Crave Parent Reports Reduced Profits

Following last October's announcement that music distributor the Handleman Company had acquired the privately-owned U.S. game distributor and publisher the Crave Entertainment Group for $72 million, the parent company has announced its first results since the acquisition went through. The company's overall revenues for the three month period ending January 31, 2006 were up to $485.0 million, compared to $459.3 million for the same. However, profit was $14.0 million, compared to $20.8 million in the holiday season the previous year, apparently due to the loss of a music distribution contract and the "reassignment of 425 customers' stores to other suppliers". Nonetheless, it was noted that, following the November 22nd competion of the CEG acqusition, for the ten weeks ended January 31, 2006, CEG had revenues of $53.8 million and operating income of $1.0 million. Handleman also mentioned "several integration opportunities to grow sales, as well as synergies that will reduce costs" which it is currently going forth with, expecting to see benefits during the second half of calendar 2006. CEG itself consists of Crave Entertainment's publishing division, which exclusively publishes titles in the U.S., has recently released titles such as World Championship Poker 2, The Bible Game, and Pinball Hall Of Fame, as well as publishing titles in the Tokyo Xtreme Racer series on North America. Customers of CEG's distribution arm, which makes up the majority of the firm's business, include Sam's Club, Costco, Toys"R"Us, GameStop, Best Buy, Target, KB Toys, Army & Air Force Exchange Service (AAFES), and other national and regional retailers, making it one of the largest game distributors in North America.