Notes to the Accounts

2. a) Analysis of sales and operating profit

	sales	operating profit before goodwill & other items	operating profit after goodwill & other items	sales	restated operating profit
Business sectors
FT Group	683	118	114	676	108
Pearson Education	702	99	(34)	563	60
The Penguin Group	523	48	46	525	58
Pearson Television	343	61	61	247	26
Lazard	–	42	42	–	43
Continuing operations	2,251	368	229	2,011	295
Discontinued operations	144	21	21	282	33
	2,395	389	250	2,293	328
Geographical markets supplied
United Kingdom	497	51	48	487	54
Continental Europe	461	114	111	382	77
North America	1,078	181	54	916	134
Asia Pacific	161	16	11	179	23
Rest of World	54	6	5	47	7
Continuing operations	2,251	368	229	2,011	295
Discontinued operations	144	21	21	282	33
	2,395	389	250	2,293	328

NOTE: In 1998 ‘other items’ comprises exceptional items of £120m and Year 2000 costs of £7m.  Exceptional items of £120m comprise integration costs following the acquisition of Simon & Schuster. These all relate to the Pearson Education business sector.  1997 operating profit is stated after restructuring costs of £34m which were classified as exceptional within operating activities. These related to FT Group, £14m, Pearson Education, £12m, Pearson Television, £4m, and discontinued businesses, £4m, and are shown mainly within United Kingdom, £16m, and North America, £17m. In 1998 operating restructuring costs of £11m were incurred of which £6m were in the FT Group and £5m in The Penguin Group.  1997 has been re-analysed to reflect expanded business groups.  Discontinued operations relate to the withdrawal of the Group from the consumer software business following its disposal of Mindscape Inc. in March 1998, the withdrawal of the Group from the consumer magazine business following its disposal of Pearson New Entertainment in April 1998 and the withdrawal of the Group from the visitor attractions business following its disposal of The Tussauds Group in October 1998.  1997 has been restated to reflect the adoption of FRS9 ‘Associates and Joint Ventures’ (see note 1).  Analyses of the profits of associates are shown in note 13.

	total by source	inter-regional	sales	total by source	inter-regional	sales
Geographical source of sales
United Kingdom	728	(52)	676	703	(46)	657
Continental Europe	355	(6)	349	302	(7)	295
North America	1,108	(28)	1,080	928	(19)	909
Asia Pacific	129	(4)	125	144	(7)	137
Rest of World	22	(1)	21	13	–	13
Continuing operations	2,342	(91)	2,251	2,090	(79)	2,011
Discontinued operations	144	–	144	284	(2)	282
	2,486	(91)	2,395	2,374	(81)	2,293

NOTE: The table above analyses sales by the geographical region from which the products and services originate. Inter-regional sales are those made between the Group companies in different regions.

2. b) Analysis of capital employed

	capital employed	capital employed
Business sectors
FT Group	143	98
Pearson Education	3,200	380
The Penguin Group	143	176
Pearson Television	39	103
Lazard	111	123
Continuing operations	3,636	880
Discontinued operations	–	195
	3,636	1,075
Geographical location
United Kingdom	220	136
Continental Europe	223	86
North America	3,055	616
Asia Pacific	96	29
Rest of World	42	13
Continuing operations	3,636	880
Discontinued operations	–	195
	3,636	1,075
Reconciliation of capital employed to net assets
Capital employed	3,636	1,075
Less: deferred taxation	(20)	(37)
Less: other provisions	(253)	(175)
Less: net debt	(2,279)	(707)
Net assets	1,084	156