The year got off to a "good start" at Houghton Mifflin, and company chairman and CEO Nader Darehshori observed that the "educational publishing environment remains favorable," with state funding staying strong despite the weakening economy. For the first quarter, total sales increased 6.2%, to $108.9 million, and the operating loss rose to $60.9 million from $58.7 million in the first quarter of 2000.
The college division posted the highest growth in the quarter, with sales up 9.8%, to $17.3 million, led by an increase in backlist sales in history, English, political science, math and business. Revenues in the elhi segment increased 6.2%, to $69.8 million, headed by good results in HM's testing, supplementary and high school divisions. The "other" segment had a 3.6% increase in sales, to $21.7 million, as higher sales in the adult division resulted in higher revenues in the trade and reference group.
The company's bad debt level increased in the quarter due in part to a provision taken to account for the bankruptcy of Bigwords.com. Darehshori said that legal expenses associated with fighting the injunction of The Wind Done Gone would be "minimal," with most of the cost borne by its insurance company. The company also recorded a $2.2-million equity loss in its investment in Classwell Learning in the quarter, and HM said the loss from the Classwell stake will total $6.6 million for the entire year. Darehshori said Classwell "was on track in every way" and expects to release its first products this fall. Classwell will not need additional funding until the first quarter of 2002. Darehshori also said HM is not looking to acquire the supplementary division of Torstar, whose sale has dragged on longer than expected. The Torstar properties "are not complementary" to HM's Great Source division, Darehshori said.
At the company's annual meeting last week, Darehshori said that HM's board of directors' compensation and nominating committee has begun the search for his successor. Darehshori will retire within the next 12 months after reaching the mandatory retirement age of 65 for CEOs. Darehshori was appointed chairman of HM in 1990.
