In this photo provided by Scholastic, 5-year-old Matthew Elam touches Snow Bear, a soft-to-touch book, as New York first lady Libby Pataki reads to students at Uriah Hill Early Childhood Center in Peekskill, N.Y., as part of Scholastic Read For 2006 Click photo for larger image.

Mention the name "Scholastic," and many adults conjure up fond memories of paperback book clubs and colorful classroom magazines.

While those still comprise a core business of Scholastic, which is celebrating its 85th anniversary this year, the New York-based company has added a number of other ventures to its ever-growing portfolio: toys, videos, software and online services.

Established in Wilkinsburg by M.R. Robinson as the publisher of a four-page weekly magazine distributed in 50 high schools, Scholastic today is the world's largest publisher and distributor of children's books.

Consider these super-sized statistics, drawn mostly from Publishers Weekly:

$2.1 billion in total revenue in fiscal 2005;

10,000 employees in 16 countries;

350 million children's books distributed in fiscal 2005;

110,000 Scholastic book fairs held each year, generating $363 million in sales in fiscal 2005;

13 school book clubs, generating $397 million in sales in fiscal 2005;

8.3 million circulation for Scholastic's 33 classroom magazines.

And, of course, there's that boy wizard named Harry Potter, whose magic has helped Scholastic set worldwide publishing records and pushed The New York Times to create a new bestseller's list just for kids' books. The latest book in the series, "Harry Potter and the Half-Blood Prince," sold 6.9 million copies in 24 hours.

While Scholastic has expanded its reach into other areas, it is the book clubs, classroom magazines and, now, its online services that continue to provide the company with a link to kids, parents and teachers.

"Kids are our customers and so we are very directly connected to them. That's the secret of our success," said Richard Robinson, Scholastic's chairman, president and chief executive officer, and the son of company founder M.R. Robinson.

Anita Silvey, who was children's book publisher at Houghton Mifflin for a number of years, believes that Scholastic's book fairs and book clubs give the company an unparalleled advantage over other publishers.

"They go into the schools where children are and get books into their hands and into their homes. In many cases, that is something that most publishers only dream about," said Ms. Silvey, author of "100 Best Books For Children."

But its school book clubs are one of several segments of Scholastic where a decline in sales led to a disappointing fiscal 2005 second quarter, which ended Nov. 30. Sales declined 3 percent during the second quarter in school book clubs and plummeted by 19 percent in direct-to-home book clubs.

As a result, Mr. Robinson said the company would make changes, including trimming costs. Scholastic officials also pointed out that part of the company's business is seasonal. Teachers -- some of the company's biggest customers -- do much of their purchasing in the first quarter before school starts.

"The second quarter was obviously a setback," said Jim Milliot, who covers Scholastic and other publishing companies for Publishers Weekly. "But they seem to be headed overall in the right direction in terms of getting their costs in line."

Scholastic spokeswoman Kyle Good noted that the school book clubs "are still a huge business for Scholastic, and an important one, too."

After years of distributing books by other publishers, meanwhile, Scholastic has become a major publisher in its own right. "The Babysitters' Club," "Goosebumps" and "Animorphs" are just a few of Scholastic's best-selling paperback series.

But the company's hallmark is the "Harry Potter" series by J.K. Rowling. Despite the success, publishing experts note that Scholastic can't pin all its financial hopes on the boy wizard, as Ms. Rowling has said that the next book, the seventh in the series, will be the last.

"Sales go up $200 million [when a Harry Potter book is published], but then they go down the next year," Mr. Milliot added. "They're [Scholastic] trying to lessen their dependence on Potter. ... It's great when it comes, but they don't proclaim it like they used to."

The educational focus that sparked the initial creation of Scholastic decades ago continues to fuel the company's success.

Last year, the company posted a 40 percent increase in revenues from its educational technology products, which include a reading skills program called READ 180 and an early childhood program starring Clifford the Big Red Dog.

In recent years, Scholastic has revved up its online presence -- www.scholastic.com -- as a way to diversify and to keep its connection strong with teachers, kids and parents. The Web site offers lesson plans and professional development materials for teachers, online activities for students and educational tips for parents.

Of course, the Web site also offers Scholastic a way to sell its merchandise; the e-commerce segment generates more than $200 million in annual revenues, according to company officials.

"Our usage [of the Web site] by teachers ... has gone up by 40 percent this fall, and it was big to begin with," Mr. Robinson said. "I think people are using the Internet for almost everything now. Fortunately for us we have been in this interactive teacher field for 14 years."

Even some of the school book club business is moving online, as 50 percent of all orders are done by teachers online, Ms. Good said.

Still, there has been some grumbling from parents over the types of merchandise offered online, which includes things like video game software and merchandise tied to TV and movie characters.

In a 2000 article for Salon.com, author and parent Shoshana Marchand complained about Scholastic's "in-school product shilling," adding that "you have to look pretty hard for the good stuff. And it can look pretty drab to kids when it is displayed next to merchandising trinkets."

Some of those "trinkets" are related to Scholastic's television programming and feature films. Shows created by the company's entertainment division include "Clifford The Big Red Dog," "The Magic School Bus" and "Maya and Miguel." These and other shows are viewed in 88 countries and 36 languages, Scholastic officials said.

Mr. Robinson said the company is trying to stay relevant in a changing world.

"The challenge is how to keep books fresh and exciting in a world where kids are using so many electronics," Mr. Robinson.