EXHIBIT 99.3
CONTACTS:
Media: Judy Corman (212) 343-6833
Investors: Ray Marchuk (212) 343-6741
SCHOLASTIC WILL NOT UPDATE LITERACY PLACE BASAL TEXTBOOKS, RESULTING IN A
$65-$70 MILLION FOURTH QUARTER FISCAL 2001 CHARGE
WILL FOCUS EDUCATIONAL PUBLISHING EFFORTS ON FAST-GROWING READING IMPROVEMENT
MARKET WHILE CONTINUING TO SUPPORT LITERACY PLACE CUSTOMERS
NEW YORK, NY, APRIL 17, 2001 - Scholastic Corporation (NMS: SCHL) announced
today that it has decided not to update SCHOLASTIC LITERACY PLACE(R), its
basal textbook reading program, for any future state adoptions and to focus its
educational publishing efforts on reading improvement programs. Scholastic will
continue to support LITERACY PLACE customers with professional development,
materials and service, and will utilize selected LITERACY PLACE content in other
programs.
The decision will result in an estimated one-time, predominantly non-cash
pre-tax charge of approximately $65-70 million ($1.05-$1.15 per share after tax)
in the fourth quarter ending May 31, 2001 to cover LITERACY PLACE capitalized
prepublication costs, inventory and severance for the elimination of
approximately l00 editorial and support positions (approximately 1% of the
Company's workforce). There will be no significant reduction in the school sales
force, a key asset in marketing educational products and supporting customers.
LITERACY PLACE is expected to account for less than 2% of Scholastic's total
revenue in the current fiscal year ending May 31, 2001.
Going forward, Scholastic will focus its educational publishing efforts on its
fast-growing research-based reading improvement instructional materials
consisting of intervention, technology, phonics, early childhood, extended
learning and summer school programs, which help students overcome reading
problems and achieve higher test scores. Launched in 1999, Scholastic's reading
improvement programs cost less to produce and have rapidly grown into a
profitable, $50 million business, with market leadership positions for READ
180(TM), SCHOLASTIC READ XL(TM) and WIGGLEWORKS(R), and the introduction of its
effective SCHOLASTIC PHONICS READING(TM), SCHOLASTIC READING COUNTS(TM) and
BUILDING LANGUAGE FOR LITERACY(TM) programs.
"We are committed to teaching children how to read and we intend to maintain a
significant presence in reading curriculum," said Richard Robinson, Chairman,
President and CEO. "Because the textbook market has changed, our resources will
be better applied to our reading improvement programs focused on helping the
more than 8 million children who are reading below grade level. We can have more
impact by helping children at risk with innovative products such as READ 180 --
where we have already established our expertise -- than by continuing to produce
basal textbooks.
"LITERACY PLACE was published to critical acclaim," said Mr. Robinson "and has
had sales of more than $250 million since its debut in 1995. While LITERACY
PLACE is an outstanding product, it has not met our long-term financial goals
and would not have done so in an acceptable time frame. Basal textbook reading
programs are expensive to develop and highly dependent on statewide adoptions
and have become increasingly competitive.
"This was a difficult strategic decision," Mr. Robinson continued, "but we are
committed to taking the necessary steps to further strengthen our financial
performance for Scholastic's shareholders. We believe that we can be more
profitable and make a greater contribution to reading instruction through our
reading improvement products."
Scholastic reaffirmed its Fiscal 2002 (June 1, 2001-May 31, 2002) earnings
outlook, noting that today's decision will reduce revenue and be earnings
neutral in Fiscal 2002, but will improve Fiscal 2002 cash flow (due to lower
prepublication spending and inventory requirements), reduce risk, and give
Scholastic greater financial flexibility to achieve its margin improvement
goals. Today's decision is expected to have a favorable impact on earnings and
margins in Fiscal 2003 and beyond.
Scholastic will continue to have a significant long-term educational presence in
schools with supplementary materials such as classroom magazines, paperback
libraries, and professional books for teachers, Grolier nonfiction children's
books for libraries, as well as core curriculum reading improvement products.
Key Scholastic reading improvement programs targeted at children who are reading
at or below grade level include:
o READ 180 -- A technology-based program for non-reading students in middle
school. It is currently being used by one or more schools in the top 70% of
urban school districts in the US.
o READ XL -- A textbook program for below grade readers in middle school.
o WIGGLEWORKS -- A beginning reading program in CD-ROM format for K-1.
o BUILDING LANGUAGE FOR LITERACY -- A Pre-K and kindergarten reading program
based on the works of authors Catherine Snow of Harvard and Susan Neuman of
the University of Michigan.
o SCHOLASTIC PHONICS READING PROGRAM - A beginning phonics instruction program
for K-1.
o SCHOLASTIC READING COUNTS(TM) - A reading motivation and management program
for K-12.
The Company expects to discuss this announcement in a conference call at 9:00
a.m. (Eastern time) today, April 17, 2001. To participate, call 1-800-621-7762
with the password "SCHOLASTIC." The meeting leader is Richard Robinson. An audio
replay of the call will also be available from 9:00 a.m. to 5:00 p.m. (Eastern
time) April 17, 2001 to April 24, 2001 by calling 1-888-566-0418.
Scholastic (NMS: SCHL) is the world's largest publisher and distributor of
children's books. A global children's publishing and media company serving the
needs of parents, teachers, and children, Scholastic provides proprietary book
and software distribution through school book clubs, school book fairs and to
classrooms, as well as through the retail trade. Since 1920, Scholastic has
created quality educational materials for schools and has expanded its reach to
include the distribution of books, software, toys, online learning services and
television programming directly to the home. Scholastic recently acquired
Grolier, the leading print and online publisher of children's reference
materials and the leader in children's direct-to-home book clubs.
Internationally, Scholastic operates wholly owned companies in Argentina,
Australia, Canada, Hong Kong, India, Indonesia, Malaysia, Mexico, New Zealand,
the Philippines, Singapore, Taiwan, Thailand and the United Kingdom. The U.S.
Scholastic web site HTTP://WWW.SCHOLASTIC.COM is a leading provider of
educational services online for parents, teachers and children.
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FORWARD-LOOKING STATEMENTS: This news release contains certain forward-looking
statements. Such forward looking statements, which are subject to various risks
and uncertainties including the conditions of the children's book and
instructional material markets and acceptance of the Company's product 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.
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