PRESS RELEASE
Intertainment back in the black during the 2nd quarter and intending to sue the Comerica
Bank and two insurance companies
Ismaning (near Munich), 16th July 2002 - The Intertainment AG, domiciled in Ismaning near
Munich, managed to increase its turnover substantially in the second quarter of the year and
is now back in the black. According to Rüdiger Baeres, the Chairman of the media company's
Executive Board, preliminary figures show that Intertainment has achieved a turnover of
"between EU 8.5 and EU 9.5 million" in the period from April to the end of June. The company
has thus succeeded in increasing its earnings substantially over those of the first quarter
2002. In the first three months of the current business year the company's turnover amounted
to EU 2.5 million. The major part of the second quarter's turnover was achieved as a result
of the sale by Intertainment of three film packages to companies in Great Britain, Eastern
Europe and Germany. "We are expecting to receive additional financial assets from these sales
agreements in the next few months," said Baeres at Intertainment's annual general meeting.
In parallel with this increase in turnover, the company's result situation was also improved.
After having had to show a loss of EU 3.7 million in the first three months of 2002, Intertainment
succeeded in closing its second quarter "with a slight profit", Baeres announced. The company's
financial assets have also risen substantially. At the end of June they amounted to EU 18.7
million, an increase of 82 percent over the end of March, when Intertainment had liquid assets
of only EU 10.3 million. "We therefore now have a solid financial cushion," Baeres emphasized.
Progress in the fraud case
Intertainment has also seen some good progress in its lawsuit against its former film supplier,
the US company Franchise Pictures. The case is currently before the courts in Los Angeles. Baeres
announced that Intertainment is intending to sue the Comerica Bank and two completion-bond
companies also in connection with the Franchise case. The completion-bond companies are WorldWide
Film Completion and Film Finances. Intertainment's claims against these companies are to be
filed, also in the USA, after the discovery against Franchise, which is expected to end on 9th
August. In addition, according to Baeres, Intertainment is intending to increase its claim for
damages against Franchise from the current sum of "at least 75 million dollars" to "at least
100 million dollars". Baeres explained that, to the extent of his knowledge at present, Franchise
had defrauded Intertainment of at least this latter amount. The sum of $ 75 million named when
the lawsuit was first brought against Franchise on 21st December 2000 was, he said, calculated
merely in accordance with an initial estimate based on the knowledge available at the time.
The reasons for the various suits announced at the annual general meeting by Intertainment's
Chairman lay, he said, in the fact that his company could only have been defrauded through the
collusion of Franchise, the Comerica Bank and - depending on the film concerned - one of the
completion-bonds companies, WorldWide Film Completion or Film Finances. These companies had
"worked hand in hand with each other to cause major financial damage to another company -
Intertainment - and thereby to enrich themselves. In our view, this is nothing other than an
example of organized crime," Baeres said.
Intertainment sees its view confirmed by the fact that a judge in Los Angeles last May upheld
two RICO claims by Intertainment. RICO is an acronym for "Racketeer Influenced and Corrupt
Organizations". This is a special provision of the American Federal Rules of Civil Procedure,
introduced in the mid-1980s with the intention of providing persons suffering losses at the
hands of the Mafia with grounds for legal action. It provides for treble damages to victims
of organized crime. If Intertainment should win its case against Franchise, the company would
therefore be able to claim payment of approx. $ 300 million plus attorneys' fees.
As Baeres explained, in view of the obvious collaboration between Franchise, the Comerica Bank
and the two completion-bonds companies, Intertainment had already filed a lawsuit against
Comerica in February 2001 but had withdrawn the lawsuit again without any waiver of rights
in order "especially to pursue the discovery against Franchise". A ten day jury trial is
scheduled to commence on November 19.
According to press reports, Franchise has meanwhile admitted operating with different budgets.
Moreover, the FBI and the US Attorney General's Office have been investigating the film producers
for several months now. Intertainment anticipates that these investigations by the US authorities
will be extended. "For the collusion between Franchise, Comerica and the completion-bond
companies is just all too obvious," said Baeres.
Start of principal photography on "Blackout"
In the last few months Intertainment has also made considerable progress in its cooperation with
the reputable film producer Arnold Kopelson. At present the partners are working together on four
new films. According to Baeres, Intertainment has so far invested a total of $ 13.1 million in
the development of these projects. The greatest progress has been made with the work on "Blackout".
"We are intending to start filming in San Francisco during the month of August," Baeres said.
"Blackout" is due for cinema distribution in mid-2003. The film's budget will amount to approx.
$ 65 million.