SCHOLASTIC REVISES SECOND HALF FISCAL 2003 OUTLOOK


Will Hold Conference Call Tomorrow at 8:30 AM

New York, NY (February 10, 2003) --  Scholastic Corporation (NMS: SCHL) today announced that it has reduced its earnings outlook for the second half of its fiscal year ending May 31, 2003 due to lower than expected revenue in January, principally in Trade and School Book Clubs, as well as a possible fourth quarter impact of heightened budgetary pressures affecting school spending and an increasingly uncertain economic and geopolitical environment.
 
For the third fiscal quarter ending February 28, 2003, Scholastic now expects approximately break-even results, including a previously disclosed $0.04 per diluted share gain from the sale of an interest in the French publisher Gallimard.  The third quarter is seasonally the Company's second smallest revenue and profit period.  For the fiscal year ending May 31, 2003, the Company now expects earnings per diluted share in the range of $1.85 to $2.15 and revenue growth in the range of 3-5% compared to Fiscal 2002. 
 
During January, Trade reorders of previously released titles were substantially below expectations following a poor holiday season for booksellers.  Trade book returns were at anticipated levels.  School Book Clubs were affected primarily by weakness in some of the Company's core offerings. 
 
"January's results were very disappointing, and we are taking corrective actions," said Richard Robinson, Chairman, President, and CEO.  "We are further reducing costs and exercising tight control over headcount, as well as discretionary spending.  In Trade, in addition to this spring's new releases, we have intensified our marketing of backlist titles.  In School Book Clubs, we are adding special offers and marketing more aggressively online.  In Education, we are working with schools to support classroom and library book sales.  Despite these actions, our revised earnings range reflects the possible fourth quarter impact of budgetary pressures on school spending, particularly books for classrooms and libraries, and the effects of the uncertain environment on consumer book purchases."
 
"Looking ahead, we remain optimistic about Scholastic's prospects for Fiscal 2004 and beyond," Mr. Robinson said.  "We are confident in our ability to revitalize School Book Clubs, and believe that Harry Potter and The Order of The Phoenix, to be released on June 21, will be a major revenue and profit contributor in Trade.  We have a strong base in Education, led by READ 180( and other products that improve reading scores.  And we expect to expand our Fiscal 2004 cost reduction program beyond this year's effort, which is on track to save at least $35 million."
 
Conference Call
 
Scholastic will discuss the subject of this news release in a conference call on Tuesday, February 11, 2003 at 8:30 AM Eastern.  To participate, call 877-234-1973.  A replay will be available after 11 AM on February 11th and until February 25th by calling 877-519-4471 (use the PIN Number 374-1742).  Starting February 12th at 9:00 AM, a replay will be available at the Investor Relations section at www.scholastic.com.
 
About Scholastic
 
Scholastic is the world's largest publisher and distributor of children's books.  Scholastic creates quality educational and entertaining materials and products for use in school and at home, including children's books, textbooks, magazines, technology-based products, teacher materials, television programming, videos and toys.  The Company distributes its products and services through a variety of channels, including: proprietary school-based book clubs, school-based book fairs, and direct-to-home continuity programs; retail stores, schools, libraries, and television networks; and the Company's www.scholastic.com Internet site.
 
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.

Contacts:
Judy Corman
(212) 343-6833
 
Ray Marchuk
(212) 343-6741