Greg Mize

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MUSIC INDUSTRY UPDATE
Fourth Quarter and Fiscal Year 2006
United States - United Kingdom - Canada
Thomas Braum Senior Vice President and Chief
Financial Officer [phone], Ext. 718
Greg Mize Vice President Investor Relations and
Treasurer [phone], Ext. 211
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United States - Fiscal Year 2006 Results
Handleman Fiscal Year 2006 Unit Sales (May
2005-April 2006) (in thousands of units)

• US music industry unit volume decreased 5.6,
  from 657.2 million units in fiscal 2005 to 620.5
  million units in fiscal 2006.
• Mass merchant sales decreased by 0.9, from 254.2
  million units in fiscal 2005 to 251.8 million
  units in fiscal 2006. The mass channel accounted
  for 40.6 of total unit sales for fiscal 2006
  an increase of 1.9 share points from 38.7 in
  2005.
• Chain store unit volume decreased from 306.0
  million units in fiscal 2005 to 270.3 million
  units in fiscal 2006. Share of industry volume
  decreased from 46.6 in 2005 to 43.6 in 2006.
• Unit sales for the non-traditional channel
  (online stores, concert venues and television
  product sales) increased 48.7.

Unit sales from Monday, May 2, 2005 to Sunday,
April 30, 2006.
Channel Share of Total Unit Sales FY2006
versus FY2005
2005
2006
Source Nielsen SoundScan National Summary Report
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United States - Fiscal 2006 Quarter 4 Results
Handleman Fiscal Quarter 4 Unit Sales
(Feb/Mar/Apr) (in thousands of units)

• US music industry unit volume decreased 2.5,
  from 146.4 million units in fiscal 2005 Q4 to
  142.7 million units in fiscal 2006 Q4.
• Mass merchant sales increased by 1.9, from 56.5
  million units in fiscal 2005 Q4 to 57.5 million
  units in fiscal 2006 Q4. The mass channel
  accounted for 40.3 of total unit sales for
  fiscal 2006 Q4 an increase of 1.7 share points
  from 38.6 in 2005 Q4.
• Chain store unit volume decreased from 66.3
  million units in fiscal 2005 Q4 to 59.9 million
  units in fiscal 2006 Q4. Share of industry
  volume decreased from 45.3 in 2005 Q4 to 42.0
  in 2006 Q4.
• Unit sales for the non-traditional channel
  (online stores, concert venues and television
  product sales) increased 57.4.
• DVD Music Video sales were 5.7 million in 2006 Q4
  down 2.1 from 2005 Q4.

Unit sales from Monday, January 30, 2006 to
Sunday, April 30, 2006.
Channel Share of Total Unit Sales FY2006 Q4
versus FY2005 Q4
Q4 2006
Q4 2005
Source Nielsen SoundScan National Summary Report
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Canada - Fiscal Year 2006 Results
Handleman Fiscal Year 2006 Unit Sales (May
2005-April 2006) (in thousands of units)

• Canada music industry unit volume decreased 1.6,
  from 49.0 million units in 2005 to 48.2 million
  units in 2006.
• Mass merchant retailers experienced an increase
  of 8.4, from 14.3 million units in fiscal 2005
  to 15.5 million units in fiscal 2006. Share of
  industry volume increased from 29.3 to 32.2.
• Retail channel sales (including chain and
  independent music retailers) decreased 5.7, from
  34.7 million in fiscal 2005 to 32.7 million in
  fiscal 2006.

Unit sales from Monday, May 2, 2005 to Sunday,
April 30, 2006.
Channel Share of Total Unit Sales FY2006
versus FY2005
2006
2005
Source Nielsen SoundScan Canada National
Summary Report
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Canada - Fiscal 2006 Quarter 4 Results
Handleman Fiscal Quarter 4 Unit Sales
(Feb/Mar/Apr) (in thousands of units)

• Canada music industry unit volume declined 4.6
  from 10.0 million units in 2005 Q4 to 9.6 million
  units in 2006 Q4.
• Mass merchant retailers experienced an increase
  of 3.5 from 3.0 million units in fiscal 2005 Q4
  to 3.1 million units in fiscal 2006 Q4. Share of
  industry volume increased from 29.6 to 32.1.
• Retail channel sales (including chain and
  independent music retailers) decreased 8.1 from
  7.1 million in fiscal 2005 Q4 to 6.5 million in
  fiscal 2006 Q4.
• DVD Music Video sales were 0.5 million in 2006
  Q4, down 12.8 from 2005 Q4.

Unit sales from Monday, January 30, 2006 to
Sunday, April 30, 2006.
Channel Share of Total Unit Sales FY2006 Q4
versus FY2005 Q4
Q4 2006
Q4 2005
Source Nielsen SoundScan Canada National
Summary Report
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United Kingdom - Fiscal Year 2006 Results
Handleman Fiscal Year 2006 Unit Sales (May
2005-April 2006) (in thousands of units)

• UK music industry unit volume decreased 2.9,
  from 183.2 million units in fiscal 2005 to 177.8
  million units in fiscal 2006.
• Album sales remained flat at 158.9 million units.
  Single sales decreased 22.6.
• The album configuration represented 89.4 of
  total unit sales an increase from 86.7 in
  fiscal 2005. Singles represented 10.6 of total
  unit sales in fiscal 2006 down 2.7 points from
  13.3 share in 2005.

Unit sales from Sunday May 1, 2005 to Saturday,
April 29, 2006.
Configuration of Total Unit Sales - Fiscal 2006
Source CIN - The Official UK Chart Company
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United Kingdom - Fiscal 2006 Quarter 4 Results
Handleman Fiscal Quarter 4 Unit Sales
(Feb/Mar/Apr) (in thousands of units)

• UK music industry unit volume decreased 6.3,
  from 39.8 million units in fiscal 2005 Q4 to 37.3
  million units in fiscal 2006 Q4.
• Album sales decreased 0.4 from 33.7 million
  units in fiscal 2005 Q4 to 33.6 million units in
  fiscal 2006 Q4. Single sales decreased 38.6.
• The album configuration represented 89.9 of
  total unit sales an increase from 84.5 in
  fiscal 2005 Q4. Singles represented 10.1 of
  total unit sales in fiscal 2006 Q4 down 5.4
  points from 15.5 share in 2005 Q4.
• DVD Music Video sales were 1.5 million in 2006 Q4
  up 37.7 from 2005 Q4.

Unit sales from Sunday, January 29, 2006 to
Saturday, April 29,2006.
Configuration of Total Unit Sales - Fiscal 2006
Q4
Source CIN - The Official UK Chart Company
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Fiscal 2006 Top Sellers
Mariah Carey Emancipation of Mimi Carrie
Underwood Some Hearts Nickelback All the
Right Reasons Kanye West Late
Registration Coldplay XY Various Artists Now
20 Kelly Clarkson Breakaway Kenny Chesney
Road and the Rodeo Eminem Curtain Call Green
Day American Idiot
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New Release Schedule - Fiscal 2007 Quarter 1
May Red Hot Chilli Peppers Stadium
Arcadium Jagged Edge Jagged Edge Disney
Soundtrack High School Musical Nick Lachey
Whats Left of Me June Blue Collar Comedy One
For the Road Three Days Grace ONEX Disney
Soundtrack Cars India Arie Testimony Vol. 1,
Life Relationships July Josh Gracin All
About Yall Various Artists Now 22 Kidz Bop
Kidz Kidz Bop 10