December 15-31, 2003 Edition Reed Elsevier Reports Lag

in Education, Business Units

but Delivers Share Growth

LONDON/12/4/03—Reed Elsevier, which owns Publishers Weekly and numerous other publications, reported it is on track to deliver double digit adjusted earnings per share growth this year, despite weak performance in its educational and magazine divisions.

The company warned analysts to expect slower growth in 2004, and flat sales in its Harcourt educational publishing and business-to-business magazine publishing units.

Reed Elsevier’s markets continue to be challenged by late cycle effects of the difficult economic conditions during the last three years. Further, the US education market is expected to decline next year, as it reaches the low point in the state textbook adoption cycle combined with continuing state budget pressures.

Harcourt Education has had a relatively stronger second half in markets that have continued to be affected by funding pressures and, in the US, by a weak adoption calendar. The Harcourt US K-12 schools business is expected once again to take a leading share of available state adoption revenues. Growth in backlist sales and in open territories has also been good. Overall revenues have however been held back by weakness in the supplemental business ahead of new publishing that addresses federally funded programs, and the previously announced loss of the California state testing contract.

Even in the face of the overall low market growth environment, Reed Elsevier will continue to increase investments in new products and market initiatives in 2004 to ensure strong long term revenue growth.

The adjusted earnings per share growth, when expressed in sterling and euros, will be impacted by currency translation effects due, in particular, to the year-on-year decline of the US dollar and the strengthening of the euro. The adjusted earnings per share growth when expressed in sterling will be a little lower, whereas the adjusted eps growth when expressed in euros is expected to be eliminated. (Adjusted eps is stated before amortization of goodwill and intangible assets and exceptional items.)

The company hopes a broadly based economic recovery will benefit its publishing operations, but has not forecast a rebound in its markets yet.