In last week's Foolish Forecast, I laid out the criteria that would make a successful quarterly report for educational publisher Scholastic (NASDAQ:SCHL): "With sales expected to rise, we'd like to see Robinson's promised operating efficiencies kick in and contribute a slower-than-sales increase. We'd also like to see progress on inventories, and watch those hoped-for sales begin to pull some books off the shelves and put them in the hands of paying customers."

The A's
Early Tuesday morning, Scholastic delivered on all of the above. The firm not only grew its revenues -- it grew them twice as fast as Wall Street had predicted, with sales rising nearly 6% to $735.5 million for the fiscal second quarter. But that alone wouldn't have sufficed to kick profits up 11% to $1.75 per share, as Scholastic did. To accomplish that feat, the firm kept its operating costs under tight control, allowing them to rise less than 5%, and enabling operating margins to expand 70 basis points to 17.2%. Finally, while inventories did not decline, they did at least grow less quickly than sales, and were up less than 5% year over year by quarter-end. (See our Fool by Numbers for a complete breakdown.)

By segment, the firm got its biggest objective boost from improvements in its biggest business -- children's book publishing -- where revenue growth of 4% year over year translated into a 12% boost in operating profits. Relatively, though, the star of the quarter was Scholastic's second-largest business segment: international. There, a weak dollar helped drive sales 14% higher year over year, and operating profits up 55%.

And now, the F's
Segment-wise, where Scholastic underperformed during the quarter was in educational publishing. There, decreased school spending on paperbacks, library materials, and classroom magazines helped produce a 2% decline in sales. The "paperbacks" part of this segment appears to be higher-margin than the others, though, because Scholastic singled paperbacks out for special blame in the segment's outsized 21% decline in operating profits.

Finally, you may recall that six months ago, CEO Richard Robinson promised to reduce "overhead spending by $40 million annually by fiscal 2008" as part of his cost-cutting program. In our September Foolish Forecast on the company, I suggested this might take a while to accomplish. Well, it is. According to Scholastic's report, overhead spending actually increased 25% last quarter, up $3.9 million year over year. That canceled out the improved overhead picture of Q1, and has Scholastic's overhead now running $2 million higher in this year's first half than in last year's.

What did we expect to see out of Scholastic last quarter, and what did it produce? Find out in:

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Fool contributor Rich Smithdoes not own shares of any company named above.