New York — April 1, 2010 —Scholastic Corporation (NASDAQ: SCHL) today reported results for the third quarter ended February 28, 2010, and revised its guidance, reflecting stronger earnings and free cash flow growth to date in fiscal 2010. For the quarter, revenue from continuing operations was $398.8 million compared to $423.6 million in the prior year period, primarily reflecting strong Harry Potter-related sales in the prior year. The third quarter is Scholastic’s second smallest revenue quarter, when it usually generates a net loss.

The Company's loss per share from continuing operations was $0.12 in the quarter compared to a loss of $0.93 a year ago. Before one-time, mostly non-cash expenses of $0.08 and $0.83 per share, which are not included in the Company’s guidance, the loss per share from continuing operations was $0.04 versus $0.10 in the current and prior year periods, respectively. Including results from discontinued operations, the Company reported a consolidated loss per share of $0.15 in the quarter compared to a loss of $0.98 in the prior year period.

Free cash flow (as defined) in the third quarter was strong at $73.3 million, holding approximately level with the prior year period, and net debt (as defined) at quarter end decreased to $26.4 million from $279.1 million a year ago.

"Excellent performance by Scholastic Education in the third quarter, coupled with the Company's disciplined approach to costs and the balance sheet, sustained our strong earnings and free cash flow growth. Based on these results and a solid outlook for the fourth quarter, we have narrowed our earnings guidance toward the top end of the range, and increased our outlook for free cash flow," commented Richard Robinson, Chairman, President and Chief Executive Officer. "Successful execution and increased federal stimulus funding drove more than 30% growth in sales of educational technology, including READ 180® and related services. Though revenue in the Children's Book segment declined relative to a challenging prior year comparison, we saw higher revenue per fair in School Book Fairs, and increased engagement among parents as we expand testing of Book Clubs’ new online ordering platform."

Scholastic revised its outlook for fiscal 2010 earnings per diluted share from continuing operations to the range of $2.00 to $2.30, before the impact of any one-time items associated with cost reductions or non-cash, non-operating items. Free cash flow is now forecast to exceed $120 million, the top end of the Company's previous guidance.

Third Quarter Results

Children's Book Publishing and Distribution. Segment revenue in the quarter was $192.1 million compared to $228.7 million in the prior year period. This primarily reflected a $22.2 million decline in Trade sales relative to a year ago, when the Company published J.K. Rowling's The Tales of Beedle the Bard. Excluding Harry Potter-related titles, Trade sales increased over the prior year, driven by continued strong sales of The 39 Clues® series as well as The Hunger Games and Catching Fire, the New York Times bestsellers by Suzanne Collins. In School Book Clubs, revenue declined 14%, reflecting the continued impact of lower sponsor numbers, initially seen in the fall, as teacher reassignments in the current school year impacted customer acquisition. In School Book Fairs, revenue declined slightly, as some schools delayed fairs into the fourth quarter because of winter weather, which also impacted Clubs. This was partially offset by a 2% rise in revenue per fair, driven by strong traffic at fair events. Segment operating income was $6.9 million in the quarter compared to $15.1 million a year ago, reflecting lower revenue.

Educational Publishing. Segment revenue in the quarter was $88.0 million, increasing significantly from $74.7 million in the prior year period. Educational technology sales rose more than 30%, on strong sales of READ 180, System 44® and related services. Sales in Scholastic’s classroom and library group held approximately level in a continued challenging market for supplemental materials. Segment operating income increased to $8.3 million from $0.9 million a year ago, as a result of the higher margin sales of educational technology, as well as cost savings in the classroom and library group.

International. Segment revenue in the quarter was $88.7 million compared to $87.3 million in the prior year period, primarily reflecting a positive foreign exchange impact of $11.5 million, partially offset by lower results in Canada. The segment operating loss for the quarter was $0.2 million, including one-time expenses associated with restructuring in the UK of $2.4 million ($0.05 per share). This compared to a loss of $13.7 million a year ago, which included a non-cash UK impairment charge of $17.0 million ($0.46 per share).

Media, Licensing and Advertising. Segment revenue in the quarter was $30.0 million compared to $32.9 million in the prior year period. The segment operating loss for the quarter was $1.5 million compared to a loss of $1.1 million a year ago. Lower year over year results reflect strong, high margin licensing and programming sales in the prior year period, partially offset by improved results in the interactive products business in the current period.

Other Financial Results

Corporate overhead in the quarter was $14.3 million compared to $23.5 million in the prior year period, primarily reflecting reductions in salary and overhead expenses in the current period, as well as $5.8 million in one-time severance a year ago. Stock-based compensation expense was $2.7 million ($0.04 per share) in the quarter compared to $2.6 million ($0.04 per share) in the prior year period. Also in the quarter, the Company recorded a non-cash loss on a minority investment of $1.5 million ($0.02 per share), which was not included in guidance.

Significantly stronger free cash flow year-to-date, driven by higher cash net income and working capital improvements, particularly in inventories, resulted in cash and cash equivalents at quarter end of $238.9 million compared to $36.2 million a year earlier. Total debt was $265.3 million, down from $315.3 million a year ago, reflecting principal payments of the Company’s amortizing term loan and repurchases of public debt. As a result, net debt at quarter end decreased to $26.4 million from $279.1 million a year ago.

As previously announced, the Company’s Board of Directors declared a quarterly cash dividend of $0.075 per share on the Company’s Class A and Common Stock for the fourth quarter of fiscal 2010. The dividend is payable on June 15, 2010 to shareholders of record as of the close of business on April 30, 2010.

As of today the Company has acquired approximately 128,000 shares of its outstanding common stock for $3.7 million under its previously announced $20 million share repurchase program. The Company currently has remaining authorization to repurchase up to $16.3 million of its common stock, from time to time as conditions allow, on the open market or in negotiated private transactions.

Year-to-Date Results

For the first nine months of fiscal 2010, revenue from continuing operations was $1,374.5 million compared to $1,353.3 million in the prior year period, primarily reflecting strong sales of educational technology, partially offset by a decline in revenue in the Children’s Book segment.

Earnings per diluted share from continuing operations in this period were $0.75 compared to a loss per share of $0.50 a year ago. Before one-time, mostly non-cash expenses of $0.83 and $0.98 per share, which are not included in the Company’s guidance, earnings per diluted share from continuing operations were $1.58 versus $0.48 in the current and prior year-to-date periods, respectively, reflecting strong education results as well as the benefit of the Company’s cost-savings plan.

Including continuing and discontinued operations, the Company reported consolidated earnings per diluted share of $0.73 in the current year, compared to a net loss per share of $1.12 a year ago.

Conference Call

The Company will hold a conference call to discuss its results at 8:30 am ET today, April 1, 2010. Richard Robinson, Scholastic's Chairman, President and CEO, and Maureen O'Connell, Executive Vice President, CAO and CFO, will moderate the call.

The conference call and accompanying slides will be webcast and accessible at investor.scholastic.com, the Investor Relations section of Scholastic’s website. Participation by telephone will be available by dialing 877-654-5161 from within the U.S. or +1 678-894-3064 internationally. Following the call, slides from the conference call will also be posted at investor.scholastic.com.

An audio only replay of the call will be available toll-free at 800-642-1687 or, for international calls at +1 706-645-9291 and by entering access code 60587907. The recording will be available through Friday, May 14, 2010.

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 children’s media. Scholastic creates quality educational and entertaining materials and products for use in school and at home, including children's books, magazines, technology-based products, teacher materials, television programming, film, videos and toys. The Company distributes its products and services through a variety of channels, including proprietary school-based book clubs and school-based book fairs, retail stores, schools, libraries, television networks and the Company’s Internet Site, 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.

Contact:

Scholastic Corporation

Investors:
Jeffrey Mathews
jmathews@scholastic.com
212-343-6741

Media: Kyle Good
kgood@scholastic.com
212-343-4563