What changed in this filing

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Item 1. Financial Statements

2022-03-18 compared with 2021-12-17 · 221 added, 155 removed, 632 unchanged (37% of the section changed)

3 unchanged sentences

(Dollar amounts in millions, except per share data)

Three months ended Six months ended

November 30, November 30,

Three months ended Nine months ended

February 28, February 28,

2022 2021 2022 2021

4 unchanged sentences

Depreciation and amortization 13.6 14.7 43.0 46.0

Asset impairments and write downs — 10.9 — 10.9

Total operating costs and expenses 364.0 301.7 1,096.6 931.3

15 unchanged sentences

(Dollar amounts in millions)

Three months ended Six months ended

November 30, November 30,

Three months ended Nine months ended

February 28, February 28,

2022 2021 2022 2021

11 unchanged sentences

(Dollar amounts in millions, except per share data)

November 30, 2021 May 31, 2021 November 30, 2020

February 28, 2022 May 31, 2021 February 28, 2021

(unaudited) (audited) (unaudited)

85 unchanged sentences

Balance at November 30, 2020 1.7 $ 0.0 32.6 $ 0.4 $ 624.3 $ ( 41.7 ) $ 933.1 $ ( 329.7 ) $ 1,186.4 $ 1.5 $ 1,187.9

Net Income (loss) — — — — — — ( 13.9 ) — ( 13.9 ) ( 0.1 ) ( 14.0 )

Foreign currency translation adjustment — — — — — 6.3 — — 6.3 — 6.3

Pension and post-retirement adjustments (net of tax of $ 0.1 )

— — — — — 0.0 — — — — —

Stock-based compensation — — — — 1.5 — — — 1.5 — 1.5

Treasury stock issued pursuant to equity-based plans — — 0.1 — ( 0.4 ) — — 0.8 0.4 — 0.4

Dividends ($ 0.15 per share)

— — — — — — ( 5.3 ) — ( 5.3 ) — ( 5.3 )

Balance at February 29, 2021 1.7 $ 0.0 32.7 $ 0.4 $ 625.4 $ ( 35.4 ) $ 913.9 $ ( 328.9 ) $ 1,175.4 $ 1.4 $ 1,176.8

See accompanying notes

31 unchanged sentences

Balance at November 30, 2021 1.7 $ 0.0 32.9 $ 0.4 $ 625.1 $ ( 44.3 ) $ 950.1 $ ( 322.5 ) $ 1,208.8 $ 1.2 $ 1,210.0

Net Income (loss) — — — — — ( 15.3 ) — ( 15.3 ) 0.2 ( 15.1 )

Foreign currency translation adjustment — — — — — 1.6 — — 1.6 — 1.6

Pension and post-retirement adjustments (net of tax of $ 0.0 )

— — — — — 0.0 — — 0.0 — 0.0

Stock-based compensation — — — — 1.6 — — — 1.6 — 1.6

Proceeds pursuant to stock-based compensation plans — — — — 7.3 — — — 7.3 — 7.3

Purchases of treasury stock at cost — — ( 0.4 ) — — — — ( 15.4 ) ( 15.4 ) — ( 15.4 )

Treasury stock issued pursuant to equity-based plans — — 0.3 — ( 7.1 ) — — 7.6 0.5 — 0.5

Dividends ($ 0.15 per share)

— — — — — — ( 5.3 ) — ( 5.3 ) — ( 5.3 )

Other (noncontrolling interest) — — — — — — — — — 0.1 0.1

Balance at February 28, 2022 1.7 $ 0.0 32.8 $ 0.4 $ 626.9 $ ( 42.7 ) $ 929.5 $ ( 330.3 ) $ 1,183.8 $ 1.5 $ 1,185.3

See accompanying notes

2 unchanged sentences

(Dollar amounts in millions)

Six months ended

November 30, November 30,

Nine months ended

February 28, February 28,

Cash flows - operating activities:

10 unchanged sentences

Income from equity-method investments ( 1.6 ) ( 6.1 )

Non cash write off related to asset impairments and write downs — 10.9

(Gain) loss on sale of assets ( 6.2 ) ( 10.4 )

9 unchanged sentences

Deferred revenue 78.4 3.6

Other accrued expenses ( 19.4 ) 6.1

Other, net ( 15.7 ) 8.3

13 unchanged sentences

Payment of dividends ( 15.5 ) ( 15.4 )

Other ( 0.1 ) 0.1

Net cash provided by (used in) financing activities ( 202.9 ) ( 46.2 )

31 unchanged sentences

Trade sales can vary throughout the year due to varying release dates of published titles.

Presently, there remain uncertainties concerning the timing of and any patterns which may emerge with respect to school instruction, whether in-school, remote or hybrid for the school year, and the nature and continuing magnitude of the negative impact of COVID-19 into and beyond the third quarter of fiscal 2022.

Use of estimates

23 unchanged sentences

The net proceeds from the sale were $ 10.4 and the Company recognized a gain on sale of $ 6.2 .

This amount is included within Gain (loss) on sale of assets and other within the Company's Condensed Consolidated Statements of Operations.

During the third quarter of fiscal 2021, the Company sold the UK distribution center located in Southam.

The long-lived assets related to the Southam facility, which consisted of land, building and building improvements, were included in the International segment.

The assets had a carrying value of $ 1.3 and were classified as held for sale as of the fiscal year ended May 31, 2020.

The net proceeds from the sale were $ 5.1 and the Company recognized a gain on sale of $ 3.8 .

During the first quarter of fiscal 2021, the Company-owned facility located in Danbury, Connecticut was sold and the Company relocated the book fairs warehousing and distribution operations conducted in Danbury to a warehouse in Easton, Pennsylvania.

2 unchanged sentences

The net proceeds from the sale were $ 12.3 and the Company recognized a gain on sale of $ 6.6 .

This amount is included within Gain (loss) on sale of assets and other within the Company's Condensed Consolidated Statements of Operations.

The amounts recognized as a gain on sale are included within Gain (loss) on sale of assets and other within the Company's Condensed Consolidated Statements of Operations.

Assets Held For Sale

3 unchanged sentences

These assets are carried at the lower of carrying value or fair value less costs to sell and no additional depreciation is being recognized.

As of November 30, 2021, the carrying amount was $ 2.1 which is included in Property, plant and equipment, net within the Company's Condensed Consolidated Balance Sheets.

As of February 28, 2022, the carrying amount was $ 2.2 which is included in Property, plant and equipment, net within the Company's Condensed Consolidated Balance Sheets.

During the second quarter of fiscal 2022, the Company entered into a purchase and sale agreement for this facility and expects a gain on the sale to be recognized in the fourth quarter of fiscal 2022.

New Accounting Pronouncements

There were no new accounting pronouncements issued in the second quarter of fiscal 2022 which would impact the Company.

There were no new accounting pronouncements issued in the third quarter of fiscal 2022 which would impact the Company.

Refer to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2021 for more information on current applicable authoritative guidance and its impact on the Company's financial statements.

2 unchanged sentences

2019-12 as of the beginning of the first quarter of fiscal 2022 which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes , and clarifies certain aspects of the current guidance to promote consistency among reporting entities.

Most amendments within ASU No.

Most amendments

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

within ASU No.

2019-12 are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.

2 unchanged sentences

2019-12 did not have a material impact on the Company's Condensed Consolidated Financial Statements.

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

Disaggregated Revenue Data

1 unchanged sentence

The following table presents the Company’s segment revenues disaggregated by region and domestic channel:

Three months ended Six months ended

November 30, November 30,

Three months ended Nine months ended

February 28, February 28,

2022 2021 2022 2021

20 unchanged sentences

Estimated Returns

A liability for expected returns of $ 50.7 , $ 45.2 , and $ 54.5 is recorded within Other accrued expenses as of November 30, 2021, May 31, 2021, and November 30, 2020, respectively.

In addition, a return asset of $ 5.0 , $ 3.4 , and $ 3.3 is recorded within Prepaid expenses and other current assets as of November 30, 2021, May 31, 2021, and November 30, 2020, respectively, for the recoverable cost of product estimated to be returned by customers.

A liability for expected returns of $ 48.8 , $ 45.2 , and $ 51.6 is recorded within Other accrued expenses as of February 28, 2022, May 31, 2021, and February 28, 2021, respectively.

In addition, a return asset of $ 4.5 , $ 3.4 , and $ 3.9 is recorded within Prepaid expenses and other current assets as of February 28, 2022, May 31, 2021, and February 28, 2021, respectively, for the recoverable cost of product estimated to be returned by customers.

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

Deferred Revenue

The Company's contract liabilities consist of advance billings and payments received from customers in excess of revenue recognized and revenue allocated to outstanding book fairs incentive credits.

The following table presents further detail regarding the Company's deferred revenue balance as of the dates indicated:

February 28, 2022 May 31, 2021 February 28, 2021

Book fairs incentive credits $ 82.7 $ 59.4 $ 57.9

Magazines+ subscriptions 30.4 4.6 28.4

digital subscriptions 18.2 11.9 13.6

education-related (1)

Media-related 11.6 2.5 0.4

Stored value cards 8.8 2.9 2.2

12.6 11.6 13.0

Total deferred revenue $ 176.8 $ 99.1 $ 121.9

(1) Primarily includes deferred revenue related to contracts with school districts and professional services.

(2) Primarily includes deferred revenue related to various international products and services.

The Company's deferred revenue consists of contract liabilities for advance billings and payments received from customers in excess of revenue recognized and revenue allocated to outstanding book fairs incentive credits.

These liabilities are recorded within Deferred revenue on the Company's Condensed Consolidated Balance Sheets and are classified as short term, as substantially all of the associated performance obligations are expected to be satisfied, and related revenue recognized, within one year.

The Company recognized revenue which was included in the opening deferred revenue balance in the amount of $ 27.9 and $ 24.2 for the three months ended November 30, 2021 and November 30, 2020, respectively, and $ 43.2 and $ 41.1 for the six months ended November 30, 2021 and November 30, 2020, respectively.

The Company recognized revenue which was included in the opening deferred revenue balance in the amount of $ 21.2 and $ 15.5 for the three months ended February 28, 2022 and February 28, 2021, respectively, and $ 64.4 and $ 56.6 for the nine months ended February 28, 2022 and February 28, 2021, respectively.

Allowance for Credit Losses

2 unchanged sentences

The Company reviews new information as it becomes available and makes adjustments to the reserves accordingly.

At the time the Company determines that a receivable balance, or any portion thereof, is deemed to be permanently uncollectible, the balance is then

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

The following table presents the change in the allowance for credit losses, which is included in Accounts Receivable, net on the Condensed Consolidated Balance Sheet:

At the time the Company determines that a receivable balance, or any portion thereof, is deemed to be permanently uncollectible, the balance is then written off.

The following table presents the change in the allowance for credit losses, which is included in Accounts Receivable, net on the Condensed Consolidated Balance Sheets:

Allowance for Credit Losses

6 unchanged sentences

Balance as of November 30, 2021 $ 22.9

Current period provision 2.7

Write-offs and other ( 2.3 )

Balance as of February 28, 2022 $ 23.3

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

SEGMENT INFORMATION

1 unchanged sentence

Children’s Book Publishing and Distribution, Education Solutions and International .

• Children’s Book Publishing and Distribution operates as an integrated business which includes the publication and distribution of children’s books, ebooks, media and interactive products in the United States through its book clubs and book fairs in its school channels and through the trade channel.

• Children’s Book Publishing and Distribution operates as an integrated business which includes the publication and distribution of children’s books, ebooks, media and interactive products primarily in the United States through its book clubs and book fairs in its school channels and through the trade channel.

This segment is comprised of three operating segments.

3 unchanged sentences

This segment is comprised of three operating segments.

The following table sets forth the Company's revenue and operating income (loss) by segment for the fiscal quarters ended November 30, 2021 and November 30, 2020:

Three months ended Six months ended

November 30, November 30,

The following table sets forth the Company's revenue and operating income (loss) by segment for the fiscal quarters ended February 28, 2022 and February 28, 2021:

Three months ended Nine months ended

February 28, February 28,

2022 2021 2022 2021

10 unchanged sentences

(1) Overhead includes all domestic corporate amounts not allocated to segments, including expenses and costs related to the management of corporate assets.

ASSET WRITE DOWN

The Company did not recognize any asset write downs through the end of the third fiscal quarter of fiscal 2022.

During the third quarter of fiscal 2021, the Company committed to a plan to cease use of certain leased office space in New York City and consolidate into the company-owned New York headquarters building.

The right-of-use (ROU) assets and the other long-lived assets associated with these operating leases are included in the Overhead segment.

An impairment expense of $ 8.5 was recognized in the prior period, of which $ 7.0 related to the ROU assets and $ 1.5 related to other long-lived assets, primarily leasehold improvements.

Also during the third quarter of fiscal 2021, the Company committed to a plan to permanently close 12 of the 54 book fairs warehouses in the U.S.

as part of a branch consolidation project.

The ROU assets and the other long-lived assets associated with these warehouse operating leases are included in the Children’s Book Publishing and Distribution segment.

An impairment expense of $ 2.4 was recognized in the prior period, primarily related to the ROU assets.

The impact of the total $ 10.9 impairment was a loss per basic and diluted share of Class A and Common Stock of $ 0.23 in the three and nine month periods ended February 28, 2021.

SCHOLASTIC CORPORATION

2 unchanged sentences

The following table summarizes the carrying value of the Company's debt as of the dates indicated:

November 30, 2021 May 31, 2021 November 30, 2020

February 28, 2022 May 31, 2021 February 28, 2021

US Revolving Credit Agreement $ — $ 175.0 $ 175.0

Unsecured lines of credit 6.8 7.9 8.5

UK Loan 6.8 7.3 11.4

UK Loans 6.9 7.3 7.2

Total debt $ 13.7 $ 190.2 $ 190.7

1 unchanged sentence

Total long-term debt $ — $ 7.3 $ —

The Company's debt obligations as of November 30, 2021 have maturities of one year or less.

The Company's debt obligations as of February 28, 2022 have maturities of one year or less.

US Credit Agreement

13 unchanged sentences

• a Eurodollar Rate equal to the London interbank offered rate (LIBOR), plus an applicable margin ranging from 1.35 % to 1.75 %, as determined by the Company’s prevailing Consolidated Leverage Ratio.

As of November 30, 2021, the applicable margin on Base Rate Advances was 0.35 % and the applicable margin on Eurodollar Advances was 1.35 %, both based on the Company’s prevailing Consolidated Leverage Ratio.

As of February 28, 2022, the applicable margin on Base Rate Advances was 0.35 % and the applicable margin on Eurodollar Advances was 1.35 %, both based on the Company’s prevailing Consolidated Leverage Ratio.

The Credit Agreement provides for payment of a commitment fee in respect of the aggregate unused amount of revolving credit commitments ranging from 0.20 % per annum to 0.30 % per annum based upon the Corporation’s then prevailing Consolidated Leverage Ratio.

As of November 30, 2021, the commitment fee rate was 0.20 %.

As of February 28, 2022, the commitment fee rate was 0.20 %.

A portion of the revolving credit facility, up to a maximum of $ 50.0 , is available for the issuance of letters of credit.

1 unchanged sentence

The Credit Agreement has an accordion feature which permits the Company, provided certain conditions are satisfied, to increase the facility by up to an additional $ 150.0 .

As of November 30, 2021, the Company had no outstanding borrowings under the Credit Agreement.

As of February 28, 2022, the Company had no outstanding borrowings under the Credit Agreement.

During the first and second quarters of fiscal 2022, the Company paid down $ 100.0 and $ 75.0 , respectively, of the remaining borrowings as of the beginning of the fiscal year.

1 unchanged sentence

The Company was in compliance with required covenants for all periods presented.

At November 30, 2021, the Company had open standby letters of credit totaling $ 4.3 issued under certain credit lines, including $ 0.4 under the Credit Agreement and $ 3.9 under the domestic credit lines discussed below.

At February 28, 2022, the Company had open standby letters of credit totaling $ 4.3 issued under certain credit lines, including $ 0.4 under the Credit Agreement and $ 3.9 under the domestic credit lines discussed below.

UK Loan Agreements

On January 24, 2020, Scholastic Limited UK entered into a term loan facility to fund the construction of the new UK facility in Warwickshire.

As of November 30, 2021, the borrowing limit was £ 3.2 .

As of February 28, 2022, the borrowing limit was £ 3.2 .

The loan had an original maturity date of July 31, 2021, which was extended to July 31, 2022 in May 2021.

2 unchanged sentences

The Base Rate is currently equal to 0.50 % per annum and is subject to change.

As of November 30, 2021, the Company had $ 4.2 outstanding on the loan and no remaining available credit under this facility.

As of February 28, 2022, the Company had $ 4.2 outstanding on the loan and no remaining available credit under this facility.

On September 23, 2019, Scholastic Limited UK entered into a term loan agreement to borrow £ 2.0 to fund a land purchase in connection with the construction of the new UK facility in Warwickshire.

3 unchanged sentences

The Base Rate is currently equal to 0.50 % per annum and is subject to change.

As of November 30, 2021, the Company had $ 2.6 outstanding on the loan.

As of February 28, 2022, the Company had $ 2.7 outstanding on the loan.

Lines of Credit

As of November 30, 2021, the Company’s domestic credit lines available under unsecured money market bid rate credit lines totaled $ 10.0 .

There were no outstanding borrowings under these credit lines as of November 30, 2021, May 31, 2021 and November 30, 2020.

As of November 30, 2021, availability under these unsecured money market bid rate credit lines totaled $ 6.1 .

As of February 28, 2022, the Company’s domestic credit lines available under unsecured money market bid rate credit lines totaled $ 10.0 .

There were no outstanding borrowings under these credit lines as of February 28, 2022, May 31, 2021 and February 28, 2021.

As of February 28, 2022, availability under these unsecured money market bid rate credit lines totaled $ 6.1 .

All loans made under these credit lines are at the sole discretion of the lender and at an interest rate and term agreed to at the time each loan is made, but not to exceed 365 days.

These credit lines may be renewed, if requested by the Company, at the option of the lender.

As of November 30, 2021, the Company had various local currency international credit lines totaling $ 34.2 underwritten by banks primarily in the United States, Canada and the United Kingdom.

Outstanding borrowings under these facilities were $ 7.5 at November 30, 2021 at a weighted average interest rate of 4.7 %, $ 7.9 at May 31, 2021 at a weighted average interest rate of 4.7 %, and $ 8.4 at November 30, 2020 at a weighted average interest rate of 4.4 %.

As of November 30, 2021, the amounts available under these facilities totaled $ 26.7 .

As of February 28, 2022, the Company had various local currency international credit lines totaling $ 27.7 underwritten by banks primarily in the United States, Canada and the United Kingdom.

Outstanding borrowings under these facilities were $ 6.8 at February 28, 2022 at a weighted average interest rate of 5.1 %, $ 7.9 at May 31, 2021 at a weighted average interest rate of 4.7 %, and $ 8.5 at February 28, 2021 at a weighted average interest rate of 4.6 %.

As of February 28, 2022, the amounts available under these facilities totaled $ 20.9 .

These credit lines are typically available for overdraft borrowings or loans up to 364 days and may be renewed, if requested by the Company, at the sole option of the lender.

1 unchanged sentence

The COVID-19 pandemic and actions taken, or which may be taken in the future following any changes in restrictions based on the future course of the pandemic, by governments, businesses and individuals to limit the spread of the virus may continue to have an adverse effect on the Company’s results of operations and financial condition.

The Company is not currently aware of any loss contingencies related to the foregoing that would require recognition in the second quarter of fiscal 2022.

The Company is not currently aware of any loss contingencies related to the foregoing that would require recognition in the third quarter of fiscal 2022.

SCHOLASTIC CORPORATION

15 unchanged sentences

The following table summarizes the reconciliation of the numerators and denominators for the basic and diluted earnings (loss) per share computation for the periods indicated:

Three months ended Six months ended

November 30, November 30,

Three months ended Nine months ended

February 28, February 28,

2022 2021 2022 2021

6 unchanged sentences

Diluted $ ( 0.44 ) $ ( 0.41 ) $ 0.80 $ ( 0.54 )

* The Company experienced a net loss for the six month period ended November 30, 2020 and therefore did not report any dilutive share impact.

Net income (loss) attributable to Class A and Common Stockholders excludes earnings of $ 0.3 and less than $ 0.1 for the three month periods ended November 30, 2021 and November 30, 2020, respectively, and $ 0.2 for the six month period ended November 30, 2021, for earnings attributable to participating restricted stock units.

The Company experienced a loss for the six month period ended November 30, 2020 and therefore did not allocate any loss to certain participating restricted stock units.

* The Company experienced a net loss for the three month period ended February 28, 2022 and the three and nine month periods ended February 28, 2021 and therefore did not report any dilutive share impact.

Net income (loss) attributable to Class A and Common Stockholders excludes earnings of $ 0.2 for the nine month period ended February 28, 2022, for earnings attributable to participating restricted stock units.

The Company experienced a loss for the three month period ended February 28, 2022 and the three and nine month periods ended February 28, 2021 and therefore did not allocate any loss to certain participating restricted stock units.

SCHOLASTIC CORPORATION

2 unchanged sentences

The following table sets forth options outstanding pursuant to stock-based compensation plans as of the dates indicated:

November 30, 2021 November 30, 2020

February 28, 2022 February 28, 2021

Options outstanding pursuant to stock-based compensation plans (in millions) 4.6 5.1

There were 1.7 million of potentially anti-dilutive shares pursuant to stock-based compensation plans as of November 30, 2021.

There were 0.6 million of potentially anti-dilutive shares pursuant to stock-based compensation plans as of February 28, 2022.

A portion of the Company’s Restricted Stock Units ("RSUs"), which are granted to employees, participate in earnings through cumulative dividends.

1 unchanged sentence

Accordingly, the Company measures earnings per share based upon the lower of the Two-class method or the Treasury Stock method.

As of November 30, 2021, $ 63.1 remained available for future purchases of common shares under the repurchase authorization of the Board of Directors (the "Board") in effect on that date.

As of February 28, 2022, $ 47.7 remained available for future purchases of common shares under the repurchase authorization of the Board of Directors (the "Board") in effect on that date.

See Note 12, Treasury Stock, for a more complete description of the Company’s share buy-back program.

3 unchanged sentences

The following table summarizes the activity in Goodwill for the periods indicated:

November 30, 2021 May 31, 2021 November 30, 2020

February 28, 2022 May 31, 2021 February 28, 2021

Gross beginning balance $ 165.9 $ 164.5 $ 164.5

5 unchanged sentences

The following table summarizes the activity in other intangibles included in Other assets and deferred charges on the Company’s Financial Statements for the periods indicated:

November 30, 2021 May 31, 2021 November 30, 2020

February 28, 2022 May 31, 2021 February 28, 2021

Beginning balance - Other intangibles subject to amortization $ 8.4 $ 10.5 $ 10.5

6 unchanged sentences

Total other intangibles $ 8.8 $ 10.5 $ 10.9

There were no additions to intangible assets within the six months ended November 30, 2021 and November 30, 2020.

There were no additions to intangible assets within the nine months ended February 28, 2022 and February 28, 2021.

Intangible assets with indefinite lives consist principally of trademark and tradename rights.

8 unchanged sentences

The following table summarizes the Company’s investments as of the dates indicated:

November 30, 2021 May 31, 2021 November 30, 2020 Segment

February 28, 2022 May 31, 2021 February 28, 2021 Segment

Equity method investments $ 34.0 $ 34.3 $ 33.8 International

6 unchanged sentences

There have been no impairments or adjustments to the carrying value of this investment.

Income from equity investments is reported in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and totaled $ 0.5 and $ 4.6 for the three months ended November 30, 2021 and November 30, 2020, respectively, and $ 1.6 and $ 5.4 for the six months ended November 30, 2021 and November 30, 2020, respectively.

Income from equity investments is reported in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and totaled $ 0.0 and $ 0.7 for the three months ended February 28, 2022 and February 28, 2021, respectively, and $ 1.6 and $ 6.1 for the nine months ended February 28, 2022 and February 28, 2021, respectively.

EMPLOYEE BENEFIT PLANS

2 unchanged sentences

Three months ended Three months ended

November 30, November 30,

February 28, February 28,

2022 2021 2022 2021

9 unchanged sentences

UK Pension Plan US Postretirement Benefits

Six months ended Six months ended

November 30, November 30,

Nine months ended Nine months ended

February 28, February 28,

2022 2021 2022 2021

9 unchanged sentences

The Company’s funding practice with respect to the UK Pension Plan is to contribute on an annual basis at least the minimum amounts required by applicable law.

For the six months ended November 30, 2021, the Company contributed $ 0.8 to the UK Pension Plan.

For the nine months ended February 28, 2022, the Company contributed $ 1.2 to the UK Pension Plan.

The Company expects, based on actuarial calculations, to contribute cash of approximately $ 1.6 to the UK Pension Plan for the fiscal year ending May 31, 2022.

1 unchanged sentence

The following table summarizes stock-based compensation expense included in Selling, general and administrative expenses for the periods indicated:

Three months ended Six months ended

November 30, November 30,

Three months ended Nine months ended

February 28, February 28,

2022 2021 2022 2021

5 unchanged sentences

The following table sets forth Common Stock issued pursuant to stock-based compensation plans for the periods indicated:

Three months ended Six months ended

November 30, November 30,

Three months ended Nine months ended

February 28, February 28,

2022 2021 2022 2021

4 unchanged sentences

TREASURY STOCK

The Board has authorized the Company to repurchase Common Stock, from time to time as conditions allow, on the open market or through negotiated private transactions.

The Board has authorized the Company to repurchase Common Stock, from time to time as conditions allow, on the open market or through privately negotiated transactions.

SCHOLASTIC CORPORATION

7 unchanged sentences

Less repurchases made under these authorizations $ ( 52.3 )

Remaining Board authorization at November 30, 2021 $ 63.1

Remaining Board authorization at November 30, 2021 represents the amount remaining under the Board authorization for Common share repurchases on March 21, 2018 and the current $ 50.0 Board authorization for Common share repurchases announced on March 18, 2020, which is available for further repurchases, from time to time as conditions allow, on the open market or through negotiated private transactions.

Repurchases of the Company's Common Stock were $ 4.2 during the three and six months ended November 30, 2021.

Remaining Board authorization at February 28, 2022 $ 47.7

Remaining Board authorization at February 28, 2022 represents the amount remaining under the current $ 50.0 Board authorization for Common share repurchases announced on March 18, 2020, which is available for further repurchases, from time to time as conditions allow, on the open market or through privately negotiated transactions.

Repurchases of the Company's Common Stock were $ 15.4 and $ 19.6 during the three and nine months ended February 28, 2022, respectively, which included a privately negotiated transaction with a related party for an aggregate purchase price of $ 12.2 .

See Note 18, Related Party Transactions, for further details regarding this transaction.

The Company's repurchase program may be suspended at any time without prior notice.

1 unchanged sentence

The following tables summarize the activity in Accumulated other comprehensive income (loss), net of tax, by component, for the periods indicated:

Three months ended November 30, 2021

Three months ended February 28, 2022

Foreign currency translation adjustments Retirement benefit plans Total

Beginning balance at September 1, 2021 $ ( 35.9 ) $ ( 4.5 ) $ ( 40.4 )

Beginning balance at December 1, 2021 $ ( 40.3 ) $ ( 4.0 ) $ ( 44.3 )

Other comprehensive income (loss) before reclassifications 1.6 — 1.6

4 unchanged sentences

Other comprehensive income (loss) 1.6 0.0 1.6

Ending balance at November 30, 2021 $ ( 40.3 ) $ ( 4.0 ) $ ( 44.3 )

Three months ended November 30, 2020

Ending balance at February 28, 2022 $ ( 38.7 ) $ ( 4.0 ) $ ( 42.7 )

Three months ended February 28, 2021

Foreign currency translation adjustments Retirement benefit plans Total

Beginning balance at September 1, 2020 $ ( 39.3 ) $ ( 8.2 ) $ ( 47.5 )

Beginning balance at December 1, 2020 $ ( 38.9 ) $ ( 2.8 ) $ ( 41.7 )

Other comprehensive income (loss) before reclassifications 6.3 — 6.3

4 unchanged sentences

Other comprehensive income (loss) 6.3 0.0 6.3

Ending balance at November 30, 2020 $ ( 38.9 ) $ ( 2.8 ) $ ( 41.7 )

Ending balance at February 28, 2021 $ ( 32.6 ) $ ( 2.8 ) $ ( 35.4 )

SCHOLASTIC CORPORATION

1 unchanged sentence

(Dollar amounts in millions, except per share data)

Six months ended November 30, 2021

Nine months ended February 28, 2022

Foreign currency translation adjustments Retirement benefit plans Total

Beginning balance at June 1, 2021 $ ( 30.1 ) $ ( 4.6 ) $ ( 34.7 )

Other comprehensive income (loss) before reclassifications ( 10.2 ) 0.5 ( 9.7 )

Other comprehensive income (loss) before reclassifications (net of tax of $ 0.1 )

( 8.6 ) 0.5 ( 8.1 )

Less amount reclassified from Accumulated other comprehensive income (loss):

3 unchanged sentences

Other comprehensive income (loss) ( 8.6 ) 0.6 ( 8.0 )

Ending balance at November 30, 2021 $ ( 40.3 ) ( 4.0 ) ( 44.3 )

Six months ended November 30, 2020

Ending balance at February 28, 2022 $ ( 38.7 ) ( 4.0 ) ( 42.7 )

Nine months ended February 28, 2021

Foreign currency translation adjustments Retirement benefit plans Total

Beginning balance at June 1, 2020 $ ( 50.0 ) $ ( 8.3 ) $ ( 58.3 )

Other comprehensive income (loss) before reclassifications 11.1 5.3 16.4

Other comprehensive income (loss) before reclassifications (net of tax of $ 1.7 )

17.4 5.3 22.7

Less amount reclassified from Accumulated other comprehensive income (loss):

3 unchanged sentences

Other comprehensive income (loss) 17.4 5.5 22.9

Ending balance at November 30, 2020 $ ( 38.9 ) $ ( 2.8 ) $ ( 41.7 )

Ending balance at February 28, 2021 $ ( 32.6 ) $ ( 2.8 ) $ ( 35.4 )

The following table presents the impact on earnings of reclassifications out of Accumulated other comprehensive income (loss) for the periods indicated:

Three months ended Six months ended Condensed Consolidated Statements of Operations line item

November 30, November 30, November 30, November 30,

Three months ended Nine months ended Condensed Consolidated Statements of Operations line item

February 28, February 28, February 28, February 28,

2022 2021 2022 2021

9 unchanged sentences

• Level 2 Observable inputs other than quoted prices included in Level 1, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs derived principally from or corroborated by observable market data.

• Level 3 Unobservable inputs in which there is little or no market data available, which are significant to the fair value measurement and require the Company to develop its own assumptions.

SCHOLASTIC CORPORATION

1 unchanged sentence

(Dollar amounts in millions, except per share data)

• Level 3 Unobservable inputs in which there is little or no market data available, which are significant to the fair value measurement and require the Company to develop its own assumptions.

The Company’s financial assets and liabilities measured at fair value consisted of cash and cash equivalents, debt and foreign currency forward contracts.

12 unchanged sentences

See Note 9, Investments, for a more complete description of the fair value measurements employed.

Operating lease ROU assets were recorded at fair value in connection with a prior period impairment and fair value was determined using the discounted cash flow method.

See Note 4, Asset Write Down, for a more complete description of the impairment recognized in the third quarter of fiscal 2021.

INCOME TAXES AND OTHER TAXES

9 unchanged sentences

The Company has deferred employer-side social security payments resulting in a future liability.

As of November 30, 2021 the Company has a current liability of $ 3.2 and a non-current liability of $ 3.8 .

As of February 28, 2022, the Company has a current liability of $ 3.8 .

In fiscal 2021, the Company applied for employee retention credits in the U.S.

and the related receivable was $ 11.9 as of November 30, 2021.

and the related receivable was $ 11.9 as of February 28, 2022.

During the first quarter of fiscal 2022, the Company received a federal tax refund of $ 63.1 primarily related to the carry back of net operating losses generated in the U.S.

In calculating the provision for income taxes on an interim basis, the Company uses an estimate of the annual effective tax rate based upon currently known facts and circumstances and applies that rate to its year-to-date earnings or losses.

The Company’s effective tax rate is based on expected income and statutory tax rates and takes into consideration permanent differences between financial statement and tax return income applicable to the Company in the various jurisdictions in which the Company operates.

The effect of discrete items, such as changes in estimates, changes in rates or tax status, and unusual or infrequently occurring events, is recognized in the interim period in which the discrete item occurs.

The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or as the result of new judicial interpretations or regulatory or tax law changes.

SCHOLASTIC CORPORATION

1 unchanged sentence

(Dollar amounts in millions, except per share data)

The Company's interim effective tax rate, inclusive of discrete items, for the three and six months period ended November 30, 2021 was 23.2 % and 21.1 %, respectively, compared to 26.1 % and 9.5 %, respectively, for the prior fiscal year period.

The interim effective tax rate for the six months ended November 30, 2021 varies from the statutory rate primarily due to the release of an uncertain tax position in the current fiscal quarter related to an effective settlement recognized as part of ongoing audit, offset by the state income effective tax rate.

the Company in the various jurisdictions in which the Company operates.

The Company's interim effective tax rate, inclusive of discrete items, for the three and nine month periods ended February 28, 2022 was 23.7 % and 19.7 %, respectively, compared to 36.4 % and 29.0 %, respectively, for the prior fiscal year periods.

The decrease in the interim effective tax rate for the nine months ended February 28, 2022 is primarily due to the release of an uncertain tax position in the current fiscal year related to an effective settlement recognized as part of an ongoing IRS audit.

The Company, including its domestic subsidiaries, files a consolidated U.S.

3 unchanged sentences

The IRS is currently examining the US income tax returns for the fiscal 2015 through fiscal 2020 tax years.

As of November 30, 2021, there is approximately $ 20.0 in receivables from the IRS related to the years under audit included in Income tax receivable in the Company’s Condensed Consolidated Balance Sheet.

As of February 28, 2022, there is approximately $ 20.0 in receivables from the IRS related to the years under audit included in Income tax receivable in the Company’s Condensed Consolidated Balance Sheet.

Non-income Taxes

9 unchanged sentences

The Company marks-to-market these instruments and records the changes in the fair value of these items in Selling, general and administrative expenses and recognizes the unrealized gain or loss in Other current assets or Other current liabilities.

The notional values of the contracts as of November 30, 2021 and November 30, 2020 were $ 27.3 and $ 29.2 , respectively.

A net unrealized gain of $ 0.6 and a net unrealized loss of $ 1.1 were recognized for the six months ended November 30, 2021 and November 30, 2020, respectively.

The notional values of the contracts as of February 28, 2022 and February 28, 2021 were $ 21.9 and $ 26.5 , respectively.

A net unrealized gain of $ 0.3 and a net unrealized loss of $ 1.6 were recognized for the nine months ended February 28, 2022 and February 28, 2021, respectively.

OTHER ACCRUED EXPENSES

Other accrued expenses consisted of the following as of the dates indicated:

November 30, 2021 May 31, 2021 November 30, 2020

February 28, 2022 May 31, 2021 February 28, 2021

Accrued payroll, payroll taxes and benefits $ 35.3 $ 32.4 $ 37.5

5 unchanged sentences

Total accrued expenses $ 184.8 $ 202.0 $ 177.6

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

RELATED PARTY TRANSACTIONS

On January 12, 2022, the Company entered into a share repurchase agreement to purchase shares of its common stock from the Estate of M.

Richard Robinson, Jr.

in a privately negotiated transaction.

Pursuant to the repurchase agreement, the Company purchased 300,000 shares of common stock on January 19, 2022 at a price of $ 40.65 per share, representing an aggregate purchase price of $ 12.2 .

The price per share paid represented a 4.2 % discount to the closing price of the stock, $ 42.43 , on the date of execution of the repurchase agreement.

The repurchase was made pursuant to the Company’s current share repurchase program as previously approved by the Board.

The aforementioned transaction was approved by the Board upon the recommendation of the Audit Committee.

SUBSEQUENT EVENTS

The Board declared a quarterly cash dividend of $ 0.15 per share on the Company’s Class A and Common Stock for the third quarter of fiscal 2022.

The dividend is payable on March 15, 2022 to shareholders of record as of the close of business on January 31, 2022.

The Board declared a quarterly cash dividend of $ 0.15 per share on the Company’s Class A and Common Stock for the fourth quarter of fiscal 2022.

The dividend is payable on June 15, 2022 to shareholders of record as of the close of business on April 29, 2022.

SCHOLASTIC CORPORATION

1 unchanged sentence

Overview and Outlook

Revenues for the second quarter ended November 30, 2021 were $524.2 million, compared to $406.2 million in the prior fiscal year quarter, an increase of $118.0 million.

The Company reported net earnings per diluted share of Class A and Common Stock of $1.91 in the second quarter of fiscal 2022, compared to $1.02 in the prior fiscal year quarter.

During the second quarter ended November 30, 2021, increased revenues were primarily driven by the U.S.

book fairs and education channels.

With schools back in session, the demand for in-person book fairs returned and customer engagement improved, resulting in increased fair count and revenue per fair.

Comprehensive instruction offerings, including PreK On My Way TM , and professional learning services continued to drive revenue in the quarter;

however, the primary driver of the revenue increase in the education channel was revenues from the Company’s new Rising Voices Library ® offering which meets the increasing demand for culturally responsive content and instruction.

Also during the quarter, the live-action movie adaptation of Clifford the Big Red Dog ® from Paramount was released as was Cat Kid Comic Club ® :

Perspectives , the second title in the bestselling series by Dav Pilkey, and J.K.

Rowling’s The Christmas Pig .

However, revenues in trade publishing were lower than the prior fiscal year quarter due to the successful introduction of J.K.

Rowling’s The Ickabog and Harry Potter ® illustrated editions in the prior period.

Internationally, Canada performed well with higher revenues in all channels;

however, Australia and New Zealand experienced additional lockdowns during their school year resulting in lower revenues and the Asia markets continued to be impacted by COVID-related shutdowns and recently adopted restrictive regulations in China.

Operating income improved $34.6 million over the prior fiscal year quarter as a result of the higher sales volume as the Company recovers from the pandemic.

Revenues for the third quarter ended February 28, 2022 were $344.5 million, compared to $277.5 million in the prior fiscal year quarter, an increase of $67.0 million.

The Company reported net loss per diluted share of Class A and Common Stock of $0.44 in the third quarter of fiscal 2022, compared to $0.41 in the prior fiscal year quarter.

With schools back in session, the book fairs channel drove a majority of the revenue increase with a higher number of in-person book fairs and higher revenue per fair.

The Company’s education offerings also drove higher revenues primarily related to core instructional products and sales from Scholastic Magazines + TM , the Company's newly branded classroom magazines business with new content in both print and digital, including videos and activities.

In addition, Education Solutions revenues increased for the New Worlds Reading Initiative , a five-year agreement with University of Florida’s Lastinger Center for Learning to provide books to Florida students (kindergarten through 5th grade) who are reading below grade level.

The Company began fulfilling orders in the third fiscal quarter for the more than 100,000 students enrolled in the program.

Higher trade channel revenues were driven by core backlist titles as demand for the Company’s best-selling series continues.

Internationally, Canada experienced higher revenues in all channels, while the Asia markets continued to be negatively impacted by COVID-related shutdowns and recently adopted restrictive regulations in China.

Operating loss improved $4.7 million over the prior fiscal year quarter as a result of the higher sales volume as the Company recovers from the pandemic.

The Company experienced and will continue to experience higher inflationary pressures in printing, paper, transportation and labor costs, which partially offset the increases in revenues.

The Company expects the U.S.

book fairs business to continue its momentum into the spring season.

The Company is carefully monitoring the impact any COVID variant may have on the school market’s ability to host in-person fairs and remains optimistic that wide-scale school closures are unlikely.

book clubs, the Company will focus on clearing a backlog in orders that resulted from the industry-wide labor shortages and a separate systems issue impacting order flow, and will re-engage sponsors at the start of the new calendar year.

The Education Solutions segment is well-positioned to take advantage of new literacy opportunities in K-12 that may arise from the federal stimulus funds education landscape.

In addition, the Company has successfully been awarded the contract for the New Worlds Reading Initiative throughout the state of Florida, a five-year agreement with the University of Florida's Lastinger Center for Learning that will begin shipping in December.

Internationally, the Company is optimistic that schools in Australia and New Zealand will experience fewer COVID-related interruptions after they return from summer break in January 2022.

Throughout the remainder of the fiscal year, the Company's financial results will reflect the increasing impact of rising cost pressures in paper, printing, and freight as current period inventory, with an associated higher cost of product, is sold.

Similarly, the Company expects higher labor costs due to continuing inflationary pressures and on-going labor shortages, especially in its warehouse and distribution operations.

The Company’s management is taking actions, when available, to mitigate these rising costs and continues to identify further opportunities for incremental cost savings through process improvements and automation, proactive resource allocation, diversifying its vendor base and pricing and product rationalization.

In the Children’s Book Publishing and Distribution segment, the Company expects the number of in-person book fairs to continue to trend at 70% of pre-pandemic levels in the fourth fiscal quarter with improved revenue per fair over the same period.

In the book clubs channel, having cleared the backlogged orders, the Company expects to see continued strong customer re-engagement.

The trade channel is anticipating the benefit of new fourth fiscal quarter releases, such as Cat Kid Comic Club ® #3:

On Purpose by Dav Pilkey, and Colin Kaepernick's I Color Myself Different.

In addition, the Company’s media group has a robust pipeline that should favorably impact future fiscal year periods commencing in fiscal 2023.

In the Education Solutions segment, the Company anticipates a strong fourth quarter driven by its comprehensive education offerings, which includes both print and digital content.

Revenues related to summer reading initiatives are also expected to be robust as educators continue to seek materials to boost student reading levels.

In addition, revenues related to the New Worlds Reading Initiative will be recognized in the fourth quarter as additional shipments are made to enrolled students, pursuant to which a significant number of books are also expected to be shipped in the summer months of June and July during the first quarter of fiscal 2023 after marketing efforts ramp up toward the end of the school year.

Scholastic Magazines+ has launched pre-orders for fiscal 2023 for the highly-anticipated Storyworks ® 1, which creates a full line of Storyworks ELA titles for advanced kindergarten and grades 1-6.

Internationally, the Company is optimistic that fewer COVID related restrictions will benefit the major markets in Canada, UK, and Australia and New Zealand, but anticipates that COVID related issues and the recently adopted restrictive regulations in China will result in continued softness in Asia.

Cost pressures for paper, printing, and freight will continue in the fourth quarter as current period inventory, with an associated higher cost of product, is sold.

Similarly, the Company expects higher labor costs due to continuing inflationary pressures.

Additionally, rising fuel costs will impact the business, primarily related to the delivery of book fairs where the Company manages its own distribution fleet.

The Company is taking all available actions to mitigate higher costs and identify further opportunities for incremental cost savings, including process improvements and automation, proactive resource allocation, book fair vehicle route optimization, vendor diversification, product rationalization and pricing, as well as the benefits of cross divisional collaborations.

Results of Operations

Revenues for the quarter ended November 30, 2021 increased to $524.2 million, compared to $406.2 million in the prior fiscal year quarter.

The Children's Book Publishing and Distribution segment revenues increased by $108.5 million, primarily driven by higher book fairs channel revenues resulting from increased fair count and higher revenue per fair due to increased demand and improved customer engagement as schools re-opened for the fall season.

The revenue increase was partially offset by lower trade channel revenues due to the successful introduction of J.K.

Rowling’s The Ickabog and Harry Potter illustrated editions in the prior fiscal year quarter, as well as lower book clubs channel revenues due to the current shipping backlog.

In the Education Solutions segment, revenues increased by $12.0 million, primarily driven by revenues from the Company’s new Rising Voices Library offering which meets the increasing demand for culturally responsive content and instruction, coupled with higher sales of instructional products and programs and professional learning services, as well as increased circulation revenue from the Magazines+ business.

In local currency, the International segment revenues decreased by $5.3 million, primarily driven by lower sales in Asia as the local markets continued to be impacted by COVID-related shutdowns and the recently adopted restrictive regulations in China.

Revenues also

Revenues for the quarter ended February 28, 2022 increased by $67.0 million to $344.5 million, compared to $277.5 million in the prior fiscal year quarter.

The Children's Book Publishing and Distribution segment revenues increased by $58.1 million, primarily driven by higher book fairs channel revenues resulting from increased fair count and higher revenue per fair as schools have reopened and resumed in-person learning.

In the Education Solutions segment, revenues increased by $10.9 million, primarily driven by revenues from the newly launched New Worlds Reading Initiative with University of Florida’s Lastinger Center for Learning, coupled with higher sales of instructional products and programs, primarily Scholastic Bookroom, and increased circulation revenue

SCHOLASTIC CORPORATION

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)

decreased in Australia and New Zealand, primarily in the school-based channels, due to additional lockdowns imposed by the COVID variant, partially offset by higher sales in Canada across all channels.

International segment revenues were impacted by favorable foreign exchange of $2.8 million in the quarter ended November 30, 2021.

Revenues for the six months ended November 30, 2021 increased to $784.0 million, compared to $621.4 million in the prior fiscal year period.

The Children's Book Publishing and Distribution segment revenues increased by $132.0 million primarily driven by higher book fairs channel revenues, particularly in the second quarter, resulting from increased fair count and higher revenue per fair due to increased demand and improved customer engagement as schools re-opened for the fall season.

Additionally, trade channel revenues were higher, primarily due to increased sales of backlist titles from best-selling series, including Harry Potter and Dog Man ® , and new releases of frontlist titles including J.K.

from the Magazines+ business.

In local currency, the International segment revenues decreased by $0.4 million, primarily driven by lower sales in Asia as the local markets continued to be impacted by COVID-related shutdowns and the restrictive regulations in China, partially offset by increased revenues in Canada across all channels.

International segment revenues were impacted by unfavorable foreign exchange of $1.6 million in the quarter ended February 28, 2022.

Revenues for the nine months ended February 28, 2022 increased by $229.6 million to $1,128.5 million, compared to $898.9 million in the prior fiscal year period.

The Children's Book Publishing and Distribution segment revenues increased by $190.1 million primarily driven by higher book fairs channel revenues, particularly in the second and third quarters, resulting from increased fair count and higher revenue per fair as schools reopened and resumed in-person learning.

Additionally, trade channel revenues were higher, primarily driven by increased sales of backlist titles from best-selling series, including Harry Potter ® and Dog Man ® , and new releases of frontlist titles including J.K.

Rowling’s The Christmas Pig and Dav Pilkey's Cat Kid Comic Club ® :

Perspectives, partially offset by lower revenues in the book clubs channel due to the shipping backlog.

In the Education Solutions segment, revenues increased by $38.5 million primarily driven by higher sales of instructional products and programs, including the early childhood curriculum program PreK On My Way, and professional learning services, coupled with revenues from the Company’s new Rising Voices Library ® offering which meets the increasing demand for culturally responsive content and instruction.

In addition, revenues increased as a result of higher circulation revenue from the Magazines+ business and higher sales of digital products, including Scholastic Literacy Pro ® and Scholastic F.I.R.S.T.

Perspectives.

In the Education Solutions segment, revenues increased by $49.4 million primarily driven by higher sales of instructional products and programs, including the early childhood curriculum program PreK On My Way TM and Scholastic Bookroom, as well as increased circulation revenue from the Magazines+ business.

In addition, revenues increased from the Company’s new Rising Voices Library ® offering, which meets the increasing demand for culturally responsive content and instruction, and the newly launched New Worlds Reading Initiative with University of Florida’s Lastinger Center for Learning.

In local currency, the International segment revenues decreased by $14.7 million primarily driven by lower sales in Asia as the local markets continued to be impacted by COVID-related shutdowns and the restrictive regulations in China.

Revenues also decreased in Australia and New Zealand in the school-based channels due to additional lockdowns imposed by the COVID variant, partially offset by higher sales in Canada across all channels.

International segment revenues were impacted by favorable foreign exchange of $6.4 million in the six months ended November 30, 2021.

Components of Cost of goods sold for the three and six months ended November 30, 2021 and November 30, 2020 are as follows:

Three months ended Six months ended

November 30, November 30, November 30, November 30,

International segment revenues benefited from favorable foreign exchange of $4.8 million in the nine months ended February 28, 2022.

Components of Cost of goods sold for the three and nine months ended February 28, 2022 and February 28, 2021 are as follows:

Three months ended Nine months ended

February 28, February 28, February 28, February 28,

2022 2021 2022 2021

5 unchanged sentences

Total $ 169.6 49.2 % $ 135.9 49.0 % $ 540.9 47.9 % $ 440.6 49.0 %

Cost of goods sold for the quarter ended November 30, 2021 was $238.0 million, or 45.4% of revenues, compared to $189.7 million, or 46.7% of revenues, in the prior fiscal year quarter.

Cost of goods sold was impacted by inflationary pressures including higher costs due to shortages in labor and transportation and supply chain issues impacting paper and printing costs.

The Company expects inflationary pressures to continue to negatively impact costs during fiscal 2022 and Cost of goods sold will reflect the higher costs as current period inventory is sold using the first-in, first-out method.

The increased costs due to inflationary pressures were more than offset by lower royalty costs due to the substantial increase in book fairs channel revenues which have a higher mix of non-royalty bearing titles.

In addition, the quarter benefited from higher revenue per unit shipped primarily in the education channel.

Cost of goods sold for the six months ended November 30, 2021 was $371.3 million, or 47.4% of revenues, compared to $304.7 million, or 49.0% of revenues, in the prior fiscal year period.

Cost of goods sold was impacted by inflationary pressures including higher costs due to shortages in labor and transportation and supply chain issues impacting paper and printing costs.

The increased costs due to inflationary pressures were more than offset by lower royalty costs due to the substantial increase in book fairs channel

Cost of goods sold for the quarter ended February 28, 2022 was $169.6 million, or 49.2% of revenues, compared to $135.9 million, or 49.0% of revenues, in the prior fiscal year quarter.

Cost of goods sold for the nine months ended February 28, 2022 was $540.9 million, or 47.9% of revenues, compared to $440.6 million, or 49.0% of revenues, in the prior fiscal year period.

Cost of goods sold was impacted by higher costs due to shortages in labor and transportation and supply chain issues impacting paper and printing costs.

The Company expects these costs to continue to be negatively impacted during the balance of fiscal 2022, and Cost of goods sold will reflect the higher costs as current period inventory is sold using the first-in, first-out method.

The increased costs were more than offset by lower royalty costs due to the substantial increase in book fairs channel revenues which have a higher mix of non-royalty bearing titles.

Selling, general and administrative expenses for the quarter ended February 28, 2022 increased to $180.8 million, compared to $140.2 million in the prior fiscal year quarter.

The $40.6 million increase was primarily attributable to higher employee-related costs as a result of higher headcount in the book fairs warehouses to meet the increased demand, coupled with higher labor costs across the Company.

In addition, the Company incurred higher warehouse-related costs, as certain reopened book fair distribution facilities were temporarily closed in the prior fiscal year quarter, and recognized lower subsidies from COVID-related governmental retention programs in the quarter ended February 28, 2022, which decreased by $7.0 million as compared to

SCHOLASTIC CORPORATION

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements