Broderbund Software, Inc. and Random House Reach Preliminary Agreement to Restructure Living Books Partnership; Resulting Agreement Would Transition Random House's 50 Percent Stake in Living Books to Broderbund

Business Wire, Jan 17, 1997

NOVATO, Calif.--(BUSINESS WIRE)--Jan. 17, 1997--Broderbund Software, Inc. (NASDAQ:BROD) and Random House Inc. have reached preliminary agreement on key terms to transition Random House's 50 percent stake in Living Books to Broderbund for an undisclosed amount. The agreement, which needs to be approved by the Random House and Broderbund Boards of Directors, provides for Living Books to become a part of Broderbund. Random House would continue to be a content partner for future Living Books products, and would continue to distribute Living Books into the U.S. bookstore channel.

"We like working with Random House and we know it's reciprocal. We feel this would be the best way to move our partnership forward," said Joe Durrett, Chief Executive Officer of Broderbund. "We will continue to work with Random House and its extensive library of children's storybooks. Both of us agree that integrating Living Books into Broderbund would leverage mutual strengths in product development and marketing."

"Our relationship with Broderbund has been an extremely positive one and we are proud of what we've accomplished together," said Alberto Vitale, Chairman and Chief Executive Officer of Random House, Inc. "Living Books has grown significantly during the past three years and it has produced many best-selling titles. We strongly believe that the future of Living Books and our partnership with Broderbund is best served by once again making Living Books an integral part of the Broderbund organization. We look forward to continuing collaboration in developing content for Living Books storybooks in the future."

Living Books, best known for "Just Grandma and Me(R)" by Mercer Mayer, Dr. Seuss's "ABC(R)" and "Green Eggs and Ham(R)" by Dr. Seuss, "Arthur's Teacher Trouble(R)" by Marc Brown, and "The Berenstain Bears Get in a Fight(R)" by Stan and Jan Berenstain, started as a development studio at Broderbund. In 1994, Broderbund entered into a partnership agreement with Random House to take advantage of its vast portfolio of children's content. Living Books is known for its exceedingly high production values and strong focus on education.

"Living Books pioneered the interactive storybook category in software and continues to provide many of the best loved titles in the market," added Durrett. "The company has a reputation for quality products and innovative marketing and we feel this will only be enhanced by joining the Broderbund family. Although Living Books remains a small portion of Broderbund's revenue, it shares our focus on children's education and will continue to play a central role in educational software development."

Broderbund Software, Inc. develops, publishes and markets a broad line of interactive content for use in homes, schools and small businesses. Since its founding in 1980, Broderbund has pioneered innovative award-winning products that take advantage of the latest technologies. Broderbund has a successful track record of identifying and capitalizing on emerging trends through its studio development approach. Broderbund's website is located at http://www.broderbund.com .

Random House Inc. is the world's largest English-language general trade book publisher. It includes an array of prestigious imprints that publish some of the foremost writers of our time in hardcover, trade paperback, mass market paperback, and other formats. Its principal divisions include the Random House Publishing Group, Random House New Media, the Knopf Publishing Group, the Crown Publishing Group, the Ballantine Publishing Group, Random House Reference and Information Publishing, Random House Children's Publishing, and Random House Direct Marketing. The impact of Random House's publishing program is worldwide, and its International Group includes companies in Canada, the United Kingdom, Australia, New Zealand, and South Africa. Random House's website is located at http://www.randomhouse.com/ . -0-

Note to Editors: "Just Grandma and Me," Dr. Seuss's "ABC," "Green Eggs and Ham," "Arthur's Teacher Trouble," and "The Berenstain Bears Get In a Fight" are registered trademarks of Living Books, a Random House/Broderbund Company.

CONTACT: Broderbund Software, Inc.

Robin Linstrom, 415/382-4449 (Investor Relations)

Eric Winkler, 415/382-4568 (Corporate Communications)

Dana Henry, 415/382-3238 (Corporate Communications)

or

Random House

William T. Loverd, 212/572-2103 (VP, Corporate Affairs)