Cannon Group Loses $9.9 Million in Quarter
Debt-ridden Cannon Group Inc., plagued by a string of box-office flops, announced on Thursday a net loss of $9.99 million for its first quarter ending April 4.
Cannon predicted the loss last month when it released its much-delayed annual report revealing that the Los Angeles-based movie maker lost $60.4 million in fiscal 1986. Some analysts predict that Cannon will lose $25 million to $50 million in the first half of 1987, mostly due to such box-office disappointments as “Hanoi Hilton,” “The Barbarians” and “American Ninja 2.”
Cannon’s first-quarter revenue of $117.5 million was more than double the year-ago period, but still not enough to cover film amortization costs, increased operating expenses and interest expenses, which exceeded $13 million for the quarter. By some estimates, Cannon has a short-term debt of about $130 million and a long-term debt of more than $400 million.
Cannon’s stock, which last year traded as high as $45.50 a share, closed Thursday at $4.--down 12.5 cents on the New York Stock Exchange.
No company officers were available for comment Thursday, but a statement issued by Cannon blamed the loss on weak theatrical performance of motion pictures released during the quarter.
Cannon acknowledged last month that it is suffering a liquidity crunch and must raise adequate working capital in order to continue operations.
In May, Cannon sold its 2,000-title British film library to the Weintraub Entertainment Group for $85 million. At the time, the film library was valued at $144 million on Cannon’s balance sheet. Reportedly, $71 million of the $85 million went to pay down bank debt.
In recent months, one New York investment firm has advised Cannon investors to press for the company’s liquidation in order to obtain the greatest value from its existing assets.