company and numerous other defendants, including CLBN, CLBN's parent
company Credit Lyonnais S.A., MGM and former officers and directors of the
Company and of MGM. Plaintiffs' complaint arises from alleged acts in
connection with the Company's merger with MGM in November 1990 and
subsequent events by which plaintiffs lost ownership and control of MGM and
the Company. Plaintiffs assert causes of action for violation of the
Racketeer Influenced and Corrupt Organizations Act, fraud, conspiracy to
defraud, rescission, injunctive relief, spoliation of evidence, malicious
prosecution, breach of employment contract, intentional interference with
contract, intentional interference with prospective economic advantage and
indemnification. Plaintiffs also purport to bring derivative claims on
PCC's behalf for breach of fiduciary duty, constructive fraud and waste of
corporate assets. The Company believes that plaintiffs' claims are largely
barred because they were previously adjudicated in a Delaware court, but
the trial court denied defendants' motion for summary judgment. The
Company is in the process of seeking appellate review of this issue.
Discovery has begun. The Company intends to defend this lawsuit
vigorously.
On June 24, 1994, Ovidio Assonitis, a former employee of Cannon Pictures,
Inc., together with a related corporation, filed a complaint against Cannon
and the Company arising out of the termination of his employment by Cannon
and challenging a settlement agreement he entered into. The Company was
not served with the complaint until November, 1994, and an answer was filed
on December 8, 1994, in which the Company has denied plaintiffs'
allegations. Discovery is underway. A trial date in October, 1995 has
been set. The Company intends to defend this lawsuit vigorously.
The Company has been named a third party defendant in an action brought by
CLBN in the United States District Court for the Central District of
California against Tracinda Corporation, Kirk Kerkorian, Jeffrey Barbakow
<PAGE>
and Stephen Silbert. Those parties claim that if they are held liable to
CLBN in the principal suit, the Company is obligated to indemnify them for
their damages and the attorneys' fees expended in defending themselves. A
trial date for the underlying action had been set for early in 1995, but
the trial judge vacated it pending resolution of a discovery matter. The
Company intends to defend this claim vigorously.
The Company understands that there is other pending litigation involving
claims by, against and among CLBN and MGM, on the one hand, and Tracinda
Corporation, Houlihan Lokey Howard & Zukin, Kirk Kerkorian, and other
related entities and individuals, on the other hand. The Company has been
a party to certain of these actions in the past, and in May, 1994, the
Company and Houlihan Lokey entered into a settlement agreement pursuant to
which all claims asserted by Houlihan Lokey against the Company were
dismissed with prejudice.
Demands for the advancement of legal fees and indemnification in the
defense of certain legal actions have been made by Giancarlo Parretti,
Maria Cecconi and Valentina Parretti and by Yoram Globus. The Company has
rejected these demands. In addition, there have been other claims for
indemnification and/or the advancement of expenses and legal fees which
have been asserted from time to time by former officers, directors and/or
employees of the Company, and the Company reviews each demand on a case by
case basis.
NOTE 6 - SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid was approximately $388,000 and $913,000 during the six-month
periods ended June 30, 1995 and 1994, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
Condensed Financial Statements and the related notes thereto. References
to Notes refer to the notes to such statements.
GENERAL
The Company has no operating assets or sources of income (See Note 1 and
"Liquidity and Capital Resources".). During the six-month period ended
June 30, 1995, the Company received payment of $2,530,000, representing the
proceeds of a litigation settlement previously recorded as an account
receivable in the Company's financial statements at December 31, 1994.
That transaction resulted in net cash provided by operating activities of
$1,371,000.
RESULTS OF OPERATIONS
The Company reported net losses for the quarters ended June 30, 1995 and
1994 of ($5,065,000) and ($5,201,000), or ($.04) and ($.05) per common
share, respectively, based on 116,747,000 weighted average common shares
outstanding. For the six-month periods ended June 30, 1995 and 1994 the
Company reported net losses of ($10,469,000) and ($9,891,000), or ($.09)
and ($.08), respectively.
GENERAL CORPORATE ADMINISTRATION EXPENSES
<PAGE>
The decrease in general corporate administration expenses by approximately
$254,000, or 68%, for the quarter and $230,000 or 25% for the six-month
period was primarily the result of legal fees associated with litigation.
OTHER INCOME (EXPENSE)
The increase in the net interest expense by approximately $133,000 for the
first quarter and $832.5 for the six-month period is due primarily to an
increase in the principal amount borrowed from CLBN and an increase in the
applicable interest rates with respect to bank and other debt, offset in
part by the elimination of the interest payable on the 12-3/8% senior
subordinated notes which matured on November 1, 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company is currently dependent on CLBN for additional capital to fund
its cash requirements. CLBN may, in its absolute discretion, decide
whether to advance additional funds to the Company. Additionally, the
Company is in default on its existing indebtedness to Sealion.
The Company's subordinated debt agreements contain cross acceleration
provisions which generally provide that if holders of certain other debt of
the Company accelerate the maturity of such debt, such acceleration would
be a default with respect to the subordinated debt. If such event were to
occur and certain notices are given under the various agreements and
indentures, a substantial portion of the Company's subordinated debt could
be accelerated. The Company has not received any such notices.
The Company currently does not meet the minimum net worth covenant under
its 12-7/8% and 8-7/8% debenture Indentures as its net worth has been below
$37,500,000 for more than two consecutive quarters. Upon the occurrence of
such event, such Indentures, as amended, require the Company to redeem 10
percent of the aggregate principal amount of the debentures then
outstanding (at 100 percent of the principal amount) plus accrued interest
by the last day of the following quarterly period. Similar payments must be
made semi-annually thereafter until all outstanding debentures are
redeemed, unless the net worth is above $37,500,000 as of the last day of
any subsequent quarter. The Company can satisfy the redemption requirement
through previously acquired and canceled debentures. Due to the significant
amount of such debentures previously acquired by the Company, the Company
will not be required to make any cash redemptions for the foreseeable
future.
COMMITMENTS AND CONTINGENCIES
The Company is a party to various lawsuits (See Note 5.). A significant
adverse judgment in one or more of the cases could have a material impact
on the Company's liquidity.
IMPACT OF INTEREST RATES
Any significant increase in interest rates would have a substantial adverse
effect on the Company's financial position.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 5 regarding various material legal proceedings. Because of the
Company's financial condition and lack of operating income, a significant
adverse judgment in one or more of the cases described therein could have a
<PAGE>
material effect on the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 - Computation of loss per common share.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended
June 30, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
PATHE COMMUNICATIONS CORPORATION
Date: August 15, 1995 by /s/ Fredric S. Newman
Fredric S. Newman
President
(Principal Executive,
Financial and Accounting
Officer)
<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit Description Page No.
<S> <C> <C>
11 Computation of Loss per Common Share 17
</TABLE>
<TABLE>
Exhibit 11
PATHE COMMUNICATIONS CORPORATION
COMPUTATION OF LOSS PER COMMON SHARE
(in thousands, except per share data)
<CAPTION>
Qtr. Ended June 30,
1995 1994
<PAGE>
<S> <C> <C>
Net loss . . . . . . . . . . . . . . . . . $ (5,065) $ (5,201)
Weighted average common
shares outstanding . . . . . . . . . . . . 116,747 116,747
Net loss per common share . . . . . . . . . $ (0.04) $ (0.05)
<CAPTION>
Six-Months ended June
30,
1995 1994
<S> <C> <C>
Net loss . . . . . . . . . . . . . . . . . $ (10,469) $ (9,891)
Weighted average common
shares outstanding . . . . . . . . . . . . 116,747 116,747
Net loss per common share . . . . . . . . . $ (0.09) $ (0.08)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Condensed Financial Statements of Pathe Communication Corporation at March
31, 1995 and for the periods then ended and is qualified in its entirety by
reference to such Condensed Financial Statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,415
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,415
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,950
<CURRENT-LIABILITIES> 0
<BONDS> 31,015
<COMMON> 1,167
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,950
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 122
<LOSS-PROVISION> 0
<PAGE>
<INTEREST-EXPENSE> 4,842
<INCOME-PRETAX> (5,065)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,065)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,065)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
