Scholastic Corporation (NASDAQ:SCHL) is a global children's publishing, education and media company. The company publishes and distributes books and educational and entertainment digital content and distributes them through proprietary channels, as well as directly to schools and libraries, through retail stores and the internet. The Company’s website, scholastic.com, is a leading site for teachers, classrooms and parents and an award-winning destination for children 
In 2009, the company received a revenue of $1.29 billion and a net income of $56.1 million, consistent with the industry's average. In recent years, there has been a shift from books to ebooks and other digital content. Since nearly half of the company's revenue comes from print publishing, the company needs to work to adapt to the changing trends if it does not wish to suffer a loss. On the other hand, the Government's support for education and the monetary stimulus in the budget increases demand for Scholastic's educational products and consequently revenue.
Established in 1920, Scholastic creates quality educational and entertainment materials and products for use in school and at home, including magazines, children’s reference and non-fiction materials, teacher materials, television programming, film, videos and toys. The Company’s Website, scholastic.com, is a site for teachers, classrooms and parents and destination for children. In addition to its operations in the United States, Scholastic has operations in Canada, the United Kingdom, Australia, New Zealand and parts of Asia, with operations in China, India and Ireland, and, through its export business, sells products in over 140 countries. The Company operates in four segments: Children’s Book Publishing and Distribution; Educational Publishing; Media, Licensing and Advertising (which collectively represent the Company’s domestic operations), and International. 
Scholastic Corporation operates in four big segments - Children’s Book Publishing and Distribution; Educational Publishing; Media, Licensing and Advertising and International.
The Children's book publishing and distribution segment operates as an integrated business. It publishes and distributes children's books in the United States through book clubs and book fairs based in school and the trade channel. This segment published or distributed approximately 280 million children's books in the United States and garnered a revenue of $910.9 million in 2009. The company follows three main channels of sale in this segment : Children's Book Clubs, Book Fairs and Trade. 
The Educational Publishing segment of the company produces, publishes and distributes educational technology products, curriculum materials, children's books, classrooms magazines and print and on-line reference and non-fiction products for pre-K to grade 12 in the US. The company also sells teaching resources to teachers and schools. The revenue from this segment of operations totalled $476.5 million in 2009. 
The Media, Licensing and Advertising segment produces and distributes media, consumer promotions and merchandising and advertising revenue, including sponsorship programmes. Scholastic has also build a library of half-an-hour television productions. Scholastic Media also creates and develops award-winning global branding campaigns for Scholastic properties. This segment produced a revenue of $113.2 million. 
The international segment included the publication and distribution of products and servies outside the United States. Scholastic has operations in Canada, Australia, New Zealand and parts of Asia, with newer operations in China, India and Ireland. Scholastic's international operations have trade and educational publishing programs; distribute children’s books, software and other materials through school-based book clubs, school-based book fairs and trade channels; distribute magazines; and offer on-line services.This segment garners a revenue of $412 million. 
|In millions of USD||2009||2008||2007|
|Cost of goods sold||859.8||881.7||1,042.3|
|Operating (loss) income||128.4||70.4||213.4|
|Net (loss) income||6.1||(14.3)||(17.2)|
Key Financial Data
In 2009, the revenue was $1,912.9 million, up 3.4% from $1,849.3 million a year ago, reflecting increased revenues in the Educational Publishing segment.  The jump in revenues was largely due to the revenues from sales of digital educational content, further assisted by the government stimulus given to education.
The increase in revenue was mostly due to the higher revenues of $92.3 million from the Educational Publishing segment driven by increased sales of educational technology products and related services. Foreign exchange fluctuations increased the revenue by $27.2 million, mostly because of a weakening U.S. dollar against the Canadian dollar and Australian dollar. 
Cost of Goods Sold (COGS) in 2009 decreased to $859.8 million, or 44.9% of revenues, compared to $881.7 million, or 47.7% of revenues, in the prior fiscal year . This decrease, as a percentage of revenue, is mostly because the sales of educational technology products went up which have a higher margin.
The past decade has seen a decline of print publications. New and cheaper media, like the internet, have led to lower circulation rates and readership of traditional publications like magazines, newspapers and other periodicals. The advent of the ebook and the iPad, Kindle and other ebook readers have played a big role in this shift. Along with this decline, the advertising industry also started moving from print publications to advertising in digital media.
These two forces had a compounded effect on Scholastic's earnings from its Children's Book Publishing and Distribution segment. The revenue from this segment has been consistently declining from $1,187.5 million in 2007 to $ 940.4 million in 2008 to $910.6 million in 2009. One of the largest factors for this decline has been the shift from print publishing to digital media.  On the other hand, if this trend is properly channeled, the Education Publishing segment that produces educational technology can be properly channeled to complement this trend. The company has been working on growing this segment in the past year or so which can be seen by the increase in revenue experienced from $ 407.1 million in 2007 to $476.5 million in 2009. 
In March 2009, the Government announced a stimulus package of $44 billion to promote education. This stimulus is aimed at creating jobs and reforming the education system. This stimulus gives schools a larger budget to spend on books and digital content for the students, hence increasing demand for the same. This is a perfect opportunity for the company to leverage on this increased demand and work on more appropriate content and market it effectively. With increased sales come higher revenue and potential for a lot of growth.
The Company’s products generally comprise intellectual property delivered through a variety of media. The ability to achieve anticipated results depends in part on the Company’s ability to defend its intellectual property against infringement, as well as the breadth of rights obtained. The Company’s operating results could be adversely affected by inadequate legal and technological protections for intellectual property and proprietary rights in some jurisdictions, markets and media, and the Company’s revenues could be constrained by limitations on the rights that the Company is able to secure to exploit its intellectual property in different media and distribution channels. 
All of the company's biggest competitors are in the educational content publishing industry. Mc-Graw Hill, Pearson, People's Education Holdings and John Wiley and Sons.
The educational publishing division of McGraw-Hill Companies publishes educational textbooks and sells them to elementary, high school, public and private universities, professional, international, and adult educations markets. The company has a reputation for reliable publications and is used by educational institutions across the globe. This segment generated $2.4 billion in revenue in 2009 and it has been growing consistently for the past 2 years.
Pearson publishes education, business information and consumer publishing. The company also provides test development, processing and scoring services to educational institutions, corporations and professional bodies around the world. The company received a revenue of $9.082 billion in 2009. In February 2010, the Company acquired Medley Global Advisors LLC. In July 2010, it acquired Wall Street Institute from an affiliate of the The Carlyle Group and Citi Private Equity. In July 2010, Pearson announced that it has completed the sale of its 61% interest in Interactive Data. 
Peoples Educational Holdings, Inc. (PEH), through its wholly owned subsidiary, Peoples Education, Inc. (PE), develops and sells its own education products, which are focused on state-required tests. The Company also distributes other publishers’ products. PEH’s products are organized into three product groups: Test Preparation, Assessment and Instruction, College Preparation and Literacy. The Test Preparation, Assessment and Instruction materials are almost exclusively PEH’s own products, while the College Preparation material products are accompanied by a number of its own titles. The company got a revenue of $34.9 million in 2009.
The Higher Education segment takes part in both online only, text only, and text with online accompaniment publishing and distribution. In addition to this, the Higher Education segment enhanced and re-launched www.wileyplus.com shortly after the end of the 2007 fiscal year, enabling the site to be more accessible to both students and faculty. It maintains publishing, marketing, and distribution centers in the United States, Canada, Europe, Asia, and Australia. The company also acquired Blackwell Publishing as an addition to its publishing business. In 2009, the company's annual revenue was $1.7 billion.
|Amount in USD||Revenue||Net Profit||Market Cap|
|Scholastic||1,912.90 M||58.70 M||935.5 M|
|Peoples Educational Holdings||36.87 M||-1.11 M||4.77 M|
|John Wiley and Sons||22.33 M||28.67 M||1.91 B|
|The McGraw-Hill Company||5,951 M||749.76 M||9.52 B|
|Pearson||8,170 M||599.28 M||13.20 B|