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Penguin USA Delivers Strong Results in 2007

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March 6 – March 13, 2008 Edition

Penguin USA

Delivers Strong

Results in 2007

NEW YORK, NY/3/6/08–Penguin Group USA played a prominent role in the success this year of Penguin Group [all companies around the world, including DK].This week Penguin Group reported that underlying sales were up 3 percent for the year ending December 31, 2007, while underlying operating profits were up 20 percent, compared with the previous year. The company’s higher backlist sales, a reduction in overall returns, tight control of working capital and seamless supply chain performance contributed to the increase in profitability. Penguin Group is part of Pearson (FTSE: PSON; NYSE: PSO), the international media company.

Penguin Group (USA) published the three biggest #1 bestseling books in the Nation, had a # 1 New York Times Bestseller 85% of the Year, and

achieved # 1 New York Times Bestsellers Across 10 Imprints, indicating healthy publishing programs throughout the company.

Penguin Young Readers Group Bestsellers rose 41%, with 38 New York Times Bestsellers, and the adult group closed out the year with four # 1 New York Times Bestsellers simultaneously (for the Third Time in ’07) and Penguin Group (USA) in 2008 has already achieved five #1 New York Times Bestsellers in one week. Twice Globally in 2007, Penguin Group delivered strong performances and achieved very good growth throughout the world. In addition to the strong results delivered in the U.S., excellent performances were also attained in the UK, Australia and Canada as well as at DK and our Travel Group. Penguin Group also expanded its leadership positions in the emerging markets of India, China and South Africa.

Looking ahead to 2008: Penguin Group (USA) is publishing internationally renowned authors whose new books are among the most highly anticipated titles of the year.

David Shanks, CEO, Penguin Group (USA), commented, “Penguin Group (USA) had an outstanding year in 2007. It was particularly gratifying to be the publisher of such great, top selling books as A Thousand Splendid Suns by Khaled Hosseini, Eat, Pray, Love by Elizabeth Gilbert, World Without End by Ken Follett and The Age of Turbulence by Alan Greenspan. In addition, our success reached throughout the company, across all categories, formats and many different imprints. Our new imprint strategy is working well and it’s exciting to see the ongoing expansion of the Premium format, which we pioneered three years ago.

“Looking at 2008, we are off to a strong start, with five #1 New York Times bestsellers in the same week twice already. We have a strong line-up for 2008, including new books from #1 New York Times bestselling authors Patricia Cornwell and Michael Pollan, Pulitzer Prize-winning author Geraldine Brooks, two-time Pulitzer Prize winner Steve Coll, and America’s premier political analyst, Kevin Philips, among many others. Of course, we are also very pleased that after four weeks we have shipped 3.45 million copies of A New Earth by Eckhart Tolle, the 61st Oprah’s Book Club selection.”

Penguin Group (USA) published the three biggest selling books in the Nation for 2007:

A Thousand Splendid Suns by Khaled Hosseini (Riverhead) was the #1 bestselling new adult hardcover of the year, selling more copies in the US than any other new adult hardcover book published in 2007. It spent 13 weeks at #1 on The New York Times list. The book has been on The New York Times hardcover fiction list for nine months and has shipped more than 2.2 million copies. Eat, Pray, Love by Elizabeth Gilbert (Penguin): the #1 top selling nonfiction trade paperback in the United Stateshas been in the #1 position on The New York Times paperback nonfiction list for 41 weeks. It has been on The New York Times list for more than a year. Eat, Pray, Love shipped nearly 1.5 million copies in December alone. Total shipped: more than 4.5 million. The Kite Runner by Khaled Hosseini (Riverhead) was the #1 top selling fiction trade paperback in the United States. The Kite Runner by Khaled Hosseini has already spent nearly three years on The New York Times trade paperback fiction bestseller list, shipping 5.8 million copies.

Penguin Group (USA) had #1 New York Times Bestsellers 85% of the year, and held the top positions on the lists with such titles as Alan Greenspan’s The Age of Turbulence, Ken Follett’s World Without End, Kim Edwards’ The Memory Keeper’s Daughter, Patricia Cornwell’s Book of the Dead, Elizabeth Gilbert’s Eat, Pray, Love, Sue Grafton’s T is For Trespass and Khaled Hosseini’s A Thousand Splendid Suns.

In addition, Berkley/NAL continued to dominate the industry in turning longrunning mass market series into hardcover bestsellers, including Laurell K. Hamilton’s Anita Blake, Vampire Hunter series’ latest installment The Harlequin (Berkley Hardcover); Charlaine Harris’ All Together Dead (Ace Hardcover); Christine Feehan’s second hardcover, Dark Possession (Berkley Hardcover); and Jim Butcher’s White Night (NAL).

Penguin Group’s digital presence continues to grow with an Increase in direct sales from Penguin Group (USA)’s website more than doubling its eBook sales, and with the launch of Breakthrough Novel Award in partnership.

In 2007, Penguin Group (USA) continued to develop new strategies, and seek out new opportunities in the digital realm. Looking at 2007, online sales in the US increased.

The Penguin Group (USA) website ( http://us.penguingroup.com) attracted in excess of 12 percent more unique visitors, breaking 3 million monthly “uniques” for the first time. And eBook sales through third party retailers more than doubled.

In October 2007, Penguin Group (USA) partnered with online retail giant Amazon.com and Hewlett-Packard to create the Amazon Breakthrough Novel Award, a unique international writing competition dedicated to finding the next popular novel. Nearly 5,000 submissions were received, with representation from nearly 2,000 cities from around the world, and from every state in the US

John Makinson, Chairman and CEO of Penguin Group [all companies] said, "Penguin’s remarkable 2007 performance rewards our determination to rebalance our publishing, rethink our supply chain and refocus as a global organization. We can now look back on three successive years of double digit profit growth, providing the platform for us to achieve our target of a 10 percent margin in 2008. Every territory and every division of Penguin has contributed to this sustained improvement in performance.”

Penguin’s parent company, Pearson, Plc., reported record profits, earnings, cash and dividends. Adjusted operating profit up 14% to £634m; adjusted earnings per share up 8% to 46.7p (up 15% at constant exchange rates); operating free cash flow up 23% to £533m; dividend up 7.8% to 31.6p.