Unrecoupable Flat Payments to Artists:

(Any special lump sum or flat or bonus payments to
the artist which are unrecoupable and unrelated to
direct sales performance.)

(All payments to the trustees of this fund, including the
U.S. Trust Company portion.)

Purchased or Leased Masters

(In some instances, record companies purchase or lease
masters produced by others, often by independent A&R men.
The total cost of any purchased or leased masters, including
royalties, if any, should be included in this account.)

Art Department Costs

(This is the cost of an in-house art department, or fees
paid for outside art services (directly or through a
producer) for use on album jackets or any other related
art work.)

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Total Cost of Goods Sold (Final number on Form # (2) )

(Self-explanatory)

Gross Profit

(Self-explanatory)

Expenses

Selling, Advertising and Promotion

(These expense categories can be combined. Remember,
if your company has a wholly owned sales subsidiary,
include the costs of the subsidiary in this account.)

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publishing is not included. In general, any income from
non-record-related activities is not included.)

(If direct tax payments are not available, please estimate
income taxes as they would apply to an independent record and
tape manufacturing operation.)

Net Profit After Taxes

(Self-explanatory)

Note: Please round all figures to nearest thousand.

(To the extent estimates are used, all items should be directly related to the functions of manufacturing of recordings, whether on records or tapes, and selling these products to distributive organizations. Thus, the balance sheet figures should accurately reflect the level and mix of assets, liabilities and net worth required to produce the profit and loss statement submitted in the form (1) SUMMARY REPORT.

Cash

(All cash and near cash items)

Accounts Receivable

(Trade credit extended arising from the manufacture and sales of
records and tapes to distributive organizations)

Inventory

(Records, tapes, supplies, etc., that result from manufacturing and
selling tapes and records to distributive organizations)

Total Current Assets

(Self-explanatory)

Fixed Assets

(All plant and equipment related to manufacturing and selling
tapes and records to distributive organizations)

Less: Accumulated Depreciation

(Indicate depreciation method and any change in method in
a footnote)

Net Fixed Assets

(Self-explanatory)

143