Handleman UK Limited and ASDA Terminate Their Music Supply Agreement
24 Mayo 2007 - 9:00AM
PR Newswire (US)
TROY, Mich., May 24 /PRNewswire-FirstCall/ -- Handleman Company
(NYSE:HDL), http://www.handleman.com/, today announced that its
subsidiary, Handleman UK Limited (Handleman UK), and United Kingdom
retailer ASDA have decided not to renew their music supply
agreement. Under that agreement Handleman UK provided category
management and distribution of music CD's and, to a limited extent,
DVD's to ASDA stores. The decision not to renew the music supply
agreement was due to Handleman UK and ASDA not being able to reach
terms that were mutually beneficial. Handleman UK will work with
ASDA over the next 3 months to ensure an orderly separation
process. The termination of the music supply agreement will result
in: -- One-time costs for Handleman UK, excluding inventory
liquidations costs, estimated at 2 million pounds Sterling.
Handleman UK will work with the music suppliers in the UK, as well
as its other customers, to sell off its remaining inventory. -- A
significant reduction in Handleman UK working capital, primarily
inventory and accounts receivable, estimated at 20 million pounds
Sterling to 25 million pounds Sterling. The cash generated from
this reduction will be used primarily to pay down Handleman Company
debt. -- An improvement, after the separation process is completed,
in operating performance for Handleman UK. For its recently
completed fiscal year ended April 28, 2007, Handleman UK music and
DVD sales to ASDA were 160 million pounds Sterling. Handleman UK
will continue to provide category management and distribution of
greeting cards, which it began in October 2006, to all ASDA stores.
As previously announced, Handleman UK began providing distribution,
in- store merchandising and category management support for music,
video and video games to Tesco PLC beginning in April 2007. Tesco
is the largest supermarket and general merchandise retailer in the
United Kingdom. About Handleman Company: Handleman Company is a
category manager and distributor of prerecorded music and console
video game hardware, software and accessories. Its customers
include leading retailers in the United States, United Kingdom, and
Canada. As a category manager, the Company manages a broad
assortment of titles to optimize sales and inventory productivity
in retail stores. Services offered include product selection,
direct-to-store shipments, marketing and in-store merchandising.
Forward-Looking and Cautionary Statements Information in this press
release contains forward-looking statements, which are not
historical facts. These statements involve risks and uncertainties
and are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Actual results, events
and performance could differ materially from those contemplated by
these forward- looking statements including, without limitation,
risks associated with achieving the business integration objectives
expected with the Crave Entertainment Group acquisition, changes in
the music and video game industries, continuation of satisfactory
relationships with existing customers and suppliers, establishing
satisfactory relationships with new customers, including Tesco,
PLC, and suppliers, improving operating performance after the
separation process with ASDA is complete, effects of electronic
commerce inclusive of digital music distribution, success of new
music and video game releases, dependency on technology, ability to
control costs, relationships with the Company's lenders, ability to
comply with the Company's credit agreements, pricing and
competitive pressures, dependence on Third-party carriers to
deliver products to customers, the ability to secure funding or
generate sufficient cash required to sustain existing businesses
while investing in and developing new businesses, the occurrence of
catastrophic events or acts of terrorism, certain global and
regional economic conditions, and other factors discussed in this
press release and those detailed from time to time in the Company's
filings with the Securities and Exchange Commission. Handleman
Company notes that the preceding conditions are not a complete list
of risks and uncertainties. The Company undertakes no obligation to
update any forward-looking statement to reflect events or
circumstances after the date of this press release. DATASOURCE:
Handleman Company CONTACT: Thomas Braum, Executive Vice President
and CFO, +1-248-362-4400, Ext. 718; Greg Mize, Vice President,
Investor Relations, +1-248-362-4400, Ext. 211, both of Handleman
Company Web site: http://www.handleman.com/
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