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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): JULY 9, 2004
METROMEDIA INTERNATIONAL GROUP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-5706 58-0971455
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(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
8000 Tower Point Drive, Charlotte, NC 28227
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (704) 321-7380
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(Former name or former address, if changed since last report)
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ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
KPMG LLP was previously the principal independent registered public
accounting firm for Metromedia International Group, Inc. (the "Company"). On
July 9, 2004, KPMG LLP notified the Company that it has resigned as the
principal independent registered public accounting firm for the Company. In
addition, on July 9, 2004, the Company engaged KPMG Limited, based in Moscow,
Russia, as its principal independent registered public accounting firm. The
decision to appoint KPMG Limited was approved by the Audit Committee of the
Company's Board of Directors.
The Company was advised by KPMG LLP that it was more appropriate for KPMG
Limited to be the Company's principal independent public accounting firm since
it audits substantially all of the Company's operating business ventures as a
result of the Company's restructuring initiatives. Furthermore, present Company
plans are to continue to maintain the Company's recently opened corporate
headquarters office in Charlotte, North Carolina, where the Company's Chief
Financial Officer, General Counsel, Chief Accounting Officer, Assistant General
Counsel and Corporate Controller maintain their current offices. KPMG Limited
will also continue as the principal independent registered public accounting
firm for both PeterStar, the Company's principal consolidated business venture
and Magticom Limited, the Company's principal unconsolidated business venture,
and as such, will continue to issue audit reports for these business ventures
standalone consolidated financial statements.
The audit reports of KPMG LLP on the Company's consolidated financial
statements as of and for the years ended December 31, 2003 and 2002 did not
contain any adverse opinion or a disclaimer of opinion, nor were they qualified
or modified as to uncertainty, audit scope, or accounting principles except for
the following paragraphs:
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in
Note 1 to the consolidated financial statements, the Company has suffered
recurring operating losses and net operating cash deficiencies, and does
not presently have sufficient funds on hand to meet its current debt
obligations. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 1. The consolidated financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
As discussed in Note 4 to the consolidated financial statements, the
Company changed its policy regarding the accounting for certain business
ventures previously reported on a three-month lag basis as of January 1,
2003.
As discussed in Note 4 to the consolidated financial statements, the
Company adopted Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangibles" as of January 1, 2002.
In connection with the audits of the two years ended December 31, 2003 and
2002, and subsequent interim periods preceding the date of the resignation of
KPMG LLP, there were no disagreements with KPMG LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of KPMG LLP,
would have caused it to make reference to the subject matter of the
disagreements in connection with its report on the Company's consolidated
financial statements.
KPMG LLP advised the Audit Committee and management that in connection with
KPMG LLP's audits for the years ended December 31, 2003 and 2002, it noted
matters involving internal controls that it considered material weaknesses. KPMG
LLP has advised the Company that under the standards of the Public Company
Accounting Oversight Board (United States), a material weakness is a significant
deficiency, or combination of significant deficiencies, that results in more
than a remote likelihood that a material misstatement of the annual or interim
financial statements will not be prevented or detected. The Company disclosed
these material weaknesses in internal control and actions taken to address such
material weaknesses in its Form 10-Q for the quarter ended March 31, 2004 as
follows:
In the fourth quarter of 2003, it was determined that the Company's
consolidated statements of operations for fiscal 2002, and the first two
quarters of fiscal 2003, would need to be restated as a result of an error
discovered in the computation of its unpaid dividends on its 7-1/4% cumulative
convertible Preferred Stock. The error was a result of the failure by Company
personnel to correctly apply compounding to the unpaid dividends. The Company
has determined that deficiencies in its internal review processes resulted in
this error not being detected on a timely basis. As a result of the Company's
relocation to Charlotte, NC, management of the Company reassessed its finance
organizational structure and has recruited the necessary personnel to improve
its internal control and review processes.
In addition, during the fourth quarter of 2003 and early 2004, it was
determined that the Company's consolidated statements of operations for fiscal
2002, and the first two quarters of fiscal 2003, would need to be restated as a
result of errors regarding the reporting of certain tax refunds. Most of these
refunds were received because the Company became eligible to carry back certain
losses and recover taxes previously paid to various taxing authorities five or
more years ago. One of these refunds resulted from a change in tax laws. The
Company has determined that not having full-time in-house tax personnel resulted
in these refunds not being recorded on a timely basis. In an effort to prevent
these errors from occurring again, the Company hired a tax director to oversee
the preparation of tax filings and deferred tax computations. In addition, the
Company has implemented a more stringent review process over the filing of tax
returns and preparation of its deferred tax computations on a prospective basis.
The Company has failed to file its most recent Form 10-K and Form 10-Qs
with the SEC on a timely basis. Such delays in filings have been due to
extenuating circumstances surrounding the Company's liquidity issues and
relocation of its corporate headquarters. The Company believes that the
recruitment of the individuals as noted above, should result in more timely
filings in accordance with SEC rules.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c)Exhibits.
16.1 Letter from KPMG LLP to SEC dated July 14, 2004.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
METROMEDIA INTERNATIONAL GROUP, INC.
By: /S/ HAROLD F. PYLE, III
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Name: Harold F. Pyle, III
Title: Executive Vice President
Finance, Chief Financial
Officer and Treasurer
Date: July 14, 2004
Charlotte, NC
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