The Ones to Watch

	THE BUDDING BUILDER

Bob Ostertag, CEO, Foster & Gallagher

CEO since: 1996 (handpicked by the company cofounder Tom Foster, who died in 1996)

Company founded: 1952, by Foster and Helen Gallagher

Catalogs: 20, including flower and plant books Michigan Bulb, Spring Hill Nurseries, Breck's, and Stark Brothers (fruit trees); food gifts catalogs Popcorn Factory and Mauna Loa (macadamia nuts); children's products books Childcraft, Learn & Play, HearthSong, and Magic Cabin Dolls; and home and gift catalogs Home Marketplace, Personal Comforts, and Walter Drake

Key managers: Bob Pellegrino, vice chairman; Mel Regal, chairman; Jon Elletson, chief financial officer

1997 sales: $480 million

Current earnings: "highly profitable," according to Ostertag

1996 sales: $376 million

Growth rate: 125% over past four years

Expected sales for 2001: $1 billion-plus, through growth, acquisitions, and new business

House file: more than 5 million

Track record: Ostertag's long resume includes stints as chief operating officer of Childcraft, chief administrative director of multititle mailer Hanover Direct, and corporate controller of mail order firm Gardenway.

Why a leader: Turned around moribund Michigan Bulb when hired as catalog president in 1992. Then organized Foster & Gallagher into five business groups: Michigan Bulb, Spring Hill, Children's, Gift, and Corporate Business Services. Magic business touch in improving fulfillment and marketing translated into higher profits and stronger platform companywide, setting stage for acquisitions and new catalog initiatives.

What they say: "Ostertag has worked miracles. Michigan Bulb was a borderline company, and he turned that around so quickly it amazed us. He has done a good job of organizing the whole company so that it's had a tremendous increase in profits and sales. I don't know anyone who has done so much to a leading company to increase its profitability and sales volume."-consultant Dick Hodgson, who also sits on F&G's board

"Foster & Gallagher continues to thrive. It will remain very profitable and will make carefully thought- through acquisitions and may by 2001 have gone public."-consultant John Lenser

Prospects: Under Ostertag, solid, diversified company could prove good home to undermanaged acquisitions. Ostertag is less publicity-shy than the late Foster: Can you spell IPO?

	THE CONSOLIDATOR KINGS

Don Steiner (below left), founder, and Bill End (below right), chairman/CEO, The International Cornerstone Group

Company founded: 1993

Catalogs: Travelsmith (travel accessories); Frontgate, Ballard Designs, and Whispering Pines (home accessories and furnishings); The Territory Ahead (apparel); and Garnet Hill (natural fibers products)

Key managers: Mark Fasold, chief financial officer; John O'Steen, president, fulfillment, database and operations; Paul Targen, president/CEO, Frontgate

1997 sales: $200 million-plus

1997 earnings: "Nicely profitable, at or above industry standards," Steiner claims.

1996 sales: Less than $100 million (Travelsmith and Frontgate only)

Growth rate: Besides growth through acquisitions, each catalog is growing 25%-50% annually

Expected sales in 2001: By some industry estimates, $1 billion-plus including potential acquisitions

House file: 3.5 million active buyers

Track record: Distinction galore. End, who came on in 1995, had been CEO of Lands' End and marketing chief at L.L. Bean; Steiner spent 12 years at Boston Capital Ventures, managing $100 million in assets.

Why leaders: As heads of the premier consolidation group with a brief, impressive history of buying quality brands with complementary customer databases and growth potential, Steiner and End make sure that Cornerstone adds the right amount of value (economies of scale in operations and database) while keeping hands off management. In short, these guys have goodeyes and deep pockets, and if it ain't broke, they don't fix it.What they say: Thanks to its key leaders, "Cornerstone is positioned very, very well with very strong properties. It would be right up there with the best."-Lenser

"It has a collection of some of the best brand names, and I think brand names are going to be increasingly important."-Battle

"It has six good companies, significant in size and with complementary databases and excellent management. Cornerstone will be the king of consolidators."-Bill Nicolai, senior vice president, marketing, The Good Catalog Co.

Prospects: With a recent $60 million equity infusion and proven ability to spend money wisely, these are the guys to watch and emulate.