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  pearson annual report 2000    

: Pearson Education :


: profile :

There has never been a better time to be in the business of education. While governments around the world invest more to educate their young people, individuals devote more of their personal hours (and finances) to help their children and to improve their own careers, earnings and life opportunities.

Over the past three years, through acquisitions, strategic alliances and organic growth, we have created the world’s leading learning company. In the US, our largest single market, our educational publishing operations play a key role in meeting the demand for first-class curriculum, both in print and online. This market, valued at some $8bn (a small proportion of the $740bn invested in education in the US each year) is currently growing on average at around 8% per year.

With federal and state governments wanting both to measure academic progress against clear standards and modernise their school systems, we are seeing faster rates of growth in demand for testing and the enterprise software that powers many schools. The acquisition of NCS, completed in September 2000, means we can meet this demand and work with schools to embed assessment as part of the daily curriculum and to tailor learning to the needs of each student. And, as the internet becomes an integral part of both the home and the classroom, our Learning Network links teachers, parents and students in ways never possible before. In addition, by facilitating ‘anytime, anywhere’ learning, it enables us to take a leading role in the faster growing markets of online consumer learning and business education and management development.

The trends in the US are also playing out in developed countries around the world. In developing countries, school rolls are growing even more rapidly as an increasing number of students stays on longer at school. And, around the world, ownership of educational publishing and learning companies is often fragmented, creating major opportunities for consolidation and growth. As the world’s most international education company, we are in a very good position to capitalise on these trends.

We have all the pieces – the most comprehensive range of educational pro-grammes, leadership in testing, assessment and enterprise software and the very best in online consumer and professional learning – to participate in the learning revolution, and to profit from the growth it brings to the business of education.

The acquisition of NCS has transformed Pearson Education into the world’s leading integrated education company, linking curriculum, assessment and data management. The NCS operations have been integrated into our US school, US higher education & professional and international businesses.

US school:
We are the leading K-12 (kindergarten to 12th grade) curriculum, testing and software company in the US. Our premier elementary (Scott Foresman) and secondary (Prentice Hall) imprints publish some of the very best school programmes, covering subjects such as reading, literature, math, science and social studies. We are a leading publisher of online assessment and digital course- ware through NCSLearn (which combines Novanet with the Computer Curriculum Corporation) and the Waterford Early Reading Programme. We also publish supplementary teaching aids for both elementary and secondary schools. We are one of the leading commercial testing companies in the US, scoring and processing some 40 million student tests across the US every year. And more than 40,000 of the 110,000 schools use at least one of our suite of student curriculum, instructional management and financial software packages.

US higher education & professional:
We are the leading higher education publisher in the US, with imprints such as Addison Wesley, Allyn & Bacon and Prentice Hall. We publish around one in three of all the text and online programmes studied on US campuses. Our professional and technology group publishes leading computer and information technology titles, with imprints such as Addison Wesley, Adobe Press, Cisco Press, New Riders, Peachpit, Prentice Hall, Que and Sams, complemented by, our online information technology service. Our government solutions group manages and processes student grant applications on behalf of the US Department of Education and has a number of education related contracts with various government departments.

We are a leading publisher of text and online programmes in school, higher education and professional markets in countries all around the world. With our Longman imprint, more people learn English as a second language with our programmes than with those of any other publisher. We also create, manage and process student tests in countries all around the world.

FT Knowledge:
In July 2000, we acquired The Forum Corporation, one of the top corporate training companies in the US, for £61m. It has combined with FT Knowledge to create one of the world’s leading corporate training and elearning companies. The combined business provides learning solutions and training programmes in executive development, sales, customer service, management, leadership and finance for both corporations (our clients include 130 of the Fortune 500 companies) and individuals.

Learning Network:
In September 2000, following the acquisition earlier in the year of Family Education Network for £96m (87% of the equity), we launched our Learning Network (; America Online Keyword: Learning Network). Learning Network is the leading consumer education source on the web, providing educational content and reference sources – as well as applications and services – for teachers, school students, parents and anyone interested in professional development and lifelong learning. By the summer of 2001, Learning Network will offer similar services to college professors and students.


: performance :

Sales at Pearson Education increased to £2,044m with underlying sales, held back by softness in the consumer technology markets, increasing by 5.4%. Underlying profits, boosted by integration benefits flowing through from the integration of the Simon & Schuster and AWL education businesses, increased by 13.4%.

After becoming part of Pearson Education on September 8, NCS contributed revenues of £146m and operating profit of £15m, meeting our revenue and profit expectations. It benefited from its leadership both in student testing and delivering enterprise software solutions to schools. The integration of NCS with Pearson Education is on track to deliver $50m of annual cost savings by the end of 2002.

Our US school business increased sales by 10%, excluding revenues from NCS. Building on a very strong performance in 1999, we made significant market share gains in some key adoptions, benefiting from a range of new print and online programmes. In secondary science, Prentice Hall School took a 40% share in the major state adoptions including California and our new Scott Foresman reading programme grew market share from less than 5% to approximately 25% nationwide. We also continued to build on the success of our best selling math programmes and took the leading position in secondary social studies. The US higher education and professional business increased sales by 9% (excluding revenues from NCS), gaining market share and growing margins. The college business delivered particularly strong growth in math, computer sciences, history and developmental English and continued to invest in combined text and online programmes. Its continued leadership in the college business helped to mitigate the impact of weakness in the consumer IT publishing market.

The international business increased sales by 18% (excluding revenues from NCS). Our major international operations all reported double digit revenue growth, with particularly strong progress in Latin America and English language training. We extended our lead in the international education market through a series of acquisitions in France, Brazil, Korea and Japan.

The integration of the Simon & Schuster and Addison Wesley Longman businesses is now completed and in 2001 is expected to deliver the projected $130m in annual cost savings. In the two years since the acquisition of the Simon & Schuster education businesses, our core US school and US college operations have increased revenues by an average of 8% per year on an underlying basis.

FT Knowledge made sales of £43m and losses of £17m as it invested in developing its corporate learning and executive education businesses in a market that is enjoying rapid worldwide growth. FT Knowledge merged successfully with The Forum Corporation; extended its financial training company, New York Institute of Finance, to Europe and Asia; launched FTdynamo, an online service focusing on world-class management thinking; and continued to develop online courses for the finance, investment and marketing professions.

Learning Network was launched successfully in September and is now established as one of the 50 most popular websites in the US. It is moving quickly to translate that traffic into the revenues which will ensure it breaks even by the end of 2003. At the same time, it is helping to drive revenue growth across Pearson’s businesses.

Pearson Broadband, a new initiative to create interactive education television for K-12, higher education, professional and lifelong learning markets, will launch its first products in 2001.

Sales Analysis

2000 Annual Report
* Introduction
* Chairman's letter
* Chief executive's review
* The Pearson Goals
* Internet Enterprises
* The Results
* Pearson Education
* The Penguin Group
* The Financial Times Group
* Recoletos
* Financial Review
* The Board
* Directors' Report
* Personnel Committee Report
* Consolidated profit and loss account
* Consolidated balance sheet
* Consolidated statement of cash flows
* Statement of total recognised gains and losses
* Reconciliation of movements in equity shareholders' funds
* Report to the Auditors to the Members of Pearson plc
* Principal subsidiaries and associates
* Five year summary
* Corporate and Operating Measures
* Shareholder information
* Notes to the accounts

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