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Penguin USA Shows Profit Despite Weak Dollar

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August 2 – August 9, 2006 Edition

Penguin USA

Shows Profit

Despite Weak Dollar

NEW YORK, NY/7/20/07–The Penguin Group, part of Pearson (FTSE: PSON; NYSE: PSO), the international media company, today reported its operating results for the first half of 2007, showing continued margin improvement despite the impact of the weak U.S. dollar on exchange rates. Underlying sales for the first six months were up 1 percent over 2006 at the mid-point and underlying profits were up 11 percent over last year’s first-half performance.

John Makinson, Penguin Group Chairman and CEO, commented, “We are delighted with Penguin’s performance so far in 2007. It’s been a testing trading period for chain bookstores, but we continue to see good growth in online sales and the supermarket channels in the UK. The consistent quality of our publishing has allowed us to maintain progress in sales, while the double digit growth in our underlying profits reflects continued success in the management of our cost base. There is more to come in the second half. A long list of great authors and titles should ensure continued growth and success.”

For most of the year to date, U.S. bookstore sales have been trending downward. For the January through May period, bookstore sales were down 4.3 percent (according to the U.S. Census Bureau). In a relatively weak market, Penguin Group (USA) has had a very good start to the year, is on plan at the half-year mark and expects to meet its targets for 2007, according to a company statement.

David Shanks, CEO, Penguin Group (USA), said, “We’re very pleased that we have outperformed the market and that our publishing programs have delivered so many New York Times bestsellers, including such blockbuster phenomena as A Thousand Splendid Suns by Khaled Hosseini, The Assault on Reason by Al Gore, and Eat, Pray, Love by Elizabeth Gilbert. We are also very excited to be publishing so many highly anticipated fall titles by such authors as Alan Greenspan, Patricia Cornwell, Sue Grafton, Ken Follett, Jan Karon and Nick Hornby.”

In the first half of 2007, Penguin Group (USA):

Held a #1 Position on the New York Times Bestseller Lists 70 Percent of the Time Headed Bestseller Lists with Two of the Most Widely Talked-About Books of the Year Outperformed Its Previous New York Times Bestseller Performance, Year-over-Year Continued to Increase Sales of the Top Multimillion-Copy Trade Paperback Titles Achieved Further Growth in the Premium Paperback Format Built Mass Market Authors into New York Times–Bestselling Hardcover Authors Fostered Bestseller Synergy Between Adult and Young Readers Divisions Led the Industry in the Hottest New Genre: Paranormal Achieved a Record Number of New York Times Young Readers Bestsellers Surpassed the Number of New York Times Bestseller Weeks in Paperback Year-over-Year, Driven by Newly Created Successes Received Literary Awards and Honors Increased Audio Sales

Globally, Penguin Group:

Is Moving Ahead on Digital Objectives Is the World’s Leading International Book Brand, and Continues to Grow in Emerging Markets

Looking Ahead, Pengun said its Fall 2007 is very strong, and features such highly anticipated titles as The Age of Turbulence by Alan Greenspan (Penguin controls world volume rights), Book of the Dead by Patricia Cornwell, T is for Trespass by Sue Grafton, Home to Holly Springs by Jan Karon, World Without End by Ken Follett, and Slam, Nick Hornby’s first novel for young adults.

In the second half of 2007, new titles are coming from many of the house’s other major bestselling authors, including Nora Roberts, Daniel Silva, John Sandford, Clive Cussler, Dave Barry, Sylvia Browne, William Gibson, Lou Dobbs, Garrison Keillor, Stuart Woods, Michael Pollan, Dick Francis, J. D. Robb, Eric Jerome Dickey, Robert B. Parker, and Jenny McCarthy. And from the Young Readers Group, new books are coming from Jan Brett, Anthony Horowitz, Brian Jacques, Jan Karon, Madonna, and Mike Lupica, among others.

Seventy percent of the first twenty-six weeks of the year featured a Penguin Group (USA) title at #1 on the New York Times bestseller lists. The company also achieved a record number of New York Times Young Readers Bestsellers, three ahead of last year’s record bestseller pace with 17 Times bestsellers through July 1,2 007.

Penguin Group’s new Global Digital Director, Genevieve Shore, who assumed her position in June, is in the process of implementing a digital strategy for Penguin that will:

Generate new streams of revenue and save money. Reach new readers and users of its content through new technology and non-book media. Market Penguin’s prestigious publishing brands and bestselling, award-winning authors to new and existing readers through dynamic and increasingly influential channels. Get closer to Penguin’s readers and build direct relationships with them to better understand their needs and interests. Manage and protect Penguin’s intellectual property more effectively. Foster collaboration among its businesses around the world­and the whole of Pearson­and accelerate Penguin’s mandate to be a truly global company.

Penguin Group (USA) online sales have continued to experience year-over-year growth. In the first half of 2007, the Penguin Group (USA) website ( http://us.penguingroup.com) attracted over1.5 million unique visitors, an increase of 4 percent, year on year, and online sales in the US increased 23 percent over the same period in 2006. In addition, e-book sales through the end of June by third-party retailers have increased 66 percent over sales from the same time period in 2006.

World’s Leading International Book Brand, Which Continues to Grow in Emerging Markets

Penguin Group is the world’s leading international book brand, with offices in nine distinct markets around the globe, including such emerging markets as India, China, and South Africa. In an effort to maximize growth potential worldwide, Penguin Group has aggressively pursued a global publishing vision. The company has raised its flag in regions with enormous growth opportunities. Penguin Group was the first international English-language trade publisher to establish offices in India and China.