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, 2004
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.) | |
| 10250 Constellation Boulevard, Los Angeles, CA | 90067 | |
| (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
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No ¨
The number of shares of the Registrant’s common stock outstanding as of July 30, 2004 was 237,575,462.
FORM 10-Q
June 30, 2004
INDEX
| Page No. | ||||
| Part I. | FINANCIAL INFORMATION |
|||
| Item 1. | Financial Statements |
|||
| Condensed Consolidated Balance Sheets as of June 30, 2004 (unaudited) and December 31, 2003 |
1 | |||
| 2 | ||||
| 3 | ||||
| 4 | ||||
| 5 | ||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
17 | ||
| Item 3. | 33 | |||
| Item 4. | 34 | |||
| Part II. | OTHER INFORMATION |
|||
| Item 4. | 35 | |||
| Item 5. | Other Information | 35 | ||
| Item 6. | 36 | |||
| Signatures | 37 | |||
Item 1. Financial Statements
METRO-GOLDWYN-MAYER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| June 30, 2004 |
December 31, 2003 |
|||||||
| (unaudited) | ||||||||
| ASSETS |
||||||||
| Cash and cash equivalents |
$ | 39,072 | $ | 61,894 | ||||
| Accounts and contracts receivable (net of allowance for doubtful accounts of $46,798 and $46,671, respectively) |
553,612 | 615,907 | ||||||
| Film and television costs, net |
1,889,313 | 1,788,225 | ||||||
| Investments in and advances to affiliates |
23,535 | 24,050 | ||||||
| Property and equipment, net |
66,991 | 68,657 | ||||||
| Goodwill |
516,706 | 516,706 | ||||||
| Other assets |
39,201 | 31,132 | ||||||
| $ | 3,128,430 | $ | 3,106,571 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Liabilities: |
||||||||
| Bank and other debt |
$ | 2,000,235 | $ | 813 | ||||
| Accounts payable and accrued liabilities |
249,114 | 234,397 | ||||||
| Accrued participants’ share |
315,937 | 320,347 | ||||||
| Income taxes payable |
39,313 | 37,129 | ||||||
| Advances and deferred revenues |
96,966 | 72,908 | ||||||
| Other liabilities |
159,678 | 112,606 | ||||||
| Total liabilities |
2,861,243 | 778,200 | ||||||
| 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, 251,960,505 shares issued |
2,520 | 2,520 | ||||||
| Additional paid-in capital |
2,048,095 | 3,915,777 | ||||||
| Deficit |
(1,548,509 | ) | (1,507,573 | ) | ||||
| Accumulated other comprehensive income (loss) |
(82 | ) | 2,046 | |||||
| Less: treasury stock, at cost, 15,560,808 and 7,347,530 shares, respectively |
(234,837 | ) | (84,399 | ) | ||||
| Total stockholders’ equity |
267,187 | 2,328,371 | ||||||
| $ | 3,128,430 | $ | 3,106,571 | |||||
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these consolidated statements.
1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
| Quarter Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenues |
$ | 406,107 | $ | 487,702 | $ | 870,103 | $ | 882,893 | ||||||||
| Expenses: |
||||||||||||||||
| Operating |
203,291 | 276,478 | 428,681 | 500,408 | ||||||||||||
| Selling, general and administrative |
194,832 | 224,698 | 446,828 | 429,775 | ||||||||||||
| Depreciation |
3,743 | 5,013 | 7,169 | 10,252 | ||||||||||||
| Total expenses |
401,866 | 506,189 | 882,678 | 940,435 | ||||||||||||
| Operating income (loss) |
4,241 | (18,487 | ) | (12,575 | ) | (57,542 | ) | |||||||||
| Other income (expense): |
||||||||||||||||
| Write-down on investment in cable channels |
— | (93,059 | ) | — | (93,059 | ) | ||||||||||
| Equity in net earnings (losses) of affiliates |
(614 | ) | (1,211 | ) | (1,813 | ) | 1,279 | |||||||||
| Interest expense, net of amounts capitalized |
(20,752 | ) | (18,863 | ) | (21,839 | ) | (36,812 | ) | ||||||||
| Interest and other income, net |
2,044 | 3,069 | 3,989 | 6,377 | ||||||||||||
| Other non-recurring costs |
(1,173 | ) | — | (1,173 | ) | — | ||||||||||
| Total other expenses |
(20,495 | ) | (110,064 | ) | (20,836 | ) | (122,215 | ) | ||||||||
| Loss from operations before provision for income taxes |
(16,254 | ) | (128,551 | ) | (33,411 | ) | (179,757 | ) | ||||||||
| Income tax provision |
(3,412 | ) | (5,028 | ) | (7,525 | ) | (9,644 | ) | ||||||||
| Net loss |
$ | (19,666 | ) | $ | (133,579 | ) | $ | (40,936 | ) | $ | (189,401 | ) | ||||
| Loss per share: |
||||||||||||||||
| Basic and diluted |
$ | (0.08 | ) | $ | (0.55 | ) | $ | (0.17 | ) | $ | (0.77 | ) | ||||
| Weighted average number of common shares outstanding: |
||||||||||||||||
| Basic and diluted |
235,961,448 | 244,807,107 | 236,803,698 | 246,628,261 | ||||||||||||
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these consolidated statements.
2
CONDENSED CONSOLIDATED STATEMENTS 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 (Loss) |
Less: Treasury Stock |
Total Stockholders’ Equity |
|||||||||||||||||||||||||||
| No. of Shares |
Par Value |
No. of Shares |
Par Value |
|||||||||||||||||||||||||||||||
| Balance December 31, 2003 |
— | $ | — | 251,960,505 | $ | 2,520 | $ | 3,915,777 | $ | (1,507,573 | ) | $ | — | $ | 2,046 | $ | (84,399 | ) | $ | 2,328,371 | ||||||||||||||
| Payment of stockholder dividend |
— | — | — | — | (1,892,983 | ) | — | — | — | — | (1,892,983 | ) | ||||||||||||||||||||||
| Acquisition of treasury stock, at cost |
— | — | — | — | — | — | — | — | (181,370 | ) | (181,370 | ) | ||||||||||||||||||||||
| Common stock issued to directors, officers and employees, net |
— | — | — | — | 6,968 | — | — | — | 30,932 | 37,900 | ||||||||||||||||||||||||
| Adoption of SFAS No. 123 |
— | — | — | — | 3,823 | — | — | — | — | 3,823 | ||||||||||||||||||||||||
| Stock-based employee compensation |
— | — | — | — | 14,510 | — | — | — | — | 14,510 | ||||||||||||||||||||||||
| Comprehensive income (loss): |
||||||||||||||||||||||||||||||||||
| Net loss |
— | — | — | — | — | (40,936 | ) | (40,936 | ) | — | — | (40,936 | ) | |||||||||||||||||||||
| Unrealized loss on derivative instruments |
— | — | — | — | — | — | (2,806 | ) | (2,806 | ) | — | (2,806 | ) | |||||||||||||||||||||
| Unrealized gain on securities |
— | — | — | — | — | — | 211 | 211 | — | 211 | ||||||||||||||||||||||||
| Change in unfunded pension obligation |
— | — | — | — | — | — | 452 | 452 | — | 452 | ||||||||||||||||||||||||
| Foreign currency translation adjustments |
— | — | — | — | — | — | 15 | |||||||||||||||||||||||||||