Relevant Information for Decision Making

In 1991 actress Kim Basinger was sued by Main Line Pictures for an alleged breach of contract involving the 1993 movie “Boxing Helena”. The lawsuit was based on the possible income from the movie if Kim Basinger acted versus the possible income if Sherilyn Fenn, Kim Basinger’s replacement, were to take the lead role. At the heart of the lawsuit was the accounting numbers that the plaintiff’s expert witness calculated. The plaintiff’s calculations were based on possible profit and expenditures for the movie if Kim Basinger starred in it and if Sherilyn Fenn starred in the movie. These calculations raised many questions on the validity of their numbers due to what the defendant claimed were missing variables, predictions in a vastly unreliable field, and the miss-calculations in the total percentage of the earnings that Main Line Pictures would capture.

Calculations

With Basinger Without Basinger Difference

-Foreign Pre-Sales

--Firm $6.8 M $2.7 M $4.1 M

--Probable $.8 M N/A $.8 M

-Total Foreign $7.6 M $2.7 M $4.9 M

-Domestic Pre-Sales $3.0 M $0.0 M $3.0 M

-Total Revenue $10.6 M $2.7 M $7.9 M

-Production Budget ($7.6 M) ($4.8 M) ($2.8 M)

-Net Profit/(Loss) $3.0 M ($2.1 M) $5.1 M

Table 1: Minimum Lost Profit—Prepared By Plaintiff

With Basinger Without Basinger Difference

-Foreign Pre-Sales

--Firm $6.8 M $ 2.7 M $ 4.1 M

--Probable $ .8M N/A $ .8 M

-Total Foreign $ 7.6M $ 2.7 M $ 4.9 M

-Domestic Pre-Sales $ 7.6M $ 0.0 M $ 7.6 M

-Total Revenue $ 15.2 M $ 2.7 M $ 12.5 M

-Production Budget ($ 7.6 M) ($ 4.8 M) ($ 2.8 M)

-Net Profit/(Loss) $ 7.6 M ($ 2.1 M) $ 9.7 M

Table 2: Maximum Lost Profit—Prepared By Plaintiff

Missing Variables

When reviewing the minimum lost profit table it is clear to see that some values did not make both the calculation with Kim Basinger and the calculation with Sherilyn Fenn. In both the minimum and maximum calculations the domestic pre-sales are zero dollars for the predictions without Basinger. The...