UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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
(Address of principal executive offices)
(Zip Code)
(212) 689-8808
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
As of August 8, 1996 there were 116,746,810 shares of common stock, par
value $.01 per share, of the registrant outstanding.
Page 1 of 18 Pages
Exhibit Index on Page 16
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PATHE COMMUNICATIONS CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE NO.
PART I - FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Condensed Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Condensed Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Condensed Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 7
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
</TABLE>
<PAGE>
PATHE COMMUNICATIONS CORPORATION
<TABLE>
CONDENSED BALANCE SHEETS
(in thousands)
<CAPTION>
June 30, December 31,
1996 1995
(unaudited)
<S> <C> <C>
ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 447 $ 831
Accounts and notes receivable . . . . . . . . . . . . . . . . . . . . -- 118
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410 489
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 857 $ 1,438
LIABILITIES AND STOCKHOLDERS' DEFICIT:
LIABILITIES:
Accounts payable and accrued liabilities . . . . . . . . . . . . . . $ 89,517 $ 80,823
Matured debt payable . . . . . . . . . . . . . . . . . . . . . . . . 15,895 14,599
Bank and other debt . . . . . . . . . . . . . . . . . . . . . . . . . 179,206 179,206
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 558 559
Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . 30,454 31,234
Total liabilities . . . . . . . . . . . . . . . . . . . . . . 315,630 306,421
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 1996 and 1995 . . . . . . . . . . . . . 1,167 1,167
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . 906,808 906,808
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . (1,222,748) (1,212,958)
Total stockholders' deficit . . . . . . . . . . . . . . . . . (314,773) (304,983)
$ 857 $ 1,438
The accompanying Notes to Condensed Financial Statements are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
PATHE COMMUNICATIONS CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<CAPTION>
Quarter Ended June 30,
1996 1995
<S> <C> <C>
General corporate administration expenses . . . . . . . . . . . . . . $218 $122
Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . (218) (122)
Other income (expenses):
Interest expense, net . . . . . . . . . . . . . . . . . . . . (4,926) (4,943)
Loss before income taxes . . . . . . . . . . . . . . . . . . . . . . (5,144) (5,065)
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . -- --
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(5,144) $(5,065)
Net loss per common share . . . . . . . . . . . . . . . . . . . . . . $ (0.04) $ (0.04)
The accompanying Notes to Condensed Financial Statements are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
PATHE COMMUNICATIONS CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<CAPTION>
Six Months Ended June 30,
1996 1995
<S> <C> <C>
General corporate administration expenses . . . . . . . . . . . . . . $ 253 $ 684
Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . (253) (684)
Other income (expenses):
Interest expense, net . . . . . . . . . . . . . . . . . . . . (9,538) (9,785)
Loss before income taxes . . . . . . . . . . . . . . . . . . . . . . (9,791) (10,469)
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . -- --
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(9,791) $(10,469)
Net loss per common share . . . . . . . . . . . . . . . . . . . . . . $ (0.08) $ (0.09)
The accompanying Notes to Condensed Financial Statements are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
PATHE COMMUNICATIONS CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<CAPTION>
Six Months Ended June 30,
1996 1995
<S> <C> <C>
Net cash provided by (used in) operating activities . . . . . . . . . $ (384) $ 1,371
Financing activities:
Net additions to borrowed funds . . . . . . . . . . . . . . . -- --
Cash provided by financing activities . . . . . . . . . . . . . . . . -- --
Increase (decrease) in cash from operating
and financing activities . . . . . . . . . . . . . . . . . . . (384) 1,371
Beginning balance - cash and cash equivalents . . . . . . . . . . . . 831 44
Ending balance - cash and cash equivalents . . . . . . . . . . . . . $ 447 $ 1,415
The accompanying Notes to Condensed Financial Statements are an integral part of these statements.
</TABLE>
<PAGE>
PATHE COMMUNICATIONS CORPORATION
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. Credit Lyonnais Bank Nederland N.V. ("CLBN")
controls the voting rights with respect to approximately 97% of the Company's
common stock. The Company has been informed that in the fourth quarter of
1995, the stock of CLBN was sold by CLBN's parent, Credit Lyonnais, S.A., to
Generale Bank N.V. The Company is currently dependent on CLBN to fund its
ongoing cash requirements to the extent that cash on hand is insufficient to
meet them.
The Company is a defendant in lawsuits claiming significant compensatory and
punitive damages (See Note 4.). The ultimate outcome of this litigation
cannot presently be determined. Accordingly, provision for the ultimate
liability that may result upon adjudication has not been recognized in the
accompanying financial statements.
In addition, all of the Company's bank indebtedness (See Note 2.) is currently
due and payable and enforcement of payment of such bank debt would constitute
an event of default under the Company's subordinated debt indentures, which
could accelerate the maturity of the Company's subordinated debt at face
value. The Company is currently dependent on the day-to-day financial support
and forbearance of CLBN from which there is no commitment to continue making
funds available to the Company. All of these conditions raise substantial
doubt about the Company's ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
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, 1995.
<PAGE>
NOTE 2 - BANK AND OTHER DEBT
The Company's bank and other debt, all of which is currently payable, is
summarized as follows (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(unaudited)
<S> <C> <C>
CLBN credit . . . . . . . . . . . . . . . . . . . . . . . $29,206 $29,206
Sealion note payable . . . . . . . . . . . . . . . . . . 150,000 150,000
$179,206 $179,206
</TABLE>
CLBN CREDIT. Under a credit arrangement the Company has had with CLBN, the
Company has borrowed funds from CLBN as needed to meet operating expenses.
All such borrowings have been made under form of demand promissory notes
bearing interest at two percentage points above LIBOR. CLBN has made no
commitment to advance any funds to the Company in the future and any such
funds will be advanced only at the discretion of CLBN.
SEALION NOTE PAYABLE. The Company is currently in default on a loan of
$150,000,000 borrowed from Sealion Corporation N.V. ("Sealion"), a company
affiliated with SASEA Holding S.A. ("SASEA") and with prior management of the
Company, the proceeds of which were lent to Melia International N.V.
("Melia"), the Company's major stockholder. Sealion has assigned, as
collateral security, its receivable from the Company to Credit Lyonnais S.A.,
the parent of CLBN. The Company's obligation is guaranteed by Melia and
collateralized by approximately 51% of the Company's outstanding stock. The
obligation, which has been due and payable as to principal since 1992, bears
interest at two percentage points above LIBOR.
NOTE 3 - RELATED PARTY TRANSACTIONS
CLBN has provided the Company with a credit facility and holds as collateral
security the Sealion note payable (See Note 2.). Interest in the aggregate
amount of approximately $3,471,000 and $3,743,000 was charged on these two
borrowings during the quarters ended June 30, 1996 and 1995, respectively.
In addition, CLBN is the holder of $27,891,000 in principal amount of
subordinated debentures issued by the Company. As the Company has no
operating assets or significant sources of income, CLBN has agreed to forgo
its receipt of interest on the debentures it holds (See Note 2.).
NOTE 4 - 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 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
<PAGE>
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 concluded an investigation into certain transactions effected
by prior management of the Company, and the Commission has advised the Company
that it will not take action against the Company or its present management.
The Company cooperated fully with the Commission in 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. Cross-complaints have been filed against the Company
seeking damages in excess of $1,000,000 plus unspecified punitive damages.
The Company has entered into a confidential settlement of all claims with the
original plaintiffs in this action. The Court sustained a demurrer by the
Company to all causes of action against it in relation to the cross-complaint,
without leave to amend. In September, 1995, the court entered a judgment in
favor of the defendants, including the Company, and in January, 1996, the
Company and MGM were awarded attorneys' fees and costs in the amount of
$416,727. The cross-complainants are appealing this action. The Company
intends vigorously to oppose the appeal.
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
<PAGE>
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. An Order preliminarily
approving the settlement was entered on October 10, 1995. On February 21,
1996, the court issued an order finally approving the settlement and the
payment of certain costs and fees from the settlement fund, including an award
of attorneys fees to counsel for the plaintiffs in an amount equal to one-
third of the amount of the actual recovery received by the class. The total
amount awarded was approximately $225,000. Counsel for plaintiffs have filed
a notice of appeal of the court's order and are seeking an increase in the fee
award. Pursuant to the settlement order, the Company has agreed to take no
position concerning the merits of this appeal.
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
court heard arguments on this appeal on August 8, 1996. 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 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 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 five 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
<PAGE>
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 the Company's behalf for breach of
fiduciary duty, constructive fraud and waste of corporate assets. Plaintiffs
have dismissed, without prejudice, the Company as a defendant on all claims
other than the derivative claims. The Company has brought a motion for
summary adjudication on the remaining claims, which motion was heard by the
Court on July 23, 1996. At the present time, a trial date is scheduled for
March 13, 1996. 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.
The parties have reached a preliminary agreement to settle this case for
$3,000 plus other nonmonetary consideration. Thereafter on April 1, 1996,
Plaintiffs filed a request for dismissal of the entire action without
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,
Valentina Parretti and 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 5 - SUPPLEMENTARY CASH FLOW INFORMATION
Interest paid was approximately $254,000 and $388,000 during the six-month
periods ended June 30, 1996 and 1995, respectively.
<PAGE>
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").
RESULTS OF OPERATIONS
The Company reported net losses for the quarters ended June 30, 1996 and 1995
of ($5,144,000) and ($5,065,000), or ($.04) and ($.04) per common share,
respectively, based on 116,747,000 weighted average common shares outstanding.
For the six-month periods ended June 30, 1996 and 1995, the Company reported
net losses of ($9,791,000) and ($10,469,000), or ($.08) and ($.09),
respectively.
GENERAL CORPORATE ADMINISTRATION EXPENSES
The increase in general corporate administration expenses by approximately
$96,000 for the quarter, and the decrease by approximately $431,000 for the
six months, arose primarily from differences in the amounts of legal fees
associated with pending litigation during the periods.
OTHER INCOME (EXPENSE)
The decrease in the net interest expense by approximately $17,000 for the
quarter and $247,000 for the six months is due primarily to a decrease in the
applicable interest rates with respect to bank and other debt.
LIQUIDITY AND CAPITAL RESOURCES
The Company has since before May of 1993 been dependent on CLBN for the
capital needed to meet its on-going expenses. The last advance by CLBN to the
Company was in November of 1994 and the Company has no information as to
whether CLBN will provide any additional capital to the Company in the future.
In addition, the Company has no information as to the effect of the sale of
the stock of CLBN to Generale Bank, N.V. on the Company's access to additional
capital.
During the 1995 fiscal year, proceeds from the settlement of a
stockholder derivative action in the amount of $2,555,000 provided all of the
funds needed to meet the Company's on-going expenses. The funds remaining
from that settlement may not be sufficient to meet 1996 expenses and the
Company has no other source of funds to meet expenses for 1996 or future years
except CLBN.
On April 15, 1996, the Company paid $254,000 in interest on the
subordinated debentures not owned by CLBN. In order to meet a sinking fund
obligation under the indentures governing the Company's subordinated
debentures, the Company also acquired from CLBN $1,296,000 in principal amount
of one of such debentures. The indentures call for further sinking fund
payments for the redemption of a portion of such debentures in October of
1996. The Company has satisfied such obligation from previously acquired
debentures with respect to all but $1,504,000 in principal amount of one of
such debentures. If CLBN is unwilling to provide the Company with the
debentures or cash to meet such obligation, the Company will be in default
with respect to the indentures and the debentureholders will have the right to
accelerate payment of principal in the amount of $33,589,000 with respect to
all debentures outstanding.
The credit extended by CLBN to date, the accrued interest on that credit
<PAGE>
and the principal and interest otherwise payable on the subordinated debt held
by CLBN, all of which are currently due and payable, exceed $65,000,000.
Furthermore, principal and accrued interest on the Sealion loan, all of which
are currently due and payable, exceed $207,000,000. The Company has no
operating assets or other sources of income to provide payment for such
amounts. Furthermore, if either CLBN or Sealion were to enforce payment, such
enforcement would give rise to acceleration of the $33,589,000 in principal
amount outstanding with respect to the subordinated debentures.
Whether the Company is able to meet operating expenses and interest
payments on its subordinated debt during 1996 and future years depends
entirely on the willingness of CLBN to advance the funds to meet such
obligations, and to forbear from enforcing payment of amounts already due and
payable. CLBN is under no obligation to the Company and has not indicated any
intention to advance additional funds to the Company.
COMMITMENTS AND CONTINGENCIES
The Company is a party to various lawsuits (See Note 4.). 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.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 4 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
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, 1996.
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 8, 1996 by /s/ Fredric S. Newman
Fredric S. Newman
President
(Principal Financial
and Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit Description Page No.
11 Computation of Loss per Common Share 15
27 Financial Data Schedule 16
<PAGE>
Exhibit 11
<TABLE>
PATHE COMMUNICATIONS CORPORATION
COMPUTATION OF LOSS PER COMMON SHARE
(in thousands, except per share data)
<CAPTION>
Quarter Ended June 30,
1996 1995
<S> <C> <C>
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . $(5,144) $(5,065)
Weighted average common shares outstanding . . . . . . . . . . 116,747 116,747
Net loss per common share . . . . . . . . . . . . . . . . . . . $ (0.04) $ (0.04)
<CAPTION>
Six Months Ended June 30,
1996 1995
<S> <C> <C>
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . $(9,791) $(10,469)
Weighted average common shares outstanding . . . . . . . . . . 116,747 116,747
Net loss per common share . . . . . . . . . . . . . . . . . . . $ (0.08) $ (0.09)
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Condensed Financial Statements of Pathe Communications Corporation at June 30,
1996 and from the period 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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 447
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 447
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 857
<CURRENT-LIABILITIES> 285,176
<BONDS> 30,454
<COMMON> 1,167
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 857
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 253
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,538
<INCOME-PRETAX> (9,791)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,791)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,791)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
