Scholastic Corporation (together with its subsidiaries, "Scholastic" or the "Company") is a global children's publishing and media company producing and distributing material for children, teachers and parents. Scholastic is among the leading publishers and distributors of children's books, classroom and professional magazines and other educational materials, with operations in the United States, the United Kingdom, Canada, Australia, New Zealand, Mexico, Hong Kong and India. Scholastic distributes most of its products directly to children and teachers in elementary and secondary schools. During its seventy-eight years of serving schools, Scholastic has developed strong name recognition associated with quality and dedication to learning, has achieved a leading market position in the school-based distribution of children's books and magazines and has developed the leading internet-based subscription service for schools. The Company has also used its proven system to develop successful children's books and then build these brands into multimedia assets.

The Company's domestic book publishing business consists primarily of the publication and distribution of children's books in paperback editions through school book clubs, school book fairs, retail stores and classroom and library sales. The Company believes that it operates the largest school book club program and the largest school book fair business in the United States. In fiscal 1998, Scholastic sold in excess of 250 million children's books in the United States. The Company's sales of core and supplemental instructional materials are also included in domestic book publishing.

Scholastic's domestic magazine publishing business consists primarily of the publication of classroom magazines distributed to children in school and professional magazines directed to teachers and other education professionals. In fiscal 1998, the United States circulation of the Company's classroom magazines was 7.5 million.

The Company's domestic operations also include the production and distribution of educational computer software, the production and distribution of children's video and television programming and the merchandising and licensing of successful branded properties.

The Company's international business consists of seven operating subsidiaries, four of which publish and distribute children's books, magazines, supplementary text products and educational software and three of which primarily distribute through schools children's books published by Scholastic as well as other publishers. For the year ended May 31, 1998, approximately 90% of the Company's international revenues were derived from the sale of children's books. The Company believes that it operates the largest school book club program and the largest school book fair business in the United Kingdom, Canada, Australia and New Zealand.

Most of the Company's revenues are generated by targeted direct mail programs to schools and by telephone sales representatives. Additionally, the Company has a sales force of full-time and part-time representatives calling on schools to sell its core curriculum materials, supplementary texts, educational software, magazines and library book programs. For trade distribution, the Company has a retail sales force calling on bookstores and other retail outlets that include the sale of children's books.

The Company's Education Group manages the development and distribution of substantially all Scholastic's school material designed for curriculum use and paid for with school funds. The Education Group encompasses the Company's core and supplemental publishing, classroom and professional magazines, early childhood and professional books, as well as the Company's sales of supplementary materials to classrooms and libraries. The Education Group also manages the development and distribution of educational software and the Scholastic NetworkTM, the Company's Internet-based subscription service for schools.