FINANCIAL INFORMATION FOR CHILDREN'S BOOK LINE FOR YEAR ENDED MAY 31, 1997

EDITORIAL FORMAT PICTURE PHOTO B+W NONFICTIO

INCOME STATEMENT
UNIT SOLD 44,313 23,180 12,485 22,097
NUMBER OF NEW TITLES 5 6 3 7
REVENUE (INCLUDING SUB RIGHT INCOME) 388,121 222,389 137,972 198,324
% GROWTH FROM 1995 15% 18% 7% -10%
PROJECTED GROWTH IN 1998 7% 9% 3% -5%
COGS 127,672 79,183 58,934 63,200
COGS % 33% 36% 43% 32%
ROYALTIES 58,218 33,358 20,696 29,749
ROYALTIES % 15% 15% 15% 15%
GROSS MARGIN % 52% 49% 42% 53%
EDITORIAL EXPENSES 42,693 24,463 15,177 21,816
MARKETING/SALES DIRECT 34,931 20,015 12,417 17,849
MARKETING/SALES OH 34,931 20,015 12,417 17,849
COST OF FREE COPIES 19,406 11,119 6,899 9,916
ART/PRODUCTION/GEN'L EDITORIAL 15,525 8,896 5,519 7,933
SHIPPING/WAREHOUSE/ORDER PROCESSING 38,812 22,239 13,797 19,832
GENERAL AND ADMINISTRATIVE 42,575 26,687 16,557 23,799
TOTAL EXPENSES 228,873 133,434 82,783 118,994
TOTAL EXPENSES % 59% 60% 60% 60%
PROFIT (LOSS) - 26,642 - 23,586 - 24,441 - 13,619

BALANCE SHEET
CURRENT ASSETS:
CURRENT INVENTORY 46,932 94,398 38,589 42,574
UNEARNED AUTHOR ADVANCE 10,000
ACCOUNT RECEIVABLE 77,624 44,478 27,594 39,665
ACCOUNT RECEIVABLE % 20% 20% 20% 20%
TOTAL 124,556 148,876 66,183 82,239
CURRENT LIABILITIES:
ACCOUNT PAYABLE 52,348 52,074 29,257 31,732
ACCOUNT PAYABLE % 13% 23% 21% 16%
ROYALTIES PAYABLE 23,218 7,696 2,749
TOTAL 75,566 52,074 36,953 34,481
INVESTMENT SPENDING
PLANT, PAPER, PRINTING, BINDING (OUTSOURCED) 174,494 173,581 97,523 105,774
AUTHOR ADVANCES 35,000 42,000 13,000 27,000
TOTAL INVESTMENT 209,494 215,581 110,523 132,774
R ENDED MAY 31, 1997 PROPOSED PRODECT MIX AND PROFIT PLAN FOR CHIL

FICTION BLACKLIST TOTAL EDITORIAL LINE

INCOME STATEMENT
7,871 109,946 NUMBER OF NEW TITLES
2 23 SALES
66,538 1,096,560 2,109,904 COGS
0% ROYALTIES
0% GROSS MARGIN %
20,372 393,308 742,669 EXPENSES % OF SALES
31% 36% EXPENSES
9,981 145,198 297,200 NET INCOME
15% 13%
54% 51% BALANCE SHEET
7,319 15,798 127,266 CURRENT ASSETS:
5,988 65,421 156,621 INVENTORY
5,988 97,656 188,856 A/R AS % OF SALES (PROJECTED)
3,327 28,248 78,915 A/R $
2,662 32,113 72,648 TOTAL CURRENT ASSET
6,654 119,492 220,826 CURRENT LIABILITIES:
7,985 167,263 284,866 A/P AS % OF SALES (PROJECTED)
39,923 525,991 1,129,998 A/P $
60% 48% ROYALTIES PAYABLE
- 3,738 32,063 - 59,963 TOTAL CURRENT LIABILITIES

FREE CASH FLOW (=NET INCOME +/- CHANGE IN NET WORKING CAPITAL)
NET INCOME
22,100 620,000 864,593 CHANGE IN NET WORKING CAPITAL
20,000 30,000 FREE CASH FLOW
13,308 221,331 424,000
20% 20% ROA
35,408 861,331 1,318,593

12,742 178,153
19% 0%
33,663
12,742 - 211,816

42,472
10,000
52,472
X AND PROFIT PLAN FOR CHILDREN'S BOOK LINE - YEAR ENDING MAY 31, 1998

PICTURE PHOTO B+W NONFICTIOFICTION BLACKLIST TOTAL

- -
401,922 231,784 140,326 193,168 66,538 1,200,000 2,233,738
132,212 82,528 59,939 61,557 20,372 384,000 740,608
60,288 34,767 21,049 28,976 9,981 280,000 435,061
52% 49% 42% 53% 54% 53%
59% 60% 60% 60% 60% 47%
237,011 139,071 84,195 115,901 39,923 564,000 1,180,101
- 27,589 - 24,582 - 24,858 - 13,265 - 3,738 72,000 - 22,033

46,932 94,398 38,589 42,574 22,100 500,000 744,593

20% 20% 20% 20% 20% 20%
80,384 46,357 28,065 38,634 13,308 240,000 446,748
127,316 140,755 66,654 81,208 35,408 740,000 1,191,341

13% 23% 21% 16% 19% 0%

54,209 54,274 29,756 30,907 12,742 - 181,889
- - - - - - -
54,209 54,274 29,756 30,907 12,742 - 181,889

E IN NET WORKING CAPITAL)

- 27,589 - 24,582 - 24,858 - 13,265 - 3,738 72,000 - 22,033
24,117 - 10,321 7,668 2,543 0 - 121,331 - 97,324
- 51,706 - 14,262 - 32,526 - 15,808 - 3,738 193,331 75,291

-0.2166994 -0.174647 -0.372941 -0.163346 -0.10556936 0.0972973 -0.018494