UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission file number 0-12252
PATHE COMMUNICATION CORPORATION
(Exact name of registrant as specified in its charter)
<PAGE>
<TABLE>
<S> <C>
DELAWARE 13-2624802
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10 East 40th Street
New York, New York 10016
(Address of principal executive offices) (Zip Code)
</TABLE>
(212) 689-8808
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock - $.01 par value
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
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for at least the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.045 of this chapter) 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 or any amendment to this Form 10-K. [ ]
As of March 11, 1996, 116,746,810 shares of Registrant's common stock
were outstanding. The aggregate market value of Registrant's Common Stock
held by non-affiliates is indeterminate because the Registrant's common stock
is not listed on a national stock exchange and is not actively traded.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
Page 1 of 27 Pages
Exhibit Index on Page 24
PART I
ITEM 1. BUSINESS
Pathe Communications Corporation (the "Company" or "Pathe") is a Delaware
corporation conducting no business activities. It has no operating assets or
sources of operating income. The Company has total liabilities in excess of
$306,000,000 and a negative net worth.
Since before May of 1993, when the present management was elected, Pathe
has been dependent on Credit Lyonnais Bank Nederland N.V., a Dutch banking
institution ("CLBN"), for the capital needed to meet its on-going expenses.
The Company is 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.
<PAGE>
("Generale Bank") and CLBN's name was changed to Generale Bank Nederland N.V.
CLBN owns or controls the voting rights of approximately 97% of the Company's
common stock. CLBN is also a major creditor of the Company. CLBN has
provided funding in the exercise of its absolute and sole discretion. There
is no contractual obligation with the Company requiring CLBN's continued
funding; nor is CLBN obligated to forbear in demanding payment of the
outstanding balance on the Company's demand promissory note. The last funding
advance by CLBN to the Company was in November of 1994. The Company has no
commitment from CLBN that it will continue to provide funding, nor does the
Company have any information as to whether CLBN will provide any additional
capital to the Company when needed in the future nor does the Company have any
information regarding the potential effects of the acquisition of CLBN by
Generale Bank on its 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 are not sufficient to meet expected 1996 expenses and
interest payments on the Company's outstanding subordinated debt.
The Company has no employees. The Company does not expect to acquire any
operating assets or sources of income, or to engage in any business
activities, in the foreseeable future.
The Company's predecessor-in-interest, The Cannon Group, Incorporated
("Cannon"), was incorporated in New York on October 23, 1967. Cannon
subsequently effected a merger into the Company, which was effective under New
York law in 1985. In May of 1992, the Company took additional actions in
Delaware to correct certain deficiencies under Delaware law with respect to
the merger. In the years prior to 1993, the Company had been engaged in the
financing, production and worldwide distribution of theatrical motion
pictures and television programming, and the operation of motion picture
theaters in the United Kingdom, the Netherlands, and Denmark.
The Company has its principal executive offices at 10 East 40th Street,
New York, New York 10016, telephone (212) 689-8808.
ITEM 2. PROPERTIES
None.
ITEM 3. LEGAL PROCEEDINGS
Information regarding material pending legal proceedings set forth in
Note 6 of the Notes to the Financial Statements beginning on page 12 hereof is
incorporated herein by reference. 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
There is no public market for the Company's common stock. The Company is
unable to predict at this time whether any public market will exist in the
<PAGE>
future. 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 any exchanges or markets.
As of March 11, 1996, there were 1,493 holders of record and
approximately 3,191,936 shares were held by stockholders other than officers,
directors, members of their immediate families and concentrated holdings of
10% or more. The Company's stock is subject to deregistration with the
Commission if the Company has less than 300 holders of record, in which event
the Company would no longer file public reports with the Commission.
The Company has not paid any dividends on its common stock during 1995,
1994 or 1993. The Company's subordinated debt indentures contain covenants
that limit the Company's ability to pay dividends. In light of the Company's
current financial condition and state of operations, the Company does not
anticipate the payment of any dividends in the foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data for the five years ended December
31, 1995 have been derived from the financial statements of the Company and
notes thereto, which have been audited by independent accountants.
<PAGE>
<TABLE>
Selected Financial Data
(in thousands, except per share data)
<CAPTION>
Fiscal years ended
1995 1994 1993 1992(1) 1991(1)
<S> <C> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ - $ - $ - $ -
Operating loss . . . . . . . . . . . . . . . . . . . . . . (803) (1,416) (10,644) (7,006) (13,536)
Equity in net loss of subsidiaries . . . . . . . . . . . . - - - (125,037) (341,485)
Extraordinary items(2) . . . . . . . . . . . . . . . . . . - - - (319,732) -
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . (20,642) (16,635) (26,163) (472,838) (352,935)
Net loss per share . . . . . . . . . . . . . . . . . . . . (.18) (.14) (.22) (4.05) (3.02)
Total assets . . . . . . . . . . . . . . . . . . . . . . . 1,438 3,181 1,356 975 540,838
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . 225,039 224,615 220,568 206,252 308,971
Cash dividends declared . . . . . . . . . . . . . . . . . . - - - - -
</TABLE>
(1) Prior to May 7, 1992, the Company was engaged, through the ownership of a
98.5% interest in MGM, Inc., in the production and distribution of motion
pictures. All amounts have been presented on a separate company (parent only)
basis.
(2) In 1992, CLBN foreclosed on the common stock of MGM, Inc., and the
Company recorded a loss of $319,732,000.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
Financial Statements and related notes thereto. References to Notes are to
the notes to such statements.
General. The Company has no operating assets or sources of operating
income (See "Liquidity and Capital Resources"). The following discussion of
"Operations" refers to management's administrative activities.
Results of Operations
1995 Versus 1994 Operations
General. The Company reported a net loss for 1995 of $20,642,000, or
$.18 per common share, as compared to a net loss of $16,635,000, or $.14 per
common share, for 1994, in both years based on 116,746,810 weighted average
common shares outstanding.
General Corporate Administration Expenses. General corporate
administration expenses decreased $613,000 (approximately 43%) for 1995 due
primarily to reductions in legal costs associated with litigation.
Other Income (Expense). Net interest expense increased by $365,000 for
1995 due primarily to an increase in the average interest rate on bank and
other debt for 1995 (See Note 2.).
1994 Versus 1993 Operations
General. The Company reported a net loss for 1994 of $16,635,000, or
$.14 per common share, as compared to a net loss of $26,163,000, or $.22 per
common share, for 1993, in both years based on 116,746,810 weighted average
common shares outstanding.
General Corporate Administration Expenses. General corporate
administration expenses decreased $9,228,000 (approximately 87%) for 1994 due
primarily to reductions in legal costs associated with litigation, in legal
settlement expenses and in reserves for pending litigation.
<PAGE>
Other Income (Expense). Net interest expense increased by $3,636,000 for
1994 due primarily to an increase in the average interest rate on bank and
other debt for 1994 (See Note 2.).
During 1994, two litigation matters involving the Company were settled
generating $4,255,000 in "legal settlements, net" for the year, of which
$2,555,000 was the receivable expected from the settlement of a stockholder
derivative action and the balance was a reduction in the reserve for pending
litigation (See Note 6.).
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. In the fourth quarter of 1995 CLBN was
acquired by Generale Bank. The Company has no information as to whether CLBN
will provide any additional capital to the Company in the future nor does the
Company have any information regarding the potential effects of the
acquisition of CLBN by Generale Bank on its 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 are not sufficient to meet 1996 expenses and the Company
has no other source of funds to meet expenses for 1996 or future years.
The indentures governing the Company's subordinated debentures call for
sinking fund payments for the redemption of a portion of such debentures in
April of 1996. The Company has satisfied such obligation from previously
acquired debentures with respect to all but $1,296,000 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 debenture holders will have the right
to accelerate payment of principal in the amount of $34,885,000 with respect
to all debentures outstanding.
The credit extended by CLBN to date, the accrued interest on that credit
and the principal and interest otherwise payable on the subordinated debt held
by CLBN, all of which are currently due and payable, exceed $60,000,000.
Furthermore, principal and accrued interest on the Sealion loan, all of which
are currently due and payable, exceed $202,000,000. 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 $34,885,000 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.
Restriction on the Issuance of New Equity Securities. The Company is
subject to an agreement with, inter alia, CLBN pursuant to which any issuance
of new equity securities of the Company must be approved by CLBN and the
proceeds from any such issuance must be applied to the repayment of the
Company's CLBN debt.
Commitments and Contingencies. The Company is a party to various
lawsuits (See Item 3 "Legal Proceedings" and Note 6.). A significant adverse
judgment in one or more of the cases could have a material impact on the
Company's liquidity.
<PAGE>
Impact of Interest Rates. Any increase in interest rates would increase
the Company's net loss and increase the amount of the Company's accrued
interest payable.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
PATHE COMMUNICATIONS CORPORATION
INDEX TO FINANCIAL STATEMENTS
<CAPTION>
Page
<S> <C>
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Financial Statements:
Balance Sheets as of December 31,
1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Statements of Operations for the
Fiscal Years Ended December 31,
1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Statements of Stockholders' Deficit
for the Fiscal Years Ended December
31, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Statements of Cash Flows for the
Fiscal Years Ended December 31,
1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
Financial Statement Schedules:
All financial statement schedules are omitted since the required
information is not applicable, is not material or is otherwise included in the
financial statements and notes thereto.
Independent Auditors' Report
Pathe Communications Corporation:
We have audited the financial statements of Pathe Communications Corporation
("the Company") as listed in the accompanying index. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As described in Note 1 to the financial
statements, the Company has no operating assets or any other source of
operating income. 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
<PAGE>
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.
Because of the effects on the financial statements of such adjustments, if
any, as might have been required had the outcome of the uncertainty referred
to in the preceding paragraph been known, we are unable to, and do not,
express an opinion on the accompanying financial statements.
KPMG Peat Marwick LLP
Los Angeles, California
March 22, 1996
<PAGE>
<TABLE>
PATHE COMMUNICATIONS CORPORATION
BALANCE SHEETS
(in thousands, except per share data)
<CAPTION>
December 31,
1995 1994
<S> <C> <C>
ASSETS $831 $44
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . .
Accounts and notes receivable . . . . . . . . . . . . . . . . . . . . . 118 2,556
Deferred loan costs . . . . . . . . . . . . . . . . . . . . . . . . . . 489 581
$1,438 $3,181
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities:
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . $10,752 $10,868
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . . 70,071 51,478
Matured debt payable (Note 3) . . . . . . . . . . . . . . . . . . . . 14,599 14,599
Bank and other debt (Note 2) . . . . . . . . . . . . . . . . . . . . 179,206 179,206
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 559 560
Subordinated debt (Note 3) . . . . . . . . . . . . . . . . . . . . . 31,234 30,811
Total liabilities 306,421 287,522
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 . . . . . . . . . . . . . . . . . . . . . . . . 1,167 1,167
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . 906,808 906,808
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . (1,212,958)(1,192,316)
Net stockholders' deficit . . . . . . . . . . . . . . . . . . (304,983) (284,341)
$1,438 $3,181
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
PATHE COMMUNICATIONS CORPORATION
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<CAPTION>
Year Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . .$ - $ - $ -
Corporate administrative expense . . . . . . . . . . . . . . . . 803 1,416 10,644
Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . (803) (1,416) (10,644)
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . . . . . . . (19,839) (19,474) (15,838)
Interest and other income, net . . . . . . . . . . . . . . . . - - 319
Legal settlements, net . . . . . . . . . . . . . . . . . . . . . - 4,255 -
Loss before income taxes . . . . . . . . . . . . . . . . . . . . (20,642) (16,635) (26,163)
Provision for income taxes (Note 4) . . . . . . . . . . . . . . . - - -
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20,642) (16,635) (26,163)
Net loss per common share . . . . . . . . . . . . . . . . . . . . $(0.18) $(0.14) $(0.22)
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
PATHE COMMUNICATIONS CORPORATION
STATEMENTS OF STOCKHOLDERS' DEFICIT
(in thousands)
<CAPTION>
Year Ended December 31, 1995, 1994 and 1993
Common Stock
Additional Net
Paid-In Accumulated Stockholders'
Shares Amount Capital Deficit Deficit
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1992 116,747 $1,167 $906,808 $(1,149,518) $(241,543)
Net loss - - - (26,163) (26,163)
Balances at December 31, 1993 116,747 $1,167 $906,808 $(1,175,681) $(267,706)
Net loss - - - (16,635) (16,635)
Balances at December 31, 1994 116,747 $1,167 $906,808 $(1,192,316) $284,341
Net loss - - - (20,642) (20,642)
Balances at December 31, 1995 116,747 $1,167 $906,808 $(1,212,958) $(304,983)
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
PATHE COMMUNICATIONS CORPORATION
STATEMENTS OF CASH FLOWS
(in thousands)
<CAPTION>
Year Ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(20,642) $(16,635) $(26,163)
Adjustments to reconcile net loss to net cash used in
operating activities:
Amortization of debt costs 423 744 718
Changes in operating assets and liabilities:
Accounts receivable and deferred loan costs 2,530 (2,123) (82)
Accounts payable, accrued interest and other liabilities 18,476 14,411 12,228
Net cash provided by (used in) operating activities 787 (3,603) (13,299)
Cash flows from financing activities:
Borrowings under line of credit - 5,794 13,598
Repayment of subordinated debt - (2,490) -
Net cash provided by financing activities - 3,304 13,598
Net increase (decrease) in cash and cash equivalents 787 (299) 299
Cash and cash equivalents - beginning of year 44 343 44
Cash and cash equivalents - end of year $831 $44 $343
See Supplemental Cash Flow information at Note 7.
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
PATHE COMMUNICATIONS CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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. ("Generale Bank"). The Company is currently dependent on
CLBN to fund all of its ongoing cash requirements.
Risks and Uncertainties
The Company is a defendant in numerous lawsuits claiming significant
compensatory and punitive damages (see Note 6). 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.
Cash Equivalents. The Company considers all highly liquid debt instruments
with original maturities of three months or less to be cash equivalents.
Debt Issuance Costs. Debt issuance costs are capitalized when incurred and,
together with original issue discount, are amortized over the term of the
related debt utilizing the bonds outstanding method.
Use of Estimates. The Company's management has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and contingent
assets and contingent liabilities in conformity with generally accepted
accounting principles. Actual results could differ from these estimates.
Fair Value of Financial Instruments. The fair value of the Company's debt
instruments are not determinable because there is no public market for the
Company's debt, no debt, to the knowledge of the Company, is currently being
traded and there is uncertainty as to the ability of the Company to meet its
financial obligations.
Current Accounting Pronouncements. During 1995, the Financial Accounting
Standards Board ("FASB") issued Statements of Financial Accounting Standards
No. 121 and No. 123, "Accounting for the impairment of long-lived assets and
for long-lived assets to be disposed of," and "Accounting for Stock-Based
Compensation," respectively. The Company will adopt these statements effective
January 1, 1996 and no material impact on the financial statement is expected.
<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>
December 31,
1995 1994
<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. Interest expense
related to the credit extended by CLBN was $2,687,000, $1,820,000 and
$1,045,000 for each of the three years ended December 31, 1995, 1994 and 1993,
respectively, and the weighted average interest rates (based on the average
ending monthly balances) were 8.08%, 7.10% and 5.21%, respectively.
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 prior to the sale of the stock of CLBN to Generale Bank in
the fourth quarter of 1995. 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. Interest expense accrued
with respect to this loan was $12,340,000, $10,644,000 and $7,864,000 for
1995, 1994 and 1993, respectively, and the weighted average interest rates
were 8.08%, 7.10% and 5.21%, respectively.
<PAGE>
NOTE 3. SUBORDINATED DEBT
The Company's subordinated debt is summarized as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
1995 1994
<S> <C> <C>
12 7/8% senior subordinated debentures $27,473 $27,050
8 7/8% convertible senior subordinated debentures 3,761 3,761
$31,234 $30,811
</TABLE>
12 7/8% and 8 7/8% Debentures. The 12 7/8% senior subordinated debentures and
8 7/8% convertible senior subordinated debentures are due on April 15, 2001
and are currently redeemable at the option of the Company. Of the $31,124,000
face value of the 12 7/8% debentures outstanding, $15,035,000 was issued with
an original issue discount of $4,603,000. The unamortized portion of the
original issue discount was $3,651,000 and $4,074,000 as of December 31, 1995
and 1994, respectively.
The Company is obligated to redeem the debentures by making (i) annual sinking
fund payments in amounts equal to 15% of the principal amount of the
debentures originally issued and (ii) semi-annual payments, for so long as the
Company's net worth is less than $37,500,000, in amounts equal to 10% of the
principal amount of the debentures currently outstanding. The Company's
payment obligations can in each case be satisfied by delivering to the
trustee debentures with a like face amount. The Company's 1996 and 1997
payment obligations not already satisfied with previously acquired debentures
are as follows (in thousands):
<TABLE>
<CAPTION>
Redemption date Principal
Amount
<S> <C>
April, 1996 $1,296
September, 1996 1,504
1997 7,291
1998 7,291
1999 7,291
2000 21,636
</TABLE>
The indentures governing the debentures contain various covenants including
reporting requirements and dividend and stock purchase limitations. The
indentures also contain provisions for default and acceleration of principal
upon the occurrence of such events as (i) the acceleration of maturity of any
other debt of the Company, (ii) final judgment in an amount exceeding
$2,000,000 rendered against the Company and not satisfied within 60 days or
(iii) action under the bankruptcy laws commenced by or against the Company.
While all of the Company's debt held by CLBN and Sealion is currently due and
payable, no demand has yet been made for payment and no event of default under
the indentures has yet occurred.
12-3/8% Notes. On November 1, 1994, the Company's 12-3/8% senior subordinated
notes then outstanding became due and payable. Payment with respect to
$2,490,000 in principal amount was made in accordance with the terms thereof.
Payment of the remaining $14,599,000 principal amount thereof, which was held
by CLBN, was not made and is included in the financial statements as matured
debt payable. The Company has recently received an inquiry from an entity
claiming to be the beneficial owner of approximately $6,000,000 in principal
<PAGE>
amount of such notes held of record by CLBN and demanding payment thereon.
The Company is investigating the circumstances surrounding such claims.
CLBN's Holdings. An aggregate of $27,891,000 of the Company's subordinated
debt is held by CLBN. Payments of principal and interest on that portion held
by CLBN have not been made since October of 1993. At December 31, 1995, an
aggregate of $11,253,000 in interest and $14,599,000 in principal otherwise
payable to CLBN had not been made. The Company has not made any provision for
the accrual of interest on the amounts payable to CLBN, although CLBN might in
the future make a claim on the Company for such interest.
NOTE 4. DOMESTIC AND FOREIGN TAXES
Due to its limited activities, the Company has incurred no currently payable
income tax liabilities.
The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," during the year ended December 31, 1993. This
statement requires the use of the liability method of accounting for deferred
income taxes. The implementation did not have a material impact as all
deferred tax assets were offset against valuation allowances as a result of
loss carry forwards which are not expected to be realized.
For income tax reporting purposes, the Company has available approximately
$89,555,000 in Federal net operating loss carry forwards on a parent-only
reporting basis. Additionally, the Company has available approximately
$429,445,000 in capital loss carry forwards.
The Company has incurred miscellaneous state franchise and other local license
fees, all of which have been treated as general and administrative costs
rather than as income tax expenses.
NOTE 5. 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 $15,027,000 and $12,463,000 was charged on these two
borrowings during 1995 and 1994, 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 3.).
NOTE 6. 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
to deliver a report to the Company's Board of Directors regarding such
<PAGE>
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 settlement of all claims with the original
plaintiffs in this action at a cost to the Company of approximately $13,000.
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
answered the complaint on November 5, 1991. Limited discovery was conducted
<PAGE>
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. 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 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. On January 4, 1996, the Delaware Supreme
Court affirmed the dismissal.
On April 16, 1993, the Company filed a bankruptcy petition against Melia with
the Bankruptcy Chamber of the Amsterdam District Court. This petition was
<PAGE>
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
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. 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. A trial date has been set for May
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.
The Company was named a third party defendant in an action brought by CLBN in
the Untied States District Court for the Central District of California
against Tracinda Corporation, Kirk Kerkorian, Jeffrey Barbakow and Stephen
Silbert. Those parties claimed that if they were held liable to CLBN in the
principal suit, the Company would be obligated to indemnify them for their
damages and the attorneys' fees expended in defending themselves. There was
also other pending litigation involving claims by, against and among CLBN and
MGM, on the one hand, and Tracinda Corporation, Kirk Kerkorian, and other
related entities and individuals, on the other hand, in the California State
courts. The Company was a party to certain of these actions. All of the
claims and counterclaims in these actions have been settled under terms which
impose no material financial obligations on the Company.
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 7. SUPPLEMENTARY CASH FLOW INFORMATION
Total interest paid was $775,000, $1,454,000 and $3,770,000 for fiscal years
ended December 31, 1995, 1994 and 1993, respectively.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT.
Fredric S. Newman, age 50, has been the sole director and sole executive
officer of the Company since May 6, 1993, when he was elected President,
Secretary and Treasurer of the Company. He has been a practicing attorney in
New York City for more than the past five years. In 1991 he was the Chief
Executive Officer of World TeamTennis, Inc. and prior thereto he was Vice
President and General Counsel of Philip Morris Incorporated.
Pursuant to an agreement dated as of May 1, 1993 between the Company and
Mr. Newman, Mr. Newman is to serve as President, Secretary and Treasurer of
the Company with all of the power and authority to direct and manage the
affairs of the Company. The agreement calls for an annual compensation at the
rate of $75,000 plus certain additional compensation determined on an hourly
basis dependent upon the services performed. The term of the agreement is one
year, renewable annually, and the Company may terminate the agreement at any
time upon payment of the agreed compensation.
ITEM 11. EXECUTIVE COMPENSATION
Except pursuant to the agreement referred to in Item 10, no compensation
was awarded to, earned by or paid to Mr. Newman or any other executive officer
or director of the Company for the 1995 fiscal year and no compensation was
awarded to, earned by or paid to any person serving as Chief Executive Officer
during 1995 for the 1993 or 1994 fiscal years. Mr. Newman earned $94,771 for
his services to the Company during 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT.
The following table sets forth, as of March 11, 1996, certain information
concerning ownership of shares of common stock (the only class of the
Company's voting securities outstanding) by (i) each person who is known by
the Company to own beneficially more than five percent of its issued and
outstanding common stock, (ii) each current director of the Company and (iii)
all current officers and directors of the Company as a group. This
information is based on information provided to the Company by or on behalf of
the stockholder or on information on file with the Securities and Exchange
Commission. The Company has made no effort to review other public information
regarding stockholders or otherwise to confirm beneficial ownership of
stockholders.
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Owner Beneficial Ownership(1) Percent of Class
<S> <C> <C>
Generale Bank Nederland N.V. 113,146,884 (2)(4)
96.9%
63 Coolsingel
3012 AB Rotterdam
The Netherlands
Giancarlo Parretti 110,672,150 (2)(3)(4)
94.8%
Via XX Septembre 3
00187 Rome
Italy
Maria Cecconi 110,672,150 (2)(3)(4)
94.8%
22/24/ Boulevard Royal
2449 Luxembourg
Comfinance S.A. ("Comfinance") 110,672,150 (2)(3)(4)
94.8%
22/24/ Boulevard Royal
2449 Luxembourg
Interpart S.A. ("Interpart") 102,672,150 (2)(3)(4)
87.9%
22/24/ Boulevard Royal
2449 Luxembourg
Melia International N.V. ("Melia") 102,672,150 (2)(3)(4)
87.9%
Nisuwezijds Voorburgwai 120-126
1012 SH Amsterdam
The Netherlands
SASEA Holding S.A. ("SASEA") 102,672,150 (2)(3)(4)
87.9%
29, rue de Candolla
DH-1205 Geneva
Switzerland
Renta Inmobiliaria International B.V. 22,363,724 (2)(4)
19.2%
("Renta B.V.")
Nieuwezijds Voorburgwai 120-126
1012 SH Amsterdam
The Netherlands
Renta Corp. ("Renta Corp.") 5,812,000 (2)(4)
5.0%
6420 Wilshire Blvd.
Los Angeles, CA 90048
Fredric S. Newman 0
0%
10 East 40th Street
New York, New York 10016
All current officers and directors 0
0%
as a group (1 person)
<PAGE>
</TABLE>
(1) Based on 116,746,810 shares of common stock issued and outstanding.
Except as indicated below, each of the persons or entities listed above
has sole voting and investment power with respect to all shares shown for
such person or entity.
(2) Generale Bank Nederland N.V. (formerly known as Credit Lyonnais Bank
Nederland N.V.) owns 2,798,424 shares of common stock and exercises
voting power pursuant to certain voting trusts and pledge agreements with
respect to 110,348,460 shares held by Melia, Comfinance, Renta B.V and
Renta Corp.
(3) Mr. Parretti and his wife, Mrs. Cecconi, are the majority owners of
Comfinance (Mr. Parretti holds 14% and Mrs. Cecconi holds 57%).
According to Mr. Parretti, he and Mrs. Cecconi hold their respective
shares under a separate property agreement governed by the laws of Italy.
They do not share any voting or dispositive power over their respective
shares in Comfinance. Interpart is beneficially owned by Mr. Parretti
and certain of his affiliates and is currently in voluntary liquidation
with its management being conducted by a liquidator. The shares
indicated as being beneficially owned by Comfinance and Interpart include
approximately 80,000,000 shares held by Melia, 16,551,724 shares held by
Renta B.V., 5,812,000 shares held by Renta Corp. and 407,990 shares held
by Viajes Melia ("Viajes").
Comfinance and Interpart together own 48.7% of the outstanding ordinary and
preferred stock of Melia (Comfinance holds 24.4% and Interpart holds
24.3.%.). SASEA and certain of its affiliates own 50.3% of the outstanding
ordinary and preferred stock of Melia (SASEA directly holds 20%.). There
is currently a dispute in a Swiss court between SASEA and Interpart
regarding the ownership of 2.4% of the shares of Melia currently held by
SASEA. The outcome of this action will determine the control of Melia.
Florio Fiorini, formerly a director of the Company, was previously a member
of the Executive Committee of SASEA, and is purportedly the owner of a
significant minority interest in the outstanding stock of SASEA. In
October 1992, SASEA was declared bankrupt under Swiss law. The competent
court in Geneva, Switzerland appointed special administrators to liquidate
SASEA's assets. Management control of Melia is vested in its Board of
Managing Directors, which currently consists solely of members appointed by
SASEA. A foundation controlled by Mr. Parretti, Mr. Fiorini and Mr.
Parretti's daughter, Valentina Parretti, exercises rights with respect to
Melia including the approval of certain actions of the Board of Managing
Directors and certain rights with respect to the appointment of the Board
of Managing Directors. Melia is the controlling stockholder of Viajes
through Corporacion Viajes Melia S.A. Melia is the sole stockholder of
Renta B.V. which in turn is the sole stockholder of Renta Corp.
(4) Includes the 16,551,724 shares owned by Renta B.V. and the 5,812,000
shares owned by Renta Corp. The Company is reviewing the facts and
circumstances surrounding the issuance of the 16,551,724 shares owned by
Renta B.V. to determine whether such shares were validly issued,
including the issue of whether sufficient consideration was received by
the Company for the issuance of such shares.
ITEM 13. CERTAIN RELATIONS AND RELATED TRANSACTIONS.
Information concerning the credit extended to the Company by CLBN is set
forth in Note 5 of the Notes to the Financial Statements beginning on page 12.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a)(1) and (2) Financial Statements and Schedules
The financial statements listed in the accompanying Index to
Financial Statements at Page 6 herein are filed as part of this Form
10-K.
<PAGE>
(a)(3) Exhibits:
The exhibits listed in the accompanying Exhibit Index are filed as
part of this report.
(b) Reports on Form 8-K:
During the three months ended December 31, 1995, no reports on Form
8-K were filed by the Company.
(c) Other Exhibits: Exhibit 11 is attached hereto
(d) Other Financial Statement Schedules: None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
by /s/ Fredric S. Newman
Fredric S. Newman
President
Dated: March 25, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report had been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dated indicated.
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Fredric S. Newman Director, President, Secretary and March 25, 1996
Fredric S. Newman Treasurer (Principal Executive,
Financial and Accounting Officer)
</TABLE>
INDEX TO EXHIBITS
Exhibit
Number Description
3.1 Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended January 3,
1987).
3.2 Amendment dated March 17, 1989 to the Restated Certificate of
Incorporation of the Company (incorporated by reference to
Exhibit 3.2 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 30, 1989).
3.3 By-Laws of the Company as amended through May 6, 1993
(incorporated by reference to Exhibit 3 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1993).
3.4 Amendment dated November 8, 1989 to the Restated Certificate of
Incorporation of the Company (incorporated by reference to
Exhibit 3.4 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 30, 1989).
3.5 Resolutions Adopted by the Board of Directors of Pathe
Communications Corporation on April 16, 1991 (incorporated by
reference to Exhibit 3.5 to the Company's Form 10-K for the
year ended December 29, 1990).
3.6 Resolutions adopted by the Board of Directors of MGM-Pathe
Communications Co. on April 16, 1991 (incorporated by reference
to Exhibit 3 (3) to MGM-Pathe Communications Co. Form 8-K dated
May 3, 1991).
4.1 Indenture, dated as of April 15, 1986, between the Company and
Manufacturers Hanover Trust Company of California, as Trustee,
in regard to $80,500,000 8-7/8% Convertible Senior Subordinated
Debentures due 2001 (incorporated by reference to Exhibit 4.1
to the Company's Form S-1 Registration Statement No. 33-3334
filed February 14, 1986).
4.2 Indenture, dated as of April 15, 1986, between the Company and
Manufacturers Hanover Trust Company of California, as Trustee,
in regard to $26,500,000 12-7/8% Senior Subordinated Debentures
due 2001 (incorporated by reference to Exhibit 4.1 to the
Company's Form S-1 Registration Statement No. 33-3333 filed
February 14, 1986).
9.1 Voting Trust Agreement by and between the Company and Credit
Lyonnais Bank Nederland N.V. dated April 15, 1991 (incorporated
by reference to Exhibit 10(9) to MGM-Pathe Communications Co.
Form 8-K dated May 3, 1991).
<PAGE>
9.2 Voting Trust Agreement by and between the Company and Credit
Lyonnais Bank Nederland N.V. dated April 15, 1991 (incorporated
by reference to Exhibit 10(10) to MGM-Pathe Communications Co.
Form 8-K dated May 3, 1991).
10.1 Agreement, dated as of May 18, 1989, between the Company, Renta
Inmobiliaria, Renta International B.V. and Renta Corp. (incorp-
orated by reference to Exhibit 10.4 to the Company's Annual
Report on Form 10-K for the year ended December 30, 1989).
10.2 Agreements between certain G&G Interests and the Company, dated
as of July 1, 1983 (incorporated by reference to Exhibit A to
the Company's Form S-1 Registration Statement No. 2-86297 filed
August 30, 1983).
10.3 Agreement dated as of May 1, 1993 by and between the Company
and Fredric S. Newman (incorporated by reference to Exhibit
10.3 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993).
10.4 Loan out Agreement, dated March 1, 1989, between Pathe
Entertainment, Inc. and Kanter Corp. for the services of Jay
Kanter (incorporated by reference to Exhibit 10.49 to the
Company's Annual Report on Form 10-K for the year ended
December 30, 1989).
10.5 Property and Share Sale Agreement, dated December 29, 1989 by
and among Cannon SE Cinema Properties Limited, Cannon Cinemas
Limited, Pathe Group (U.K.) Limited and Cinema 5 Europe N.V.
(incorporated by reference to Exhibit 10.52 to the Company's
Form 10-K for the year ended December 30, 1989).
10.6 Heads of Agreement, dated December 29, 1989, among Cannon
Tuschinski Theaters B.V., Cannon Tuschinski Beheer B.V., Cannon
Cinema B.V., Holland Exhibitors B.V., Theaterbedrijf Cinerama
Exhibitors Nederland B.V., Nationale Bioscoop Ondernemingen
B.V., Cinerama Amsterdam B.V., Cannon Theaters (Nederlands)
N.V. and Exploitatiemaatschappij "Midden- Hofstad" B.V.
(incorporated by reference to Exhibit 10.53 to the Company's
Annual Report on Form 10-K for the year ended December 30,
1989).
10.7 Stock Purchase Agreement, dated as of October 26, 1990, between
the Company and MGM-Pathe Communications Co. (incorporated by
reference to Exhibit B to MGM-Pathe Communications Co. Form 8-K
dated November 14, 1990).
10.8 Agreement, dated November 6, 1990, between the Company and Fin
Soft Holding S.A. (incorporated by reference to Exhibit 10.15
to the Company's Form 10-K for the year ended December 29,
1990).
10.9 Subscription Agreement, dated November 1, 1990, between the
Company and Melia International N.V. (incorporated by reference
to Exhibit 10.16 to the Company's Form 10-K for the year ended
December 29, 1990).
10.10 Subscription Agreement, dated November 1, 1990, between the
Company and Comfinance S.A. (incorporated by reference to
Exhibit 10.17 to the Company's Form 10-K for the year ended
December 29, 1990)
10.11 Promissory Note, dated November 15, 1990, from Transmarine
Holdings S.A. payable to the Company (incorporated by reference
to Exhibit 10.18 to the Company's Form 10-K for the year ended
December 29, 1990).
<PAGE>
10.12 Comfinance Promissory Note dated November 18, 1990
(incorporated by reference to Exhibit 10.19 to the Company's
Form 10-K for the year ended December 29, 1990).
10.13 Interim Revolving Credit Facility Agreement and Security
Assignment, dated March 22, 1991, by and among MGM-Pathe
Communications Co. and certain affiliates and Credit Lyonnais
Bank Nederland N.V.(incorporated by reference to Exhibit 10.20
to the Company's Form 10-K for the year ended December 29,
1990).
10.14 Letter Agreement among Credit Lyonnais Bank Nederland N.V.,
Pathe Communications Corporation, MGM-Pathe Communications Co.
and Melia International N.V., dated April 12, 1991 (incorp-
orated by reference to Exhibit 10(5) to MGM-Pathe Com-
munications Co. Form 8-K dated May 3, 1991).
10.15 Memorandum of Facility Agreement among MGM-Pathe Communications
Co. and its U.S. subsidiaries and Credit Lyonnais Bank
Nederland N.V., dated April 12, 1991 (incorporated by reference
to Exhibit 10(6) to MGM-Pathe Communications Co. Form 8-K dated
May 3, 1991).
10.16 Stock Sale Agreement among Melia International N.V., the
Company and CLINVEST, dated April 13, 1991 (incorporated by
reference to Exhibit 10(7) to MGM-Pathe Communications Co. Form
8-K dated May 3, 1991).
10.17 Mandat Exclusif de Vente de Titres among the Company, Melia
International N.V. and Credit Lyonnais Bank Nederland N.V.,
dated as of May 10, 1991.
10.18 Assignment, Assumption and Release Agreement among Pathe
Communications Corporation, Melia International N.V. and Credit
Lyonnais Bank Nederland N.V., dated as of April 15, 1991 (inco-
rporated by reference to Exhibit 10(8) to MGM-Pathe
Communications Co. Form 8-K dated May 3, 1991).
10.19 Agreement regarding Certain Corporate Governance Matters for
MGM-Pathe Communications Co. dated April 15, 1991 among
Giancarlo Parretti, the Company and MGM-Pathe Communications
Co. (incorporated by reference to Exhibit 10(11) to MGM-Pathe
Communications Co. Form 8-K dated May 3, 1991).
10.20 Agreement regarding Certain Corporate Governance Matters for
Pathe Communications Corporation, among Giancarlo Parretti, the
Company and the Company's majority stockholders (incorporated
by reference to Exhibit 10(12) to MGM-Pathe Communications Co.
Form 8-K dated May 3, 1991).
10.21 Amended and Restated Credit Agreement between MGM-Pathe
Communications Co. and Credit Lyonnais Bank Nederland N.V.
dated as of May 15, 1991 (incorporated by reference to Exhibit
10.31 to the Company's Form 10-K for the year ended December
29, 1990).
11. Computation of Earnings (Loss) Per Common Share.
27. Financial Data Schedule.
Exhibit 11
PATHE COMMUNICATIONS CORPORATION
COMPUTATIONS OF LOSS PER COMMON SHARE
(in thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Loss before extraordinary
items $ (20,642) $ (16,635) $ (26,163)
Net loss $ (20,642) $ (26,163) $ (472,838)
Weighted average
common shares
outstanding 116,746,810 116,746,810 116,746,810
Primary loss per
common share $ (.18) $ (.14) $ (.22)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
Financial Statements of Pathe Communications Corporation at December 31, 1995
and for the periods then ended and is qualified in its entirety by reference
to
such Financial Statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 831
<SECURITIES> 0
<RECEIVABLES> 118
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 949
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,438
<CURRENT-LIABILITIES> 275,187
<BONDS> 31,234
0
0
<COMMON> 1,167
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,438
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 803
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,839
<INCOME-PRETAX> (20,642)
<INCOME-TAX> 0
<INCOME-CONTINUING> (20,642)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (20,642)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> (.18)
</TABLE>
