SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: November 19, 1997
SCHOLASTIC CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 0-19860 13-3385513
(State of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
555 Broadway
New York, New York 10012
(Address of principal executive offices) (Zip Code)
(212) 343-6100
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On November 17, 1997 Scholastic received notice of an action commenced on
November 14, 1997 in the United States District Court, Southern District of New
York, by Parachute Press, Inc. ("Parachute"), the licensor of certain
publication and non-publication rights to the "Goosebumps"(R) series, against
Scholastic Inc. and Scholastic Entertainment Inc. (formerly Scholastic
Productions, Inc.) (collectively, "Scholastic"). The action was commenced
following repeated notices from Scholastic to Parachute of material breaches by
Parachute of the agreements under which such rights are licensed. Based on
Parachute's failure to cure these material breaches, Scholastic exercised its
contractual remedies under the agreements. As a result, Scholastic believes that
it has made all payments required under the agreements and is also entitled to
the return of certain amounts previously advanced to Parachute. Scholastic is
continuing to publish the "Goosebumps" books and to exploit its media rights.
In its complaint, Parachute alleges and seeks a declaratory judgment that
Parachute has not breached material terms of the agreements under which the
"Goosebumps" rights were licensed and, accordingly, that Scholastic has
materially breached and anticipatorily repudiated the agreements by withholding
advances and other payments due to Parachute under the agreements. Parachute
also alleges trademark and copyright infringement by Scholastic in publishing
the first book in the "Goosebumps Tripleheader" series, allegedly without a
valid license from Parachute. In addition to the relief requested as part of the
declaratory judgment, including the payment of all advances and other amounts
provided for in the agreements (assuming no material breach by Parachute),
Parachute seeks relief in the form of damages, including profits, in respect of
its infringement and unfair competition claims. Although Parachute also requests
a declaratory judgment that the license of Scholastic to exploit future
"Goosebumps" books has been terminated as a result of Scholastic' s actions,
Parachute indicates in its complaint that it intends to continue to deliver new
"Goosebumps" manuscripts to Scholastic under the agreements.
Goosebumps publishing is expected to account for less than 4% of
Scholastic's revenues in fiscal 1997-1998. Scholastic does not expect that this
dispute will have a material adverse effect on its financial condition.
Scholastic believes that Parachute's claims, outlined above, are without
foundation. Scholastic will vigorously defend the lawsuit and protect its
contractual rights.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SCHOLASTIC CORPORATION
Date: November 19, 1997
By:/s/Kevin J. McEnery
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Name: Kevin J. McEnery
Title: Executive Vice President and
Chief Financial Officer
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