Music Industry Update June 2003

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Music Industry UpdateJune 2003

• Thomas Braum
• Senior Vice President
• and Chief Financial Officer
• [phone], Ext. 718
• Greg Mize
• Vice President
• Investor Relations
• [phone], Ext. 211

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United States - Fiscal 2003 Quarter 4 Results

• U.S. unit sales decreased by 6.1 from 161.0
  million units in fiscal 2002 Q4 to 151.2 million
  units in fiscal 2003 Q4. The album configuration
  experienced a decrease of 5.4 and singles
  -36.1.
• Although mass merchant sales were relatively flat
  last quarter with a decrease of 0.4, sales
  decreased during Q4 by 2.6. Unit sales
  decreased from 52.5 million units in fiscal 2002
  Q4 to 51.2 million units in fiscal 2003 Q4.
• Independent retailers experienced a decrease of
  20.5 and chain retailers -5.3. Note that
  during Q3, chain retailers experienced a decrease
  of 11.8. The non-traditional channel (online
  stores, concerts, venues and television product
  sales) reported a gain of 6.5.
• The mass channel accounted for 33.9 of total
  unit sales for fiscal 2003 Q4 - an increase of
  1.3 share points from 32.6 in 2002. Chain store
  share increased from 50.1 in 2002 to 50.6 in
  2003.

Handleman Fiscal Quarter 4 Unit Sales
(Feb/Mar/Apr) (in thousands of units)
Unit Sales from Monday, February 3, 2003 to
Sunday, May 4, 2003
Channel Share of Total Unit Sales - Fiscal 2003 Q4
Source Nielsen SoundScan National Summary Report
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Canada - Fiscal 2003 Quarter 4 Results

• The Canadian music market was down 7.9 from 10.9
  million units in fiscal 2002 Q4 to 10.0 million
  units in fiscal 2003 Q4.
• Album sales decreased by 8.9 from 10.8 million
  units in fiscal 2002 Q4 to 9.9 million units in
  fiscal 2003 Q4. The CD format experienced a
  decrease of 8.0 falling to 9.7 million units.
• With increased attention on the single
  configuration, unit sales increased by 167.7.
  Singles represented only 1.6 of total unit
  sales.
• Mass merchant retailers experienced an increase
  of 5.1 from 2.6 million units to 2.8 million
  units. In 2003 Q4, the mass channel accounted
  for 27.6 of unit sales - an increase of 3.4
  percentage points from 24.2 share in fiscal 2002
  Q4.

Handleman Fiscal Quarter 4 Unit Sales
(Feb/Mar/Apr) (in thousands of units)
Unit Sales from Monday, February 3, 2003 to
Sunday, May 4, 2003
Channel Share of Total Unit Sales - Fiscal 2003 Q4
Source Nielsen SoundScan Canada National
Summary Report
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United Kingdom - Fiscal 2003 Quarter 4 Results

• Despite an increase of 5.7 in Q3, unit sales
  decreased by 4.3 from fiscal 2002 Q4 to fiscal
  2003 Q4. Unit sales of chart product decreased
  from 43.4 million units to 41.6 million units.
• Album sales increased by 9.8 from 30.8 million
  units in fiscal 2002 Q4 to 33.8 million units in
  fiscal 2003 Q4. Single sales experienced a
  decrease of 38.6.
• The album configuration represented 81.3 of
  total unit sales - an increase from 70.9 in
  fiscal 2002 Q4. Singles represented 18.7 of
  total unit sales in fiscal 2003 Q4.

Handleman Fiscal Quarter 4 Unit Sales
(Feb/Mar/Apr) (in thousands of units)
Unit Sales from Sunday, February 2, 2003 to
Saturday, May 3, 2003
Configuration Share of Total Unit Sales - Fiscal
2003 Q4
Source CIN - The Official UK Chart Company
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New Release Schedule - Fiscal 2004 Quarter 1
(May/Jun/Jul)
May Third Eye Blind Out of the Vein Staind 14
Shades of Grey Weird Al Yankovic Poodle Hat Jo
Dee Messina Greatest Hits June Jewel
0304 Train My Private Nation John Mellencamp
Trouble No More Metallica St. Anger Sarah
Brightman Harem Lonestar Greatest Hits Annie
Lennox Bare Radiohead Hail to the
Thief July Beyonce Dangerously in Love Various
Artists Now 13 Thalia Thalia