The lack of product severely trimmed Carolco Pictures’ second quarter earnings, but the indie appears to be on a stronger financial footing.
For the period ended June 30, Carolco posted a net loss of $ 13.5 million (47 cents a share), down from a $ 14.5 million loss (54 cents) in the same quarter last year.
Revenues, however, were slashed nearly 70% to $ 28 million vs. the comparable period last year.
The results reflect the lack of films during the period. Feature film revenues were $ 26.6 million, compared with $ 39.8 million last year.
No help from ‘Cliffhanger’
“Cliffhanger,” Carolco’s latest offering, didn’t hit the screens till May, but according to the company, it owned less than 50% of the picture and revenues aren’t included in the period’s performance. Film revenues included foreign theatrical and video release of “Basic Instinct,” and foreign pay and free TV of “Terminator 2: Judgment Day.”
Meanwhile, Carolco continues to wrestle with its bondholders and internal cost structure as it reshapes its balance sheet. Overhead was sliced 73.5% during the period, much of it attributable to layoffs and lack of production. Also, interest expenses dropped $ 43.7%. Carolco has an estimated $ 14 million in loans from Credit Lyonnais. The indie is in violation of several bank loan covenants, including a demand to maintain a $ 40 million net worth.
But the company has failed to pay the principal and accrued interest on two bond issues, and is awaiting acceptance by its bondholders for new debt securities. Failure to win acceptance, Carolco warned, would mean a default and possible bankruptcy.
Live on the mend
Separately, Live Entertainment Inc. — in which Carolco owns approximately 37 % of the voting equity — appears to be on the mend.
The video distributor posted a net loss of $ 1.5 million for the second quarter, ended June 30, compared with a net loss of $ 13.4 million. After payouts for preferred dividends, the losses were 20 cents a share vs. $ 1.15.
Operating income, however, was $ 314,000, vs. a $ 9.7 million loss in the same period last year.
Revenues were up 55.9% to $ 67 million compared with the comparable quarter.
Underlining the strength of the results is that the company absorbed a $ 2.1 million operating loss at its Germany-based VCL/Carolco Communications unit.
This past spring, Live teetered and then fell into bankruptcy as it attempted to restructure its balance sheet. Subsequently, bondholders accepted a new issue of debt, permitting Live to re-emerge from court protection (Daily Variety, March 25).
More critical still, Live’s interest payments on debt was cut by 60% to $ 1.5 million.