Higher sales in the consumer and special sales markets offset lower sales to libraries, resulting in a 2.2% revenue gain, to $5.4 million, at Millbrook Press for the first quarter ended October 31, 2001. Net income in the quarter fell to $149,000 from $330,000, due to increased sales in the less profitable consumer book segment.

Millbrook chairman Howard Graham said the company's New York City telemarketing program, which is responsible for a substantial portion of the company's school and public library sales, was "severely impacted" by the September 11 attacks. Graham is expecting a "partial recovery" of library sales in the third quarter of the fiscal year. In addition to disruptions in its telemarketing operations, Graham said he is concerned about the "difficult economic climate" that will likely mean lower school and public library budgets. As a result, Graham said, Millbrook "anticipates that they [schools and libraries] will reduce purchases of school and library books compared to the previous year."

Because of its decline in profitability in the first quarter, Graham said Millbrook is taking steps to reduce its overhead and cash commitments. In the first quarter, general and administrative costs fell 20% due to the company's decision not to replace Jeff Conrad, who resigned as CEO last year. Graham said new cost-saving initiatives should be reflected in the second half of fiscal 2002.