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MGM's Third-Quarter Revenue Increases 26% as Net Income Loss Hits $16 Million

22 Oct, 2001 By: Hive News

Metro-Goldwyn-Mayer Inc. on Monday reported revenues of $393.3 million and EBITDA of $9.2 million for the quarter ended Sept. 30, 2001. Net income in the quarter was a loss of $16 million. These results reflect the impact of new industry accounting rules, adopted in the first quarter of 2001, which reduced EBITDA and net income by $44.2 million, the company said in a press release.

Looking considerably better before the new accounting rules took effect, the company's third-quarter EBITDA of $53.4 million and net income of $28.2 million, respectively, were both the highest in the company's history. In addition, unconsolidated EBITDAattributable to the domestic and international channels of MGM Networks amounted to $8.6million in the quarter.

Commenting on these pre-rule-change results, Alex Yemenidjian, chairman and c.e.o., said, "The all-time record results for the quarter were fueled by great performances from all four of our core businesses -- film and television library, MGM Networks, film production, and television production. In particular, our film and television library revenues grew by 29% in the quarter."

Chris McGurk, vice chairman and c.o.o., added about the pre-rule-change results: "During the quarter, MGM set a new all-time annual domestic box-office record. Legally Blonde continued its phenomenal run with a number one opening in Australia, recording the second-highest October weekend box-office gross ever.

"Hannibal and the re-release of Silence of the Lambs performed extraordinarily well in home video and DVD during the quarter. And United Artists had a very strong quarter, with two successful releases, Jeepers Creepers and Ghost World. Jeepers Creepers premiered at number one at the domestic box office in August, the fourth MGM/UA film to do so this year," McGurk said.

With the new accounting rules in effect, MGM's third-quarter revenues increased 26% to $393.3 million from $311.8 million in last year's third quarter. Consolidated EBITDA was $9.2 million, and overall EBITDA, including the share of unconsolidated EBITDA from MGM Networks, was $17.8 million. Net income was a loss of $16 million, or $.07 per share.

Due to the implementation of the new accounting rules, the company said comparisons to prior year EBITDA and net income were not meaningful.

Before effecting the new accounting rules, consolidated EBITDA increased 23% to $53.4 million, MGM's highest quarterly EBITDA ever.Overall EBITDA, including the share of unconsolidated EBITDAfrom MGM Networks, was $61.9 million, also an all-time record, the company claimed.

Net income increased 4% to $28.2 million, the highestnet income for any quarter in the company's 77-year history, according to an MGM press release. Earnings per share were $.12, a decline of $.01 per share from the third quarter of 2000, due to an increase in shares outstanding.

Among operating highlights, according to the company, worldwide feature film revenues increased 30%; worldwide film and television library revenues increased 29%; worldwide home video revenues increased 35%; and worldwide DVD unit sales were up 200%. Hannibal was released on DVD and VHS in August, with 4.1 million units shipped; and Silence of the Lambs was re-released with Hannibal, with 1.4million units shipped.

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