Higher sales from Simon & Schuster's trade, Pocket Books and children's divisions were enough to turn a 2.4% revenue decline in 2000 into an 8.8% increase, to $648.8 million, in 2001. Earnings before interest, taxes, depreciation and amortization (EBITDA), however, fell for the second straight year, dropping 8.7% to $65.1 million in 2001.
Company president Jack Romanos said the decline in earnings was due in part to higher-than-expected information systems costs. Earnings were also down in international operations, because of unfavorable currency translations and costs associated with restructuring its U.K. operation, and fell in the audio division as well. Romanos attributed the soft year in audio to negative market conditions, including a loss of retail space and consumer confusion over formats—tape vs. disc; abridged vs. unabridged. A final factor contributing to the lower bottom line was the midyear loss of distribution client Prima Communications, which was acquired by Random House.
Despite the earnings slide, Romanos said he was extremely pleased that the publisher was able to increase sales by nearly 9%. The company's core businesses all posted gains, and Romanos was particularly encouraged by the performance of S&S's adult hardcover segment, whose hits included John Adams, Dreamcatcher, He Sees You When You're Sleeping and Self Matters. Unexpected bestsellers, such as Germs and Holy War Inc., helped to offset titles whose sales suffered because of the lack of media exposure after September 11.
Self Matters by Phillip McGraw and Bob Greene's Get with the Program! were shipped late in the year and have helped S&S get off to a good start in 2002. The addition of Andrews McMeel as a distribution client has also helped to boost sales in the early part of 2002. As a result, sales in January and the first few weeks in February were strong, which, Romanos said, "should mean a good first quarter."
For the remainder of the year, Romanos expects a better performance from the U.K., and the company may add a few distribution clients. And while S&S has not made an acquisition in quite a while, Romanos said the company will "continue to look for something that fits."
