German licence trader and producer Intertainment has blamed its failure to return to profit in the 2002 financial year on the "ongoing negative effects" of its dispute with US producer Franchise Pictures.

Intertainment's spat with Franchise has been dragging on since 2000, when the company alleged that Franchise and its principals had submitted fraudulently inflated budgets to Intertainment on films including 3,000 Miles To Graceland, The Whole Nine Yards, The Pledge, Get Carter and Angel Eyes.

According to Intertainment's annual report, it posted a net loss of Euros 16.1m for 2002, compared with a loss of Euros 86.8m in the previous year. The company added that it had "substantially" reduced the level of unscheduled expenses resulting from the alleged fraud to Euros 3.3m compared to Euros 142.4m in 2001.

Sales in 2002 amounted to Euros 19m compared with Euros 31.1m in 2001. Film llicensing revenues dropped from Euros 28.4m to Euros 14.5m.

Intertainment's CEO Ruediger Baeres described 2002 as "a year of transition with the first key steps toward a turnaround for Intertainment."

He forecast that overall sales for 2003 will be "substantially higher" than 2002.

This optimism is based on the expectations of the revenues to be generated from Intertainment's pre-sales for the thriller Blackout, starring Samuel L. Jackson, Ashley Judd and Andy Garcia and produced with Kopelson Entertainment and Paramount Pictures, when the film opens theatrically in the second half of the year.