Handleman (HDLM) 8-K Current report

Exhibit 99.2

HANDLEMAN COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(amounts in thousands except per share data)

Fiscal 2003:	For the Three Months Ended (unaudited)												Total Fiscal Year
	July 27, 2002 Restated			October 26, 2002 Restated			January 31, 2003 Restated			May 3, 2003
Revenues	$	277,230		$	328,278		$	467,346		$	285,075		$	1,357,929
Costs and expenses:
Direct product costs		219,406			252,109			374,432			221,496			1,067,443
Selling, general and administrative expenses		53,169			55,204			60,163			51,766			220,302
Impairment of subsidiary assets		—			—			33,100			—			33,100
Interest expense (income), net		391			230			(53	)		(250	)		318
Income (loss) before income taxes and minority interest		4,264			20,735			(296	)		12,063			36,766
Income tax (expense) benefit		(1,777	)		(7,182	)		3,723			(4,225	)		(9,461	)
Minority interest		174			192			—			—			366
Net income	$	2,661		$	13,745		$	3,427		$	7,838		$	27,671
Net income per share
Basic	$	0.10		$	0.52		$	0.13		$	0.30		$	1.06
Diluted	$	0.10		$	0.52		$	0.13		$	0.30		$	1.06
Weighted average number of shares outstanding during the period
Basic		26,476			26,202			25,792			25,715			26,046
Diluted		26,569			26,217			25,845			25,827			26,046
Fiscal 2002:	For the Three Months Ended (unaudited)												Total Fiscal Year Restated
	July 28, 2001 Restated			October 27, 2001 Restated			January 31, 2002 Restated			April 27, 2002 Restated
Revenues	$	256,259		$	333,920		$	407,071		$	328,456		$	1,325,706
Costs and expenses:
Direct product costs		198,019			255,374			329,103			256,577			1,039,073
Selling, general and administrative expenses		51,627			57,322			63,049			55,288			227,286
Impairment of subsidiary assets		—			—			5,693			—			5,693
Interest expense, net		912			1,313			1,317			692			4,234
Income before income taxes and minority interest		5,701			19,911			7,909			15,899			49,420
Income tax (expense) benefit		(3,651	)		(7,150	)		2,206			(4,458	)		(13,053	)
Minority interest		87			106			(61	)		415			547
Net income	$	2,137		$	12,867		$	10,054		$	11,856		$	36,914
Net income per share
Basic	$	0.08		$	0.48		$	0.38		$	0.45		$	1.38
Diluted	$	0.08		$	0.48		$	0.37		$	0.44		$	1.38
Weighted average number of shares outstanding during the period
Basic		26,618			26,707			26,689			26,610			26,656
Diluted		26,841			26,948			26,890			26,700			26,763

Handleman Company

Quarterly Financial Summary

(unaudited)

The following is a reconciliation of previously reported quarterly financial information restated to reflect the adjustments related to an internal review as a result of a SEC investigation and the change in revenue recognition method (in thousands of dollars except per share data):

	For the Three Months Ended
Fiscal Year 2003	July 27, 2002			October 26, 2002			January 31, 2003			May 3, 2003
Revenues, previously reported	$	270,964		$	348,891		$	437,595		$	n/a
Adjustments for:
Revenue recognition		6,266			(20,613	)		29,751			n/a
Revenues, restated		277,230			328,278			467,346			285,075
Income (loss) before income taxes and minority interest, previously reported		4,295			24,501			(5,849	)		n/a
Adjustments for:
Revenue recognition		(102	)		(3,814	)		5,479			n/a
Vendor contracts		71			48			74			n/a
Income (loss) before income taxes and minority interest, restated		4,264			20,735			(296	)		12,063
Net income, previously reported		2,694			16,033			24	(a)		n/a
Adjustments for:
Revenue recognition		(79	)		(2,319	)		3,355			n/a
Vendor contracts		46			31			48			n/a
Net income, restated	$	2,661		$	13,745		$	3,427	(a)	$	7,838
Net income per share—basic, previously reported	$	.10		$	.61		$	.00		$	n/a
Adjustments for:
Revenue recognition		—			(.09	)		.13			n/a
Net income per share—basic, restated		.10			.52			.13			.30
Net income per share—diluted, previously reported		.10			.61			.00			n/a
Adjustments for:
Revenue recognition		—			(.09	)		.13			n/a
Net income per share—diluted, restated		.10			.52			.13			.30

(a) The low effective tax rate in the third quarter of fiscal 2003 primarily related to the sale of a subsidiary company and the use of a capital loss carryforward.

2

Handleman Company

Quarterly Financial Summary

(unaudited)

	For the Three Months Ended
Fiscal Year 2002	July 28, 2001				October 27, 2001			January 31, 2002			April 27, 2002
Revenues, previously reported	$	261,115			$	355,223		$	389,903		$	331,275
Adjustments for:
Revenue recognition		(4,856	)			(21,303	)		17,168			(2,819	)
Revenues, restated		256,259				333,920			407,071			328,456
Income (loss) before income taxes and minority interest, previously reported		5,571				24,587			3,278			16,352
Adjustments for:
Revenue recognition		(129	)			(4,863	)		4,116			162
Vendor contracts		259				187			515			(615	)
Income (loss) before income taxes and minority interest, restated		5,701				19,911			7,909			15,899
Net income, previously reported		2,038				15,745			7,193	(b)		12,142	(b)
Adjustments for:
Revenue recognition		(67	)			(2,998	)		2,530			109
Vendor contracts		166				120			331			(395	)
Net income, restated	$	2,137			$	12,867		$	10,054	(b)	$	11,856	(b)
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Net income per share—basic, previously reported	$	.08			$	.59		$	.27		$	.46
Adjustments for:
Revenue recognition		—				(.11	)		.10			—
Vendor contracts		—				—			.01			(.01	)
Net income per share—basic, restated		.08				.48			.38			.45
Net income per share—diluted, previously reported		.08				.58			.27			.45
Adjustments for:
Revenue recognition		—				(.10	)		.10			—
Vendor contracts		—				—			—			(.01	)
Net income per share—diluted, restated		.08				.48			.37			.44

(b) The low effective tax rates in the third and fourth quarters of fiscal 2002 resulted from tax benefits recognized primarily related to prior period losses at certain subsidiary companies for which no tax benefit was recorded in such prior periods.