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Table of Contents
 
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 
 
FORM 10-Q
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the Quarterly Period Ended June 30, 2002
 
Commission File No. 1-13481
 
METRO-GOLDWYN-MAYER INC.
(Exact name of registrant as specified in its charter)
 
 
Delaware
  
95-4605850
(State or other jurisdiction
of incorporation or organization)
  
(I.R.S. Employer
Identification No.)
2500 Broadway Street, Santa Monica, CA
  
90404
(Address of principal executive offices)
  
(Zip Code)
 
Registrant’s telephone number, including area code: (310) 449-3000
 
 
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.  x  Yes  ¨  No
 
The number of shares of the Registrant’s common stock outstanding as of July 23, 2002 were 251,795,200.
 

Table of Contents
 
METRO-GOLDWYN-MAYER INC.
 
FORM 10-Q
 
June 30, 2002
 
INDEX
 
         
Page
No.
Part I.    Financial Information
     
Item 1.
   
Financial Statements
     
       
1
       
2
       
3
       
4
       
5
Item 2.
      
15
Item 3.
      
28
Part II.    Other Information
     
Item 1.
      
30
Item 4.
      
31
Item 6.
      
32
  
33

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Table of Contents
PART I.    FINANCIAL INFORMATION
 
Item 1.    Financial Statements
 
METRO-GOLDWYN-MAYER INC.
 
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
 
    
June 30,
2002
     
December 31,
2001
  
    
(unaudited)
         
ASSETS
                  
Cash and cash equivalents
   
$
446,860
 
   
$
2,698
 
Accounts and contracts receivable (net of allowance for doubtful accounts of $40,088 and $26,173, respectively)
   
 
370,537
 
   
 
458,010
 
Film and television costs, net
   
 
1,982,446
 
   
 
2,035,277
 
Investments in and advances to affiliates
   
 
851,270
 
   
 
845,042
 
Property and equipment, net
   
 
34,538
 
   
 
38,837
 
Goodwill
   
 
516,706
 
   
 
516,706
 
Other assets
   
 
33,743
 
   
 
26,594
 
    
  
    
$
4,236,100
 
   
$
3,923,164
 
    
  
LIABILITIES AND STOCKHOLDERS' EQUITY
                  
Liabilities:
                  
Bank and other debt
   
$
1,211,915
 
   
$
836,186
 
Accounts payable and accrued liabilities
   
 
170,971
 
   
 
198,520
 
Accrued participants' share
   
 
235,580
 
   
 
243,836
 
Income taxes payable
   
 
29,152
 
   
 
31,865
 
Advances and deferred revenues
   
 
77,520
 
   
 
82,156
 
Other liabilities
   
 
33,901
 
   
 
41,119
 
    
  
Total liabilities
   
 
1,759,039
 
   
 
1,433,682
 
    
  
Commitments and contingencies
                  
Stockholders' equity:
                  
Preferred stock, $.01 par value, 25,000,000 shares authorized, none issued
   
 
—  
 
   
 
—  
 
Common stock, $.01 par value, 500,000,000 shares authorized, 251,771,186 and 239,629,500 shares issued and outstanding
   
 
2,518
 
   
 
2,396
 
Additional paid-in capital
   
 
3,913,067
 
   
 
3,717,767
 
Deficit
   
 
(1,416,166
)
   
 
(1,203,565
)
Accumulated other comprehensive loss
   
 
(22,358
)
   
 
(27,116
)
    
  
Total stockholders' equity
   
 
2,477,061
 
   
 
2,489,482
 
    
  
    
$
4,236,100
 
   
$
3,923,164
 
    
  
 
 
The accompanying Notes to Condensed Consolidated Financial Statements  are an integral part of these consolidated statements.

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Table of Contents
METRO-GOLDWYN-MAYER INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
 
    
Quarters Ended June 30,
     
Six Months Ended June 30,
  
    
2002
     
2001
     
2002
     
2001
  
Revenues
   
$
336,923
 
   
$
274,859
 
   
$
652,051
 
   
$
618,755
 
Expenses:
                                    
Operating
   
 
264,961
 
   
 
181,975
 
   
 
489,154
 
   
 
372,268
 
Selling, general and administrative
   
 
166,366
 
   
 
128,774
 
   
 
319,071
 
   
 
283,753
 
Depreciation and non-film amortization
   
 
4,849
 
   
 
8,056
 
   
 
9,477
 
   
 
16,001
 
    
  
  
  
Total expenses
   
 
436,176
 
   
 
318,805
 
   
 
817,702
 
   
 
672,022
 
    
  
  
  
Operating loss
   
 
(99,253
)
   
 
(43,946
)
   
 
(165,651
)
   
 
(53,267
)
Other income (expense):
                                    
Equity in net earnings (losses) of affiliates
   
 
6,019
 
   
 
(1,147
)
   
 
(815
)
   
 
(1,259
)
Interest expense, net of amounts capitalized
   
 
(26,530
)
   
 
(13,475
)
   
 
(42,625
)
   
 
(22,928
)
Interest and other income, net
   
 
930
 
   
 
1,360
 
   
 
1,625
 
   
 
7,137
 
    
  
  
  
Total other expenses
   
 
(19,581
)
   
 
(13,262
)
   
 
(41,815
)
   
 
(17,050
)
    
  
  
  
Loss from operations before provision for income taxes
   
 
(118,834
)
   
 
(57,208
)
   
 
(207,466
)
   
 
(70,317
)
Income tax provision
   
 
(2,975
)
   
 
(4,097
)
   
 
(5,135
)
   
 
(8,509
)
    
  
  
  
Net loss before cumulative effect of accounting change
   
 
(121,809
)
   
 
(61,305
)
   
 
(212,601
)
   
 
(78,826
)
Cumulative effect of accounting change
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
(382,318
)
    
  
  
  
Net loss
   
$
(121,809
)
   
$
(61,305
)
   
$
(212,601
)
   
$
(461,144
)
    
  
  
  
Loss per share:
                                    
Basic and diluted
                                    
Net loss before cumulative effect of accounting change
   
$
(0.48
)
   
$
(0.26
)
   
$
(0.86
)
   
$
(0.35
)
Cumulative effect of accounting change
   
 
—  
 
   
 
—  
 
   
 
—  
 
   
 
(1.70
)
    
  
  
  
Net loss
   
$
(0.48
)
   
$
(0.26
)
   
$
(0.86
)
   
$
(2.05
)
    
  
  
  
Weighted average number of common shares outstanding:
                                    
Basic and diluted
   
 
251,732,625
 
   
 
234,002,719
 
   
 
247,155,037
 
   
 
224,521,913
 
    
  
  
  
 
 
The accompanying Notes to Condensed Consolidated Financial Statements  are an integral part of these consolidated statements.

2

Table of Contents
METRO-GOLDWYN-MAYER INC.
 
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in thousands, except share data)
 
    
Preferred Stock
   
Common Stock
   
Add'l Paid-in
Capital
   
Deficit
     
Comprehensive
Income (Loss)
     
Accum.
Other
Comprehensive
Income
     
Total
Stockholders'
Equity
  
    
No. of
Shares
   
Par Value
   
No. of
Shares
   
Par Value
               
Balance December 31, 2001
   
—  
   
$
—  
   
239,629,500
   
    $
2,396
   
$
3,717,767
   
$
(1,203,565
)
   
$
      —  
 
   
      $
(27,116
)
   
$
2,489,482
 
Common stock issued to outside parties, net
   
—  
   
 
        —  
   
10,550,000
   
 
106
   
 
164,665
   
 
—  
 
   
 
—  
 
   
 
      —  
 
   
 
164,771
 
Common stock issued to related parties, net
   
—  
   
 
—  
   
1,591,686
   
 
16
   
 
30,635
   
 
—  
 
   
 
        —  
 
   
 
—  
 
   
 
30,651
 
Comprehensive income (loss):
                                                                   
Net loss
   
—  
   
 
—  
   
—  
   
 
—  
   
 
—  
   
 
(212,601
)
   
 
(212,601
)
   
 
—  
 
   
 
(212,601
)
Unrealized gain on derivative instruments
   
—  
   
 
—  
   
—  
   
 
—  
   
 
—  
   
 
—