Samuel Goldwyn Co., one of the last remaining independent film distributors, confirmed on Thursday that it lost $20 million in its fiscal year ended March 31. It warned that it may be unable to pay its bank loans unless it can attract new investment funds.
The red ink was especially severe in the fourth quarter, when Goldwyn lost $12.8 million. Revenue for the fiscal year fell to $91.3 million, down $17.4 million. Goldwyn's stock plunged $2.75 on Thursday to $5.625 on the American Stock Exchange, less than half the $13 it reached at one point last year.
In its results, the company said it had "significant write-downs" on its movies and TV shows. The company has been plagued by lackluster results at the box office for such recent films as "The Perez Family," which sources said has grossed slightly more than $2 million but cost about $11 million to make.
It also had a failed TV series, "Wild West Showdown," which the company confirmed cost it about $5 million.
"We obviously had a very bad year," said Meyer Gottlieb, president and chief operating officer.
So bad that the company's accountants included in their audit report a clause raising questions about Goldwyn's "ability to continue as a going concern." Such cautions are relatively common for companies that encounter financial difficulties, but nonetheless serve as a red flag for investors.
The company recently renewed its credit line until next April with its three banks--Bank of America, Britain's National Westminster Bank and Japan's Yasuda Trust & Banking--increasing the maximum amount it can tap to $77.4 million. But Goldwyn said that without new financing, or an infusion of cash, it will lack the money needed to repay the banks.
Headed by Samuel Goldwyn Jr., son of the legendary Hollywood mogul, the company is best known for distributing such art house films as "The Madness of King George," "Much Ado About Nothing" and "Eat Drink Man Woman." Goldwyn is the company's controlling shareholder with more than 60% of the stock.
The company also owns the Landmark theater chain, which includes such venerable Southern California movie houses as the Rialto in South Pasadena, the Nuart in West Los Angeles and the Port in Corona del Mar.
The company is involved in television production with such shows as "American Gladiators."
Rumors about Goldwyn's financial troubles have been circulating for weeks in Hollywood.
Gottlieb rebuffed the most recent rumors of a looming bankruptcy due to a hefty debt load, saying: "Anyone who has the ability to read a balance sheet can see this is not a bankrupt company.
Certainly we are unhappy with this $20-million loss, but we are in the process of doing something about it."
Specifically, he said, the company is cutting its staff, consolidating operations such as its theatrical sales and marketing areas and also looking for a hefty cash infusion, probably from some international strategic partners. Among the names mentioned are France's Canal Plus and Britain's Channel 4.
"[Goldwyn] is looking for strategic partnerships in the $20-million to $40-million range," Gottlieb said. "This is not an issue of operating capital. It is an issue of debt reduction."
Many analysts and investors believe the company badly needs a financially strong partner to keep pace with its two main rivals, Miramax and New Line Cinema's Fine Line Features.
Miramax and Fine Line were acquired by Walt Disney Co. and Turner Broadcasting System, respectively, giving them deep-pocketed parents to tap when buying films. As a result, many analysts and investors say the company may be willing to sell a large stake--or even a majority position.
The most frequently mentioned name has been the giant Hallmark greeting card concern, which has a video deal with Goldwyn, but both companies deny a sale is in the works.
Other names that have surfaced include Family Channel parent International Family Entertainment and TV producer All American Communications.
Goldwyn has reportedly retained the investment banking firm Wertheim Schroeder to pursue one or more strategic foreign investors with deep pockets from a list of about 10 prospects.
Another lending source familiar with Goldwyn's balance sheet estimated that the company needs as much as $90 million in operating and production capital to get back into shape.Gottlieb disputed the $90-million estimate.
Bates is a Times staff writer. Brennan is a free-lance writer.