476 MAY 2002 SELLING STOCK
Volume 12, Number 5
©2002 Jim Pickerell - SELLING STOCK is written and
published by Jim
Pickerell six times a year. The annual subscription rate is $120.00 to have the printed
version mailed to you. The on-line version is $100.00 per year. Subscriptions may be
obtained by writing Jim Pickerell, 10319 Westlake Drive, Suite 162, Bethesda, MD 20817, phone 301-251-0720, fax 301-309-0941, e-mail: email@example.com. All rights
are reserved and no information contained herein may be reporduced in any
manner whatsoever without written permission of the editor. Jim Pickerell is also
co-owner of Stock Connection, a stock agency. In addition, he is co-author
with Cheryl Pickerell of Negotiating Stock Photo Prices, a guide to pricing
stock photo usages.
Thought For The Month
"When people are free to do as they please, they usually imitate each other."
More Rights For Same Money = Less To Bottom Line
March 15, 2002 - (Story 466) Pricing textbook uses is getting more and more complex as publisher seek
broader and broader rights for the images they purchase. The request are no longer a simple 1/4 page
North American rights, for under 40,000 copies of a particular title.
With the variety of ways a new publishing product can be sold it is also easy to understand why
publishers want to acquire such broad rights. For the most part we have no problem with publishers asking
for broad rights, and in licensing such uses. But the fee charged needs to be commensurate to the rights
granted. What is tending to happen is that publishers are often getting rights to make many uses for a
fee that is only slightly higher than a single use fee.
Image sellers must take the time to carefully break down broad rights requests before quoting a price.
Failing to do this may not result in an immediate drop in revenue in the current year. The long term
effects are often overlooked, but they can lead to a significant loss of income for both stock agencies
and image creators in years to come, if the trend isn't immediately corrected.
Consider a recent request that many photographers and agencies received from a publisher for a new book
project. I will not identity the publisher because this is an example of the current practices of many
XX is developing a new middle school World Cultures and Geography program to be published by XX. XX
anticipates publishing this program in three versions, a full survey (all units), an Eastern Hemisphere
volume (Unit 1 & Units 4-8), and a Western Hemisphere volume (Units 1-4), for first publication in the
year 2003. Regardless of which volume your image(s) appear in, the total print run for all three volumes
combined will not exceed 250,000 for the life of the program. We would like to use the images listed on
the next page in the pupil books with a facsimile of that pupil book page also to appear in an annotated
teacher's edition. XX requests the following non-exclusive rights, for use in this program:
Publication date: 2003
Term: 10 years from the date of this agreement or life of the program, whichever is later
Other Formats: Password-protected companion web site (5 year term)
Estimated First print run (entire program): 30,000
Life of product print run (entire program): 250,000
Territory: North America - United States, U.S. territories and dependencies, Canada and schools
that serve U.S. military and other U.S. agency related personnel.
While the primary sale of the pupil edition will be in hardcover form, we also request the right to bind
the material in which the image(s) appear(s) as a separate soft cover module. XX estimates that less than
10% of its customers prefer this format.
XX may need to make minimal changes in the program to meet state-specific adoption requirements.
Therefore, we request that you allow XX to publish minor revisions of this program (less than 10%) within
the term of this agreement.
We request the right to sublicense the images on a non-profit basis, for publication in whole or in
part, in forms and special formats for individuals with disabilities who are unable to read print in a
We also request the right to show facsimiles of some complete pupil's edition and/or teacher's edition
pages in XX's promotional materials related to the program.
That's it. The publisher wants a single price that will cover all these uses. In discussions various
sellers had with the Photo and Art Manager it seemed that if all of these rights weren't granted the
publisher would choose another image.
So lets break it down.
The only limiting factor is the total press run of 250,000 copies. There are two different
strategies that might be used to calculate the base price since the images may be used in three different
books. One is to price the use as three books. The other is to price it as a single project.
Historically, the way to approach this would be as three separate books with a different price for each
unique ISBN number. However, with the advent of custom publishing and the fact that they intend to make
"minimal changes in the program to meet state-specific adoption requirement," it is entirely possible
that there will be in excess of a hundred different ISBN numbers before this program is completed. It
would seem unreasonable to price each one of these uses (some with tiny circulations) as separate books.
In responding to this request, some agents used the three book strategy. Clearly that will result in a
much higher number than a single project with 250,000 circulation. Some sellers concentrated on the total
number of copies to be distributed. One thing that becomes very clear is that anyone who is still pricing
textbook uses on an "under 40,000" and "over 40,000" strategy needs to quickly develop a sliding scale
for higher press runs.
I will offer separate breakdowns here for pricing the use as a single 250,000 circulation projects, and
as three separate 80,000 circulation books. I will use the 1/4 page numbers in Negotiating Stock Photo
Prices on pages 274-275 as a basis for these calculations. The highest base figure offered in NSPP is
for 200,000 circulation. We have interpolated that up to $410 for the 250,000 circulation.
The prices in NSPP are for English Language, North American rights. Some sellers set their base
price for U.S. English Language use and add an additional 25% for the rest of North America.
For the separate annotated teachers edition stock agencies we normally add between 15% and 25%.
We'll use 15% here.
For web use most agencies normally add 50% of the base North American rights figure.
The state revisions factor is a real problem. Many stock agencies have historically charged an
additional 10% for each revision that has a separate ISBN number. However, this fee was normally charged
when there were only a few revisions. If there are ten or more with only slight modifications, this
add-on seems inappropriate. What is happening now with the ease of manipulating pages digitally is that
there are lots of "custom" editions and none of the publishers are giving us very straight answers about
how many that might be. (Often, in up front negotiations they probably don't know because that will not
become clear until they start selling the book.)
If the concept of additional payment for future revisions is eliminated, then it may be necessary to
make some increases in the price for higher circulations in order to compensate for the loss in "revision
payments" that were made in the past. This may be the only practical way to make the total compensation
for the use of the photos equitable.
An additional percentage of the base North American rate of 25% to 50% is normally charged for a
separate soft cover edition. Since in this case it will be basically the same book and no more than 10%
of the total press run, we believe it is reasonable to allow the publisher to produce these books at no
additional charge so long as the total number of copies of all versions of the book is less than 250,000.
On the other hand, based on past practices, and past pricing structures there is justification for
charging an additional percentage for this use.
The publisher is asking permission to sublicense the image for other formats. This is a dangerous
door to open. In this case the "special formats" is narrowly defined. However, it is not clear that each
of the "special format" uses is counted as part of the 250,000. They should be. Giving a user the right
to sublicense should be avoided whenever possible.
Despite our concerns relating to this use, we would have suggested in this case that nothing additional
be charged for the "special format" use as long as the publisher is paying a reasonable price for the
Here's how the numbers break down.
80,000 - 3 Titles
$ 291.00 per title
Teachers Edition 15%
43.65 per title
Web Use 50%
145.50 per title
State Revisions 10%
29.10 per title
$ 509.25 per title
Total 3 Titles
Now for the bad news. According to Photo and Art Manager on this particular project many major
agencies were charging between $300 and $400 for this use. We checked with some of the agencies
named and determined this was what they had charged. A fee of $400 doesn't look all that bad for
a textbook use until you realized what rights are being given away for this price.
In reporting to their photographers most agencies supply minimal details about a use such as "1/4
page textbook, 250,000 circulation." In a case like this that is not a full explanation.
The frequency of these expanded uses are rising dramatically, but the average fees for photo
usage have not been keeping pace. Publishers have been raising prices to the consumer, but they
argue that they can not afford to pay more to the content providers.
Given the additional uses they are requesting it is worth working backwards and considering what
a base price would be for a standard 40,000 print run project with no additional uses, if we
assume that a reasonable fee for a project with this scope is in the range of $350 to $400.
If the base price for 250,000 circulation were $220 and we added 15% for a teachers edition, 10%
for state revisions and 50% for web use the total fee would be $385.
Teachers Edition 15%
Web Use 50%
State Revisions 10%
Since the rates in NSPP for a 40,000 print run are about half of the rate for a 250,000 print run, if
the base price is $220 for a circulation of 250,000, a picture printed in a corresponding book of only
40,000 would only be worth about $110. If you are ready to sell this picture for $110 to the next
publisher who comes along and wants to do a single book with a 40,000 print run then $385.00 may be a
reasonable fee for all these uses. There are very few image sellers who would agree that $110 is
unreasonable fee for a book with a 40,000 copy press run.
If the publisher was buying 20 or 30 pictures from you that might be a justification for a somewhat
reduced price, but some of the companies who were giving these low prices weren't licensing very many
images to the publisher for this particular project.
Why Are Higher Fees Justified?
The prices students are charged for books has been rising dramatically. A textbook may sell for $40 to
$60. The royalty for each photo in that book, based on the 40,000 circulation rate in NSPP is about 1/2
of one cent per image. If the publisher sells 200,000 copies the price the buyer pays per copy does not
drop, but the publisher realizes certain additional savings in marketing as a result of selling a larger
quantity. Nevertheless, the royalty the photographer receives drops dramatically to only about 2/10ths of
one cent per book. There seems to be no good reason why the creators income should be reduced so
substantially relative to the publishers income. 200 images in a book might cost the publisher between
$.40 to $1.00 of that $60 retail price.
Significant income has been generated from re-use and secondary uses. Keep in mind that with the above
project you have effectively eliminated reuses from this publisher for the next ten years. If reuse fees
are eliminated it may have severe impact on the future profitability of a photographic operation. In the
long run photographers will stop shooting many of the images publishers need because they can no longer
make a profit for their efforts.
Photographers and stock agencies have tended not to keep good records of that portion of their income
that comes from reuse as compared to the original use. Some agents have estimated that 20% of their
revenue comes from reuse. I believe in some cases that figure is probably much higher, but to lose even
20% of total revenue can be a severe hit on a business.
Assume total revenue from licensing to books is $100,000 and $20,000 of that was for reuses. Assume the
average per image price for those $80,000 of first uses was $200 which means there were 400 uses. If
reuses are eliminated, just to break even in licensing the same 400 images the average price per use must
now be $250. If, in fact, the reuses make up 30% of that $100,000 in revenue then there are only 350
first uses for that $70,000. In order to continue to earn same $100,000 you were making when there was
reuse income each image formerly priced at $200 must now be priced at $285.71. These higher prices don't
provide any increase in overall income, they are break even prices.
Part of the industry's problem is that we are in transition between an old system and a new one. In the
old system it was a big deal to come out with a new version of a book. When a publisher produced a new
title it was assured that lots of copies would be printed and few changes would be made. Thus, pricing by
version made sense. Now it doesn't.
As changes occur in what publishers can do with content, sellers need to adjust their methods of pricing
uses to make sure they receive adequate compensation for all uses. Many sellers are afraid to quote big
numbers because they vary so much from the kinds of numbers they were quoting previously. These sellers
need to focus on how much additional use is being asked for, compared to what the publishers were asking
The photo industry also needs to have a better understanding of the portion of total revenue that
currently comes from selling secondary rights beyond the initial publication right. And they need to look
at what these figures were two or three years ago. These figures would help establish how much the prices
for certain circulations need to be raised in order to balance the revenue lost by not charging for each
If publisher want long term rights, but can't afford to pay high fees up front then they need to develop
some system for providing additional compensation to the creative suppliers in future years as the
product continues to generate income. It is easy to understand why the publishers can not afford to pay
high fees up front, but that is no excuse for denying creators an equitable share of future revenue.
SOME PUBLISHERS PAY MORE
March 29, 2002 - (Story 469) After publishing the story above on our online site we heard from several
people who agreed that it was a major problem and who said they needed to more carefully examine the
practices of their organizations.
We also heard from some photographers who deal with publishers directly, instead of through an agent.
These photographers are receiving significantly better fees for the images they license to textbooks.
One photographer reported that he was regularly able to get fees in the $600 to $650 range for
publication of a single title with circulations under 100,000 copies and including some additional web
Another photographer reported a specific example where he negotiated a $320 fee for one-time,
non-exclusive, English language use for a 1/2 page photo with a print run up to 40,000.
A few months later the publisher returned and wanted several additional rights for the project. These
additional rights included the rights to publish some copies in Spanish (but all to be sold in North
America) and to raise the press run to 60,000. The publisher also wanted to include the image on a
Student & Teacher CD-ROM with a print run of up to 5,000 copies, and a six year license to publish the
same material on an internet/extranet password protected website. Finally, they wanted rights to make
revisions of less than 10% in the overall content of the project without it being considered a new
The photographer got an additional fee of $1288 for these additional rights. Clearly, some publishers
are willing to pay reasonable fees if you only ask.
Interestingly, this same publisher told the photographer a year ago that they didn't want to deal with
the intricacies of different rates for different sizes. They asked if the photographer could provide a
single rate for any size up to full page North American use under 40,000 copies. The photographer said,
"Sure, how about $320?" (At the time this was the up-to-40,000 full-page rate listed in the 4th edition
of Negotiating Stock Photo Prices. Since then the 5th edition of NSPP has come out and the current
full-page rate is $438.)
Since that quote the photographer has been getting $320 for spots, 1/4 page, 1/2 page uses from this
publisher. Now it appears that in at least a few cases the publisher needs even broader rights and they
are willing to pay a reasonable fee for those additional uses. This publisher is not griping when the
quote goes over $1,000 for inside textbook use.
Reasonable fees are possible for those who hold the line.
HARPER COLLINS SUED
Unfair Dealings With Authors
March 15, 2002 - (Story 467) If you had a book in print with Harper Collins between January 1993 and
April 2001, you might be a class member in an action against the publisher in New York. The New York
appellate court affirmed in December the certification of the class in this lawsuit.
Plaintiffs Ken Englade and Patricia Simpson charge that authors were not treated fairly when Harper sold
copies of its U.S. works to foreign affiliates for resale in foreign countries. The plaintiffs accuse
Harper of selling books to its affiliates at improperly high discounts of up to 75%, leading to low
author royalty payments for those sales. The plaintiffs claim that Harper breached its implied
contractual duty of fair dealing and express royalty rates clauses.
In the next several weeks class members should receive notice from the trial court about the action. The
court's notice will contain instructions for authors who do not want to be represented in the
class-action suit, giving them a chance to opt out. Those who remain in the suit would receive the
benefits of any favorable court judgment or settlement, but would not be permitted to bring any
individual claims they may have against Harper Collins for these same acts. If you have any questions you
may contact Robert Lax, an attorney for the plaintiffs at 212-818-9150.
March 29, 2002 - (Story 468) It's tax time and photographers are taking a careful look at what they
earned in 2001. Many are not happy. It is not just that sales were down in 2001, but in many cases
photographers are not being paid by their agencies for all the sales that were made.
Photographers are increasingly concerned that they are being cheated by their agents. The following are
In some cases photographers get sales reports in the month after the sale is booked. Their
some reasons why.
contracts indicate they will be paid for these sales three or four months after the sale is booked, or in
the month after the money is collected. This practice would be fine if that's what happened, but too
often it isn't.
Photographers who are diligent in checking payments against sales often find that there are sales going
Some sales are legitimately cancelled when a customer changes his or her mind before using the
back more than a year that have not been paid. Usually, they receive no explanation as to why this is
image. However, there are a few problems with cancellations. First, in many cases cancellations are never
explained to the photographer in a future sales report -- payment for reported sales just never shows up.
Second, too frequently some agencies book sales before the customer has made a definite commitment to
use the picture. When the customer comes back a day or two later with a slightly different use, they
cancel the first sale and book a new sale for the revised price.
Again, such cancellations are understandable, but what makes photographers very suspicious is when sales
are cancelled months or even more than a year after they were initially booked. At the very least, this
tends to make photographers believe that their agent wasn't doing a very good job of following up to
collect after the sale was booked. Collection is an important part of the selling process, and the
I recently reviewed one photographer's records of several year from one agent and over 13% of the sales
Most U.S. agencies have a term in their "conditions of sale" that says if a sale is cancelled a
(in dollar value) had been cancelled beyond what might be considered a reasonable period of time for
cancellation. This seems to be a very high percentage.
"cancellation fee" will be charged. The time period and the amount vary from agency to agency, but
agencies with the greatest number of cancellations usually don't provide any evidence that they charged
their customers anything when sales are cancelled. The argument often given is that in order to maintain
"good relations", the customers were allowed to cancel free of charge. However, this may not serve the
best interests of the photographer.
Normal cancellation policies of most non-U.S. agencies are not clear. It may be standard practice in
A favorite trick of one agency is to write the royalty check in the month when the money is owed,
other countries to be more lenient in allowing customers to cancel without a fee. Cancellations tend to
appear more frequently in connection with foreign sales, than with U.S. sales.
but hold the check for a month or two before mailing. This gives the agent time to get cash in the bank
to cover the check. It is not clear whether the oldest checks are mailed first, or whether some
photographers are given favorable treatment. This agency must think that their photographers are not
smart enough to look at the date on the check, or that if they do they will assume the postal service was
Of course, the photographer can check the date on the envelope to see when the check was actually
Some agencies never pay their photographers until they call and request payment. Most photographers
mailed. And when this practice is repeated payment after payment photographers quickly understand that
their agent is not treating them in a fair and responsible manner.
who supply images to such agencies are aware of this practice and make frequent calls to get their money,
but photographers should not have to beg their agent to be paid.
One agency doesn't seem to know what they have paid their photographers. This agency sent one
photographer a note saying, "tell us how much we paid you last year, and we will send you a 1099 form for
One of the favorite tricks of foreign agencies is to tell the photographer that they never received
an invoice. In many countries the law requires photographers to invoice the agency before the agency can
pay. The agency normally notifies the photographer of the amount due, and waits for the photographer to
submit an invoice before they pay.
Then the agency argues, sometimes as much as years later, that they never received the invoice and
therefore they could not pay. We believe the "agent" has a responsibility to send the photographer a
second notice, if they haven't received an invoice within a certain time period.
Too often the attitude seems to be, "if the photographer doesn't try to aggressively claim what he is
Photographers frequently see uses of their images that are never reported or paid. Photographers
owed, then we'll just keep the money." One agent even said, "some photographers prefer to be paid once
every couple years." I would like to meet a photographer who has this attitude.
who catch an agent doing this once immediately become suspicious that there are a lot more uses that have
not been reported.
It adds to the photographer's suspicion and mistrust if, once notified of such a use, the agent seems to
make little or no effort to collect for the sale, or to get to the bottom of what happened and explain it
to the photographer.
Photographers are amazed by agents who go for long periods of time without paying any royalties on
collected sales, and then suddenly call to ask for additional permissions that might be necessary to
license one of the photographers images for a big ad sale. If the agent hadn't been paying for past sales
why does he think the photographer is going to help him license additional rights for another image when
the photographer knows he will probably never see any money for this new sale either.
One might think there would be fewer accounting irregularities with big multi-national companies
than with small agencies, but that is not always the case. Often some of the smaller companies provide
more accurate and detailed reporting because they are dealing with fewer sales overall, and with fewer
variations in types of sale.
The acquisition and consolidation of brands in recent years have created some major problems for most of
the acquiring companies. Each brand had different accounting procedures. Often, trying to integrated
these into one unified system has led to confusion and incorrect reporting for long periods of time.
When sales drop off and an agency starts looking for cash to pay expenses the first thing many seem
to do is stop paying photographers their royalty. They use the cash to cover their operating expenses.
Operating expenses don't necessarily decrease when income drops.
The rationale is that it is in everyone's best interest to keep the agency functioning. In theory when
sales pick up the agent will be able to pay the photographers everything they are owed. Often that
doesn't work and the agent ends up playing catch up for years. Of course, the agent almost never goes to
their photographers and get permission to withhold some of the royalties for a specified period of time.
On the other hand, I know one agent who did just that when he didn't have enough capital to invest in
necessary digitization for the future. This agent went to some of his most productive photographers,
explained the situation and asked permission to withhold some of the monies he owed them in order to pay
other photographers their royalties and invest in the digitization. Each photographer was given the
option to participate and who agreed would eventually receive all monies owed, plus interest. Many
photographers supported the agent in this effort. During the time when monies were being withheld the
photographers were fully informed as to the sales that had been made of their work, and the total of what
was owed to them.
If it is impossible to get a bank loan, this is the way to handle the problem. This agent's
A few years ago one agent bragged to me that he was a "past master" at figuring out how much of the
photographers respected him for the way he handled the situation.
total owed a photographer he needed to pay in order to keep the photographer happy. He said that as long
as he paid the photographer about the same as he got in the previous pay period the photographer would be
satisfied. Royalty payments were based not on the total owed, but on what the agent thought he could
reasonably get away with paying.
He even had a separate module built into his computer program so he could look at the total sales for a
given photographer and then pick and choose which of those sales he wanted to pay. Fortunately, this
agent is no longer in the industry.
When photographers call their agents with accounting questions they often get put off. This is
understandable because the agent may not have the answer at his fingertips, but there is no excuse for
the agent not to get back to the photographer with an explanation, which too often is what happens.
What To Do?
When sales are down two things begin to happen. The activities described above become more prevalent,
and photographers start examining their sales and payment reports with greater care because they are not
making as much as they had in the past.
Agents get away with these practices because photographers have little recourse. The process of auditing
an agent's records is difficult, time consuming and expensive. Contracts are often for long terms and
hard to break. And when a contract is broken or terminated the photographer may have a major problem in
getting the images returned. From time to time various groups of photographers talk about joining
together to do an audit, but that seldom happens.
On the other hand, agents should recognize that when these things happen photographers start talking to
each other. With the internet that has become much easier. An agent can be pretty sure that if any of
these things happen to any one of their photographer many of the other photographers the agent represents
are going to hear about it.
When photographers learn about such problems they tend to do several things.
They stop submitting work on a regular basis.
They start looking around for another agent to represent them.
They bug their agent taking up valuable time that the agent could be using to contact potential
They start looking very hard at internet solutions that will enable them to handle sales directly
without the aid of an agent.
Photographers are also tired of being locked into on-sided contracts that allow agents to continue to
license rights to their work without paying them any royalties.
These problems are so widespread that even agencies that are providing honest and accurate reports to
their photographers have cause for concern. An agent can't just assume that because they are not doing
any of the things described above that they have nothing to worry about. Many photographers tend to
distrust all agents because of the things they have heard about a few.
To maintain a good reputation an agent must not only pay its photographers promptly, but keep them fully
informed about what is happening at the agency. Photographers tend to trust those agents who send them
statements and checks monthly. The statements must be easy to read and understand, but at the same time
give detailed information about how the image was used. Checks should arrive on approximately the same
day every month. Consistency is important.
When this doesn't happen mistrust starts to breed.
IMAGE STATE RESTRUCTURING
April 15, 2002 - (Story 471) Recently, ImageState has gone through some major restructuring of its
business. Sheldon Marshall, President of the company, says they had "geared up the business anticipating
a much bigger business than it is. With the changes in the economy other factors, we found it necessary
to downsize to meet the level of existing business that we have."
They have scaled back their London operation and moved the headquarters of the group to New York.
Marshall and Chief Financial Officer, Chris Adamson, will be working out of New York for the foreseeable
future. All photographic content has been centralized in the New York office. All relationship management
and content production will also be controlled from New York. Lindsey Nicholson, former VP of Index
Stock, has recently been hired to be Director of Photographer Relations for ImageState.
The International Sales Department will remain in London. Stephen Harvey Franklin, who formerly headed
ImageState's London operation will be leaving the company. Marshall said, "As a result of the
consolidation, fundamentally, we don't need someone of Stephen's caliber in the UK. We have downsized the
management in the UK and are building up our management in the U.S." Currently ImageState has a staff of
approximately 32 people in New York, and is looking to make additional hires.
Until the end of March ImageState's had an office in Seattle. Most of the editing and the image files
for the U.S. operation were handled out of Seattle. That office was closed in March and all the picture
files were moved to New York by April 6th. In the process of the move the company has been editing the
files and many of the images either have been or will be returned to the photographers.
A significant portion of the work had been edited before the company left Seattle and those images that
they had decided not to keep were returned to the photographers. When they made the move to New York
there was still a large number of images that had not been edited and all of them were shipped to New
York. As the editing is completed, any additional images ImageState decides not to keep will be returned
to the photographers. Much of the imagery they decide to keep will be scanned and placed online.
There have been rumors that images that are not selected for the files would be put in storage and not
returned to the photographers. There is no truth to that rumor.
ImageState has retained a "remote sales staff" in Seattle, but they will be operating from their homes.
Rick Groman and Mark Karas, former owners of WestStock which was purchased by ImageState in November
2000, have retired and will no longer be connected with the company.
The www.weststock.com site will be retained and will focus on supplying smaller sized files for power
point and SOHO users. Users that need a larger file size will be upgraded to the www.imagestate.com site.
European photographers will still deliver their images to London where a photo liaison person will make
an initial edit. However, the final decisions on what images will be added to the file, or selected for
catalogs, will be made in New York. This will be the case for both Rights Protected and Royalty Free
images. In the future, London will be primarily a sales office.
The contract of George Sinclair who was Managing Director for North America was not renewed, and
Marshall will be taking over operational control for the medium term. Sinclair will be handling a few
specific integration projects for his remaining months with ImageState.
John Macfie, former president of International Stock, will be leaving the company later in the year.
Donna Sickles who was Director of Operations for International Stock is taking over the operations role
at ImageState. In the last fiscal year ending June 30, 2001, Image State had gross sales of 3,164 million
pounds and cost of sales (mostly royalties) of 1,203 million pounds leaving a gross profit of 1,961
million pounds. Operating expenses, not counting a write down of loans to discontinued operations, were
8,450 million pounds showing a huge loss on operations.
There have also been rumors in New York that ImageState is in Chapter 11 bankruptcy and has closed its
doors. There is no basis whatsoever for that rumor.
Marshall says that in the past year they have been trying to get the company to a break even situation
and, "now with the restructuring we have put in place, we have managed to do that. We had record sales
last month and have a much healthier run rate. I believe we are moving forward toward profitability."