Cannon Group Posts $98.3-Million Loss for ’87

In another belated financial report, Cannon Group under its new European owners disclosed that its 1987 net loss came to $98.3 million, a 63% increase over its disastrous 1986 deficit. The latest figures indicated to an analyst that the Los Angeles movie maker’s debts are now greater than its assets.

The company had said April 1 that the 1987 loss would “substantially exceed” the previous year’s deficit. The firm’s nine-month loss had totaled $41.3 million, indicating a $57-million loss in the final quarter.

Cannon also said it expects a further loss for the first quarter, which will prevent it from maintaining a minimum net worth, as required by the terms of its bonds.

In addition, the company disclosed that its most recent chief financial officer, Frederic Scheer, has resigned.

He joined Cannon management last June as part of the firm’s new European investor group, headed by Giancarlo Parretti. Parretti took over as Cannon’s chief executive in April. Cannon’s former controlling stockholders and top executives, Menahem Golan and Yoram Globus, were put in charge of the company’s film making subsidiary, Cannon Entertainment.

“Subject to certain conditions,” Parretti has said he plans to inject $100 million of new capital into the company in return for more of its stock. Parretti’s companies already control 40% of Cannon’s shares.

Cannon reported last June that Parretti was “subject to a criminal proceeding pending in Naples-Syracuse, Italy,” in which he denied all guilt. The company has not announced anything further on the case. Cannon, which has said it plans to move its headquarters to New York, also reported Tuesday that it has hired Fabio Serena, a partner in a Rome law firm, as senior executive vice president and general counsel. Serena, previously associated with Sullivan & Cromwell, a prominent New York law firm, is a graduate of McGill University in Montreal, Cannon said.

For the fiscal year ended Jan. 2, Cannon reported revenue of $456.8 million and expenses of $541.5 million, plus a provision of $13.6 million for income taxes. The announcement did not give any figures for the fourth quarter.

Using Cannon’s figures, which showed a $38.6-million net worth at the end of the third quarter last year, analyst Lisbeth Barron of the investment firm Balis Zorn Gerard in New York calculated Tuesday that the fourth-quarter loss brought the firm to a negative net worth of about $18 million.

However, she said that from her own analysis of the company’s assets, the figure is “more like a negative $200 million.” In particular, Barron said she believes that the Cannon film library is worth far less than the $432 million claimed by the company at the end of the third quarter.

Cannon said it presently has two films playing widely in theaters, “Salsa” and “Bloodsport,” plus three others in limited release.