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: http://www.zoomerang.com/Survey/?p=WEB229BCWD7VDJ

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 months.

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,


Steven Piersanti
The Berrett-Koehler Group, Inc.