Another Flap Over a Movie’s Net Profits : Finance: According to Paramount Pictures, ‘Indecent Proposal’ has a net loss of $35.7 million, even though it has generated $250 million in ticket sales.

A New Jersey author whose novel formed the basis for the 1993 hit film “Indecent Proposal” is questioning Paramount Pictures’ accounting methods after studio financial statements show the film has yet to make a net profit--despite more than $250 million in worldwide ticket sales.

A studio financial statement shows that “Indecent Proposal”--a romantic drama starring Robert Redford, Woody Harrelson and Demi Moore--has generated more than $162 million in domestic and foreign box-office sales for Paramount--after the studio split the revenues with theater owners--but the film had a net loss of $35.7 million as of April 1, 1995.

“We assume that with a movie that made as much money as ‘Indecent Proposal,’ which was based on my book, there would be some sort of profit,” said author Jack Engelhard, 55, of Cherry Hill, N.J. “It’s kind of shocking to me that after all this time has transpired . . . there’s not a penny left for the author.”

The author has received approximately $120,000 for the movie rights to his 1988 novel, said his lawyer, Richard M. Rosenthal, and is contractually entitled to 2% of any net profits.

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The matter is similar to a controversy that surfaced in May, when Winston Groom, the author of “Forrest Gump,” complained about Paramount’s accounting practices. Studio documents showed that the Academy Award-winning film starring Tom Hanks had not made a net profit, despite amassing the fourth-biggest box-office take in history. Paramount eventually made peace with Groom, purchasing the rights to a “Gump” sequel.

A Paramount spokesman said Monday he could not comment on how much money had been given to Redford and other gross-profit participants, but other studio sources said it is not uncommon for pictures to be in the red, given the huge costs of producing, distributing and advertising as well as paying the major stars.

The spokesman said the studio would welcome sitting down with Engelhard or his representatives to explain how the studio defines net profits.

In the case of “Indecent Proposal,” a percentage of gross revenues were given to the three principal stars, as well as director Adrian Lyne and producer Sherry Lansing, who now heads Paramount Pictures.

Sources told The Times that Redford, as part of his deal to make the film, agreed to forgo an upfront fee, and instead took between 10% and 15% of the gross. The gamble paid off for Redford, who sources estimated has subsequently made between $20 million and $25 million off the film. Redford’s publicist could not be reached for comment.

The gross percentage participants include: The Robert Redford Motion Picture Co. and Wildwood Enterprises, Inc., Sherry Lansing Productions, Lyne’s Amylyne, Inc., Harrelson Enterprises, Inc. and Moore’s Pajama Party Productions, Inc.

Sources say that Lansing’s production company paid back 20% of its share of the gross to executive producers Tom Schulman and Alex Gartner, who brought the project to Paramount. Schulman and Gartner could not be reached for comment.

Engelhard said that for the past several months, he has tried unsuccessfully to get answers from the studio as to why the film shows no net profits, and he has hired Rosenthal, a Beverly Hills attorney, to pursue his case.

“Paramount has refused to provide us with its net profit formula or even its net profit definition,” Rosenthal told The Times. “He has not even received an explanation as to how a movie that has grossed more than $250 million--plus home video sales--has been $35 million in the red.”

But Paramount sources contend that a net profit definition had been provided to Engelhard’s previous attorney, based in Philadelphia.

“That’s legal stuff to me. What do I care about profit definitions,” Engelhard said Monday. “I was told that if this movie is a hit, everybody’s going to make money, don’t worry about it. I operated on that confidence in the system. . . . Now, after everyone has divided up the millions, is it too much to ask that there be something left for the author?”

Engelhard, a one-time journalist who also said he is a Holocaust survivor, said he “wasn’t thinking net or gross” points when he signed the initial contract.

“We were told this was a standard Hollywood contract, just sign the bottom line,” he recalled. “It’s such a dizzying experience, you’ll sign anything.”

The original movie rights were acquired by Cinetudes Film Productions Ltd. and Schulman in 1989 and were subsequently resold to Paramount a year later.

Sources said that the final screenplay, written by Amy Holden Jones, deviated greatly from the novel. In the film, Redford portrays a wealthy businessman who offers $1 million to a young couple (Moore and Harrelson) if the wife will sleep with him for one night.

Engelhard said he and his family got along well with the filmmakers during the production and were invited to the premiere. “I thought we were all one, big happy family,” the author said.

After the opening weekend grosses began rolling in, and the studio realized it had a monster hit on its hands, Engelhard said there was an “air of giddiness” at Paramount and Lansing told him, “We owe it all to you.”

Engelhard said he has only the highest regard for Lansing, Schulman and the other filmmakers, but believes he should be financially rewarded.

At the time the movie was released, a paperback version of “Indecent Proposal” was released, but Engelhard complained that the studio did nothing to promote the book. Industry sources told The Times that one reason might be that the book had little in common with the film.

Lansing was unavailable for comment Monday.

As months dragged on to years, Engelhard continued to puzzle over Paramount’s financial statements on the movie, which showed increasing revenues but no net profits. He said his Philadelphia lawyer had tried to get answers from the studio but was “stonewalled.”

“Two or three months ago, I contacted Paramount personally,” Engelhard said. “I said, ‘I don’t want to see lawyers. Let’s just talk.’ I got the runaround by one of their lawyers.”

Free-lance writer Connie Benesch contributed to this story.