Scholastic Reports Q4 And Fiscal 2014 Results And Fiscal 2015 Outlook

    Scholastic Reports Q4 And Fiscal 2014 Results And Fiscal 2015 Outlook

Children's Book Publishing and Education Groups Deliver Strong Finish to
Successful Year

PR Newswire

NEW YORK, July 24, 2014

NEW YORK, July 24, 2014 /PRNewswire/ --Scholastic Corporation (NASDAQ: SCHL),
the global children's publishing, education and media company, today reported
financial results for the Company's fiscal fourth quarter and full year ended
May 31, 2014.

Scholastic logo.

Fiscal 2014 Highlights

  o2014 EPS increased +43% to $1.36, on +2% revenue growth.
  oExcluding special one-time items, 2014 EPS climbed +51% to $1.84,
    exceeding outlook.
  oBook Clubs revenue rose +12% in the year on higher engagement levels and
    popular titles.
  oEd Tech sales grew +9%, led by award-winning new MATH 180^® intervention
    program.
  oMinecraft™ books top best seller lists with more releases planned for
    fiscal 2015.

"We are pleased with our performance in fiscal 2014, a year in which we grew
sales and profits in the Company's major businesses in the U.S. before the
impact of one-time, mostly non-cash, charges," said Richard Robinson,
Chairman, President and Chief Executive Officer. "We began the year with the
successful introduction of our new innovative educational technology products,
including the ground-breaking math intervention program, MATH 180, that,
together with our aligned professional development and services offerings,
further strengthened our ability to offer comprehensive solutions to raise the
bar on performance in schools and classrooms. Our reenergized book clubs hit
stride in the second half of the year, with new mailing and incentive
marketing strategies that, combined with an expanded line of popular and
engaging titles, resulted in higher value orders and increased ordering
frequency. In Trade, new bestsellers drove frontlist growth although annual
trade revenues were down slightly, as expected, on lower Hunger Games trilogy
sales. We also achieved manufacturing and distribution efficiencies across
our businesses over the course of the year."

Fourth Quarter 2014 Results

Scholastic reported fourth quarter 2014 revenues of $549.3 million, an
increase of $42.4 million, or 8%, compared to $506.9 million in the fourth
quarter of 2013, resulting from higher sales in four of the Company's five
operating segments. Revenues of the Company's international business were
impacted by unfavorable foreign exchange of $5.6 million in the quarter.
Operating income in the fourth quarter increased 21% to $48.6 million,
compared to $40.3 million a year ago, with increased profitability in
Children's Book Publishing and Distribution, Educational Technology and
Services, and Classroom and Supplemental Materials Publishing. Consolidated
earnings were $0.85 per diluted share, compared to $0.66 per diluted share in
the fourth quarter of 2013, an increase of 29%.

Fourth quarter 2014 results included one-time, mostly non-cash, pre-tax
charges of $21.4 million, primarily related to Storia^® operating
system-specific apps that will no longer be supported due to the planned
transition to a Storia streaming model, as well as a settlement charge related
to the Company's pension plan and severance paid in connection with certain
cost reduction and restructuring programs. These one-time items resulted in
after-tax charges of $12.7 million, or $0.39 per share in the current
period. Fourth quarter 2013 results included after-tax charges of $6.8
million, or $0.21 per share, related to the Company's cost reduction and
restructuring programs. Excluding these special items in both years, fourth
quarter 2014 operating income was $69.9 million, compared to $50.9 million in
the prior year period, and consolidated earnings per diluted share increased
43% to $1.24, compared to $0.87 in the fourth quarter of 2013.

Fiscal Year 2014 Results

Total revenues in 2014 were $1.82 billion, an increase of 2% from $1.79
billion in 2013, reflecting higher engagement levels in our school-based book
clubs, buoyed by more popular titles and incentives and revamped marketing
tools, the successful introduction of new educational technology products,
higher circulation in classroom magazines, and strong demand for the Company's
summer reading programs, partially offset by unfavorable foreign currency
translation of $24.2 million. Operating income for the full year 2014 was
$63.1 million, down 7% from $67.9 million in 2013. Consolidated earnings
per diluted share were $1.36 for the fiscal year, compared to $0.95 in the
prior year, which include one-time charges of $0.48 and $0.27 per diluted
share, respectively.

Excluding special one-time items, operating income was $107.0 million,
compared to $81.5 million a year ago, an increase of 31%. For fiscal 2014,
consolidated earnings per diluted share excluding one-time items were $1.84
versus $1.22 in fiscal 2013, topping the Company's outlook of $1.40 to $1.80
per diluted share, excluding one-time items

Free cash flow (as defined) for the fiscal year was $63.7 million, compared to
$59.6 million in fiscal 2013. During the fourth quarter, Scholastic repaid
$42.8 million of debt incurred as a result of the Company's purchase of its
headquarters location in New York City in February 2014. At year end, the
Company's net debt (as defined) was $114.9 million. A year ago, cash and cash
equivalents exceeded the Company's total debt by $85.4 million.

Fiscal 2015 Outlook

In fiscal 2015, Scholastic expects revenue growth and enhanced profitability
across the majority of its businesses and channels. In its children's book
businesses, the Company's outlook reflects expectations for continued growth
in its re-positioned book clubs and increased revenue per fair in its book
fairs unit. Scholastic also expects the recent success of Minecraft to
continue, with two additional titles and a boxed set scheduled for release
later this year, as well as new titles in many of its bestselling series, like
Captain Underpants^® and Star Wars^®: Jedi Academy. Additionally, Scholastic
intends to extend its leadership position in multiplatform publishing,
introducing Tombquest™ in early 2015, while creatively promoting its backlist
and digital offerings. Sales of the Hunger Games trilogy in both domestic
trade and international major markets are expected to decrease in 2015, but
will remain a significant contributor to revenue.

In its education businesses, the Company expects sales of its educational
technology products, in reading and math, along with their comprehensive
professional development and services solutions, to continue their positive
trajectory as the Company adds sales resources and focuses on broadening the
user base of its high-margin programs, including READ 180^® and System 44^®.
The Company also expects to launch the sequel to MATH 180 in the fourth
quarter of fiscal 2015 with its concentration on foundational pre-algebra
concepts. In its classroom books unit, the Company expects revenue growth to
be driven by acceptance of its new guided reading non-fiction books and
instructional resources. Lastly, the Company expects growth in its
international business to be partially offset by increased investment in new
education products and the build-out of the sales organization in Asia.

As a result of the above factors, the Company expects total revenue in fiscal
2015 of approximately $1.9 billion and earnings per diluted share in the range
of $1.80 to $2.00, before the impact of special one-time items.

Fiscal 2015 free cash flow is expected to be between $65 and $85 million. This
outlook includes capital expenditures returning to more normal levels of $45
to $55 million, compared to $27.0 million in fiscal 2014, and prepublication
and production spending of approximately $65 to $75 million, compared to $66.1
million in fiscal 2014.

Fourth Quarter and Fiscal 2014 Segment Results

Children's Book Publishing and Distribution. Segment revenue in the fourth
quarter was $276.8 million, up 15% from $241.1 million in the prior year
period. Operating income, which was impacted by special one-time charges
relating to the transition from Storia native apps to a Storia streaming model
for children's ebook delivery, was $26.0 million, up 31%, compared to $19.9
million in the prior period. For fiscal 2014, segment revenue was $873.5
million, an increase of $26.6 million, compared to $846.9 million in fiscal
2013. Full year operating income was $22.8 million, compared to operating
income of $24.5 million in the prior year, including the impact of special
one-time items of $31.4 million and $4.0 million, respectively. Excluding
these one-time items, full year operating income increased by $25.7 million,
or 90%, to $54.2 million. Segment results for both the quarter and fiscal
year primarily reflect higher revenue per book club order and higher revenue
per fair in the Company's school-based distribution channels. Trade revenues
were up 22% in the fourth quarter with growth in the frontlist driven by
multiplatform bestselling Spirit Animals™, the latest release in the Wings of
Fire series by Tui Sutherland and David Baldacci's The Finisher, as well as
the strength of Minecraft handbooks and Lego^® movie titles, which were
leveraged across all channels. For the full year, trade revenues were lower,
as expected, due to lower sales of the Hunger Games trilogy, although it
remains a top-10 series on The New York Times bestseller list.

Educational Technology and Services. Segment revenue in the fourth quarter
was $57.2 million, up 7% from $53.7 million in the prior period due mainly to
stronger sales of MATH 180, READ 180, and iRead™. Segment operating income
was $7.2 million, compared to $2.9 million in the fourth quarter of fiscal
2013, an increase of 148%. For the fiscal year, segment revenue was $248.7
million, up $21.0 million, or 9%, compared to $227.7 million a year ago.
Segment operating income was $39.6 million in fiscal 2014, compared to $29.5
million in the prior year, an increase of 34%, due to higher sales, partially
offset by the amortization of prepublication expense tied to the newly
released programs.Fiscal year results were driven by higher purchases of the
Company's new curriculum educational technology products – MATH 180, System 44
Next Generation, iRead and Common Core Code X^®, partially offset by lower
mid-year sales of READ 180, which were affected by a realignment of the sales
force, and lower revenues from professional development and consulting
services.

Classroom and Supplemental Materials Publishing. Segment revenue in the
fourth quarter was $88.2 million, an increase of 5% versus the prior period
revenue of $83.7 million, due to increased sales of classroom magazines and
summer reading programs. Segment operating income for the quarter was $27.1
million, compared to $25.0 million in the fourth quarter of fiscal 2013. For
the fiscal year, segment revenue was $229.6 million, compared to $218.0
million a year ago, a 5% improvement, due to strong sales of classroom
magazines, especially the Common Core-aligned print and digital editions of
Scholastic News^®/Weekly Reader^®, and classroom books and summer reading
programs. Segment operating income improved by 27% to $37.5 million in fiscal
2014, up from $29.6 million in the prior period.

International. Segment revenue in the fourth quarter was $109.0 million, down
3% versus the prior period revenue of $112.8 million. Operating income for
the quarter was $9.2 million versus $10.3 million in the fourth quarter of
fiscal 2013. For the fiscal year, segment revenue was $414.3 million,
compared to $441.1 million in the prior year. Due to the strengthening of the
U.S. dollar, foreign exchange had a negative impact on revenue of $5.6 million
and $24.2 million in the fourth quarter and full year, respectively. Segment
operating income in fiscal 2014 was $30.8 million, compared to $39.8 million
in fiscal 2013, as a result of lower revenues, including a decline in Hunger
Games trilogy sales, and the higher cost of U.S. dollar-denominated product,
combined with higher levels of investment in expanded education product
development in India and Singapore.

Media, Licensing and Advertising. Segment revenue in the fourth quarter was
$18.1 million, an increase of 16%, as compared to $15.6 million in the prior
year period, primarily due to higher programming and rights and royalties
revenues. Operating income was $3.1 million for the quarter, compared to $4.7
million in the fourth quarter of fiscal 2013. The lower operating income on
higher realized sales in the quarter was primarily due to higher amortization
of production expenses for original animated programming for Word Girl^® and
Astroblast™. For the fiscal year, segment revenue was $56.2 million, compared
to $58.7 million in the prior year. Operating loss for the segment in fiscal
2014 was $0.7 million, compared to income of $4.7 million a year ago. Segment
results for the fiscal year are primarily the result of lower consumer
magazine and custom publishing revenues and decreased sales of interactive
products, partially offset by higher proceeds from the sale of Scholastic
Media programming. 

Other Financial Results. Corporate overhead expense was $66.9 million in
fiscal 2014, compared to $60.2 million in the prior year, reflecting higher
employee-related and incentive compensation expenses in the current period,
including one-time items of $11.9 million and $7.6 million, respectively.

As previously announced, the Company's Board of Directors declared a quarterly
cash dividend of $0.15 per share on the Company's Class A and Common Stock for
the first quarter of fiscal 2015. The dividend is payable on September 15,
2014 to shareholders of record as of the close of business on August 29, 2014.

Additional Information

To supplement our financial statements presented in accordance with GAAP, we
include certain non-GAAP calculations and presentations. Please refer to the
non-GAAP financial tables attached to this press release for supporting
details on special one-time items and other financial measures included in
this release. This information should be considered as supplemental in nature
and not as a substitute for the related financial information prepared in
accordance with GAAP.

Conference Call

The Company will hold a conference call to discuss its results at 8:30 am ET
today, July 24, 2014. Scholastic's Chairman, President and CEO, Richard
Robinson, and Executive Vice President, CAO and CFO, Maureen O'Connell, will
moderate the call.

The conference call and accompanying slides will be webcast and accessible
through the Investor Relations section of Scholastic's website,
www.scholastic.com. Participation by telephone will be available by dialing
(877) 654-5161 from within the U.S. or +1 (678) 894-3064 internationally.
Shortly following the call, an archived webcast and accompanying slides from
the conference call will also be posted at investor.scholastic.com. An
audio-only replay of the call will be available by dialing (855) 859-2056 from
within the U.S. or +1 (404) 537-3406 internationally, and entering access code
65494395. The recording will be available through Friday, August 1, 2014.

About Scholastic

Scholastic Corporation (NASDAQ: SCHL) is the world's largest publisher and
distributor of children's books and a leader in educational technology and
related services and children's media. Scholastic creates quality books and
ebooks, print and technology-based learning materials and programs, magazines,
multi-media and other products that help children learn both at school and at
home. The Company distributes its products and services worldwide through a
variety of channels, including school-based book clubs and book fairs, retail
stores, schools, libraries, on-air, and online at www.scholastic.com.

Forward-Looking Statements

This news release contains certain forward-looking statements. Such
forward-looking statements are subject to various risks and uncertainties,
including the conditions of the children's book and educational materials
markets and acceptance of the Company's products within those markets, and
other risks and factors identified from time to time in the Company's filings
with the Securities and Exchange Commission. Actual results could differ
materially from those currently anticipated.

SCHL: Financial



SCHOLASTIC CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Amounts in millions except per share data)
                             THREE MONTHS ENDED        TWELVE MONTHS ENDED
                             05/31/14    05/31/13      05/31/14   05/31/13
 Revenues                    $549.3      $506.9        $1,822.3   $1,792.4
 Operating costs and
 expenses:
      Cost of goods sold (1) 252.6       226.8         846.0      829.6
      Selling, general and
      administrative         216.3       219.7         815.6      821.6
      expenses (2)
      Bad debt expense       1.8         2.9           8.2        6.8
      Depreciation and       15.4        17.2          61.4       66.5
      amortization
      Asset impairments (3)  14.6        -             28.0       -
 Total operating costs and   500.7       466.6         1,759.2    1,724.5
 expenses
 Operating income (loss)     48.6        40.3          63.1       67.9
 Interest expense, net       1.0         3.0           6.9        14.5
 Loss on investments (4)     1.1         -             5.8        0.0
 Earnings (loss) from
 continuing operations       46.5        37.3          50.4       53.4
 before income taxes
 Provision (benefit) for     18.3        12.5          6.1        17.6
 income taxes (5)
 Earnings (loss) from        28.2        24.8          44.3       35.8
 continuing operations
 Earnings (loss) from
 discontinued operations,    (0.1)       (3.3)         0.1        (4.7)
 net of tax
 Net income (loss)           $28.1       $21.5         $44.4      $31.1
 Basic and diluted earnings
 (loss) per Share of Class A
 and Common Stock: (6)
 Basic:
      Earnings (loss) from   0.87        0.78          1.38       1.12
      continuing operations
      Earnings (loss) from
      discontinued           (0.00)      (0.11)        0.01       (0.15)
      operations, net of tax
      Net income (loss)      0.87        0.67          1.39       0.97
 Diluted:
      Earnings (loss) from   0.86        0.76          1.36       1.10
      continuing operations
      Earnings (loss) from
      discontinued           (0.01)      (0.10)        0.00       (0.15)
      operations, net of tax
      Net income (loss)      0.85        0.66          1.36       0.95
 Basic weighted average      32,240      31,774        31,985     31,786
 shares outstanding
 Diluted weighted average    32,825      32,314        32,528     32,387
 shares outstanding
      In the three and twelve months ended May 31, 2014, the Company
 (1)  recognized a pretax charge of $2.4 for royalties on Storia operating
      system-specific apps that will no longer be supported due to the
      planned transition to a Storia streaming model.
      In the three and twelve months ended May 31, 2014, the Company
      recognized pretax severance charges of $1.6 and $10.8, respectively,
      related to the Company's cost savings initiatives; a pretax non-cash
      settlement charge of $1.7 in respect to certain lump sum benefits paid
      from the Company's defined benefit pension plan; and a pretax charge of
 (2)  $1.0 for Storia operating system-specific apps that will no longer be
      supported due to the planned transition to a Storia streaming model.
      In the three and twelve months ended May 31, 2013, the Company
      recognized pretax severance charges of $6.6 and $9.6, respectively,
      related to such cost savings initiatives and a pretax charge of $4.0
      related to asset impairments.
      In the three and twelve months ended May 31, 2014, the Company
      recognized a pretax impairment charge of $14.6 related to Storia
      operating system-specific apps that will no longer be supported due to
 (3)  the planned transition to a Storia streaming model. In the twelve
      months ended May 31, 2014, the Company recognized a pretax goodwill
      impairment charge of $13.4 in the Children's Book Publishing and
      Distribution segment.
      In the twelve months ended May 31, 2014, the Company recognized a
 (4)  pretax loss of $4.8 related to a UK-based cost method investment and a
      pretax loss of $1.0 related to a US-based equity method investment.
      In the twelve months ended May 31, 2014, the Company recognized $13.8
 (5)  of tax benefits from previously unrecognized income tax positions
      related to the Company's settlement of the 2007, 2008 and 2009 IRS
      audits.
      Earnings (loss) per share are calculated on non-rounded net income
 (6)  (loss) and shares outstanding. Recalculating earnings per share based
      on numbers rounded to millions may not yield the results as presented.



SCHOLASTIC CORPORATION
RESULTS OF CONTINUING OPERATIONS - SEGMENTS
(UNAUDITED)
(Amounts in millions)
                THREE MONTHS ENDED              TWELVE MONTHS ENDED
                05/31/14 05/31/13  Change       05/31/14 05/31/13  Change
 Children's
 Book
 Publishing and
 Distribution
   Revenue
   Book Clubs   $66.9    $43.3     $23.6 55%    $230.7   $206.0    $24.7  12%
   Book Fairs   170.2    165.2     5.0   3%     472.3    458.2     14.1   3%
   Consolidated 39.7     32.6      7.1   22%    170.5    182.7     (12.2) (7%)
   Trade
   Total        276.8    241.1     35.7  15%    873.5    846.9     26.6   3%
   revenue
   Operating
   income       26.0     19.9      6.1   31%    22.8     24.5      (1.7)  (7%)
   (loss)
   Operating    9.4%     8.3%                   2.6%     2.9%
   margin
 Educational
 Technology and
 Services
   Revenue      57.2     53.7      3.5   7%     248.7    227.7     21.0   9%
   Operating
   income       7.2      2.9       4.3   148%   39.6     29.5      10.1   34%
   (loss)
   Operating    12.6%    5.4%                   15.9%    13.0%
   margin
 Classroom and
 Supplemental
 Materials
 Publishing
   Revenue      88.2     83.7      4.5   5%     229.6    218.0     11.6   5%
   Operating
   income       27.1     25.0      2.1   8%     37.5     29.6      7.9    27%
   (loss)
   Operating    30.7%    29.9%                  16.3%    13.6%
   margin
 International
   Revenue      109.0    112.8     (3.8) (3%)   414.3    441.1     (26.8) (6%)
   Operating
   income       9.2      10.3      (1.1) (11%)  30.8     39.8      (9.0)  (23%)
   (loss)
   Operating    8.4%     9.1%                   7.4%     9.0%
   margin
 Media,
 Licensing and
 Advertising
   Revenue      18.1     15.6      2.5   16%    56.2     58.7      (2.5)  (4%)
   Operating
   income       3.1      4.7       (1.6) (34%)  (0.7)    4.7       (5.4)
   (loss)
   Operating    17.1%    30.1%                  -        8.0%
   margin
 Overhead       24.0     22.5      (1.5) (7%)   66.9     60.2      (6.7)  (11%)
 expense
 Operating
 income (loss)
 from           $48.6    $40.3     $8.3  21%    $63.1    $67.9     ($4.8) (7%)
 continuing
 operations



SCHOLASTIC CORPORATION
SUPPLEMENTAL INFORMATION
(UNAUDITED)
(Amounts in millions)
SELECTED BALANCE SHEET ITEMS
                           05/31/14   05/31/13
 Continuing Operations
     Cash and cash         $20.9      $87.4
     equivalents
     Accounts receivable,  253.3      214.9
     net
     Inventories, net      272.7      278.1
     Accounts payable      145.3      156.2
     Accrued royalties     34.1       34.4
     Lines of credit,
     short-term debt and   15.8       2.0
     current portion of
     long-term debt
     Long-term debt,
     excluding current     120.0      0.0
     portion
     Total debt            135.8      2.0
     Total capital lease   0.0        57.7
     obligations
     Net debt (1)          114.9      (85.4)
 Discontinued Operations
     Total assets of
     discontinued          0.4        0.4
     operations
     Total liabilities of
     discontinued          1.1        1.3
     operations
 Total stockholders'       915.5      864.4
 equity
SELECTED CASH FLOW ITEMS
                           THREE MONTHS ENDED          TWELVE MONTHS ENDED
                           05/31/14   05/31/13         05/31/14   05/31/13
     Net cash provided by
     (used in) operating   $71.5      $81.4            $156.8     $189.1
     activities
     Less: Additions to
     property, plant and   7.6        12.3             27.0       55.8
     equipment
     
     Pre-publication and   18.8       22.4             66.1       73.7
     production costs
     Free cash flow (use)  $45.1      $46.7            $63.7      $59.6
     (2) (3)
     Net debt is defined by the Company as lines of credit and short-term
     debt plus long-term-debt, net of cash and cash equivalents. The Company
 (1) utilizes this non-GAAP financial measure, and believes it is useful to
     investors, as an indicator of the Company's effective leverage and
     financing needs.
     Free cash flow (use) is defined by the Company as net cash provided by
     or used in operating activities (which includes royalty advances),
     reduced by spending on property, plant and equipment and pre-publication
     and production costs. The Company believes that this non-GAAP financial
 (2) measure is useful to investors as an indicator of cash flow available
     for debt repayment and other investing activities, such as
     acquisitions. The Company utilizes free cash flow as a further
     indicator of operating performance and for planning investing
     activities.
 (3) Free cash flow (use) includes discontinued operations for the three and
     twelve months ended May 31, 2014 and May 31, 2013.



SCHOLASTIC CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS SUPPLEMENTAL
(UNAUDITED)
(Amounts in millions except per share data)
                     THREE MONTHS ENDED
                     Reported One-time Excluding   Reported One-time Excluding
                     05/31/14 items    One-time    05/31/13 items    One-time
                                       items                         items
 Revenues            $549.3   $0.0     $549.3      $506.9   $0.0     $506.9
 Operating costs
 and expenses:
     Cost of goods   252.6    (2.4)    250.2       226.8    -        226.8
     sold (1)
     Selling,
     general and
     administrative  216.3    (4.3)    212.0       219.7    (10.6)   209.1
     expenses
     (1)(2)
     Bad debt        1.8      -        1.8         2.9      -        2.9
     expense
     Depreciation
     and             15.4     -        15.4        17.2     -        17.2
     amortization
     Asset
     impairments     14.6     (14.6)   -           0.0      -        -
     (1)
 Total operating     500.7    (21.3)   479.4       466.6    (10.6)   456.0
 costs and expenses
 Operating income    48.6     21.3     69.9        40.3     10.6     50.9
 (loss)
 Interest expense,   1.0      -        1.0         3.0      -        3.0
 net
 Loss on             1.1      (0.1)    1.0         0.0      -        -
 investments
 Earnings (loss)
 from continuing     46.5     21.4     67.9        37.3     10.6     47.9
 operations before
 income taxes
 Provision
 (benefit) for       18.3     8.7      27.0        12.5     3.8      16.3
 income taxes
 Earnings (loss)
 from continuing     28.2     12.7     40.9        24.8     6.8      31.6
 operations
 Earnings (loss)
 from discontinued   (0.1)    -        (0.1)       (3.3)    -        (3.3)
 operations, net of
 tax
 Net income (loss)   $28.1    $12.7    $40.8       $21.5    $6.8     $28.3
 Basic and diluted
 earnings (loss)
 per Share of Class
 A and Common
 Stock:
 Basic:
     Earnings
     (loss) from     0.87     0.39     1.26        0.78     0.21     0.99
     continuing
     operations
     Earnings
     (loss) from
     discontinued    (0.00)   -        (0.00)      (0.11)   -        (0.11)
     operations,
     net of tax
     Net income      0.87     0.39     1.26        0.67     0.21     0.88
     (loss)
 Diluted:
     Earnings
     (loss) from     0.86     0.39     1.25        0.76     0.21     0.97
     continuing
     operations
     Earnings
     (loss) from
     discontinued    (0.01)   -        (0.01)      (0.10)   -        (0.10)
     operations,
     net of tax
     Net income      0.85     0.39     1.24        0.66     0.21     0.87
     (loss)
                     TWELVE MONTHS ENDED
                     Reported One-time Excluding   Reported One-time Excluding
                     05/31/14 items    One-time    05/31/13 items    One-time
                                       items                         items
 Revenues            $1,822.3 $0.0     $1,822.3    $1,792.4 $0.0     $1,792.4
 Operating costs
 and expenses:
     Cost of goods   846.0    (2.4)    843.6       829.6    -        829.6
     sold (1)
     Selling,
     general and
     administrative  815.6    (13.5)   802.1       821.6    (13.6)   808.0
     expenses
     (1)(2)
     Bad debt        8.2      -        8.2         6.8      -        6.8
     expense
     Depreciation
     and             61.4     -        61.4        66.5     -        66.5
     amortization
     Asset
     impairments     28.0     (28.0)   -           0.0      -        -
     (1)(3)
 Total operating     1,759.2  (43.9)   1,715.3     1,724.5  (13.6)   1,710.9
 costs and expenses
 Operating income    63.1     43.9     107.0       67.9     13.6     81.5
 (loss)
 Interest expense,   6.9      -        6.9         14.5     -        14.5
 net
 Loss on             5.8      (4.8)    1.0         0.0      -        -
 investments (4)
 Earnings (loss)
 from continuing     50.4     48.7     99.1        53.4     13.6     67.0
 operations before
 income taxes
 Provision
 (benefit) for       6.1      33.0     39.1        17.6     5.0      22.6
 income taxes (5)
 Earnings (loss)
 from continuing     44.3     15.7     60.0        35.8     8.6      44.4
 operations
 Earnings (loss)
 from discontinued   0.1      -        0.1         (4.7)    -        (4.7)
 operations, net of
 tax
 Net income (loss)   $44.4    $15.7    $60.1       $31.1    $8.6     $39.7
 Basic and diluted
 earnings (loss)
 per Share of Class
 A and Common
 Stock:
 Basic:
     Earnings
     (loss) from     1.38     0.48     1.86        1.12     0.27     1.39
     continuing
     operations
     Earnings
     (loss) from
     discontinued    0.01     -        0.01        (0.15)   -        (0.15)
     operations,
     net of tax
     Net income      1.39     0.48     1.87        0.97     0.27     1.24
     (loss)
 Diluted:
     Earnings
     (loss) from     1.36     0.48     1.84        1.10     0.27     1.37
     continuing
     operations
     Earnings
     (loss) from
     discontinued    0.00     -        0.00        (0.15)   -        (0.15)
     operations,
     net of tax
     Net income      1.36     0.48     1.84        0.95     0.27     1.22
     (loss)
     In the three and twelve months ended May 31, 2014, the Company recognized a
 (1) pretax charge of $2.4 for royalties on Storia operating system-specific
     apps that will no longer be supported due to the planned transition to a
     Storia streaming model.
     In the three and twelve months ended May 31, 2014, the Company recognized
     pretax severance charges of $1.6 and $10.8, respectively, related to the
     Company's cost savings initiatives; a pretax non-cash settlement charge of
     $1.7 in respect to certain lump sum benefits paid from the Company's
 (2) defined benefit pension plan; and a pretax charge of $1.0 for Storia
     operating system-specific apps that will no longer be supported due to the
     planned transition to a Storia streaming model. In the three and twelve
     months ended May 31, 2013, the Company recognized pretax severance charges
     of $6.6 and $9.6, respectively, related to such cost savings initiatives
     and a pretax charge of $4.0 related to asset impairments.
     In the three and twelve months ended May 31, 2014, the Company recognized a
     pretax impairment charge of $14.6 related to Storia operating
 (3) system-specific apps that will no longer be supported due to the planned
     transition to a Storia streaming model. In the twelve months ended May 31,
     2014, the Company recognized a pretax goodwill impairment charge of $13.4
     in the Children's Book Publishing and Distribution segment.
     In the twelve months ended May 31, 2014, the Company recognized a pretax
 (4) loss of $4.8 related to a UK-based cost method investment and a pretax loss
     of $1.0 related to a US-based equity method investment.
     In the twelve months ended May 31, 2014, the Company recognized $13.8 of
 (5) tax benefits from previously unrecognized income tax positions related to
     the Company's settlement of the 2007, 2008 and 2009 IRS audits.



SCHOLASTIC CORPORATION
RESULTS OF CONTINUING OPERATIONS - SEGMENT SUPPLEMENTAL
(UNAUDITED)
(Amounts in millions except per share data)
                     THREE MONTHS ENDED
                     Reported One-time Excluding   Reported One-time Excluding
                     05/31/14 items    One-time    05/31/13 items    One-time
                                       items                         items
     Children's
     Book
     Publishing and
     Distribution
     Revenue
     Book Clubs      $66.9             $66.9       $43.3             $43.3
     Book Fairs      170.2             170.2       165.2             165.2
     Consolidated    39.7              39.7        32.6              32.6
     Trade
     Total revenue   276.8             276.8       241.1             241.1
     Operating
     income (loss)   26.0     18.0     44.0        19.9     4.0      23.9
     (1)
     Operating       9.4%              15.9%       8.3%              9.9%
     margin
     Educational
     Technology and
     Services
     Revenue         57.2              57.2        53.7              53.7
     Operating       7.2               7.2         2.9               2.9
     income (loss)
     Operating       12.6%             12.6%       5.4%              5.4%
     margin
     Classroom and
     Supplemental
     Materials
     Publishing
     Revenue         88.2              88.2        83.7              83.7
     Operating       27.1              27.1        25.0              25.0
     income (loss)
     Operating       30.7%             30.7%       29.9%             29.9%
     margin
     International
     Revenue         109.0             109.0       112.8             112.8
     Operating
     income (loss)   9.2               9.2         10.3     2.0      12.3
     (2)
     Operating       8.4%              8.4%        9.1%              10.9%
     margin
     Media,
     Licensing and
     Advertising
     Revenue         18.1              18.1        15.6              15.6
     Operating       3.1               3.1         4.7               4.7
     income (loss)
     Operating       17.1%             17.1%       30.1%             30.1%
     margin
     Overhead        24.0     (3.3)    20.7        22.5     (4.6)    17.9
     expense (3)
     Operating
     income (loss)
     from            $48.6    $21.3    $69.9       $40.3    $10.6    $50.9
     continuing
     operations
                     TWELVE MONTHS ENDED
                     Reported One-time Excluding   Reported One-time Excluding
                     05/31/14 items    One-time    05/31/13 items    One-time
                                       items                         items
     Children's
     Book
     Publishing and
     Distribution
     Revenue
     Book Clubs      $230.7            $230.7      $206.0            $206.0
     Book Fairs      472.3             472.3       458.2             458.2
     Consolidated    170.5             170.5       182.7             182.7
     Trade
     Total revenue   873.5             873.5       846.9             846.9
     Operating
     income (loss)   22.8     31.4     54.2        24.5     4.0      28.5
     (1)
     Operating       2.6%              6.2%        2.9%              3.4%
     margin
     Educational
     Technology and
     Services
     Revenue         248.7             248.7       227.7             227.7
     Operating       39.6              39.6        29.5              29.5
     income (loss)
     Operating       15.9%             15.9%       13.0%             13.0%
     margin
     Classroom and
     Supplemental
     Materials
     Publishing
     Revenue         229.6             229.6       218.0             218.0
     Operating       37.5              37.5        29.6              29.6
     income (loss)
     Operating       16.3%             16.3%       13.6%             13.6%
     margin
     International
     Revenue         414.3             414.3       441.1             441.1
     Operating
     income (loss)   30.8     0.6      31.4        39.8     2.0      41.8
     (2)
     Operating       7.4%              7.6%        9.0%              9.5%
     margin
     Media,
     Licensing and
     Advertising
     Revenue         56.2              56.2        58.7              58.7
     Operating       (0.7)             (0.7)       4.7               4.7
     income (loss)
     Operating       -                 -           8.0%              8.0%
     margin
     Overhead        66.9     (11.9)   55.0        60.2     (7.6)    52.6
     expense (3)
     Operating
     income (loss)
     from            $63.1    $43.9    $107.0      $67.9    $13.6    $81.5
     continuing
     operations
     In the three and twelve months ended May 31, 2014, the Company recognized a
     pretax charge of $18.0 related to Storia operating system-specific apps that
     will no longer be supported due to the planned transition to a Storia
 (1) streaming model. In the twelve months ended May 31, 2014, the Company
     recognized a pretax goodwill impairment charge of $13.4 in the Children's
     Book Publishing and Distribution segment. In the three and twelve months
     ended May 31, 2013, the Company recorded a pretax charge of $4.0 related to
     asset impairments.
     In the twelve months ended May 31, 2014, the Company recognized a pretax
     severance charge in its International segment of $0.6 related to cost
 (2) savings initiatives. In the three and twelve months ended May 31, 2013, the
     Company recorded a pretax severance charge of $2.0 related to the Company's
     cost savings initiatives.
     In the three and twelve months ended May 31, 2014, the Company recognized a
     pretax non-cash settlement charge of $1.7 in respect to certain lump sum
     benefits paid from the Company's defined benefit pension plan. In the three
     and twelve months ended May 31, 2014, the Company recognized pretax
 (3) severance charges of $1.6 and $10.2, respectively, in Corporate Overhead
     related to the Company's cost savings initiatives. In the three and twelve
     months ended May 31, 2013, the Company recognized pretax severance charges
     of $4.6 and $7.6, respectively, in Corporate Overhead related to such cost
     savings initiatives.



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SOURCE Scholastic Corporation

Website: http://www.investor.scholastic.com
Contact: Scholastic Corporation: Investors, Gil Dickoff, (212) 343-6741,
investor_relations@scholastic.com or Media, Kyle Good, (212) 343-4563,
kgood@scholastic.com
 
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