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North American Education

North American Education is Pearson's largest business, with 2009 sales of £2.5bn and operating profit of £403m. Over the past five years, it has increased both sales and profits at a compound annual growth rate of 8%. Building on our roots as a leading publisher of educational materials and provider of assessment services, we have made significant investments and change to transform Pearson into a worldleading provider of learning technologies for students and enterprise technologies for educational institutions.

Overview

These technology services – including eCollege (3.5m student users in 2009), PowerSchool (8.5m), the MyLabs (6m) and Edustructures (8.1m) – are the backbone of our strategy to help educators raise student performance and institutions to become more effective. We are currently developing a new generation of powerful technologies to integrate student information, assessment, instruction and performance data into connected learning environments, for students and institutions at all levels of education.

In 2009, our combined US school curriculum and higher education businesses grew 5% on an underlying basis, once again outperforming the industry which was flat, according to the Association of American Publishers. We also achieved good margin improvement, benefiting from the growth of our higher education business and the successful integration of the Harcourt Assessment business acquired in 2008.

The education publishing industry is going through a period of significant structural change driven by the demand for high educational standards and accountability, the shift from print to digital products and a rapidly changing competitive environment.

Though the current economic climate has placed considerable pressure on state and local tax receipts – and therefore education funding – raising student achievement remains a key priority across the political spectrum in the US. In particular, the federal government's education reform proposals contain a range of measures designed to raise standards; use student data to improve classroom instruction; boost the quality of teachers and school leaders; and turn around the lowest-performing schools.

North American Education: Key performance indicators

£ millions 2009 2008 Headline growth CER growth Underlying growth
Sales 2,470 2,002 23% 5% 5%
Adjusted operating profit 403 303 33% 13% 13%

US combined school and college sales growth vs industry

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Pearson's total year-on-year sales growth in school and college products in the US versus the year on year sales growth of the total US industry.

Adoption cycle win rates

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Pearson's market share by value of new business in the US adoption states. Market share is quoted as a percentage of the total value of adoptions that we participated in.

State and national testing contract win rates

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The lifetime value of US school testing contracts won by Pearson this year as a percentage of the total lifetime value of contracts bid for this year.

Online learning users

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The number of registrations by students to access one of our US online learning programmes.

Higher Education Highlights in 2009 include:

The US Higher Education publishing market grew 11.5% in 2009, according to the Association of American Publishers. The industry benefited from strong enrolment growth and federal government action to support student funding.

Pearson grew faster than the industry and outperformed the market for the eleventh straight year, continuing to see strong demand for instructional materials enhanced by technology and customisation.

The MyLabs

Pearson's 'MyLab' digital learning, homework and assessment programmes again grew strongly. Our MyLab products saw more than 6m student registrations globally, 39% higher than in 2008. In North America, student registrations grew 37% to more than 5.6m. Evaluation studies show that the use of the MyLab programmes can significantly improve student test scores and institutional productivity.

See more at www.mymathlab.com

Our sustained investment in content and technology continues to grow existing franchises and build new ones. In Engineering Mechanics, our market leading textbook Hibbeler's Statics and Dynamics 12th Edition gained an additional four percentage points of market share with the addition of our newly launched MasteringEngineering digital learning and assessment platform. Pearson became market leader in psychology supported by the recently launched textbook Psychology 2nd Edition by Cicarelli with MyPsychLab.

Custom Solutions grew strongly across both bespoke books and customised services including content creation, technology, curriculum, assessments and courseware. We partnered with the Kentucky Virtual Learning Initiative, for example, to deliver personalised mathematics instruction mapped to state college entry standards and have begun to extend this programme into transitional English and Reading.

eCollege

eCollege, our platform for fully-online distance learning in higher education, increased online enrolments by 36% to 3.5m and benefited from continued strong renewal rates of approximately 95% by value, new contract wins and strong growth in the usage of the platform, particularly by US forprofit colleges.

Thirteen Pearson higher education and school products in ten categories were nominated as America's best educational software products in the Software & Information Industry Association's 25th Annual CODiE Awards. They include MyMathLab, Miller & Levine Biology, PowerSchool, Prentice Hall Literature, myWorld Geography, MyWritingLab, CourseConnect and eCollege.

Assessment and Information Highlights in 2009 include:

Significant profit increase in Assessment and Information, benefiting from the successful integration of the Harcourt Assessment business acquired in 2008.

Our National Services assessment business renewed its contract with the College Board, worth $210m over 10 years, to process and score the SAT and contracts to support the College Board's new Readi-Step and ACCUPLACER diagnostics programmes.

Our State Services business won a number of significant new contracts including new programmes in Florida and Arizona. We continue to gain share, winning 60% of the contracts bid for by value, and to be a leader in online testing, delivering 9 million secure online assessments in 2009, up more than 100% on 2008.

Our Evaluation Systems teacher certification business secured contract extensions in California, Illinois, Arizona and Washington; won re-bids in Michigan and New York, each for five years; and added new contracts in California and Minnesota.

In Clinical Assessments, our AIMSWeb responseto- intervention data management and progress monitoring service for children who are having difficulty learning, continued to grow and now has more than 3 million students on the system.

Our Edustructures business, which provides interoperable systems to support data collection and reporting between school districts and state governments, doubled the number of students served to 8 million.

Our Student Information Systems (SIS) business continued to grow strongly, benefiting from strong demand for its services that help teachers automate and manage student attendance records, gradebooks, timetables and the like. It supports more than 12 million students – 8 million of them through its flagship PowerSchool product which is now available in more than 50 countries. In 2009 it won contracts for new school districts including Nova Scotia Department of Education (133,000 students), Newark, NJ (45,000 students), and the Hamilton County DOE, TN (40,000 students).

School Curriculum Highlights in 2009 include:

The US School publishing market declined 13.8% in 2009, according to the Association of American Publishers. State budget pressures and a slower new adoption year caused particular weakness in the basal publishing market.

US School publishing

Though Pearson's US School publishing sales declined, we significantly outperformed the industry and took an estimated 37% of new adoptions competed for (our highest market share for a decade) and 32% of the total new adoption market.

Pearson's enVisionMATH, an integrated printand- digital programme, was the top-selling basal programme in the US in 2009. It helped Pearson to a market-leading 46% share of all maths adoptions and sold strongly across the open territories.

See more at www.envisionmath.com

We successfully launched new blended digital curriculum programmes for the 2010 adoption campaign:

Interactive Science www.interactivescience.com

Prentice Hall Mathematics www.poweralgebra.com/
www.powergeometry.com

Prentice Hall Literature www.pearsonschool.com/live/customer_central/microsite/
connectedsampling/overview/nat/lit/player.html

Successnet, our online learning platform for teachers and students which supports Pearson's digital instruction, assessment and remedial programmes, grew strongly, achieving more than 4 million registrations in 2009.

Poptropica

Poptropica became one of the largest virtual worlds for young children in the US, with unique visitors growing by more than 100%, to almost 70 million, and the numbers of characters they have created approaching 200m, up 150% on 2008.

See more at www.poptropica.com

Annual report

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