Music Industry Update February 2003

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Music Industry UpdateFebruary 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 3 Results

• U.S. unit sales decreased by 8.5 from 252.6
  million units in fiscal 2002 Q3 to 231.1 million
  units in fiscal 2003 Q3. The album configuration
  experienced a decrease of 7.7 and singles
  -48.5.
• Mass merchant sales were relatively flat with a
  decrease of 0.4. Unit sales decreased from 84.8
  million units in fiscal 2002 Q3 to 84.5 million
  units in fiscal 2003 Q3.
• Independent retailers experienced a decrease of
  20.5 and chain retailers -11.8. The
  non-traditional channel (online stores, concerts,
  venues and television product sales) reported a
  gain of 2.2.
• The mass channel accounted for 36.6 of total
  unit sales for fiscal 2003 Q3 - an increase of
  3.0 share points from 33.6 in 2002. Chain store
  share decreased from 52.3 share to 50.4 share.

Handleman Fiscal Quarter 3 Unit Sales
(Nov/Dec/Jan) (in thousands of units)
Unit Sales from Monday, October 28, 2002 to
Sunday, February 2, 2003.
Channel Share of Total Unit Sales - Fiscal 2003 Q3
NOTE 2003 Q3 14 weeks. This is compared to
a 13 week quarter for 2002.
Source Nielsen SoundScan National Summary Report
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Canada - Fiscal 2003 Quarter 3 Results

• The Canadian music market was down 15.0 from
  21.7 million units in fiscal 2002 Q3 to 18.5
  million units in fiscal 2003 Q3.
• Album sales decreased by 15.5 from 21.6 million
  units in fiscal 2002 Q3 to 18.3 million units in
  fiscal 2003 Q3. The CD format experienced a
  decrease of 14.8 falling to 17.9 million units.
  
• Although unit sales of singles increased by
  97.6, the configuration represented only 1.0 of
  total unit sales.
• The mass channel accounted for 29.4 of unit
  sales - an increase of 5.1 percentage points from
  24.3 share in fiscal 2002 Q3.

Handleman Fiscal Quarter 3 Unit Sales
(Nov/Dec/Jan) (in thousands of units)
Unit Sales from Monday, October 28, 2002 to
Sunday, February 2, 2003.
Channel Share of Total Unit Sales - Fiscal 2003 Q3
NOTE 2003 Q3 14 weeks. This is compared to
a 13 week quarter for 2002.
Source Nielsen SoundScan Canada National
Summary Report
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United Kingdom - Fiscal 2003 Quarter 3 Results

• Although the U.K. music market was down 4.9 last
  quarter, unit sales increased by 5.7 from fiscal
  2002 Q3 to fiscal 2003 Q3. Unit sales of chart
  product increased from 67.2 million units to 71.0
  million units.
• Album sales increased by 7.9 from 56.3 million
  units in fiscal 2002 Q3 to 60.7 million units in
  fiscal 2003 Q3. Single sales experienced a
  decrease of 5.6.
• The album configuration represented 85.4 of
  total unit sales - an increase from 83.7 in
  fiscal 2002 Q3. Singles represented 14.6 of
  total unit sales in fiscal 2003 Q3.

Handleman Fiscal Quarter 3 Unit Sales
(Nov/Dec/Jan) (in thousands of units)
Unit Sales from Sunday, October 27, 2002 to
Saturday, February 1, 2003.
Configuration Share of Total Unit Sales - Fiscal
2003 Q3
NOTE 2003 Q3 14 weeks. This is compared to
a 13 week quarter for 2002.
Source CIN - The Official UK Chart Company
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New Release Schedule - Fiscal 2003 Quarter 4
(Feb/Mar/Apr)
February Alabama In The Mood The Love Songs 50
Cent Get Rich or Die Trying Various Artists
WOW Gospel 2003 Lionel Richie The Definitive
Collection Vince Gill Next Big Thing Various
Artists Grammy Nominees March Everclear Slow
Motion Daydream Celine Dion One Heart Pearl
Jam Live Cher Very Best of Cher Various
Artists Kidz Bop 3 April Play Replay Robbie
Williams Escapology Various Artists Now
12 Godsmack Faceless