Intervisual Books reports year-end results.

SANTA MONICA, Calif.--(BUSINESS WIRE)--March 14, 1997-- Intervisual Books Inc. (NASDAQ: IVBK)(IBI) Friday reported operating results for the three- and 12-month periods ended Dec. 31, 1996.

The company reported that net sales for the fourth quarter decreased to $4,368,742 from $5,882,203 a year ago. The net loss for the fourth quarter was $348,695 or 7 cents per share compared with net income of $335,739 or 7 cents per share for the same period last year.

For the 12 months ended Dec. 31, 1996, net sales decreased to $16,766,292 compared with $19,494,405 for the year-earlier period. A net loss of $544,242 or 11 cents per share was reported for the 1996 12-month period compared with net income of $435,879 or 9 cents per share in 1995.

The net loss for fiscal 1996 was due mainly to lower sales and the increase in administrative costs resulting in more than $900,000, of which $640,000 occurred in the fourth quarter, of non-recurring expenses which relates primarily to contract settlements with two former IBI officers and the pursuit and extensive evaluation of two acquisition candidates which were later rejected, as well as increased legal fees and relocation expenses related to the move of its corporate headquarters.

This net loss included an offsetting tax benefit in 1996 of $416,000 as compared with a 1995 tax expense of $320,500.

Waldo Hunt, IBI chairman who assumed the position of chief executive officer in November 1996 said, "I am very disappointed with IBI's performance and, though there are some valid explanations for the decline in sales, I consider the overall 1996 results totally unacceptable."

Three factors played a major role in contributing to IBI's fourth- quarter and fiscal 1996 sales results. One was Turner Publication's decision to discontinue producing Bedrock Press books, and another was the reduction in the number of interactive books being produced for Disney Press, New York, and sold to Disney's international licensees.

In addition, IBI's international sales were down as a result of the strong U.S. dollar, which increased the cost of the company's books from 5 percent to 15 percent to our major publishers in Japan, Spain, Germany, Italy and Scandinavia. International sales in 1995 were 52 percent of total sales, compared with only 40 percent in 1996.

Hunt, who is also IBI's founder, added, "In spite of recent setbacks, with new products, a new sales and marketing strategy, and a new management team, we are optimistic about our future."

Norman Sheinman, who recently joined the company as its president and chief operating officer, was formerly the co-publisher and senior vice president of sales at Penguin USA's Packaging Division. He said, "Over the past four years, the consolidation of publishers and their imprints within the book industry has eroded the sales of most packagers.

"To help counter the effects of this trend, we are in the process of negotiating a distribution agreement with Andrews and McMeel (A&M), Kansas City, Missouri, for the North American marketplace. A&M has over 15 years experience in the book publishing industry.

"In September 1997, a line of IBI's backlist titles will be reissued and distributed by A&M into the traditional book trade, as well as through the warehouse clubs, mass merchants, gift and stationery markets.

"The initial list, selected from IBI's 1,100 backlist titles, will include the works of well-known authors/illustrators such as Jan Pienkowski, Dave Carter, Mick Inkpen, Kees Moerbeek, Chuck Reasoner, David Pelham, Richard Scarry and Ernest Nister," he added.

"It is also our intention to expand our efforts to market books through direct selling channels. During the last two years, we, in cooperation with our publishers, have worked successfully with several book direct-marketing companies in the U.S.A. and the U.K.

"Now we are negotiating with one of the world's largest direct marketers of children's books through whom we hope to gain direct sales access to consumers in over 25 countries worldwide," continued Sheinman.

Hunt added, "We are proud of IBI's history as a successful international packager and of having worked cooperatively with our top 30 publishers (10 in the U.S.A.) for an average of 18 years. It is our intention that our pursuit of new backlist distribution and the expansion of our direct sales business will be with their full knowledge and hopefully with their support and understanding.

"If IBI is to continue to grow and prosper it is important that we develop alternative means of distribution."

In addition to its book marketing expansion plans, the company has also decided to re-enter the advertising premium and promotional business. Six years ago, IBI was the leading producer of paper pop-up magazine inserts, direct mail pieces and premiums. The advertising division was sold to R.R. Donnelley & Sons Co. in 1991. IBI's non-compete agreement has now expired, and since IBI has the experience, the creative staff and the overseas production capability, it is ready to begin selling again in this specialized market.

IBI gained international recognition for such dramatic efforts as producing 5-1/2 million pop-up inserts of the Transamerica Insurance Company's pyramid building that appeared in Time magazine, the world's first talking advertisement for Texas Instruments, notable book premiums included 1.2 million pop-up "Night Before Christmas" books for Hallmark Cards Inc., and 370,000 "Christopher Columbus" books for Sears Roebuck and Co.

For 22 years the name Intervisual has been synonymous with innovative and dimensional books, but IBI has now made significant changes in its 1997 product mix. IBI's newest books combine electronic, vinyl and cloth elements with traditional pop-ups, increasing their intrinsic and entertainment value.

New IBI books to be introduced at the children's book fair in Bologna, Italy, next month include a wind-up train that chugs, ding-dongs and whistles its way through a pop-up village; Jan Pienkowski's creepy cloth board books, which feature a spider, bat, frog and octopus; and Warner Bros.' Wonderscope books featuring Looney Tune characters in a combination book and video viewer.

Hunt concluded, "We have the plans and its implementors in place, but our goals must be realistic considering that our new president and chief operating officer just joined the company in January of this year. We intend to make 1997 a turnaround year, but we want everyone to understand that the full impact on sales and profits resulting from our new products and new marketing initiatives may not be realized until 1998." -0- NOTE: This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended. The company intends that such statements shall be protected by the safe harbors provided for in such sections.

Such statements are subject to risks and uncertainties that could cause actual results to vary materially from those projected in the forward-looking statements. The company may experience significant fluctuations in future operating results due to a number of economic, competitive and other factors, including, among other things, the size and timing of customer orders, changes in laws, new or increased competition, delays in new products, changes in market demand, market acceptance of new products, seasonality in product purchasers, changes in foreign exchange rates and others.

These factors and others could cause operating results to vary significantly from those in prior periods, and those projected in forward-looking statements. Additional information with respect to these and other factors that could materially affect the company and its operations are included in the company's filings with the Securities and Exchange Commission and are incorporated herein. -0-

                       INTERVISUAL BOOKS INC.
                      STATEMENTS OF OPERATIONS


                        Quarter Ended Dec. 31     Year Ended Dec. 31
                          1996        1995           1996         1995

Net sales          $ 4,368,742 $ 5,882,203  $  16,766,292 $ 19,494,405

Cost of sales        3,406,833   4,294,281     12,984,796   14,897,013

Gross profit           961,909   1,587,922      3,781,496    4,597,392

Selling, general and
 administrative
 expenses            1,666,664   1,027,473      4,853,875    4,069,555

Other income (expense)   2,229     (52,932)         2,510      100,705
Interest income (net)   38,567      31,883        109,627      127,837

Income (loss)
 before income        (663,959)    539,400       (960,242)     756,379

Taxes on income
 (benefit)            (315,264)    203,661       (416,000)     320,500

Net income (loss)  $  (348,695) $  335,739  $    (544,242) $   435,879


Earnings (loss)
 per share         $     (0.07) $     0.07  $       (0.11) $      0.09

Weighted average
 number of shares
 and equivalents
 outstand            4,782,798   5,072,084      4,782,798    5,009,872


                         BALANCE SHEET HIGHLIGHTS

                                         Dec. 31        Dec. 31
                                           1996           1995
Cash and short-term
   investments                        $  2,690,604 $    2,843,032
Total current assets                     9,006,693     10,682,008
Total assets                            12,142,275     14,051,513
Total current liabilities                4,924,512      6,027,621
Total liabilities                        5,079,352      6,493,400
Stockholders' equity                     7,062,923      7,558,113

CONTACT: Intervisual Books Inc., Santa Monica

Waldo H. Hunt, 310/396-8708