June 23, 2009
Dear Berrett-Koehler Shareholder,
I am writing for several purposes.
First, whether or not you are planning to attend the Berrett-Koehler Annual
Shareholders Meeting on July 8, we would ask you to complete a quick
7-question survey on what questions and concerns you as a shareholder would
like us to address either in the Shareholders Meeting or in our written
communications to you. Please take a few minutes now to complete this
survey by clicking on this link:
Second, I have attached the final audited financial statements for The
Berrett-Koehler Group, Inc., for the period ended December 31, 2008.
Revenues decreased by 11.4 percent, from $7,560,556 in 2007 to $6,696,356 in
2008. This decrease was due principally to the global economic slowdown.
Revenues started off healthy in 2008, with sales in the first four months at
an annualized rate of over $7.5 million, but then peaked in April 2008.
Mirroring what was happening in the general economy, BK sales declined in
the second four months of 2008 and dropped still further in the last four
Operating expenses increased by 2.3 percent in 2008, despite the revenue
decrease, due to several factors. The largest was our substantial
investment in new digital publishing and digital community building
initiatives, including the expense of adding two full-time staff in this
area; we knew that this investment would take years to pay off but viewed it
as critical to BK’s future. Other factors included health care insurance
cost increases, the cost of our strategic planning process (beginning with
our January 2008 “Future Search” conference), further roll-out of our
branding design templates across all areas of the company, payment in 2008
of bonuses earned by employees for our record-breaking 2007 profits, and the
fact that we were fully staffed in 2008 whereas in 2007 we had several open
positions for a number of months.
The combination of the decreased revenues and increased costs led to a
decline in profitability from $413,907 net income in 2007 to $74,685 net
income in 2008. The only good news here is that we were still able to
register a small profit in a year that turned into a global economic crisis.
Third, as I indicated in my May 18, 2009 “Update for Berrett-Koehler
shareholders,” 2009 is a tremendously challenging year for Berrett-Koehler
and for the book publishing industry in general. According to the
Association of American Publishers, sales of adult hardcover and adult
paperback books in the U.S. fell by 27.6 percent in the first quarter of
2009, which is the same revenue decrease that Berrett-Koehler has
experienced for the first five months of 2009. Reports from many
booksellers have indicated that sales in some of BK’s core areas
(management, training, professional development, and other business
categories) are among the hardest hit by the economic downturn, which has
made our sales environment even tougher. One ray of of hope is that
Berrett-Koehler’s revenues appear to have bottomed out in November and
December 2008, and May 2009 was our best month in revenues since October
2008. Another ray of hope is that we have made expense cuts across all
areas of Berrett-Koehler and have succeeded in lowering our cost structure
much below what it was in 2008.
Fourth, as I also indicated in my May 18 “Update,” the paradox is that, even
in these difficult economic times, many things are going exceedingly well
for Berrett-Koehler. For example, I just returned from the “BK Authors
Marketing Workshop,” which was co-sponsored by the American Society for
Training and Development (ASTD) and the BK Authors Cooperative, and this
unique event was tremendously successful on numerous levels, including
further deepening BK’s highly productive partnership with ASTD. And BK
books and authors continue to win many awards, with the latest being that BK
author Juana Bordas was just named “the 2009 Unique Woman of Colorado” by
the Women’s Foundation of Colorado, Lockheed Martin, and The Denver Post;
and BK author Janelle Barlow was just named an “International Woman of
Influence” by the Global EXEC Women Magazine. Various other recent awards
are described in the attached list of awards.
Fifth, I want to alert BK shareholders who are attending our Shareholders
Meeting or who simply reside in the Bay Area about an event happening on the
evening of July 8 at the Commonwealth Club of San Francisco. BK author
Peter Brown will be speaking about the ideas in his new book, Right
Relationship: Building a Whole Earth Economy. The networking reception will
be at 5:30 pm, followed by the program at 6:00 pm (at a cost of $8 to
Commonwealth Club members and $15 to non-members). Here is a link for more
information and to register:
We look forward to seeing many of you at the BK Shareholders Meeting. And
we appreciate the support of all of our shareholders.
All the best,
The Berrett-Koehler Group, Inc.