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Bertelsmann, RH Grow Revenues, Profits In Fiscal Year 2005

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March 23-30, 2006 Edition

Bertelsmann, RH

Grow Revenues, Profits

In Fiscal Year 2005

BERLIN/3/22/06—Bertelsmann, the international media company which owns Random House, increased its revenues and further improved its profitability in 2005. Several strategic acquisitions enhanced Bertelsmann’s market positions in key segments.

Consolidated revenues grew from $17.0 billion in 2004 to $17.9 billion in 2005. Acquisitions and organic growth each accounted for roughly half of the 5.1% increase. Consolidated net income wads again high at $1,041 million, but remained below the previous year’s $1,172 million, which included significant one-time gains.

The number of employees worldwide rose to 88,516 at the end of the year, compared to 76,266 employees in 2004. Staff growth was due to acquisitions and job creation.

Random House CEO Peter Olson said in a March 22 letter to employees that Random House “reinforced its position as one of the most reliable profit centers for our parent company among Bertelsmann’s core businesses.”

For Random House worldwide, 2005 was a record year, both in overall revenue and in operating profits, continuing a steady upward trend of the last few years. “Every one of the publisher’s North American divisions was profitable and made a significant contribution to the total results, with Random House of Canada setting a new record for the third straight year.” Once again, the London-based Random House Group, which comprises our publishing operations in the U.K., Australia, New Zealand, and South Africa, was the most successful business, substantially enhancing their 2004 record-year results. In Germany, Verlagsgruppe Random House had a profitable year, also posting a significant improvement over last year.

“We have begun our 2006 fiscal year well,” said Olson. “In the U.S., we’ve placed sixty-nine Random House, Inc. titles on the New York Times bestseller lists this quarter, ten of them at—one of our best bestseller starts ever. “By the end of March, we expect to reach a broad-based title sell-through at retail ahead of the levels we achieved for our overall frontlist and backlist this time last year in North America.”

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He added that while the retail environment remains uncertain, “we once again have a very strong lineup of new adult and children’s nonfiction and fiction across all divisions for the months ahead, particularly for our most important sales season, the December holidays.”