The Harvey Entertainment Company Reports Second Quarter Results.

LOS ANGELES--(BUSINESS WIRE)--Aug. 16, 1999--

Experienced Entertainment Industry Management Team

Supports Pursuit of Future Growth Opportunities

The Harvey Entertainment Company (Nasdaq:HRVY) today reported results for the second quarter and six-months ended June 30, 1999.

Net revenues for the second quarter of 1999 were $361,000, compared to $420,000 in the year-ago period. The low level of net revenues in the 1999 and 1998 second quarter periods reflect a limited level of operating activity within the Company over the last year due to uncertainties regarding the recruitment of a long term management team and working capital constraints. These issues were resolved in late April 1999, as reviewed below, but during the remainder of the 1999 second quarter, new management was focused primarily on recruiting the remaining members of the management team as well as completing a long-term strategic business plan to guide the Company's future initiatives.

On April 26, 1999 the Company completed a Stock Purchase Agreement with an investor group including Roger A. Burlage, Michael R. Burns, Ken Slutsky and The Kushner-Locke Company pursuant to which the Company received $17.7 million in consideration for newly issued shares of the Company's Series A Convertible Preferred Stock, convertible into Harvey Common Stock at $6.75 per share, and warrants to purchase up to 2,400,000 shares of the Company's common stock. As part of the agreement, Roger A. Burlage, a senior entertainment industry executive with over 20 years of experience, joined the Company to lead the new permanent management team.

Mr. Burlage's management team is in the early stages of developing new home video, television and film products and formulating a corporate business strategy regarding a range of business opportunities. The development of new revenue opportunities in the entertainment industry requires significant lead times, and therefore the number of projects expected to generate revenues in 1999 is limited.

Reflecting the low level of operating activity in the 1999 second quarter, Harvey Entertainment reported a net loss applicable to common stock of $2,025,000 (including $810,000 in non-cash dividends and amortization), or $0.48 per share, compared to net loss of $1,203,000, or $0.29 per share, in the second quarter of 1998. The weighted average number of basic shares outstanding in the 1999 second quarter was 4,187,000, compared to 4,174,000 in the year-ago period. As of June 30, 1999, the Company had approximately $9.5 million in cash and no outstanding balance under its line of credit. The income tax benefit for 1999 was $0 compared to $797,000 for 1998 due to the possibility that any income tax benefit generated by the current quarter's losses may not be realized.

Net revenues for the first half of 1999 were $923,000, compared to $1,280,000 in the first half of 1998. The Company reported a net loss applicable to common stock of $4,434,000 (including $810,000 in non-cash dividends and amortization), or $1.06 per share, for the six month period ended June 30, 1999, compared to a net loss of $3,262,000, or $0.83 per share, in the comparable year-ago period. The weighted average number of basic shares outstanding in the first half of 1999 was 4,187,000 compared to 3,908,000 in the first half of 1998.

Mr. Burlage, Chairman and Chief Executive Officer, commented, "As expected, Harvey's second quarter operations resulted in a net loss, reflecting the Company's minimal level of operating activities over the past year. Importantly, during this period Harvey's new management team was put into place and is enthusiastically working on a range of entertainment and licensing initiatives that we believe have the potential to revive the Company's operations.

"We have identified a range of characters within the Harvey character portfolio, many of which have not been recently exploited, that we believe offer significant entertainment and commercial potential and value. We are actively marketing these characters and entertainment concepts to a range of potential partners. Based on initial responses, we are optimistic regarding our prospects but remind shareholders that the development of entertainment projects is a time-consuming process. As shareholders ourselves, we are firmly committed to returning Harvey to a strong base of operations and look forward to keeping shareholders apprised on our progress in the coming quarters."

The Harvey Entertainment Company is engaged in the management and exploitation of its proprietary branded characters through merchandising and filmed entertainment, which includes theatrical, home video and television. The Harvey Classic Character Brands include Casper, the Friendly Ghost, Fatso, Stinkie and Stretch (the Ghostly Trio), Richie Rich, Baby Huey, Hot Stuff, Little Audrey, Wendy the Good Little Witch, and many others. For more information on The Harvey Entertainment Company, visit the Company's website at http://www.harvey.com.

This press release includes forward-looking statements that involve risks and uncertainties, including, but not limited to, the success of the Company's expansion strategy and risks of the Company's merchandising, home video and filmed entertainment activities, the management of growth, fluctuations in quarterly and annual operating results, dependence upon the release of filmed entertainment products and other risks most recently in the section entitled "Factors Which May Affect Future Results" in the Company's filings with the Securities and Exchange Commission. Actual results may differ materially from management expectations. -0-

                   THE HARVEY ENTERTAINMENT COMPANY
                 Consolidated Statements of Operations
                              (Unaudited)

                           Three Months Ended        Six-Months Ended
                                June 30,                 June 30,
                            1999         1998       1999        1998
                            ----         ----       ----        ----
Operating Revenues:
  Filmed entertainment    $    -     $ 20,000      $   -   $ 105,000
  Merchandising          364,000      400,000    794,000   1,775,000
  Publishing              (3,000)           0    129,000           -
                         -------     --------    -------    --------
Net operating revenues   361,000      420,000    923,000   1,280,000
                         -------     --------    -------   ---------

Operating Expenses:
  Cost of sales          561,000      418,000  1,384,000   1,556,000
  Selling, general
    and administrative
    expenses           1,245,000    1,636,000  3,286,000   4,290,000
  Amortization of
    intangibles           58,000       39,000    117,000     104,000
  Depreciation expense    55,000       32,000    108,000      66,000
                         -------     --------    -------   ---------
Total operating
  expenses             1,919,000    2,125,000  4,895,000   6,016,000
                       ---------    ---------  ---------   ---------
Loss from
  operations          (1,558,000)  (1,705,000)(3,972,000) (4,736,000)

Other income             381,000       72,000    405,000     106,000
Stock based compensation       -     (367,000)         -    (800,000)
Interest expense         (38,000)           -    (57,000)          -
                       ---------    ---------  ---------   ---------

Loss before income
  tax benefit         (1,215,000)  (2,000,000)(3,624,000) (5,430,000)

Income tax benefit             -      797,000          -   2,168,000
                       ---------    ---------  ---------   ---------

Net loss             $(1,215,000) $(1,203,000)$(3,624,000)$(3,262,000)
                     ===========  =========== =========== ===========

Net loss             $(1,215,000) $(1,203,000)$(3,624,000)$(3,262,000)
Preferred stock
  dividends and
  amortization of
  beneficial
  conversion feature    (810,000)           -    (810,000)          -
                       ---------    ---------  ----------   ---------

Net loss applicable
  to common stock    $(2,025,000) $(1,203,000)$(4,434,000)$(3,262,000)
                     ===========  =========== =========== ===========

Net loss per share
  of to common stock:
    Basic and Diluted   $  (0.48) $     (0.29) $    (1.06)  $   (0.83)
                        ========  ===========  ==========   =========

Weighted average
shares outstanding:
  Basic and Diluted    4,187,000    4,174,000   4,187,000   3,908,000
                       =========    =========   =========   =========