<PAGE>
 
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                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                               ----------------
 
                                   FORM 10-Q
 
                               ----------------
 
            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
 
                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
 
                          COMMISSION FILE NO. 0-13481
 
                           METRO-GOLDWYN-MAYER INC.
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
 
                               ----------------
 
<TABLE>
<S>                                            <C>
                  DELAWARE                                       95-4605850
       (STATE OR OTHER JURISDICTION OF                        (I.R.S. EMPLOYER
       INCORPORATION OR ORGANIZATION)                        IDENTIFICATION NO.)
</TABLE>
 
                 2500 BROADWAY STREET, SANTA MONICA, CA 90404
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
 
      REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 449-3000
 
       SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
 
                         COMMON STOCK, PAR VALUE $0.01
 
                               ----------------
 
  Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]
 
  The number of shares of the Registrant's common stock, $.01 par value,
outstanding as of April 30, 1998 was 65,788,353.
 
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<PAGE>
 
                   METRO-GOLDWYN-MAYER INC. AND SUBSIDIARIES
 
                                   FORM 10-Q
 
                                 MARCH 31, 1998
 
                                     INDEX
 
<TABLE>
<CAPTION>
                                                                         PAGE NO.
                                                                         --------
<S>                                                                      <C>
                     PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
    Condensed Consolidated Balance Sheets as of March 31, 1998 and
     December 31, 1997.................................................      3
    Condensed Consolidated Statements of Operations for the Quarters
     ended March 31, 1998 and 1997.....................................      4
    Condensed Consolidated Statements of Stockholders' Equity for the
     Quarter ended March 31, 1998......................................      5
    Condensed Consolidated Statements of Cash Flows for the Quarters
     ended March 31, 1998 and 1997.....................................      6
    Notes to Condensed Consolidated Financial Statements...............      7
Item 2. Management's Discussion and Analysis of Financial Condition and
 Results of Operations.................................................     10
Item 3. Quantitative and Qualitative Disclosure About Market Risk......     14
                      PART II. OTHER INFORMATION
Item 1. Legal Proceedings..............................................     15
Item 2. Changes in Securities and Use of Proceeds......................     16
Item 6. Exhibits and Reports on Form 8-K...............................     16
Signatures.............................................................     17
</TABLE>
 
                                       2
<PAGE>
 
                         PART I. FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL INFORMATION
 
                            METRO-GOLDWYN-MAYER INC.
 
                     CONDENSED CONSOLIDATED BALANCE SHEETS
         (AMOUNTS IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                         MARCH 31,   DECEMBER 31,
                                                           1998          1997
                                                        -----------  ------------
                                                        (UNAUDITED)
<S>                                                     <C>          <C>
                        ASSETS
                        ------
Cash and cash equivalents.............................  $   11,950    $    3,978
Accounts and contracts receivable (net of allowance
 for doubtful accounts of $29,464 and $27,603,
 respectively)........................................     280,001       285,283
Film and television costs, net........................   1,928,614     1,867,126
Investments and advances to affiliates................       8,695         9,917
Property and equipment, net...........................      33,326        32,785
Excess of cost over net assets of acquired businesses,
 net..................................................     571,957       574,795
Other assets..........................................      47,464        48,770
                                                        ----------    ----------
                                                        $2,882,007    $2,822,654
                                                        ==========    ==========
         LIABILITIES AND STOCKHOLDERS' EQUITY
         ------------------------------------
Liabilities:
  Bank and other debt.................................  $  993,630    $  890,508
  Accounts payable and accrued liabilities............     137,368       147,476
  Accrued participants' share.........................     215,664       216,530
  Income taxes payable................................      31,792        31,579
  Advances and deferred revenues......................     116,230       130,329
  Other liabilities...................................      26,801        27,677
                                                        ----------    ----------
Total liabilities.....................................   1,521,485     1,444,099
                                                        ----------    ----------
Commitments and contingencies
Stockholders' equity:
  Common stock, $.01 par value, 125,000,000
   authorized, 65,779,852 and 65,765,655 shares issued
   and outstanding....................................         658           658
  Additional paid-in capital..........................   1,505,508     1,504,850
  Deficit.............................................    (146,591)     (127,948)
  Accumulated other comprehensive income..............         947           995
                                                        ----------    ----------
Stockholders' equity..................................   1,360,522     1,378,555
                                                        ----------    ----------
                                                        $2,882,007    $2,822,654
                                                        ==========    ==========
</TABLE>
 
  The accompanying Notes to Condensed Consolidated Financial Statements are an
                       integral part of these statements.
 
                                       3
<PAGE>
 
                            METRO-GOLDWYN-MAYER INC.
 
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
            (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                             QUARTER ENDED
                                                               MARCH 31,
                                                         ----------------------
                                                            1998        1997
                                                         ----------  ----------
<S>                                                      <C>         <C>
Revenues...............................................  $  316,460  $  197,629
Expenses:
  Film and television production and distribution......     286,670     179,191
  General and administrative expenses..................      24,622      18,912
  Goodwill amortization................................       3,239       1,910
                                                         ----------  ----------
    Total expenses.....................................     314,531     200,013
                                                         ----------  ----------
Operating income (loss)................................       1,929      (2,384)
Other income (expense):
  Interest expense, net of amounts capitalized.........     (18,254)    (11,016)
  Interest and other income, net.......................         675       1,630
                                                         ----------  ----------
    Total other expense................................     (17,579)     (9,386)
                                                         ----------  ----------
Loss from operations before provision for income taxes.     (15,650)    (11,770)
Income tax provision...................................      (2,993)     (2,423)
                                                         ----------  ----------
Net loss...............................................  $  (18,643) $  (14,193)
                                                         ==========  ==========
Basic and diluted loss per share.......................  $    (0.28) $    (0.85)
                                                         ==========  ==========
Weighted average number of common shares outstanding...  65,771,938  16,721,842
                                                         ==========  ==========
</TABLE>
 
 
     The accompanying Notes to Condensed Consolidated Financial Statements
                   are an integral part of these statements.
 
                                       4
<PAGE>
 
                            METRO-GOLDWYN-MAYER INC.
 
           CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 (AMOUNTS IN THOUSANDS, EXCEPT FOR SHARE DATA)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                            COMMON STOCK
                          ----------------   ADD'L               ACCUM. OTHER      TOTAL
                            NO. OF    PAR   PAID-IN              COMPREHENSIVE STOCKHOLDERS'
                            SHARES   VALUE  CAPITAL    DEFICIT      INCOME        EQUITY
                          ---------- ----- ---------- ---------  ------------- -------------
<S>                       <C>        <C>   <C>        <C>        <C>           <C>
BALANCE DECEMBER 31,
 1997 ..................  65,765,655 $658  $1,504,850 $(127,948)     $995       $1,378,555
Issuance of common
 stock..................      14,197  --          274       --        --               274
Amortization of deferred
 stock compensation.....         --   --          384       --        --               384
Foreign currency
 translation adjustment.         --   --          --        --        (48)             (48)
Net loss................         --   --          --    (18,643)      --           (18,643)
                          ---------- ----  ---------- ---------      ----       ----------
BALANCE MARCH 31, 1998..  65,779,852 $658  $1,505,508 $(146,591)     $947       $1,360,522
                          ========== ====  ========== =========      ====       ==========
</TABLE>
 
 
 
  The accompanying Notes to Condensed Consolidated Financial Statements are an
                       integral part of these statements.
 
                                       5
<PAGE>
 
                            METRO-GOLDWYN-MAYER INC.
 
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (AMOUNTS IN THOUSANDS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                              QUARTER ENDED
                                                                MARCH 31,
                                                            -------------------
                                                              1998       1997
                                                            ---------  --------
<S>                                                         <C>        <C>
Net cash provided by operating activities.................  $ 152,528  $ 68,845
                                                            ---------  --------
Investing activities:
  Additions to film costs, net............................   (241,299)  (76,089)
  Additions to property and equipment.....................     (2,384)     (961)
  Other investing activities..............................     (3,808)     (562)
                                                            ---------  --------
  Net cash used in investing activities...................   (247,491)  (77,612)
                                                            ---------  --------
Financing activities:
  Proceeds from issuance of preferred and common stock....        --      1,538
  Net bank advances ......................................    103,117    24,714
                                                            ---------  --------
  Net cash provided by financing activities...............    103,117    26,252
                                                            ---------  --------
Net change in cash and cash equivalents from operating,
 investing and financing activities.......................      8,154    17,485
Net decrease in cash due to foreign currency fluctuations.       (182)     (419)
                                                            ---------  --------
Net change in cash and cash equivalents...................      7,972    17,066
Cash and cash equivalents at beginning of the period......      3,978    16,381
                                                            ---------  --------
Cash and cash equivalents at end of the period............  $  11,950  $ 33,447
                                                            =========  ========
</TABLE>
 
 
  The accompanying Notes to Condensed Consolidated Financial Statements are an
                       integral part of these statements.
 
                                       6
<PAGE>
 
                           METRO-GOLDWYN-MAYER INC.
 
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
                                MARCH 31, 1998
 
NOTE 1--BASIS OF PRESENTATION
 
  The accompanying unaudited condensed consolidated financial statements
include the accounts of Metro-Goldwyn-Mayer Inc. ("MGM"), Metro-Goldwyn-Mayer
Studios Inc. and its majority owned subsidiaries ("MGM Studios") and Orion
Pictures Corporation and its majority owned subsidiaries ("Orion")
(collectively, unless the context indicates otherwise, the "Company"). MGM is
a Delaware corporation that was formed on July 10, 1996 specifically to
acquire MGM Studios, and is majority owned by an investor group comprised of
Tracinda Corporation ("Tracinda"), Seven Network Limited ("Seven") and certain
executive officers of the Company. The acquisition of MGM Studios by MGM was
completed on October 10, 1996, at which time MGM commenced principal
operations. The acquisition of Orion was completed on July 10, 1997 (see Note
2). Prior to its acquisition by MGM, MGM Studios was wholly owned by MGM Group
Holdings Corporation, an indirect wholly owned subsidiary of Consortium de
Realisation ("CDR"). CDR is a wholly owned subsidiary of Credit Lyonnais S.A.
and is controlled by the French State.
 
  The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial statements and the instructions to Form 10-Q related to
interim period financial statements. Accordingly, these condensed consolidated
financial statements do not include certain information and footnotes required
by generally accepted accounting principles for complete financial statements.
However, the accompanying unaudited condensed consolidated financial
statements contain all adjustments (consisting only of normal recurring
accruals) which, in the opinion of management, are necessary in order to make
the financial statements not misleading. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
full year. The Company's condensed consolidated financial statements should be
read in conjunction with the Company's audited financial statements and notes
thereto included in the Company's Form 10-K for the year ended December 31,
1997 (the "1997 Form 10-K"). As permitted by Statement of Financial Accounting
Standards ("SFAS") No. 53, "Financial Reporting by Producers and Distributors
of Motion Pictures," the Company has presented unclassified condensed
consolidated balance sheets.
 
NOTE 2--ACQUISITION OF ORION
 
  On July 10, 1997, the Company acquired all the outstanding common stock of
Orion for an aggregate purchase price of $573,000,000 (the "Orion
Acquisition"). The pro forma results of operations set forth below for the
quarter ended March 31, 1997 are stated as if the Orion Acquisition, the
conversion of the Company's Series A Cumulative Convertible Preferred Stock
(the "Preferred Stock") into the Company's common stock and the 41.667 for 1
stock split (see Note 5) had occurred at the beginning of the period (in
thousands, except share and per share data):
 
<TABLE>
<CAPTION>
                                                                  QUARTER ENDED
                                                                  MARCH 31, 1997
                                                                  --------------
     <S>                                                          <C>
     Revenues....................................................   $  225,049
     Operating loss..............................................   $   (2,847)
     Net loss....................................................   $  (21,224)
     Pro forma loss per share....................................   $     (.40)
     Pro forma weighted average shares...........................   52,597,362
</TABLE>
 
                                       7
<PAGE>
 
                           METRO-GOLDWYN-MAYER INC.
 
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
NOTE 3--FILM AND TELEVISION COSTS
 
  Film and television costs, net of amortization, are summarized as follows
(in thousands):
 
<TABLE>
<CAPTION>
                                                         MARCH 31,  DECEMBER 31,
                                                            1998        1997
                                                         ---------- ------------
   <S>                                                   <C>        <C>
   Theatrical productions:
     Released........................................... $1,376,395  $1,418,446
     Completed not released.............................     61,099       7,662
     In process and development.........................    178,248     174,386
   Television programming...............................    312,872     266,632
                                                         ----------  ----------
                                                         $1,928,614  $1,867,126
                                                         ==========  ==========
</TABLE>
 
  Interest costs capitalized to theatrical productions were $3,165,000 and
$1,076,000 during the quarters ended March 31, 1998 and 1997, respectively.
 
NOTE 4--BANK AND OTHER DEBT
 
  Bank and other debt is summarized as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                            MARCH   DECEMBER 31,
                                                           31, 1998     1997
                                                           -------- ------------
   <S>                                                     <C>      <C>
   Revolving Facility..................................... $278,000   $175,000
   Term Loans.............................................  700,000    700,000
   Capitalized lease obligations and other borrowings.....   15,630     15,508
                                                           --------   --------
                                                           $993,630   $890,508
                                                           ========   ========
</TABLE>
 
  On October 15, 1997, the Company entered into an amended and restated credit
facility with a syndicate of banks (the "Amended Credit Facility") aggregating
$1.3 billion consisting of a six year $600 million revolving credit facility
(the "Revolving Facility"), a $400 million seven and one-half year term loan
("Tranche A Loan") and a $300 million eight and one-half year term loan
("Tranche B Loan" and, collectively with the Tranche A Loan, the "Term
Loans"). The Amended Credit Facility contains provisions allowing, with the
consent of the requisite lenders and subject to syndication thereof, for an
additional $200 million tranche, raising the potential amount of Amended
Credit Facility to $1.5 billion. The Revolving Facility and the Tranche A Loan
bear interest at 2.25 percent over the Adjusted LIBOR rate, as defined (7.96
percent at March 31, 1998). The Tranche B Loan bears interest at 2.50 percent
over the Adjusted LIBOR rate (8.21 percent at March 31, 1998). Scheduled
amortization of the Term Loans under the Amended Credit Facility commences
with $33 million in 2001, $73 million in 2002, $103 million in 2003, $103
million in 2004 and $103 million in 2005, with the remaining balance due at
maturity. The Revolving Facility matures in October 2003, subject to extension
under certain conditions.
 
  The Company has entered into three year fixed interest rate swap contracts
in relation to a portion of the Term Loans for a notional value of
$500,000,000 at an average rate of 8.6 percent, which expire in November 2000.
 
                                       8
<PAGE>
 
                           METRO-GOLDWYN-MAYER INC.
 
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  The Company's borrowings under the Amended Credit Facility are secured by
substantially all the assets of the Company. The Amended Credit Facility
contains various covenants including limitations on dividends, capital
expenditures and indebtedness, and the maintenance of certain financial
ratios.
 
NOTE 5--RECAPITALIZATION
 
  On November 18, 1997, the Company consummated a recapitalization pursuant to
which the Company (i) converted each share of Preferred Stock into one share
of common stock, $.01 par value per share, of the Company ("Common Stock"),
(ii) effected a 41.667 for 1 stock split and (iii) increased the number of
authorized shares of Common Stock from 50,000,000 to 125,000,000. Share and
per share information for the quarter ended March 31, 1997 have been
retroactively restated to reflect this recapitalization.
 
  On November 18, 1997, the Company completed the issuance and sale of
9,000,000 new shares of Common Stock at a price per share of $20, less an
underwriting discount and offering expenses, for net proceeds of $165,000,000,
in an initial public offering (the "Offering"). Concurrent with the
consummation of the Offering, Tracinda purchased directly from the Company
3,978,780 shares of Common Stock, at a price per share of $20 less an amount
equal to the underwriting discount per share for shares issued in the
Offering, for net proceeds of $75,000,000 (the "Tracinda Purchase").
Subsequently, $190,000,000 of the net proceeds of the Offering and the
Tracinda Purchase were used to repay existing bank debt and the remaining net
proceeds were retained and used for working capital purposes.
 
  Basic earnings per share for the quarter ending March 31, 1997 decreased by
$0.47 per share due to the adoption of SFAS No. 128, "Earnings Per Share,"
effective for the year ending December 31, 1997. Dilutive securities of
217,492 and 21,104,455 shares are not included in the calculation of diluted
earnings per share in the quarters ending March 31, 1998 and 1997,
respectively, because they are antidilutive.
 
NOTE 6--COMMITMENTS AND CONTINGENCIES
 
  The Company, together with other major companies in the filmed entertainment
industry, has been subject to numerous antitrust suits brought by various
motion picture exhibitors, producers and others. In addition, various legal
proceedings involving alleged breaches of contract, antitrust violations,
copyright infringement and other claims are now pending, which the Company
considers routine to its business activities.
 
  In the opinion of Company management, any liability under pending litigation
is likely to be not material in relation to the Company's financial condition.
 
NOTE 7--SUPPLEMENTARY CASH FLOW INFORMATION
 
  The Company paid interest, net of capitalized interest, of $11,510,000 and
$7,049,000 during the quarters ended March 31, 1998 and 1997, respectively.
The Company paid income taxes of $1,283,000 during the quarter ended March 31,
1998, and received foreign remittance tax refunds of $1,703,000 during the
quarter ended March 31, 1997, respectively.
 
  During the quarter ended March 31, 1998, the Company contributed 14,197
shares of common stock valued at $274,000 to the Company's 401-k Savings Plan.
 
                                       9
<PAGE>
 
                           METRO-GOLDWYN-MAYER INC.
 
       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
NOTE 8--COMPREHENSIVE INCOME (LOSS)
 
  In 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive Income."
Comprehensive income (loss) for the quarters ended March 31, 1998 and 1997 are
as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                              QUARTER ENDED
                                                                MARCH 31,
                                                            ------------------
                                                              1998      1997
                                                            --------  --------
     <S>                                                    <C>       <C>
     Foreign currency translation adjustment............... $    (48) $    147
     Net loss..............................................  (18,643)  (14,193)
                                                            --------  --------
                                                            $(18,691) $(14,046)
                                                            ========  ========
</TABLE>
 
  Accumulated other comprehensive income for the quarter ended March 31, 1997
consisted of a cumulative foreign currency translation adjustment of
$1,292,000.
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 
  Information in this Item 2 and elsewhere herein include forward-looking
statements. Generally, the words "believes," "anticipates," "may," "will,"
"should," "expect," "intend," "estimate," "continue" and similar expressions
or the negative thereof or comparable terminology are intended to identify
forward-looking statements. Such statements are subject to certain risks and
uncertainties, including the matters set forth in this report or other reports
or documents the Company files with the Securities and Exchange Commission
from time to time, which could cause actual results or outcomes to differ
materially from those projected. Undue reliance should not be placed on these
forward-looking statements which speak only as of the date hereof. The Company
undertakes no obligation to update publicly any revisions to these forward-
looking statements.
 
  The following discussion and analysis should be read in conjunction with the
Condensed Consolidated Financial Statements and the related notes thereto and
other financial information contained elsewhere in this Form 10-Q, as well as
the Company's Audited Financial Statements included in the 1997 Form 10-K.
 
GENERAL
 
  The Company is engaged primarily in the development, production and
worldwide distribution of theatrical motion pictures and television
programming.
 
  The commercial potential of individual motion pictures and television
programming varies dramatically, and does not directly correlate with
production or acquisition costs. Therefore, it is difficult to predict or
project a trend of the Company's income or loss. However, the likelihood of
the Company reporting losses, particularly in the year of a motion picture's
release, is increased by the industry's method of accounting which requires
the immediate recognition of the entire loss (through increased amortization)
in instances where it is estimated the ultimate revenues of a motion picture
or television program will not recover the Company's costs. On the other hand,
the profit of a profitable motion picture or television program must be
deferred and recognized over the entire revenue stream generated by that
motion picture or television program. This method of accounting may also
result in significant fluctuations in reported income or loss, particularly on
a quarterly basis, depending on the Company's release schedule and the
relative performance of individual motion pictures or television programs. As
a result of the lack of movie production and distribution during the period
from January 1996 (when CDR announced its intention to sell MGM Studios)
through the sale of MGM Studios on October 10, 1996, the Company expects to
experience lower revenues for at least the next two years, and thus the
fluctuations caused by this accounting method may have a greater impact than
otherwise might be the case. For films released by the Company since January
1994 which resulted in feature film write-downs in the period of initial
release, subsequent performance as it relates to this group of films has not
resulted in additional material write-downs.
 
                                      10
<PAGE>
 
RESULTS OF OPERATIONS
 
 Quarters Ended March 31, 1998 and 1997
 
  The following table sets forth EBITDA (defined as operating income (loss)
before depreciation and non-film amortization principally of goodwill related
to business combinations) for the quarters ended March 31, 1998 (the "1998
Quarter") and March 31, 1997 (the "1997 Quarter"). Prior year results are not
comparable to results in the current period due to the Orion Acquisition on
July 10, 1997. While many in the financial community consider EBITDA to be an
important measure of comparative operating performance, it should be
considered in addition to, but not as a substitute for or superior to,
operating income, net earnings, cash flow and other measures of financial
performance prepared in accordance with generally accepted accounting
principles. EBITDA does not reflect cash necessary or available to fund cash
requirements, and the items excluded from EBITDA, such as depreciation and
non-film amortization, are significant components in assessing the Company's
financial performance. Other significant uses of cash flows are required
before cash will be available to the Company, including debt service, taxes
and cash expenditures for various long-term assets. The Company's calculation
of EBITDA may be different from the calculation used by other companies and,
therefore, compatibility may be limited.
 
<TABLE>
<CAPTION>
                                                              QUARTER ENDED
                                                                MARCH 31,
                                                            ------------------
                                                              1998      1997
                                                            --------  --------
                                                               (AMOUNTS IN
                                                               THOUSANDS)
<S>                                                         <C>       <C>
Revenues:
  Feature films............................................ $254,137  $167,948
  Television programs......................................   58,746    27,780
  Other....................................................    3,577     1,901
                                                            --------  --------
    Total revenues......................................... $316,460  $197,629
                                                            ========  ========
EBITDA:
  Feature films............................................ $ 33,056  $ 26,006
  Television programs......................................    4,845    (1,872)
  Other....................................................   (8,111)   (5,696)
                                                            --------  --------
  EBITDA before general and administration expenses........   29,790    18,438
  General and administration expenses......................  (22,648)  (17,312)
                                                            --------  --------
    EBITDA.................................................    7,142     1,126
Depreciation and non-film amortization.....................   (5,213)   (3,510)
                                                            --------  --------
Operating income (loss)....................................    1,929    (2,384)
Interest expense, net of amounts capitalized...............  (18,254)  (11,016)
Interest and other income, net.............................      675     1,630
                                                            --------  --------
Loss before provision for income taxes.....................  (15,650)  (11,770)
Income tax provision.......................................   (2,993)   (2,423)
                                                            --------  --------
Net loss................................................... $(18,643) $(14,193)
                                                            ========  ========
</TABLE>
 
                                      11
<PAGE>
 
  Feature Films. Feature film revenues increased by $86.2 million, or 51
percent, to $254.1 million in the 1998 Quarter compared to the 1997 Quarter.
Explanations for the increase in revenues are discussed in the following
paragraphs.
 
  Worldwide theatrical revenues increased by $103.3 million to $112.8 million
in the 1998 Quarter due to significant worldwide theatrical revenues earned by
Tomorrow Never Dies, which was initially released in December 1997, and The
Man In The Iron Mask, which was successfully released in March 1998. There
were no comparably performing films released in the 1997 Quarter. Overall, in
the 1998 Quarter the Company released four new feature films domestically and
one new film internationally, as compared to two films released domestically
and no new films in initial release internationally in the 1997 Quarter.
 
  Worldwide home video revenues decreased by $26.3 million, or 23 percent, to
$86.7 million in the 1998 Quarter, which included the release in the domestic
rental market of Hoodlum, Gang Related, Ulee's Gold and Eight Heads In A
Duffel Bag, as compared to the releases of Kingpin and Fled in the domestic
rental market in the 1997 Quarter as well as the sell-through release of The
Birdcage. The majority of the decrease in home video revenues was due to lower
international home video revenues earned in the 1998 Quarter than in the 1997
Quarter. The 1997 Quarter included significant international revenues from
GoldenEye, Get Shorty and The Birdcage, among others. There were no comparable
international home video releases in the 1998 Quarter.
 
  Worldwide pay television revenues increased by $3.3 million, or 17 percent,
to $22.8 million in the 1998 Quarter, primarily due to revenues from the
distribution of the Orion film library which did not contribute to operating
results in the 1997 Quarter as it was not acquired by the Company until July
10, 1997. Network television revenues decreased by $3.7 million, or 51
percent, to $3.5 million in the 1998 Quarter, principally due to the delivery
of only one new film, Species, to network television in the 1998 Quarter as
compared to three films delivered in the 1997 Quarter. Worldwide syndicated
television revenues increased by $6.8 million, or 37 percent, to $25.5 million
in the 1998 Quarter principally due to syndication revenues of $6.0 million
contributed by the Orion film library in the period, as well as higher
international syndication license fees realized primarily for Rob Roy, Tank
Girl and Speechless, among others.
 
  Other operating income increased $2.8 million in the 1998 Quarter due to
miscellaneous rebates and other income collected in the period.
 
  EBITDA from feature films increased by $7.1 million, or 27 percent, to $33.1
million in the 1998 Quarter as compared to the 1997 Quarter. Operating results
in the 1998 Quarter reflect the successful releases Tomorrow Never Dies and
The Man In The Iron Mask, partially offset by feature film write-downs on
certain other current period releases of $2.8 million. There were no feature
film write-downs in the 1997 Quarter.
 
  Television Programming. Television programming revenues increased by $31.0
million, or 111 percent, to $58.7 million in the 1998 Quarter as compared to
the 1997 Quarter. Network television revenues were $14.1 million in the 1998
Quarter, consisting of the new series The Magnificent Seven. There were no
series on network television in the 1997 Quarter. Worldwide pay television
revenues increased by $0.4 million, or 4 percent, to $9.6 million in the 1998
Quarter, which included three series in broadcast on domestic pay television,
The Outer Limits, Poltergeist and Stargate SG-1, as compared to The Outer
Limits, Poltergeist and one television movie in the 1997 Quarter. Worldwide
syndicated television revenues increased by $6.7 million, or 44 percent, to
$21.8 million in the 1998 Quarter, primarily due to the addition of the new
series Fame LA in worldwide syndication. Worldwide home video revenues with
respect to television programming increased by $2.9 million, or 100 percent,
to $5.7 million in the 1998 Quarter due to the release of Garth Brooks Live In
Concert in the period. The remaining television programming revenue increase
of $7.2 million principally related to a payment received from a third party
for the remake rights to Hollywood Squares.
 
  EBITDA from television programming was a profit of $4.8 million in the 1998
Quarter as compared to a loss of $1.9 million in the 1997 Quarter. The
increase in profits in the 1998 Quarter was principally a result of
 
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<PAGE>
 
the aforementioned increase in revenues and the receipt of the remake rights
payment for Hollywood Squares, partially offset by write-downs of $4.5 million
on certain television programming released in the period.
 
  Other. Other revenues include distribution of consumer products, interactive
media and branded programming services, all of which constitute emerging
businesses for the Company with relatively limited current operations. EBITDA
from other businesses was a loss of $8.1 million in the 1998 Quarter as
compared to a loss of $5.7 million in the 1997 Quarter. Operating results in
the 1998 Quarter include interactive product and development costs of $4.4
million, as compared to similar costs of only $2.8 million in the 1997
Quarter. In addition, the 1998 Quarter includes aggregate losses of $3.1
million on the Company's investment in MGM Gold (Asia), a satellite and cable
delivered channel based in Asia in which the Company holds a 50 percent equity
interest, and the Company's newly launched service MGM Gold (Brazil), as
compared to $2.9 million for such start-up losses in the 1997 Quarter. The
Asian channel service was terminated in April 1998. Related termination costs
are not expected to be significant.
 
  General and Administration Expenses. General and administration expenses,
excluding depreciation expense, increased by $5.3 million, or 31 percent, to
$22.6 million in the 1998 Quarter as compared to the 1997 Quarter, primarily
due to the Orion Acquisition resulting in additional overhead charges of $1.2
million in the 1998 Quarter with no corresponding charge in the 1997 Quarter
as Orion was not acquired by the Company until July 10, 1997, and increased
legal fees of $3.5 million related to ongoing litigation.
 
  Depreciation and Non-Film Amortization. Depreciation and non-film
amortization increased by $1.7 million, or 49 percent, to $5.2 million in the
1998 Quarter as compared to the 1997 Quarter as a result of higher goodwill
due to the Orion Acquisition.
 
  Interest Expense, Net of Amounts Capitalized. Net interest expense increased
by $7.2 million, or 66 percent, to $18.3 million in the 1998 Quarter as
compared to the 1997 Quarter, primarily due to higher debt levels associated
with the financing of the Orion Acquisition, as well as borrowings for
increased production and operating activities.
 
  Income Tax Provision. The income tax provisions of $3.0 million in the 1998
Quarter and $2.4 million in the 1997 Quarter primarily reflect foreign
remittance taxes attributable to international distribution revenues.
 
LIQUIDITY AND CAPITAL RESOURCES
 
  In recent years the Company has funded its operations primarily from
internally generated funds, bank borrowings and proceeds from the sales of
equity securities. The Company is currently operating under a business plan
which calls for substantial continued borrowings, primarily to fund film and
television production. Pursuant to such plan, the Company's investment in film
and television production and distribution in the 1998 Quarter increased to
$286.7 million from $179.2 million in the 1997 Quarter.
 
  On October 15, 1997, the Company and its principal lenders entered into the
Amended Credit Facility aggregating $1.3 billion consisting of the Revolving
Facility, the Tranche A Loan and the Tranche B Loan. The Amended Credit
Facility also contains provisions allowing, with the consent of the requisite
lenders and subject to syndication thereof, for an additional $200 million
tranche, raising the potential amount of the Amended Credit facility to $1.5
billion. As of March 31, 1998, The Company had $322 million available under
the Amended Credit Facility to fund the ongoing operating activities of the
Company. The Revolving Facility and Tranche A Loan bear interest at 2.25
percent over the Adjusted LIBOR rate, as defined, and the Tranche B Loan bears
interest at 2.50 percent over the Adjusted LIBOR rate. The Company has entered
into three year fixed interest rate swap contracts in relation to a portion of
the Term Loans for a notional value of $500 million at an average rate of 8.6
percent, which expire in November 2000. Scheduled amortization of the Term
Loans under the Amended Credit Facility commences with $33 million in 2001,
$73 million in 2002, $103 million in 2003, $103 million in 2004, and $103
million in 2005, with the remaining balance at maturity. The revolving
facility portion of the Amended Credit Facility matures in October 2003,
subject to extension under certain conditions.
 
                                      13
<PAGE>
 
The Amended Credit Facility contains various covenants, including limitations
on indebtedness, dividends and capital expenditures and maintenance of certain
financial ratios.
 
  The Company's strategy and business plans contemplate substantial on-going
investments in the production of new feature films and television programs. In
addition, the Company plans to continue to make investments or enter into
joint ventures to develop new distribution channels to further exploit the
Company's motion picture and television library (the "Library"). The Company
may also make strategic acquisitions, including acquisitions to obtain such
distribution channels or to further expand the Library, and may enter into
other joint ventures, including ventures to produce motion pictures. The
nature and extent of such additional investments (including potential
acquisitions and joint ventures) are dependent upon the future evaluation of
the specific strategic and economic factors underlying such opportunities.
 
  The Company believes that the available credit under the Amended Credit
Facility should be sufficient to meet the Company's current obligations and
commitments and will enable the Company to continue to conduct its operations
in accordance with its current business plan, although no assurance can be
given in that regard. The Company may need to seek other sources of financing
in order to complete any future acquisitions. Even if the Company does not
consummate any acquisitions, in order to take advantage of opportunities in
the capital markets, the Company may from time to time seek additional
financing. No assurance can be given that such other sources will be available
or on terms acceptable to the Company.
 
YEAR 2000 DATE CONVERSION
 
  The Company has begun to identify, evaluate and implement the changes that
need to be made to computer systems and applications necessary to achieve a
year 2000 date conversion with no disruption of business operations. These
actions are necessary to ensure that the systems and applications will
recognize and process the year 2000 and beyond. The Company also is
communicating with suppliers, distributors, financial institutions and others
with which it does business to coordinate year 2000 conversion. Due to
recently completed and ongoing systems implementations, the Company does not
anticipate that the additional costs of completing the year 2000 date
conversion will be material to the Company's results of operations, liquidity
or its capital resources.
 
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
 
  Pursuant to the general instructions to Rule 305 of Regulation S-K, the
disclosures called for by Item 3 and Rule 305 of Regulation S-K are
inapplicable to the Company.
 
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<PAGE>
 
                          PART II. OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS
 
  On November 17, 1997, the Company and Danjaq, LLC ("Danjaq") filed an action
in federal court in Los Angeles against Sony Corporation, Sony Pictures
Entertainment Inc., Columbia Pictures Industries, Inc. ("Columbia"), John
Calley, Kevin McClory and Spectre Associates, Inc. seeking declaratory and
injunctive relief and/or damages for copyright infringement, trademark
dilution, slander of title, unfair competition, inducing breach of contract
and breach of fiduciary duties, and misappropriation of trade secrets, based
on Sony's publicized assertion on October 13, 1997 that it had the right
(together with Mr. McClory) to create its own James Bond film franchise. The
complaint seeks various forms of legal relief based on the Company's position
that the defendants do not have any legal right to produce or distribute a
franchise of James Bond films, or any James Bond films, in the United States.
On January 23, 1998, the Company and Danjaq filed an amended complaint adding
claims for trademark infringement, federal unfair competition and California
trademark dilution. The Company and Danjaq contend not only that Mr. McClory's
rights were limited to remaking Thunderball but that even those rights have
expired under U.S. law pursuant to the doctrine of Stewart v. Abend, 495 U.S.
207 (1990) and that Mr. McClory's rights have been recently acquired by
Danjaq. They also contend that Mr. Calley misappropriated trade secret
information about the James Bond franchise when he left United Artists
Pictures, a wholly owned subsidiary of the Company, for Sony. On February 12,
1998, Sony Pictures Entertainment Inc. and Columbia filed an answer and
counterclaim asserting, among other things, that Mr. McClory owns the rights
to materials he claims were the genesis of the cinematic James Bond, and that
Sony is the assignee of those rights and that they are therefore owed an
accounting of profits on all James Bond films Danjaq and the Company have
produced and marketed in the United States. Mr. McClory answered the complaint
on March 19, 1998, asserting contentions similar to Sony's. On April 10, 1998,
the Company and Danjaq filed a motion to dismiss a portion of one of Sony's
claims for relief, the Third Claim For Relief seeking an accounting of the
Company's and Danjaq's profits in exploiting the James Bond franchise. While
that motion was pending, but before it was heard, Sony Pictures Entertainment
Inc. and Columbia on May 1, 1998 filed a First Amended Counterclaim making
certain modifications to their claims, including a modification to the Third
Claim For Relief so that it no longer seeks an accounting but instead seeks
damages for copyright infringement. Discovery is ongoing in the case. Trial
has been set for December 15, 1998.
 
  The Company intends vigorously to assert both substantive and procedural
defenses to all of Sony's claims and to pursue its own remedies fully. The
Company believes that a remake of Thunderball by Mr. McClory, Sony or others
would not have a material adverse effect on the Company's business or results
of operations. However, a determination that Mr. McClory, Sony or others have
broader rights to produce or exploit other films, television programs or other
similar programs that are based, in whole or in part, on the James Bond
character, or that such persons are entitled to copyright damages from the
Company, could have a material adverse effect on the Company's business and
results of operations. For background about the James Bond franchise, refer to
the discussion contained in the Company's 1997 Form 10-K.
 
  In the two consolidated litigations entitled Turner Broadcasting System,
Inc., ("Turner") et al. vs. Tracinda Corporation and Turner Broadcasting
System, Inc., et al. vs. Metro-Goldwyn-Mayer Inc., (Base File CV-S-97-415), on
April 24, 1998 the Company moved to dismiss the Amended Complaint against it
on jurisdictional grounds. In such litigation, MGM Studios, as successor in
interest to United Artists Corporation, and Tracinda are defendants in
consolidated actions in the United States District Court for the District of
Nevada. Turner alleges that, as a result of Turner's 1986 acquisition of a
predecessor in interest to MGM Studios and related transactions, there was a
$260 million tax loss and that the defendants are contractually obligated to
pay over to Turner any resulting tax benefits attributable to that loss that
Tracinda has received or will be allowed. The Company has not claimed and will
not receive any such tax benefits. The Internal Revenue Service has disallowed
both Turner's and Tracinda's tax claims, which are now pending in the United
States Tax Court. Based upon information to date, the Company's management
believes that it is unlikely that the Turner litigation will have a material
adverse effect on the Company's financial condition or results of operations.
 
                                      15
<PAGE>
 
  Reference is made to the Company's 1997 Form 10-K for a description of other
pending legal proceedings involving the Company.
 
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
 
  During the quarter ended March 31, 1998, the Company contributed an
aggregate of 14,197 shares of unregistered Common Stock valued at $274,000 as
its matching contribution to the MGM Savings Plan. Registration for such
shares was not required because the transaction did not constitute a "sale"
under Section 2(3) of the Securities Act of 1933, as amended.
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 
  (a) Exhibits
 
   27.1 Financial Data Schedule
 
  (b) Reports on Form 8-K
 
  A Current Report on Form 8-K dated February 6, 1998 was filed by the
Registrant pursuant to Section 13 of the Securities Exchange Act of 1934,
reporting under Item 5 thereto with respect to the possibility that the
exemption from the application of Article 85(1) of the Treaty of Rome with
respect to United International Pictures theatrical distribution activities
within the European Union may not be extended.
 
                                      16
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
 
                                          METRO-GOLDWYN-MAYER INC.
 
                                                 /s/ Frank G. Mancuso
May 12, 1998                              By: _________________________________
                                                      Frank G. Mancuso
                                                  Chairman of the Board of
                                                          Directors
                                                and Chief Executive Officer
 
                                                /s/ Michael G. Corrigan
May 12, 1998                              By: _________________________________
                                                    Michael G. Corrigan
                                              Senior Executive Vice President
                                                and Chief Financial Officer
 
                                       17