Brian J. Knez, co-chief executive officer, said, Our businesses performed exceptionally well across the board in the quarter, led by outstanding growth in our elementary and secondary school publishing businesses that resulted in our Education Group posting a 49.4 percent increase in operating earnings on a 47.5 percent revenue gain.
Harcourt General reported revenues from continuing operations for the quarter ended July 31, 2000, of $871.2 million, up 25.7 percent from $693.0 million a year earlier.
Operating earnings rose 33.3 percent to $285.8 million from $214.3 million in the third quarter of fiscal 1999. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) rose 24.7 percent in the third quarter to $347.6 million from $278.8 million a year ago.
Net earnings before one-time gains were $163.7 million in the 2000 quarter, equal to $2.22 per share, up from $118.2 million or $1.64 per share the prior year. Investment and other income in the quarter rose to $16.5 million, including a gain of $15.5 million or $9.8 million after-tax, equal to 13 cents per share, from the previously announced sale of the Company’s professional publishing unit, bringing net earnings for the quarter to $173.5 million or $2.35 per share.
In the third quarter a year ago the Company had investment and other income of $7.5 million, including a gain of $6.4 million or $3.9 million after-tax, equal to 5 cents per share, from the sale of a business. In the year-ago quarter, the Company also had earnings from its discontinued specialty retailing operations of $18.3 million, equal to 25 cents per share, bringing net earnings for that period to $140.5 million or $1.95 per share.
For the nine months ended July 31, 2000, Harcourt General reported revenues from continuing operations of $1.68 billion, up 15.4 percent from $1.46 billion a year ago. Operating earnings rose 50.3 percent in the current year to $209.8 million from $139.6 million in the 1999 period. EBITDA increased 20.4 percent to $396.0 million from $328.8 million in the same period a year earlier. Net earnings for the first nine months of fiscal 2000 were $99.9 million, equal to $1.37 per share, up 97.8 percent from earnings from continuing operations of $50.5 million or 70 cents per share the prior year.
Net earnings in the fiscal 2000 period include the after-tax gain from the sale of the professional publishing business of $9.8 million or 13 cents per share and an after-tax gain of $4.8 million or 7 cents a share from the sale of securities.
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The year-ago period included a pre-tax gain from the sale of securities of $3.0 million, equal to 3 cents per share, and a gain of $6.4 million, equal to 5 cents per share, from the sale of a business. In the first nine months of fiscal 1999, the Company had earnings from its discontinued specialty retailing operations of $46.9 million, equal to 65 cents per share, bringing net earnings for that period to $97.4 million or $1.35 per share.
The Company reported that its third quarter gains were led by its Education Group, which principally publishes instructional materials for elementary and secondary schools.
Revenues in the quarter from this group rose 47.5 percent to $388.3 million from $263.3 million a year ago, while operating earnings increased 49.4 percent to $188.1 million from $125.9 million in the 1999 quarter.
Robert A. Smith, co-chief executive officer, said, Demand for our educational programs is extremely strong across all disciplines, and we have won leading market shares in important adoptions across the country, including Texas, Florida, California and North Carolina.
Our past investments to develop strong instructional programs in all major subject areas for the K-12 education markets are enabling us to take full advantage of increasing demand by the nation’s schools for new programs. Mr. Smith reported that Steck Vaughn, the Company’s publisher of supplemental educational products, also contributed to the Group’s strong performance with higher revenues and operating earnings in the quarter.
The Company’s Higher Education Group had a 7.0 percent increase in revenues in the third quarter to $128.8 million from $120.4 million the prior year, while operating earnings rose 12.9 percent to $43.0 million from $38.1 million.
Mr. Knez stated, This Group’s gains were paced by a solid performance by our college publishing business, which experienced good demand for its front list publications in the quarter, and by strong results from our legal and professional education businesses, including the BAR/BRI law review courses. Harcourt Learning Direct, the Company’s distance learning business, had, as expected, slightly lower revenues in the quarter due to the transfer of its Canadian operations to the international group and the closing of its Singapore operations; however, operating earnings rose slightly on improved profit margins.
The Corporate and Professional Services Group had a 23.7 percent gain in revenues in the quarter to $159.8 million from $129.2 million the prior year, with operating earnings falling to $11.7 million from $12.8 million.
The testing and assessment businesses had significantly higher revenues compared to a year ago, according to Mr. Smith, but had lower operating earnings due to higher scoring expenses associated with new statewide educational assessment contracts, costs related to the build out and operation of its testing center network and delayed starts on several major contracts. NETg, our technology-based training company, had a strong revenue gain, but a slight loss in the quarter which was comparable to a year ago.
Our career counseling and outplacement business had higher operating earnings in the quarter on relatively flat revenues.
The Company announced that during the quarter it purchased the 8 percent minority interest in NETg from Gartner Group for $36 million in cash. We’re pleased to eliminate the minority interest in a business where we are making significant investments that we believe will generate rapid growth and improved profitability in the future, Mr. Smith said.
The Worldwide Scientific, Technical, Medical (STM) Group contributed revenues of $194.3 million, up 7.9 percent from $180.1 million a year ago. Operating earnings rose 15.1 percent to $49.4 million from $42.9 million the prior year.
Harcourt Health Sciences had higher revenues and operating earnings in the quarter and our scientific publisher, Academic Press, recorded another outstanding quarter with significantly higher revenues and operating earnings. Results from our international businesses also improved, with substantially higher profit margins, Mr, Knez said.
