Houghton Mifflin reported that total revenues in 1998 increased 8.1% to $861.7 million. Operating income in the year fell to $40.8 million from $42.7 million. Income in 1998 was affected by writedowns attributable to the acquisition of Computer Adaptive Technologies as well as to costs related to HM's failed bid to acquire a portion of the Simon &Schuster publishing assets. Net income rose from $49.8 million in 1997 to $63.6 million in 1998; earnings in 1998 included a gain of $18 million from the early retirement of debt.

Among its three publishing groups, the K-12 publishing segment posted the biggest gain in the year, with sales up 9.2%, to $611.8 million. The group's high school, testing and supplementary divisions all had double-digit gains last year, while the school division managed a modest increase. College publishing revenues rose 7.9% in the year to $160.7 million, with new editions and backlist titles both enjoying sales gains.

Sales in HM's "other" segment increased 1.3% to $89.2 million in 1998. The company reported that higher sales in the trade and reference division were partially offset by lower sales at Houghton Mifflin Interactive. HM is restructuring its new media unit to focus more on educational-related software and less on product for the retail market. To help speed HMI's transition, the company recently acquired the pre-K to grade 3 Little Planet Literacy series.