##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For the quarterly period ended August 31, 2007
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
 For the transition period from  to .
 Commission File No. 000-50916
 Peoples Educational Holdings, Inc.
  Delaware
    
    41-1368898(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
  (Address of principal executive offices) (Zip Code)
  (Registrants telephone number, including area code)
 þ o
  o o þ
 o þ




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##### 



PagePART I. FINANCIAL INFORMATIONItem 1: Financial Statements:Consolidated Balance Sheets as of August 31, 2007 (Unaudited) and May 31, 2007
    
    
    3Unaudited
Consolidated Statements of Income for the Three Months Ended August 31, 2007 and 2006
    
    
    4Unaudited Consolidated Statement of Changes in Stockholders Equity for the Three Months Ended August 31, 2007
    
    
    5Unaudited Consolidated Statements of Cash Flows for the Three Months Ended August 31, 2007 and 2006
    
    
    6Condensed Notes to Consolidated Financial Statements (Unaudited)
    
    
    7Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3: Quantitative and Qualitative Disclosures About Market Risk
    
    
    19Item 4: Controls and Procedures
    
    
    19PART II. OTHER INFORMATIONItem 1: Legal Proceedings
    
    
    20Item 1A:Risk Factors
    
    
    20Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    20Item 3: Defaults Upon Senior Securities
    
    
    20Item 4: Submission of Matters to a Vote of Security Holders
    
    
    20Item 5: Other Information
    
    
    20Item 6: Exhibits
    
    
    21SIGNATURES
    
    
    22EXHIBITS
    
    
    23CEO CertificationCFO Certification906 CEO Certification906 CFO Certification
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##### Table of Contents



Part I
Financial Information
 
 Item 1. Financial Statements
 PEOPLES EDUCATIONAL HOLDINGS, INC. AND SUBSIDIARY
 
 CONSOLIDATED BALANCE SHEETS
 UNAUDITED
    
    
    AUDITED(In Thousands-Except Shares)
    
    August 31, 2007
    
    
    May 31, 2007ASSETSCurrent AssetsCash
    
    $
    156
    
    
    $
    98Accounts Receivable Net of Allowances for
Doubtful Accounts and Returns
    
    
    7,792
    
    
    
    3,961Inventory
    
    
    5,035
    
    
    
    5,270Prepaid Expenses and Other
    
    
    451
    
    
    
    334Prepaid Marketing Expenses
    
    
    979
    
    
    
    638Deferred Income Taxes
    
    
    871
    
    
    
    871Total Current Assets
    
    
    15,284
    
    
    
    11,172Equipment and Leasehold Improvements- At Cost, Less
Accumulated Depreciation of $1,767 and $1,692, respectively
    
    
    655
    
    
    
    697Other AssetsDeferred Prepublication Costs, Net
    
    
    17,080
    
    
    
    17,180Deferred Income Taxes
    
    
    386
    
    
    
    1,155Trademarks, Net
    
    
    170
    
    
    
    141Prepaid Expenses and Other
    
    
    329
    
    
    
    370Prepaid Marketing Expenses
    
    
    901
    
    
    
    1,036Total Other Assets
    
    
    18,866
    
    
    
    19,882Total Assets
    
    $
    34,805
    
    
    $
    31,751LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesCurrent Maturities of Long Term Obligations
    
    $
    603
    
    
    $
    649Accounts Payable
    
    
    11,312
    
    
    
    6,304Accrued Compensation
    
    
    373
    
    
    
    547Other Accrued Expenses
    
    
    378
    
    
    
    327Deferred Revenue
    
    
    564
    
    
    
    327Total Current Liabilities
    
    
    13,230
    
    
    
    8,154Long Term Obligations, Less Current Maturities
    
    
    13,208
    
    
    
    16,405Total Liabilities
    
    
    26,438
    
    
    
    24,559Commitments and ContingenciesStockholders EquityPreferred Stock, authorized 1,500,000 shares; none issuedCommon Stock, $0.02 par value; authorized 8,500,000 shares;
issued: 4,441,173 as to both periods
    
    
    89
    
    
    
    89Additional Paid In Capital
    
    
    7,887
    
    
    
    7,875Retained Earnings (Accumulated Deficit)
    
    
    455
    
    
    
    (708
    )Treasury Stock - 16,232 shares as to both periods, at cost
    
    
    (64
    )
    
    
    (64
    )Total Stockholders Equity
    
    
    8,367
    
    
    
    7,192Total Liabilities and Stockholders Equity
    
    $
    34,805
    
    
    $
    31,751
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##### Table of Contents



CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
  Three Months EndedAugust 31,2007
    
    
    2006Revenue, Net
    
    $
    16,867
    
    
    $
    15,347Cost of RevenueDirect Costs
    
    
    8,703
    
    
    
    7,758Prepublication Cost Amortization
    
    
    1,703
    
    
    
    1,443Total
    
    
    10,406
    
    
    
    9,201Gross Profit
    
    
    6,461
    
    
    
    6,146Selling, General and Administrative Expenses
    
    
    4,129
    
    
    
    4,167Income from Operations
    
    
    2,332
    
    
    
    1,979Other Expenses (Income), Net
    
    
    12
    
    
    
    (6
    )Interest Expense
    
    
    388
    
    
    
    258Net Income Before Income Taxes
    
    
    1,932
    
    
    
    1,727Income Tax Expense
    
    
    769
    
    
    
    691Net Income
    
    $
    1,163
    
    
    $
    1,036Net Income per Common Share:Basic
    
    $
    0.26
    
    
    $
    0.23Diluted
    
    $
    0.26
    
    
    $
    0.23Weighted-average Number of
Common Shares Outstanding:Basic
    
    
    4,409
    
    
    
    4,439Diluted
    
    
    4,499
    
    
    
    4,595
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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (UNAUDITED)
 Additional
    
    RetainedCommon
    
    Paid-In
    
    Earnings
    
    Treasury(In Thousands  Except Shares)
    
    Stock
    
    Capital
    
    (Deficit)
    
    Stock
    
    TotalBalance at May 31, 2007
    
    $
    89
    
    
    $
    7,875
    
    
    $
    (708
    )
    
    $
    (64
    )
    
    $
    7,192Stock-Based Compensation
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    12Net Income
    
    
    
    
    
    
    
    
    
    
    1,163
    
    
    
    
    
    
    
    1,163Balance at August 31, 2007
    
    $
    89
    
    
    $
    7,887
    
    
    $
    455
    
    
    $
    (64
    )
    
    $
    8,367
  5




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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
  Three Months EndedAugust 31,2007
    
    
    2006Cash Flows From Operating ActivitiesNet Income
    
    $
    1,163
    
    
    $
    1,036Adjustments to Reconcile Net Income to Net Cash
Provided by Operating ActivitiesDepreciation
    
    
    75
    
    
    
    82Amortization of Prepublication Costs and Intangible Assets
    
    
    1,704
    
    
    
    1,446Stock-Based Compensation
    
    
    12
    
    
    
    28Deferred Income Taxes
    
    
    769
    
    
    
    692Changes in Assets and LiabilitiesAccounts Receivable
    
    
    (3,831
    )
    
    
    (3,882
    )Inventory
    
    
    235
    
    
    
    (348
    )Prepaid Expenses and Other
    
    
    (76
    )
    
    
    (58
    )Prepaid Marketing Expenses
    
    
    (206
    )
    
    
    Accounts Payable and Accrued Expenses
    
    
    4,885
    
    
    
    3,788Deferred Revenue
    
    
    237
    
    
    
    5Income Taxes Payable or Refundable
    
    
    
    
    
    
    3Net Cash Provided By Operating Activities
    
    
    4,967
    
    
    
    2,792Cash Flows From Investing ActivitiesPurchases of Equipment and Leasehold Improvements
    
    
    (33
    )
    
    
    (81
    )Expenditures for Intangibles
    
    
    (30
    )
    
    
    (14
    )Expenditures for Prepublication Costs
    
    
    (1,603
    )
    
    
    (1,804
    )Net Cash Used In Investing Activities
    
    
    (1,666
    )
    
    
    (1,899
    )Cash Flows From Financing ActivitiesNet Payments Under Line of Credit
    
    
    (3,187
    )
    
    
    (962
    )Purchases of Treasury Stock
    
    
    
    
    
    
    (4
    )Principal Payments On Long-Term Debt
    
    
    (56
    )
    
    
    (280
    )Net Cash Used In Financing Activities
    
    
    (3,243
    )
    
    
    (1,246
    )Net Increase (Decrease) in Cash
    
    
    58
    
    
    
    (353
    )CashBeginning of Period
    
    
    98
    
    
    
    750End of Period
    
    $
    156
    
    
    $
    397Supplemental Cash Flow InformationCash Payments for:Interest
    
    $
    344
    
    
    $
    258Income Taxes
    
    $
    
    
    
    $
    
  6




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Peoples Educational Holdings, Inc., and Subsidiary
 
 Notes to Condensed Consolidated Financial Statements (UNAUDITED)
 NOTE 1
    NOTE 2
 ®
  NOTE 3
  7




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NOTE 4
   Three Months EndedAugust 312007
    
    2006Balances, Beginning
    
    $
    17,180
    
    
    $
    16,605Prepublication Cost Additions
    
    
    1,603
    
    
    
    1,804Amortization Expense
    
    
    (1,703
    )
    
    
    (1,443
    )Balances, Ending
    
    $
    17,080
    
    
    $
    16,966
  For the remainder of fiscal 2008
    
    $
    5,462For the year ended May 31, 2009
    
    
    5,042For the year ended May 31, 2010
    
    
    3,222For the year ended May 31, 2011
    
    
    2,048For the year ended May 31, 2012
    
    
    1,082Thereafter
    
    
    224$
    17,080
  NOTE 5
   Three Months EndedAugust 312007
    
    2006Balances, Beginning
    
    $
    141
    
    
    $
    126Additions
    
    
    30
    
    
    
    14Amortization Expense
    
    
    (1
    )
    
    
    (3
    )Balances, Ending
    
    $
    170
    
    
    $
    137
  NOTE 6
  8




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##### Table of Contents



August 31, 2007
    
    
    May 31, 2007Total Prepaid Balance
    
    $
    1,880
    
    
    $
    1,674Less current portion
    
    
    979
    
    
    
    638Long-term balance
    
    
    901
    
    
    
    1,036
   For the remainder of fiscal 2008
    
    $
    844For the year ended May 31, 2009
    
    
    541For the year ended May 31, 2010
    
    
    495
 NOTE 7
  
    
    The revolving line of credit provides for advances up to $10 million and expires in
March 2012. The interest rate on the revolving line of credit is in a range from LIBOR
plus 2.0% to LIBOR plus 2.25%, or prime to prime plus 0.5%, with the exact interest rate
based on the ratio of the Companys Total Funded Debt to EBITDA. At August 31, 2007, $3.6
million was outstanding under this facility, and $6.4 million was available for borrowing.
    
    The term loan is for $10 million and matures in December 2012. The term loan provides
for payments of interest only for the first twelve months and for 20 equal quarterly
payments of principal and interest thereafter until maturity. The term loan bears interest
at the same rate as the revolving line of credit for $5 million of the $10 million
outstanding. We entered into a swap agreement to fix the interest rate on the balance of
the term loan for three years at a rate of 5.3% plus an interest spread of 2.00% to 2.25%
based upon our total funded debt to EBITDA ratio. After the three-year period, the interest
rate reverts back to a variable rate. The change in the fair value of the interest rate
swap will be recognized as interest expense during each reporting period. As of August 31,
2007, we have a recorded $54,000 of interest expense as a result of the mark-to-market
interest rate adjustment related to our swap agreement on our term loan.
   9




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NOTE 8


WeightedWeighted
    
    AverageAverage
    
    RemainingNumber of
    
    Exercise
    
    ContractShares
    
    Price
    
    LifeOutstanding options at 5/31/07
    
    
    856,036
    
    
    $
    3.44Granted
    
    
    
    
    
    $
    Exercised
    
    
    
    
    
    $
    Canceled
    
    
    
    
    
    $
    Outstanding options at 8/31/07
    
    
    856,036
    
    
    $
    3.44
    
    
    3.93 Yrs.Outstanding exercisable at 8/31/07
    
    
    822,102
    
    
    $
    3.40
    
    
    3.75 Yrs.
   NOTE 9
  Accounting for Uncertainty in Income Taxes-an Interpretation of FASB Statement 109
 NOTE 10
 Accounting for Asset Retirement Obligations
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Accounting for Uncertainty in
Income Taxesan Interpretation of FASB Statement 109
  Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities
 NOTE 11
  Three Months EndedAugust 312007
    
    2006Casabonne Associates
    
    $
    25,600
    
    
    $
    3,000Marketing Works (1)
    
    
    
    
    
    
    12,000Total Payments
    
    $
    25,600
    
    
    $
    15,000
 
 (1)
    
    As Mr. Casabonne is no longer a related party of the organization, current year disclosure is not required. 11




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 FORWARDLOOKING STATEMENTS
  SEASONALITY
  Jun - Aug
    
    Sep - Nov
    
    Dec - Feb
    
    Mar - May1st Quarter
    
    2nd Quarter
    
    3rd Quarter
    
    4th QuarterTest Preparation, Assessment, and Instruction
    
    
    27
    %
    
    
    27
    %
    
    
    20
    %
    
    
    26
    %College Preparation
    
    
    64
    %
    
    
    15
    %
    
    
    7
    %
    
    
    14
    %Total Revenue
    
    
    39
    %
    
    
    23
    %
    
    
    16
    %
    
    
    22
    %
 OVERVIEW
  Test Preparation, Assessment, and Instruction Product Group
 Test Preparation, Assessment
 
    
    We create and sell print and web-based materials targeted to grades 2-12 to help
students prepare for state proficiency tests. The Measuring Up®Test Preparation
and assessment print products are sold in twelve states. MeasuringUp® is positioned as standards-based, state customized instruction and
classroom assessment, designed to be an integral part of a schools instructional program
throughout the school year.
    
    Measuring Up e-Pathä, a web-based assessment product developed in conjunction with
Cisco Learning Systems, provides schools and districts the ability to provide formative
classroom level
 12




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##### Table of Contents



assessments, which, in turn, allows for informed instruction relative to state
standards. Measuring Up e-Pathä delivers a detailed prescriptive instructional path
for individual students tied into our instructional materials or to other products in use
within a school or district. The strategy is to help educators assess a childs strengths
and weaknesses relative to the state standards and then provide a Personal Prescriptive
Path for remediation. The assessment data can be aggregated using NCLB-compliant reporting
at the class, school and district level and can be used to drive not only student learning,
but teacher professional development as well.
 Instruction
 
    
    We have two product lines within this grouping: Focused Instruction, and remedial,
multicultural text and professional development related materials. Focused Instruction
materials provide standardsbased, state-specific supplemental instruction on particular
subject areas such as reading comprehension, mathematics problem solving, and vocabulary
development. Essential to this strategy is the market alignment of the Focused Instruction
and Test Preparation and Assessment products so that both product lines are suitable for
sale to an identical customer base with an identical sales force. We continue to sell our
backlist remedial, multicultural and professional development materials, but we are not
investing in new development for these products.
 College Preparation Product Group
 
    
    We have the exclusive U.S. high school distribution rights for college textbooks and
related instruction materials published by two major college publishers. In addition to
these distributed products, we also publish our own proprietary products for the college
preparation market. The college preparation products that we offer are utilized in a wide
range of Advanced Placement, honors, electives and other high-level high school courses.
Distribution revenue consists of direct billings to customers, as well as commissions
earned on sales generated by our marketing efforts though billed directly by the college
publishers. Such sales, for which the commission rate varies, include purchases by schools
through online bookstores and sales derived as a result of purchases made through state
adoption contracts.
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##### Table of Contents



RESULTS OF OPERATIONS
 Three Months Ended August 31, 2007 vs. Three Months Ended August 31, 2006
 Three Months Ended August 31,(Amounts in Thousands  Except Earnings Per Share)
    
    2007
    
    2006RevenueTest Preparation, Assessment and Instruction
    
    $
    7,347
    
    
    
    43.6
    %
    
    $
    7,223
    
    
    
    47.1
    %College Preparation
    
    
    9,520
    
    
    
    56.4
    %
    
    
    8,124
    
    
    
    52.9
    %Total Revenue
    
    
    16,867
    
    
    
    100.0
    %
    
    
    15,347
    
    
    
    100.0
    %Cost of RevenueDirect Costs
    
    
    8,703
    
    
    
    51.6
    %
    
    
    7,758
    
    
    
    50.6
    %Prepublication Cost Amortization
    
    
    1,703
    
    
    
    10.1
    %
    
    
    1,443
    
    
    
    9.4
    %Total Cost Of Revenue
    
    
    10,406
    
    
    
    61.7
    %
    
    
    9,201
    
    
    
    60.0
    %Gross Profit
    
    
    6,461
    
    
    
    38.3
    %
    
    
    6,146
    
    
    
    40.0
    %Selling, General and Administrative ExpensesMarketing and Selling
    
    
    2,911
    
    
    
    17.3
    %
    
    
    2,861
    
    
    
    18.6
    %General and Administrative
    
    
    1,218
    
    
    
    7.2
    %
    
    
    1,306
    
    
    
    8.5
    %Total Selling, General and Administrative Expenses
    
    
    4,129
    
    
    
    24.5
    %
    
    
    4,167
    
    
    
    27.1
    %Operating Income
    
    
    2,332
    
    
    
    13.8
    %
    
    
    1,979
    
    
    
    12.9
    %Other Expenses (Income), Net
    
    
    12
    
    
    
    0.1
    %
    
    
    (6
    )
    
    
    0.0
    %Interest Expense
    
    
    388
    
    
    
    2.3
    %
    
    
    258
    
    
    
    1.7
    %Net Income Before Taxes
    
    
    1,932
    
    
    
    11.4
    %
    
    
    1,727
    
    
    
    11.2
    %Income Tax Expense
    
    
    769
    
    
    
    4.6
    %
    
    
    691
    
    
    
    4.5
    %Net Income
    
    $
    1,163
    
    
    
    6.8
    %
    
    $
    1,036
    
    
    
    6.7
    %EPS Basic and Diluted
    
    $
    0.26
    
    
    
    
    
    
    $
    0.23
 14




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##### Table of Contents



Overview
  REVENUE
 Test Preparation, Assessment, and Instruction
  College Preparation
  COST OF REVENUE
  
 
    
    Direct costs as a percentage of revenue increased from 50.6% in the prior year to 51.6%
in the current quarter. The percentage increase is due to revenue mix, as College
Preparation revenue increased from 52.9% of the total revenue for quarter in the prior
year, to 56.4% in the current year. College Preparation direct costs are substantially
higher than the direct cost of Testing, Assessment and Instruction, as the majority of
College Preparation revenue consists of non-proprietary products.
    
    Prepublication costs include one-time expenses associated with developing and producing
new or revised proprietary products. It includes all editorial expenses, writing, page
design and makeup, art and other permissions, prepress, and any other costs incurred up to
the print/bind stage of the books. These prepublication costs also include expenses
incurred for other forms of product development, such as expert reviews. Prepublication
costs are capitalized and expensed on a straight-line basis over a three- or five-year
period, based upon the product. We believe our amortization policy is in line with industry
practice. For the three-month period ending August 31, 2007 we amortized $1.7 million of
prepublication costs, compared to $1.4 million during the same period in the prior year.
 15




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##### Table of Contents



MARKETING AND SELLING
    GENERAL AND ADMINISTRATIVE
  INTEREST EXPENSE
  LIQUIDITY AND CAPITAL RESOURCES
     
    
    The revolving line of credit provides for advances up to $10 million and expires in
March 2012. The interest rate on the revolving line of credit is in a range from LIBOR
plus 2.0% to LIBOR plus 2.25%, or prime to prime plus 0.5%, with the exact interest rate
based on the ratio of the Companys Total Funded Debt to EBITDA. At August 31, 2007, $3.6
million was outstanding under this facility, and $6.4 million was available for borrowing.
 16




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##### Table of Contents




    
    The term loan is for $10 million and matures in December 2012. The term loan provides
for payments of interest only for the first twelve months and for 20 equal quarterly
payments of principal and interest thereafter until maturity. The term loan bears
interest at the same rate as the revolving line of credit for $5 million of the $10 million
outstanding. We entered into a swap agreement to fix the interest rate on the balance of
the term loan for three years at a rate of 5.3% plus an interest spread of 2.00% to 2.25%
based upon our total funded debt to EBITDA ratio. After the three-year period, the interest
rate reverts back to a variable rate. The change in the fair value of the interest rate
swap will be recognized as interest expense during each reporting period. As of August 31,
2007, we have a recorded $54,000 of interest expense as a result of the mark-to-market
interest rate adjustment related to our swap agreement on our term loan.
     Payments Due by PeriodFiscal Year
    
    Fiscal Year
    
    Fiscal Year
    
    Fiscal Year
    
    Fiscal YearContractual Cash Obligations
    
    Total
    
    2008
    
    2009
    
    2010
    
    2011
    
    2012Term Loan
(including interest portion)
    
    $
    10,701
    
    
    $
    1,061
    
    
    $
    2,637
    
    
    $
    2,486
    
    
    $
    2,334
    
    
    $
    2,183Capital
Leases
(including interest portion)
    
    
    182
    
    
    
    100
    
    
    
    47
    
    
    
    35
    
    
    
    
    
    
    
    Operating Leases
    
    
    1,266
    
    
    
    428
    
    
    
    572
    
    
    
    266
    
    
    
    
    
    
    
    Total
    
    $
    12,149
    
    
    $
    1,589
    
    
    $
    3,256
    
    
    $
    2,787
    
    
    $
    2,334
    
    
    $
    2,183
  OFF-BALANCE SHEET ARRANGEMENTS
  CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES
  17




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##### Table of Contents



Revenue Recognition and Allowance for Returns
  Deferred Prepublication Costs
  Allowance for Doubtful Accounts
  Allowance for Excess and Slow-Moving Inventory
  Stock-Based Compensation
 Share-Based Payment,
 Income
Taxes
  18




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 Evaluation of Controls and Procedures
   Changes in Internal Control over Financial Reporting
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PART II
 OTHER INFORMATION
 
 Item 1. Legal Proceedings
 None.
 
 Item 1A. Risk Factors
 There has not been a material change to the risk factors set forth in our Annual Report on
Form 10-K for the fiscal year ended May 31, 2007.
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 During the three-months ended August 31, 2007, we did not issue any securities without
registration under the Securities Act of 1933On October 5, 2005, we announced that our Board of Directors had approved a share repurchase
program, permitting us to repurchase up to 100,000 shares of our common stock. At August 31,
2007, 83,768 shares remained that could be purchased under the plan or programs. No share
repurchase plan or program expired, or was terminated, during the period covered by this report.
 
 Item 3. Defaults Upon Senior Securities
 None.
 
 Item 4. Submission of Matters to a Vote of Security Holders
 None.
 
 Item 5. Other Information
 None.
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Item 6. Exhibits
 Exhibit 10.1

    Amendment to Employment Agreement between Peoples Education,
Inc. (f/k/a The Peoples Publishing Group, Inc.) and James J.
Peoples, dated June 4, 2007 [filed as Exhibit 10.1 to the
Companys Current Report on Form 8-K filed June 4, 2007 and
incorporated herein by reference].Exhibit 10.2

    Amendment to Employment Agreement between Peoples Education,
Inc. (f/k/a The Peoples Publishing Group, Inc.) and James J.
Peoples, dated August 7, 2007 [filed as Exhibit 10.1 to the
Companys Current Report on Form 8-K filed August 7, 2007 and
incorporated herein by reference].Exhibit 31.1

    CEO Certification pursuant to Rule 13a-14(a).Exhibit 31.2

    CFO Certification pursuant to Rule 13a-14(a).Exhibit 32.1

    CEO Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.Exhibit 32.2

    CFO Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
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SIGNATURES
  Dated: October 10, 2007
    
    PEOPLES EDUCATIONAL HOLDINGS, INC.By: /s/ Brian T. BeckwithBrian T. BeckwithPresident and Chief Executive Officer
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