Pearson plc - Information Services -  Category Directory

+44-20-7010-2000

80 Strand
London, England WC2R 0RL

www.pearson.com
 

Sales

$7 billion (U.S. dollars)

Business Description 
Pearson is a global publishing company with its principal operations in the
education, business information and consumer publishing markets. We have
significant operations in the United States, where we generate over 65% of our
revenues, and in the United Kingdom and continental Europe. We create and manage
intellectual property, which we promote and sell to our customers under
well-known brand names, to inform, educate and entertain. We deliver our content
in a variety of forms and through a variety of channels, including books,
newspapers and internet services. We increasingly offer services as well as
content, from test processing to training.

Pearson was incorporated and registered in 1897 under the laws of England
and Wales as a limited company and re-registered as a public limited company in
1981. We conduct our operations primarily through our subsidiaries and other
affiliates. Our principal executive offices are located at 80 Strand, London
WC2R 0RL, United Kingdom (telephone: +44 (0) 20 7010 2000).

OVERVIEW OF OPERATING DIVISIONS

Although our businesses increasingly share markets, brands, processes and
facilities, they break down into three core operations:

PEARSON EDUCATION is a global leader in educational publishing and
services. We are a leading international publisher of textbooks, supplementary
materials and electronic education programs for elementary and secondary school,
higher education and business and professional markets worldwide. We also play a
major role in the testing and certification of school students and
professionals, mainly in the US but increasingly in the UK.

THE FT GROUP consists of our international newspaper, print and online
financial information, business magazine and professional publishing interests.
Our flagship product is the Financial Times, known internationally for its
premium editorial content and international scope both in newspaper and internet
formats.

THE PENGUIN GROUP is one of the premier English language publishers in the
world, with brand imprints such as Penguin, Putnam, Berkley, Viking and Dorling
Kindersley ("DK"). We publish an extensive portfolio of fiction, non-fiction,
reference and illustrated works. We publish the works of many authors, including
Maeve Binchy, Tom Clancy, Patricia Cornwell, Nick Hornby, Jamie Oliver, Nora
Roberts and Amy Tan.

OUR STRATEGY

Since 1998 we have reshaped Pearson by divesting a range of non-core
interests and investing over $7 billion in education, consumer publishing and
business information companies. Today our portfolio transformation is largely
complete and each one of our businesses aims to benefit from educating,
informing and entertaining people in an increasingly knowledge-based economy.
Our strategy is:

- to focus on businesses which provide "education" in the broadest sense
of the word.

- to provide a combination of publishing, both in print and online, and
related services that make our publishing more valuable and take us into
new, faster-growing markets.

- to continue to invest in the growth of our businesses, including:

- extending our lead in education publishing, investing in new programs
for students in School and Higher Education and in testing and
software services that help educators to personalise the learning
process, both in the US and around the world;

- developing our fast-growing contracting businesses, which provide
testing and other services to corporations and government agencies;

- building the international reach of the Financial Times -- both in
print through its four editions worldwide and online through FT.com --
and enhancing the market positions of our network of national business
newspapers around the world; and

- growing our position in consumer publishing, balancing our investment
across our stable of best-selling authors, new talent and our own
home-grown content.

- to foster a collaborative culture which facilitates greater productivity
and innovation by sharing processes, costs, technology, talent and
assets across our business.

- to capitalize on the growth prospects in our markets and on our leaner
operations to improve profits, cash flows and returns on invested
capital.

OPERATING DIVISIONS

PEARSON EDUCATION

Pearson Education is one of the world's largest publishers of textbooks and
paper and online teaching materials based on published sales figures and
independent estimates of sales. Pearson Education serves the growing demands of
teachers, students, parents and professionals throughout the world for
stimulating effective education programs. With federal and state governments
under pressure to measure academic progress against clear objective standards,
the market for educational testing services in the United States has grown
significantly. Pearson Assessments & Testing enables us to combine testing and
assessment with our traditional educational curriculum services and products to
form one of the world's leading integrated education companies. Pearson
Assessments & Testing provides the entire spectrum of educational services --
from educational curriculum to testing and assessment to data management.

We report Pearson Education's performance along the lines of the three
markets it serves: School, Higher Education and Professional. In 2003, Pearson
Education had sales of L2,451 million or 61% of Pearson's total sales (64% in
2002).

School

In the United States, our School business includes publishing, testing and
software operations. Outside of the United States, we have a growing English
Language Teaching business and we also publish school materials in local
languages in a number of countries. In the US we publish for kindergarten
through 12th grade, with a comprehensive range of textbooks, supplementary
materials and electronic education programs. Pearson Education's premier
elementary school imprint, Pearson Scott Foresman, and premier secondary school
imprint, Pearson Prentice Hall, publish high quality programs covering subjects
such as reading, literature, math, science and social studies. We also publish
supplementary teaching aids for both elementary and secondary schools and
teacher-written activity books. We are a leading publisher in online assessment
and digital courseware through Pearson Education Technologies and the Waterford
Early Reading Program. Through LessonLab, we provide professional development
for teachers in kindergarten through 12th grade with the use of the latest
technologies and software tools to improve classroom teaching.

Pearson's Assessments & Testing operations make us a leading player in the
markets for test processing and scoring and the provision of enterprise software
solutions to schools. We score and process some 40 million student tests across
the United States every year.

With over 90% of education spending for kindergarten through 12th grade in
the United States financed at the state or local level, the School division's
major customers are state education boards and local school districts. In the
United States, 20 states, which account for over 50% of the total kindergarten
through 12th grade US school population of some 53 million students, buy
educational programs by means of periodic statewide "adoptions". These adoptions
cover programs in the core subject areas. Typically, a state committee selects a
short-list of education programs from which the school districts then make
individual choices. We actively seek to keep as many of our offerings as
possible on the approved list in each state, and we market directly to the
school districts. In the 30 states without adoptions, or "open territories",
local school districts choose education programs from the extensive range
available. We actively market to school districts in open territories as well.
At present our open territory state revenues exceed those from adoption states,
although we anticipate a more even split in 2005 due to the stronger adoption
calendar.

Higher Education

Pearson Education is the United States' largest publisher of textbooks and
related course materials for colleges and universities based on sales. We
publish across all of the main fields of study with imprints such as Pearson
Prentice Hall, Pearson Addison Wesley, Pearson Allyn & Bacon and Pearson
Benjamin Cummings. Our sales force markets primarily to college professors, who
choose the texts to be purchased by their students. Over 1,330 of Pearson
Education's college textbooks have an interactive companion website with online
study guides to reinforce text concepts, chat rooms and bulletin boards to
facilitate interaction between students and faculty. An increasing number of our
programs incorporate online course management systems that provide a powerful
set of easy-to-use tools that allow professors to create sophisticated web-based
courses. In addition, our custom publishing business works with professors to
produce textbooks specifically adapted for their particular course.

Professional

We publish text, reference, and interactive products for IT industry
professionals, graphics and design users of all types, and consumers interested
in software applications and certification, professional business books, and
strategy guides for those who use PC and console games. Publishing imprints in
this area include Addison Wesley Professional, Prentice Hall PTR, and Cisco
Press (our three high end imprints), Peachpit Press and New Riders Press (our
graphics and design imprints), Que/Sams (consumer and professional imprint),
Prentice Hall Financial Times (professional business imprint) and BradyGames
(software game guides imprint). We also generate revenues through our own
website -- InformIt. We also provide services to professional markets. We manage
significant commercial contracts to implement and execute qualification and
assessment systems for individual professions, including IT professionals and
nurses.

Our Government Solutions group manages and processes student loan
applications on behalf of the US Department of Education and has a number of
education, testing-related contracts with various government departments. We
also provide a range of data collection and management services, including the
sale of scanners, to a wide range of customers. We also provide corporate
training courses to professionals.

In 2003, our professional testing business entered into two significant
contracts. In November 2003, we were awarded a seven-year contract with the
Driving Standards Agency (DSA) of Great Britain and the Driver Vehicle Testing
Agency (DVTA) of Northern Ireland. Pearson Assessments & Testing will administer
and process the results of the driving theory section of the driving licence
examination, beginning in September 2004. Candidates will take the computerized
theory test at more than 150 examination centers throughout England, Scotland,
Wales and Northern Ireland. In December 2003, we were selected as the prime
contractor for a seven-year contract to develop and administer the Graduate
Management Admission Test (GMAT) worldwide. Commencing in January 2006, the GMAT
will be available at more than 400 Pearson test centers in 96 countries.

THE FT GROUP

The FT Group, one of the world's leading business information companies,
aims to provide a broad range of business information, analysis and services to
an audience of internationally-minded business people. In 2003, the FT Group had
sales of L757 million, or 19% of Pearson's total sales (17% in 2002). The FT
Group's business is
global, producing a combination of news, data, comment, analysis and context. In
addition to professional and business consumers, individuals worldwide are
demanding such strategic business information. We believe that the FT Group is
well positioned to supply information and benefit from these trends.

The Financial Times Newspaper

The Financial Times is a leading international daily business newspaper.
Its average daily circulation of 447,552 copies in December 2003, as reported by
the Audit Bureau of Circulation, gives the Financial Times the second largest
circulation of any English language business daily in the world. The Financial
Times derived approximately 65% of its revenue in 2003 from advertising and
approximately 35% from circulation. The geographic distribution of the Financial
Times average daily circulation in 2003 was:

United Kingdom/Republic of Ireland.......................... 31%
Continental Europe, Africa and Middle East.................. 32%
Americas.................................................... 30%
Asia........................................................ 7%
 
The Financial Times is printed on contract in 21 cities around the world
and our sales mix is becoming increasingly international. The newspaper draws
upon an extensive network of international correspondents to produce unique,
informative and timely business information. For production and distribution,
the Financial Times uses computer-driven communications and printing technology
for timely delivery of the various editions of the newspaper to the appropriate
geographic markets. The Financial Times is distributed through independent
newsagents and direct delivery to homes and institutions.

The FT seeks to make its content available both in print and online,
through FT.com, its internet service, and sales of electronic content to third
parties. FT.com charges subscribers to access detailed industry news, comment
and analysis, whilst providing general news and market data to a wider audience.
The business earns revenues by selling content directly, selling advertising and
through its subscription program. At the end of January 2004, FT.com had 74,000
paying subscribers. According to figures independently audited by ABCE, the site
has 3.5 million unique monthly users and 58.8 million page views.

Financial Times Publishing

Our other business publishing interests include France's leading business
newspaper, Les Echos with circulation of 116,400 and lesechos.fr, its internet
service.

FT Business produces specialist information on the retail, personal and
institutional finance industries and publishes the UK's premier personal finance
magazine, Investors Chronicle, together with Money Management, Financial Advisor
and The Banker for professional advisers and financial sector professionals.

Recoletos

We own a 79% stake in Recoletos, a publicly quoted Spanish media group that
we built with its Spanish founding shareholders over several years. Recoletos'
publishing businesses in Spain, Portugal and Latin America include Marca, a
leading sports newspaper for the region with an average daily circulation of
391,000 in 2003, Expansion, Spain's leading business newspaper and website,
Actualidad Economica, a weekly business magazine, and Telva, a monthly women's
magazine. Recoletos is also developing its internet activities as it seeks to
extend the reach of its print-based products.

Interactive Data Corporation

Through our 61% interest in Interactive Data Corporation ("Interactive
Data"), we are one of the world's leading global providers of financial and
business information to financial institutions and retail investors. Interactive
Data supplies time-sensitive pricing, dividend, corporate action, and
descriptive information for more than 3.5 million securities traded around the
world, including hard-to-value instruments. Customers subscribe to Interactive
Data's services and use the company's analytical tools in support of their
trading, analysis, portfolio

management, and valuation activities. In February 2003, Interactive Data
acquired S&P ComStock, Inc. ("ComStock") from The McGraw-Hill Companies, Inc.,
allowing us to provide real-time information regarding securities traded around
the world to our institutional clients.

Joint Ventures and Associates

The FT Group also has a number of other associates and joint ventures,
including:

A 50% interest in FT Deutschland, launched in February 2000, in partnership
with Gruner + Jahr, is our German language newspaper with a fully integrated
online business news, analysis and data service. Its circulation grew by 9% in
2003 to 92,000 copies.

A 50% interest in The Economist Group, which publishes the world's leading
weekly business and current affairs magazine.

A 50% interest in FTSE International, a joint venture with the London Stock
Exchange, which, among other things, publishes the FTSE index.

A 32% interest in MarketWatch.com, Inc., a publicly traded financial media
company. In early 2004, our shareholding was reduced to 23% following
MarketWatch's issuance of shares to acquire Pinnacor Inc.

A 33% interest in Vedomosti, a leading Russian business newspaper and a
partnership venture with Dow Jones and Independent Media.

A 50% interest in Business Day and Financial Mail, publishers of South
Africa's leading financial newspaper and magazine.

THE PENGUIN GROUP

Penguin is one of the premier English language publishers in the world. We
publish an extensive backlist and frontlist of titles, including some of the
very best new fiction and non-fiction, literary prize winners and commercial
blockbusters. Our titles range from history and science to essential reference.
We are also one of the pre-eminent classics publishers and publish some of the
most highly prized and enduring brands in children's publishing, featuring
popular characters such as Spot, Peter Rabbit and Madeline, as well as the books
of Roald Dahl. We rank in the top three consumer publishers, based upon sales,
in all major English speaking markets -- the United States, the United Kingdom,
Australia, New Zealand, Canada, India and South Africa.

Penguin publishes under many imprints including, in the adult market, Allen
Lane, Avery, Berkley Books, Dorling Kindersley, Dutton, Hamish Hamilton, Michael
Joseph, Plume, Putnam, Riverhead and Viking. Our leading children's imprints
include Puffin, Ladybird, Warne and Grosset & Dunlap. In 2003, Penguin's US
imprints placed 110 titles on The New York Times bestseller list. In the United
Kingdom, 60 Penguin titles featured on the Nielsen Bookscan top fifteen
bestseller list. Our illustrated reference business, Dorling Kindersley, or DK,
is the leading global publisher of high quality illustrated reference books. DK
has built a unique graphic style that is now recognized around the world. It
produces books for children and adults covering a huge variety of subjects
including childcare, health, gardening, food and wine, travel, business and
sports. Not only does DK's "lexigraphic" design approach make its books easily
translatable across cultures, but it has also formed the basis of a library of
2.5 million wholly-owned images which have many applications -- in print or
online.

In 2003, Penguin had sales of L840 million representing 21% of Pearson's
total sales (19% in 2002). Revenues are balanced between frontlist and backlist
titles, reducing Penguin's exposure to volatility in either market. The Penguin
Group earns over 90% of its revenues from the sale of hard cover and paperback
books. The balance comes from audio books and from the sale and licensing of
intellectual property rights, such as the Beatrix Potter series of fictional
characters, and acting as a book distributor for a number of smaller publishing
houses.

We sell directly to bookshops and through wholesalers. Retail bookshops
normally maintain relationships with both publishers and wholesalers and use the
channel that best serves the specific requirements of an order. We also sell
online through third parties such as Amazon.com.

The Penguin Group's gateway internet site, Penguin.com, provides access to
its focused websites in the United States, Canada, United Kingdom and Australia.
Websites have also been developed to target certain niche audiences. For
example, Penguinclassics.com has an entire online service for the classics, with
anthologies, original essays, interviews and discussions and links to other
classics sites.

During 2004, we intend to launch three new imprints in the United States,
Penguin Press and Sentinel and a new teenage imprint, Razorbill. 2004 will also
see us trial a US direct to consumer sales channel, expected to launch in the
final quarter.

Penguin TV was incorporated into the Penguin Group during 2003, created
from the former Pearson Broadband Television Group. Penguin TV will specialize
in two areas: factual, non-fiction documentary programming and children's
programming.

COMPETITION

All of Pearson's businesses operate in highly competitive environments.

Pearson Education competes with other publishers and creators of
educational materials and services. These companies include some small niche
players and some large international companies, such as McGraw-Hill, Reed
Elsevier, Houghton Mifflin and Thomson. Competition is based on the ability to
deliver quality products and services that address the specified curriculum
needs and appeal to the school boards, educators and government officials making
purchasing decisions.

The FT Group's newspapers and magazines compete with newspapers and other
information sources, such as The Wall Street Journal, by offering timely and
expert journalism. It competes for advertisers with other forms of media based
on the ability to offer an effective means for advertisers to reach their target
audience. The efficiency of its cost base is also a competitive factor.

The Penguin Group competes with other publishers of fiction and non-fiction
books. Principal competitors include Random House and HarperCollins. Publishers
compete by developing a portfolio of books by established authors and by seeking
out and promoting talented new writers. Our scale is also a source of
competitive strength.
 

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