On Tuesday, Dec. 19, children's book publisher Scholastic (NASDAQ:SCHL) released second-quarter 2007 earnings for the period ended Nov. 11, 2006.

  • Weaker results from the educational segments were more than balanced out by stronger sales and operating margins in the international and children's book publishing divisions.
  • Inventory is following Scholastic's normal seasonal pattern, starting with a fat inventory load in Q1 that drops quarter by quarter until the end of the fiscal year -- which coincides with the school year.
  • We could use your opinion! Scholastic is thinly followed by Motley Fool CAPS investors, and every bit of insight helps. Sign in today and make your voice heard.

(Figures in millions, except per-share data)

Income Statement Highlights

Q2 2007

Q2 2006

Change

Sales

$735.5

$696.7

5.6%

Net Profit

$75.1

$66.9

12.3%

EPS

$1.75

$1.58

10.8%

Diluted Shares

42.8

42.4

0.9%



Get back to basics with a look at the income statement.

Margin Checkup

Q2 2007

Q2 2006

Change*

Gross Margin

56.1%

56.7%

(0.6)

Operating Margin

17.2%

16.6%

0.6

Net Margin

10.2%

9.6%

0.6

Return On Average Equity

28.8%

27.7%

1.2

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q2 2007

Q2 2006

Change

Cash + ST Invest.

$133.7

$249.3

(46.4%)

Accounts Rec.

$339.0

$308.3

10%

Inventory

$494.3

$472.3

4.7%



Liabilities

Q2 2007

Q2 2006

Change

Accounts Payable

$145.6

$164.4

(11.4%)

Long-Term Debt

$173.3

$473.5

(63.4%)



Learn the ways of the balance sheet.

Cash Flow Highlights

Q2 2007

Q2 2006

Change

Cash From Ops.

$142.5

$324.7

(56.1%)

Capital Expenditures

$13.1

$15.3

(14.4%)

Free Cash Flow

$129.4

$309.4

(58.2%)

Owner Earnings

$78.0

$68.4

14%



Find out why Fools always follow the money.

Cash Management Checkup

Q2 2007

Q2 2006

Change

Days in Inventory

145.2

111.9

33.27

Days in Receivables

36.0

46.5

(10.48)

Days Payables Outstanding

43.2

39.2

3.98

Cash Conversion Cycle

138.0

119.2

18.81



Read up on cash conversion metrics.

Related Companies:

  • Readers Digest (NYSE:RDA)
  • LeapFrog (NYSE:LF)
  • Answers (NASDAQ:ANSW)
  • Educate (NASDAQ:EEEE)
  • Reed Elsevier (NYSE:ENL)

Related Foolishness:

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At the time of publication, Anders Bylund had no position in any company mentioned. Fool rules are here .