Announces Higher Earnings for Fourth Quarter and Full Year.CHESTNUT HILL Chestnut Hill may refer to: In geography:
See: New York Stock Exchange : H) announced today that its Harcourt Brace publishing and educational services businesses had a very strong fourth quarter performance, complementing improved results from the Company's specialty retailing businesses and leading to sharply higher net earnings of 87 cents per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share for the period, compared to 11 cents per diluted share in the final quarter of 1997. "Harcourt Brace had an outstanding fourth quarter that featured higher revenues and improved operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before from each of its three groups," said Richard A. Smith, chairman and chief executive officer. "Particularly strong performances in the quarter were achieved by our secondary school and supplemental publishing businesses in the Education Group; by our testing and assessment business in the Lifelong Learning Lifelong learning is the concept that "It's never too soon or too late for learning", a philosophy that has taken root in a whole host of different organisations. Lifelong learning is attitudinal; that one can and should be open to new ideas, decisions, skills or behaviors. & Assessment Group; and by our scientific publishing and international businesses in the Worldwide Scientific, Technical, and Medical (STM (Scanning Tunneling Microscope) A microscope that can image down to the atomic level. An STM uses a piezoelectric tube with a tiny sharp tip at the end that is moved within nanometers of the object being sampled. ) Group." For the three months ended October 31, 1998, Harcourt General reported revenues of $1.14 billion, up 14.6 percent from $991.3 million in the fourth quarter of 1997. Operating earnings in the 1998 quarter rose to $138.8 million from $50.0 million a year ago. The Company indicated that operating earnings in the fourth quarter of 1998 benefited from lower charges for amortization of goodwill and intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc last year's acquisition of National Education Corporation (NEC (NEC Corporation, Tokyo, www.nec.com, www.necus.com) An electronics conglomerate known in the U.S. for its monitors. In Japan, it had the lion's share of the PC market until the late 1990s (see PC 98). NEC was founded in Tokyo in 1899 as Nippon Electric Company, Ltd. ). Those charges amounted to $17.0 million in the 1998 quarter, compared to $62.5 million in the final quarter of 1997. Net earnings were $62.5 million, equal to 87 cents per diluted share, compared to $8.1 million, equal to 11 cents per diluted share, in the fourth quarter of 1997. The after-tax effect of the amortization of goodwill and intangible assets reduced net earnings in the year-ago quarter by 61 cents per diluted share, compared to 17 cents per diluted share in the 1998 quarter. Harcourt General's consolidated statements include the operating results of The Neiman Marcus Neiman Marcus U.S. department-store chain. It was founded in Dallas, Texas, in 1907 by Herbert Marcus, his sister Carrie Marcus Neiman, and her husband, A.L. Neiman. Group, its 54 percent-owned specialty retailing subsidiary, with a lag of one quarter. In the fourth quarter, revenues from the Company's specialty retailing segment rose 7.9 percent to $536.7 million, while operating earnings rose 7.5 percent to $36.4 million. After recognition of the minority interest, The Neiman Marcus Group's contribution to Harcourt General's fourth quarter net earnings was $8.2 million, equal to 11 cents per diluted share, compared to $7.5 million, or 11 cents per diluted share, in the year-ago period. For the full year, Harcourt General's revenues totaled $4.24 billion, an increase of 14.7 percent from $3.69 billion in 1997. Operating earnings in 1998 rose to $410.9 million from an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. in 1997 of $5.7 million. Operating earnings were reduced by amortization of goodwill and intangible assets related to the NEC acquisition totaling $68.4 million in 1998, down from $104.1 million in 1997. On an after-tax basis After-tax basis The comparison basis used to analyze the net after-tax returns on a corporate taxable bond and a municipal tax-free bond. , these charges reduced net earnings by approximately 75 cents per diluted share in 1998 and nearly $1.00 per diluted share in 1997. In addition, the 1997 operating loss includes non-recurring charges of $277.2 million primarily for integration costs and purchased in-process research and development related to the NEC acquisition. Net earnings in 1998 were also reduced by higher net interest expense of $103.4 million compared to $65.3 million in 1997, reflecting the Company's use of its cash balances and borrowings to fund several acquisitions in the publishing and educational services industry. Net earnings for 1998 rose 11.5 percent to $141.6 million, equal to $1.96 per diluted share, from earnings before non-recurring charges of $127.0 million, or $1.78 per diluted share, in 1997. After a non-recurring charge of $242.1 million net of taxes, equal to $3.42 per share in 1997, the Company reported a net loss of $115.1 million, equal to $1.64 per share in the prior year. "Our reported earnings improvement in 1998 only partially reflects the inherent strength of our businesses and their very strong performances for the year," stated Mr. Smith. "Although 1998 earnings benefited by approximately 25 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. from reduced NEC-related amortization expense, the recognition of a full year of minority interest in our specialty retailing operations lowered year-to-year earnings on a net basis by 61 cents per share. The net effect of those two accounting matters created a 36 cent per share shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. for us to make up during the year. The fact that we closed that gap and still grew earnings an additional 18 cents per share, from $1.78 before non-recurring charges to $1.96 in 1998, is a more accurate illustration of the earnings growth achieved by our operating businesses." Revenues from the Company's Harcourt Brace publishing businesses in 1998 were $1.86 billion, a 25.7 percent increase from $1.48 billion in 1997. Operating earnings for the year more than doubled to $232.7 million from $112.9 million, before non-recurring charges in 1997. For the full year, Harcourt Brace's Education Group reported revenues of $714.9 million, a 14.9 percent increase compared to 1997, while operating earnings rose 50.7 percent to $125.4 million before non-recurring charges in the prior year. "Every business in this Group increased its revenues and earnings in 1998," said Mr. Smith. "Of particular note was our elementary and high school publishing businesses, which reported improved performances despite difficult comparisons to strong years in 1997, and our college publishing operations, which had significantly higher earnings." The Group's earnings also benefited from an excellent full year performance by Steck-Vaughn, the Company's publisher of supplemental education materials, as well as from a decline in amortization related to its acquisition. Revenues in the Lifelong Learning & Assessment Group were $619.5 million in 1998, a 51.6 percent increase compared to 1997. After lower amortization charges, the Group reported a slight operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. in 1998 of $6.9 million, compared to an operating loss of $64.6 million before non-recurring charges in the prior year. "The Psychological Corporation had an outstanding year, led by strong demand for the Stanford-9 student achievement tests, which were used by students throughout the country, including more than four million in California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). alone," said Mr. Smith. "Our BarBri bar review business also performed very well during the year," he indicated. The Group's performance also benefited from a full year of profitable results from the ICS (1) (Internet Connection Sharing) A Windows feature that enables two or more computers to share one Internet connection. First introduced in Windows 98 Second Edition, sharing is accomplished with network address translation (NAT), which is the common method. distance learning company and the NETg computer-based information technology training company. Both businesses were acquired from NEC in June 1997 and were included in operating results for only five months in 1997. The Worldwide STM Group reported a revenue increase of 17.0 percent, to $527.5 million in 1998, while operating earnings grew 6.5 percent before non-recurring charges a year ago to $100.3 million. "Academic Press, our scientific publisher, benefited from higher journal subscriptions and increasing demand for its innovative on-line product, IDEAL," Mr. Smith continued. "The Company's medical publisher, WB Saunders Saun´ders n. 1. See Sandress. , had a slight increase in profits despite the negative impact of economic declines in Asia. On the international front, our London operations had a very strong year due to the acquisition of the Churchill Livingstone Imprint of a medical publishing company owned by Elsevier Ltd, but previously owned by Harcourt and Pearsons. Originally formed from Livingstone, Edinburgh, Scotland, and J & A Churchill, London, UK, and subsequently with an office in New York, but now integrated with the rest of medical publishing imprint im·print tr.v. im·print·ed, im·print·ing, im·prints 1. To produce (a mark or pattern) on a surface by pressure. 2. To produce a mark on (a surface) by pressure. 3. and higher demand for scientific and medical journals." Revenues from The Neiman Marcus Group rose 7.4 percent to $2.37 billion in 1998, while operating earnings increased 9.4 percent to $213.1 million. The Neiman Marcus Group's contribution to Harcourt General's full-year earnings was $54.0 million, equal to 75 cents per diluted share, compared to $82.7 million, or $1.17 per diluted share, in 1997. The decrease is attributable to the minority interest in The Neiman Marcus Group that Harcourt General began recognizing in the fourth quarter of 1997. That minority interest decreased the contribution of the specialty retailing operations by 69 cents per diluted share in 1998, compared to 8 cents per diluted share in 1997. "We exceeded our financial objectives for the full year," said Mr. Smith, "and, most importantly Adv. 1. most importantly - above and beyond all other consideration; "above all, you must be independent" above all, most especially , successfully completed the integration of the former NEC businesses. Our efforts have laid the groundwork for continued strong performances in 1999 and beyond. Our educational businesses, which hold leading positions in a broad spectrum of learning and assessment markets, are poised for dynamic growth in traditional as well as emerging new markets. Similarly, we remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the long-term growth prospects of our specialty retailing businesses as those branded franchises extend their unique relationships with America's growing population of affluent consumers," he said. Harcourt General is a leading global multiple-media publisher and service provider to established educational, trade and professional markets as well as to emerging for-profit educational, career-training and assessment markets. The Company is also a leading specialty retailer through its 54% controlling interest controlling interest The ownership of a quantity of outstanding corporate stock sufficient to control the actions of the firm. Controlling interest often involves ownership of significantly less than 51% of a firm's outstanding stock because many owners fail in The Neiman Marcus Group (NYSE:NMG NmG No More Gas (Myers Motors electric vehicle) NMG Navy Metrication Group NMG Nuera Media Gateway NMG Network Media Gateway NMG Network Management Gateway NMG Network Measurement Group ). The figures are as follows: Statements in this release referring to the expected future plans and performance of the Company are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Actual future results may differ materially from such statements. Factors that could affect future performance in the Company's publishing and educational services businesses include, but are not limited to: the Company's ability to develop and market its products and services; the relative success of the products and services offered by competitors; failure of the Company or third parties to be Year 2000 compliant a. 1. (Computers) having dates fully and properly represented, and not susceptible to failure due to the year 2000 bug. ; integration of acquired businesses; the seasonal and cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. nature of the markets for the Company's products and services; changes in economic conditions; changes in public funding Public funding is money given from tax revenue or other governmental sources to an individual, organization, or entity. See also
2.-Sec. 1. costs; and changes in the Company's relationships with designers and other resources. For more information, see the Company's filings with the Securities and Exchange Commission. -0-
HARCOURT GENERAL, INC. AND SUBSIDIARIES
OPERATINGS EARNINGS DATA
(In thousands except for per share amounts)
Fiscal Year For the Three Months
Ended October 31, Ended October 31,
1998 1997 1998 1997
Revenues:
Publishing and
educational
services $ 1,861,907 $ 1,481,748 $ 599,467 $ 493,959
Specialty
retailing 2,373,347 2,209,891 536,729 497,309
$ 4,235,254 $ 3,691,639 $ 1,136,196 $ 991,268
Operating earnings
(loss):
Publishing and
educational
services $ 232,659 $ 112,918 $ 110,780 $ 25,215
Specialty retailing 213,062 194,714 36,440 33,910
Corporate expenses (34,837) (36,101) (8,403) (9,173)
Non-recurring
and other charges -- (277,227) -- --
Operating
earnings (loss) 410,884 (5,696) 138,817 49,952
Investment income 4,880 28,984 896 2,699
Interest expense (108,298) (94,319) (27,960) (28,080)
Earnings (loss)
before income
taxes and
307,466 (71,031) 111,753 24,571
Income tax expense (116,837) (38,239) (42,466) (10,592)
Earnings (loss)
before minority
interest 190,629 (109,270) 69,287 13,979
Minority interest
in net earnings
of subsidiaries (49,013) (5,852) (6,775) (5,852)
Net earnings(loss)$ 141,616 ($ 115,122) $ 62,512 $ 8,127
Weighted average number of common
and common equivalent shares outstanding:
Basic 70,837 70,812 71,017 70,751
Diluted 72,141 70,812 72,124 70,751
Net earnings (loss)
per common share:
Basic 1.99 ($ 1.64) $ .88 $ .11
Diluted 1.96 ($ 1.64) $ .87 $ .11
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