COMPANY TOWN : SEC Filings Show Carolco Has Little to Sing About : Movies: The company expects to lose money this year and next, despite a major financial reorganization negotiated last year.

Carolco Pictures Inc.’s first film in more than a year is the Western comedy “Wagons East.” But for the big-budget producer that once made such hit movies as “Terminator 2: Judgment Day” and “Basic Instinct,” things seem to be heading south.

“Wagons East,” best known as the last film made by comic actor John Candy, who died of a heart attack before the production was completed, is a box office dud. The TriStar Pictures release grossed an anemic $1.8 million on its opening weekend, finishing in 14th place.

But the more interesting tale with Carolco--which is led by flamboyant Chairman Mario Kassar--lies in documents filed two weeks ago with the Securities and Exchange Commission. In those filings, Carolco said it expects to lose money for 1994 and 1995, despite a major financial reorganization negotiated last year with creditors and partners--including Japan’s Pioneer, France’s Canal Plus, Italy’s RCS and French bank Credit Lyonnais.

The company also said it will not generate revenue from new production this year and expects to “experience significant liquidity constraints in the third and fourth quarters of 1994,” before a much-needed infusion of as much as $47.5 million arrives Jan. 1 from co-production investments and notes that were part of the restructuring.

Company executives declined to comment Monday except to say they are looking forward to launching their next two films--the high-profile “Cutthroat Island” and “Showgirls”--in October.

Because it is highly leveraged, Carolco said in the filings, it will need more financing to achieve its production goals, and raising more money on favorable terms will be “substantially more difficult” if it fails to consummate a planned merger with video distributor Live Entertainment, a company Carolco has long been associated with.

As for “Cutthroat Island” and “Showgirls,” Carolco said there are still financing obstacles to overcome. Most important is negotiating with Credit Lyonnais--which, through its Metro-Goldwyn-Mayer studio is a major Carolco investor--for production loans to finance a substantial part of the two films, whose combined budgets will total a whopping $130 million. Carolco’s partners are also said to be getting restless, although there is no evidence that they have threatened to pull the plug.

Carolco said it believes it can negotiate the loans on satisfactory terms but can offer no assurances that will happen. However, Credit Lyonnais has a stake in making sure Carolco gets the films done, because they would be the first two movies MGM would release under a deal in which the studio replaces TriStar as Carolco’s domestic distributor.

In the documents, Carolco said it will have sufficient funds to continue financing the two movies and meet its other obligations only if everything falls into place--the Credit Lyonnais financing, the co-production money and the funds from the notes.

What was to be a third major film for Carolco, “Crusade” starring Arnold Schwarzenegger, has been postponed indefinitely because its budget, by some accounts, has soared well past $100 million. In the SEC documents, Carolco said it has already sunk $10 million into the project and may be on the hook for another $12 million to fulfill various contracts, presumably payments to Schwarzenegger and others it would be obligated to make even if the movie doesn’t happen. The company said it hopes to recover some $3.5 million of its “Crusade” costs and to revive the film next year.

Carolco’s last big hit, released in 1993, was “Cliffhanger” with Sylvester Stallone. Although that movie was an international success, Carolco shared little of the financial reward because it was only a minority owner in the film. As a result, the SEC documents say, revenue associated with “Cliffhanger” does not show up in its feature film revenue.

Carolco’s recent inactivity shows up in its numbers. Overall, the company posted a net loss of $23.2 million for the first six months of the year, compared to a $20.2-million loss for the period a year earlier.

Feature film revenue plunged more than 50% to $30.1 million in the first six months of the year, and that revenue came largely from television payments for past hits such as “Terminator 2” and “Rambo III.”

Also lurking as a potential problem for Carolco is the tax man. According to the SEC documents, the Internal Revenue Service--which has been examining Carolco’s 1988, 1989 and 1990 returns--has proposed adjustments; Carolco will not be more specific. In addition, the California Franchise Tax Board is examining Carolco’s 1988 and 1989 state tax returns. As previously reported, tax officials are said to be interested in such matters as Carolco’s foreign financing arrangements.

The company did make progress in one area that has historically been a problem for it: high overhead. Expenses fell nearly 40% to $3.6 million in the quarter ended June 30, in part because of work force cutbacks. The firm even sold its luxury jet, posting a gain of nearly $1.3 million from the sale.