What changed in this filing

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Item 1. Financial Statements

2023-12-15 compared with 2023-09-22 · 222 added, 88 removed, 493 unchanged (39% of the section changed)

3 unchanged sentences

(Dollar amounts in millions, except per share data)

Three months ended

Three months ended Six months ended

November 30, November 30,

2023 2022 2023 2022

Revenues $ 562.6 $ 587.9 $ 791.1 $ 850.8

19 unchanged sentences

(Dollar amounts in millions)

Three months ended

Three months ended Six months ended

November 30, November 30,

2023 2022 2023 2022

Net income (loss) $ 76.9 $ 75.4 $ 2.7 $ 30.0

10 unchanged sentences

(Dollar amounts in millions, except per share data)

August 31, 2023 May 31, 2023 August 31, 2022

November 30, 2023 May 31, 2023 November 30, 2022

(unaudited) (audited) (unaudited)

78 unchanged sentences

Balance at August 31, 2022 1.7 $ 0.0 32.7 $ 0.4 $ 629.5 $ ( 55.0 ) $ 924.1 $ ( 334.2 ) $ 1,164.8 $ 1.5 $ 1,166.3

Net Income (loss) — — — — — — 75.3 — 75.3 0.1 75.4

Foreign currency translation adjustment — — — — — 3.0 — — 3.0 — 3.0

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

— — — — — ( 0.1 ) — — ( 0.1 ) — ( 0.1 )

Stock-based compensation — — — — 4.2 — — — 4.2 — 4.2

Proceeds pursuant to stock-based compensation plans — — — — 1.5 — — — 1.5 — 1.5

Purchases of treasury stock at cost — — ( 0.6 ) — — — — ( 26.0 ) ( 26.0 ) — ( 26.0 )

Treasury stock issued pursuant to equity-based plans — — 0.3 — ( 6.2 ) — — 7.0 0.8 — 0.8

Dividends ($ 0.20 per share)

— — — — — — ( 7.0 ) — ( 7.0 ) — ( 7.0 )

Balance at November 30, 2022 1.7 $ 0.0 32.4 $ 0.4 $ 629.0 $ ( 52.1 ) $ 992.4 $ ( 353.2 ) $ 1,216.5 $ 1.6 $ 1,218.1

Class A Stock Common Stock Additional Paid-in Capital Accumulated

20 unchanged sentences

Balance at August 31, 2023 1.7 $ 0.0 29.3 $ 0.4 $ 632.7 $ ( 53.8 ) $ 955.1 $ ( 479.8 ) $ 1,054.6 $ — $ 1,054.6

Net Income (loss) — — — — — — 76.9 — 76.9 — 76.9

Foreign currency translation adjustment — — — — — 0.2 — — 0.2 — 0.2

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

— — — — — 0.1 — — 0.1 — 0.1

Stock-based compensation — — — — 4.1 — — — 4.1 — 4.1

Proceeds pursuant to stock-based compensation plans — — — — 0.6 — — — 0.6 — 0.6

Purchases of treasury stock at cost — — ( 1.4 ) — — — — ( 52.3 ) ( 52.3 ) — ( 52.3 )

Treasury stock issued pursuant to equity-based plans — — 0.3 — ( 6.6 ) — — 7.5 0.9 — 0.9

Dividends ($ 0.20 per share)

— — — — — — ( 6.0 ) — ( 6.0 ) — ( 6.0 )

Balance at November 30, 2023 1.7 $ 0.0 28.2 $ 0.4 $ 630.8 $ ( 53.5 ) $ 1,026.0 $ ( 524.6 ) $ 1,079.1 $ — $ 1,079.1

See accompanying notes

2 unchanged sentences

(Dollar amounts in millions)

Three months ended

August 31, August 31,

Six months ended

November 30, November 30,

Cash flows - operating activities:

78 unchanged sentences

• Cost of goods sold from book fair operations during interim periods based on estimated gross profit rates

• Sales tax contingencies

SCHOLASTIC CORPORATION

1 unchanged sentence

(Dollar amounts in millions, except per share data)

• Sales tax contingencies

• Royalty advance reserves and royalty expense accruals

4 unchanged sentences

New Accounting Pronouncements

There were no new accounting pronouncements issued in the first quarter of fiscal 2024 which would impact the Company.

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures.” This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

This ASU will be effective for the Company's fiscal year 2025, and interim periods starting in fiscal year 2026.

Early adoption is permitted.

The amendments in this ASU are to be applied retrospectively to all prior periods presented in the financial statements.

The Company is currently assessing the impact of the disclosure requirements on its consolidated financial statements.

Refer to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2023 for more information on current applicable authoritative guidance and its impact on the Company's financial statements.

1 unchanged sentence

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

Three months ended

Three months ended Six months ended

November 30, November 30,

2023 2022 2023 2022

Book Clubs - U.S.

$ 32.4 $ 57.6 $ 35.0 $ 63.9

Book Fairs - U.S.

242.1 240.8 269.4 269.1

101.0 107.9 163.5 184.1

Trade - International (1)

17.3 12.0 27.7 25.9

Total Children's Book Publishing and Distribution $ 392.8 $ 418.3 $ 495.6 $ 543.0

5 unchanged sentences

International - Other Markets (3)

11.1 12.5 20.5 24.1

Total International $ 86.5 $ 89.6 $ 143.7 $ 154.6

3 unchanged sentences

(3) Primarily includes markets in Asia.

(4) Total revenues of $ 228.5 in fiscal 2024 include rental income of $ 2.5 related to leased space in the Company's headquarters which was not allocated to a segment.

In fiscal 2023, rental income of $ 1.5 was recognized as a reduction to Selling, general and administrative expenses.

(4) Total revenues of $ 562.6 and $ 791.1 for the three and six months ended November 30, 2023, respectively, included rental income of $ 2.3 and $ 4.8 , respectively, related to leased space in the Company's headquarters which was not allocated to a segment.

Rental income of $ 1.6 and $ 3.1 for the three and six months ended November 30, 2022, respectively, was recognized as a reduction to Selling, general and administrative expenses.

Estimated Returns

A liability for expected returns of $ 33.1 , $ 34.9 , and $ 41.5 is recorded within Other accrued expenses as of August 31, 2023, May 31, 2023, and August 31, 2022, respectively.

In addition, a return asset of $ 5.4 , $ 4.7 , and $ 7.8 is recorded within Prepaid expenses and other current assets as of August 31, 2023, May 31, 2023, and August 31, 2022, respectively, for the recoverable cost of product estimated to be returned by customers.

A liability for expected returns of $ 37.7 , $ 34.9 , and $ 43.9 is recorded within Other accrued expenses as of November 30, 2023, May 31, 2023, and November 30, 2022, respectively.

In addition, a return asset of $ 5.4 , $ 4.7 , and $ 6.1 is recorded within Prepaid expenses and other current assets as of November 30, 2023, May 31, 2023, and November 30, 2022, respectively, for the recoverable cost of product estimated to be returned by customers.

SCHOLASTIC CORPORATION

3 unchanged sentences

The following table presents further detail regarding the Company's contract liabilities as of the dates indicated:

August 31, 2023 May 31, 2023 August 31, 2022

November 30, 2023 May 31, 2023 November 30, 2022

Book fairs incentive credits $ 114.1 $ 110.8 $ 107.6

4 unchanged sentences

Media-related 0.2 0.0 10.6

Stored value cards 13.1 12.4 9.3

Stored value programs

24.1 12.4 13.8

Total contract liabilities $ 234.5 $ 169.1 $ 232.7

2 unchanged sentences

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.

As of August 31, 2023, contract liabilities of $ 171.1 are recorded within Deferred revenue on the Company's Condensed Consolidated Balance Sheet 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 remaining $ 10.6 of contract liabilities as of August 31, 2023 are recorded within Other noncurrent liabilities on the Company's Condensed Consolidated Balance Sheet as the associated performance obligations are expected to be satisfied, and related revenue recognized, in excess of one year.

Contract liabilities of $ 169.1 and $ 182.6 as of May 31, 2023 and August 31, 2022, respectively, are recorded within Deferred revenue on the Company's Condensed Consolidated Balance Sheets.

The Company recognized revenue which was included in the opening Deferred revenue balance in the amount of $ 32.3 for the three months ended August 31, 2023, and $ 30.8 for the three months ended August 31, 2022.

As of November 30, 2023, contract liabilities of $ 225.0 are recorded within Deferred revenue on the Company's Condensed Consolidated Balance Sheet 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 remaining $ 9.5 of contract liabilities as of November 30, 2023 are recorded within Other noncurrent liabilities on the Company's Condensed Consolidated Balance Sheet as the associated performance obligations are expected to be satisfied, and related revenue recognized, in excess of one year.

Contract liabilities of $ 169.1 and $ 232.7 as of May 31, 2023 and November 30, 2022, respectively, are recorded within Deferred revenue on the Company's Condensed Consolidated Balance Sheets.

The Company recognized revenue which was included in the opening Deferred revenue balance in the amount of $ 48.4 and $ 80.7 for the three and six months ended November 30, 2023, respectively, and $ 49.5 and $ 80.3 for the three and six months ended November 30, 2022, respectively.

Allowance for Credit Losses

9 unchanged sentences

Balance as of August 31, 2023 $ 17.1

SEGMENT INFORMATION

The Company categorizes its businesses into three reportable segments:

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

Provision (benefit) 2.5

Write-offs and other ( 3.4 )

Balance as of November 30, 2023 $ 16.2

SCHOLASTIC CORPORATION

1 unchanged sentence

(Dollar amounts in millions, except per share data)

United States through its school reading events business, which includes book clubs and book fairs channels, and through the trade channel.

SEGMENT INFORMATION

The Company categorizes its businesses into three reportable segments:

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 primarily in the United States through its school reading events business, which includes the book clubs and book fairs channels, and through the trade channel.

This segment is comprised of two operating segments.

4 unchanged sentences

The following table sets forth the Company's revenue and operating income (loss) by segment for the periods indicated:

Three months ended

Three months ended Six months ended

November 30, November 30,

2023 2022 2023 2022

Children's Book Publishing and Distribution $ 392.8 $ 418.3 $ 495.6 $ 543.0

8 unchanged sentences

Total $ 101.3 $ 100.1 $ 2.2 $ 42.0

(1) Total revenues of $ 228.5 in fiscal 2024 include rental income of $ 2.5 related to leased space in the Company's headquarters which was not allocated to a segment.

In fiscal 2023, rental income of $ 1.5 was recognized as a reduction to Selling, general and administrative expenses.

(1) Total revenues of $ 562.6 and $ 791.1 for the three and six months ended November 30, 2023, respectively, included rental income of $ 2.3 and $ 4.8 , respectively, related to leased space in the Company's headquarters which was not allocated to a segment.

Rental income of $ 1.6 and $ 3.1 for the three and six months ended November 30, 2022, respectively, was recognized as a reduction to Selling, general and administrative expenses.

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

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

August 31, 2023 May 31, 2023 August 31, 2022

November 30, 2023 May 31, 2023 November 30, 2022

US Revolving Credit Agreement $ — $ — $ —

3 unchanged sentences

Total long-term debt $ — $ — $ —

The Company's debt obligations as of August 31, 2023 have maturities of one year or less.

The Company's debt obligations as of November 30, 2023 have maturities of one year or less.

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

US Credit Agreement

1 unchanged sentence

The Credit Agreement provides for a $ 300.0 unsecured revolving credit facility and allows the Company to borrow, repay or prepay and reborrow at any time prior to the October 27, 2026 maturity date.

The Credit Agreement also provides an unlimited basket for permitted payments of

dividends and other distributions in respect of capital stock so long as the Corporation’s pro forma Consolidated Net Leverage Ratio, as defined, is not in excess of 2.75 :1.

The Credit Agreement also provides an unlimited basket for permitted payments of dividends and other distributions in respect of capital stock so long as the Corporation’s pro forma Consolidated Net Leverage Ratio, as defined, is not in excess of 2.75 :1.

On February 28, 2023, the Company entered into the First and Second Amendments to the Credit Agreement with the lenders from time to time party thereto, Truist Bank and Wells Fargo Bank, National Association, as co-syndication agents and Bank of America, N.A., as administrative agent (collectively the "Amendments").

4 unchanged sentences

• a Eurodollar Rate equal to SOFR (Daily Simple or Term), plus a SOFR adjustment of 0.10 % per annum and an applicable margin ranging from 1.35 % to 1.75 %, as determined by the Company’s prevailing Consolidated Leverage Ratio.

As of August 31, 2023, 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 November 30, 2023, 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 August 31, 2023, the commitment fee rate was 0.20 %.

As of November 30, 2023, 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 August 31, 2023, the Company had no outstanding borrowings under the Credit Agreement.

As of November 30, 2023, the Company had no outstanding borrowings under the Credit Agreement.

The Credit Agreement contains certain financial covenants related to leverage and interest coverage ratios (as defined in the Credit Agreement), limitations on the amount of dividends and other distributions, and other limitations on fundamental changes to the Company or its business.

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

At August 31, 2023, the Company had open standby letters of credit totaling $ 3.8 issued under certain credit lines, including $ 0.4 under the Credit Agreement and $ 3.4 under the domestic credit lines discussed below.

At November 30, 2023, the Company had open standby letters of credit totaling $ 3.8 issued under certain credit lines, including $ 0.4 under the Credit Agreement and $ 3.4 under the domestic credit lines discussed below.

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

Lines of Credit

As of August 31, 2023, 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 August 31, 2023, May 31, 2023 and August 31, 2022.

As of August 31, 2023, availability under these unsecured money market bid rate credit lines totaled $ 6.6 , excluding commitments of $ 3.4 .

As of November 30, 2023, 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, 2023, May 31, 2023 and November 30, 2022.

As of November 30, 2023, availability under these unsecured money market bid rate credit lines totaled $ 6.6 , excluding commitments of $ 3.4 .

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 August 31, 2023, the Company had various local currency international credit lines totaling $ 24.7 underwritten by banks primarily in the United States, Canada and the United Kingdom.

Outstanding borrowings under these facilities were $ 5.9 at August 31, 2023 at a weighted average interest rate of 4.4 %, compared to outstanding borrowings of $ 6.0 at May 31, 2023 at a weighted average interest rate of 4.9 %, and $ 6.3 at August 31, 2022 at a weighted average interest rate of 5.8 %.

As of August 31, 2023, the amounts available under these facilities totaled $ 18.8 .

As of November 30, 2023, the Company had various local currency international credit lines totaling $ 30.9 underwritten by banks primarily in the United States, Canada and the United Kingdom.

Outstanding borrowings under these facilities were $ 6.3 at November 30, 2023 at a weighted average interest rate of 3.9 %, compared to outstanding borrowings of $ 6.0 at May 31, 2023 at a weighted average interest rate of 4.9 %, and $ 4.8 at November 30, 2022 at a weighted average interest rate of 5.8 %.

As of November 30, 2023, the amounts available under these facilities totaled $ 24.6 .

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.

9 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

Three months ended Six months ended

November 30, November 30,

2023 2022 2023 2022

Net income (loss) attributable to Class A and Common Stockholders $ 76.9 $ 74.8 $ 2.7 $ 29.6

6 unchanged sentences

Anti-dilutive shares pursuant to stock-based compensation plans

* The Company experienced a net loss for all periods presented and therefore did not report any dilutive share impact

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

August 31, 2023 August 31, 2022

Options outstanding pursuant to stock-based compensation plans (in millions) 3.0 3.3

As of August 31, 2023, $ 85.7 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.

1.1 1.3 0.7 0.8

SCHOLASTIC CORPORATION

1 unchanged sentence

(Dollar amounts in millions, except per share data)

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

November 30, 2023 November 30, 2022

Options outstanding pursuant to stock-based compensation plans (in millions) 3.1 3.4

As of November 30, 2023, $ 33.8 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 and Note 18, "Subsequent Events", for additional Board authorization for Common share repurchases.

On June 1, 2023, the Company acquired the remaining shares of Make Believe Ideas Limited, a UK-based children's book publishing company for $ 2.1 , increasing the Company's total ownership from 95.0 % to 100 %.

2 unchanged sentences

The difference between the fair value of consideration paid and the carrying value was recognized as an adjustment to Additional paid-in capital of $ 0.5 .

On September 1, 2022, the Company acquired 100 % of the share capital of Learning Ovations, Inc., a U.S.-based education technology business and developer of a literacy assessment and instructional system, for $ 11.1 , net of cash acquired.

The Company accounted for the acquisition as a business combination under the acquisition method of accounting.

Fair values were assigned to the assets and liabilities acquired, including cash, receivables, and technology/know-how.

The receivables acquired had a fair value of $ 0.1 and have been collected as of November 30, 2023.

The Company utilized internally-developed discounted cash flow forecasts to determine the fair value of the technology/know-how using a discount rate of 17.5 % to account for the relative risks of the estimated future cash flows.

The Company classified this as a Level 3 fair value measurement due to the use of these significant unobservable inputs.

The fair values of the net assets were $ 3.6 , which included $ 4.1 of amortizable intangible assets attributable to the technology/know-how and a $ 0.6 deferred tax liability.

This acquisition resulted in $ 7.6 of goodwill that was assigned to the Company's Education Solutions segment and was not deductible for tax purposes.

The results of operations of this business subsequent to the acquisition are included in the Education Solutions segment.

The transaction was not determined to be material to the Company's results and therefore pro forma financial information has not been presented.

GOODWILL AND OTHER INTANGIBLES

2 unchanged sentences

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

August 31, 2023 May 31, 2023 August 31, 2022

November 30, 2023 May 31, 2023 November 30, 2022

Gross beginning balance $ 172.3 $ 164.9 $ 164.9

5 unchanged sentences

In fiscal 2023, the Company acquired Learning Ovations, Inc, a U.S.-based education technology business, which resulted in the recognition of $ 7.6 of Goodwill included in the Education Solutions segment.

Refer to Note 7, Acquisitions, for further details regarding the acquisition.

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

There were no impairment charges related to Goodwill in any of the periods presented.

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:

August 31, 2023 May 31, 2023 August 31, 2022

November 30, 2023 May 31, 2023 November 30, 2022

Beginning balance - Other intangibles subject to amortization $ 7.8 $ 6.0 $ 6.0

6 unchanged sentences

Total other intangibles $ 14.5 $ 9.9 $ 11.0

During the second quarter of fiscal 2024, the Company acquired certain amortizable intangible assets related to educational programs for $ 5.8 .

These intangible assets are amortized over the estimated useful life of 8 years.

In fiscal 2023, the Company acquired Learning Ovations, Inc., a U.S.-based education technology business, which resulted in the recognition of $ 4.1 of amortizable intangible assets.

These intangible assets are amortized over the estimated useful life of 7 years.

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

Intangible assets with definite lives consist principally of customer lists, intellectual property, tradenames and other agreements.

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

Intangible assets with definite lives consist principally of customer lists, intellectual property, trade names and other agreements.

Intangible assets with definite lives are amortized over their estimated useful lives.

1 unchanged sentence

There were no impairment charges related to Intangible assets in any of the periods presented.

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

Investments are included in Other assets and deferred charges on the Condensed Consolidated Balance Sheets.

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

August 31, 2023 May 31, 2023 August 31, 2022 Segment

November 30, 2023 May 31, 2023 November 30, 2022 Segment

Equity method investments $ 32.4 $ 31.6 $ 31.0 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 $ 0.2 and $ 0.1 for the three months ended August 31, 2023 and August 31, 2022, respectively.

Income from equity investments is reported in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and totaled $ 0.1 and $ 0.3 for the three and six months ended November 30, 2023, respectively, and $ 1.2 and $ 1.3 for the three and six months ended November 30, 2022, respectively.

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

EMPLOYEE BENEFIT PLANS

2 unchanged sentences

Three months ended Three months ended

August 31, August 31,

November 30, November 30,

2023 2022 2023 2022

5 unchanged sentences

Total $ 0.3 $ 0.0 $ ( 0.1 ) $ ( 0.1 )

UK Pension Plan US Postretirement Benefits

Six months ended Six months ended

November 30, November 30,

2023 2022 2023 2022

Components of net periodic benefit cost:

Interest cost $

Expected return on assets ( 0.6 ) ( 0.6 ) — —

Amortization of prior service (credit) loss 0.0 0.0 ( 0.4 ) ( 0.4 )

Amortization of net actuarial (gain) loss 0.6 0.2 0.0 —

Total $ 0.7 $ 0.1 $ ( 0.2 ) $ ( 0.2 )

Actuarial gains and losses are amortized using a corridor approach.

2 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 three months ended August 31, 2023, the Company contributed $ 0.3 to the UK Pension Plan.

For the six months ended November 30, 2023, the Company contributed $ 0.6 to the UK Pension Plan.

The Company expects, based on actuarial calculations, to contribute cash of approximately $ 1.2 to the UK Pension Plan for the fiscal year ending May 31, 2024.

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

STOCK-BASED COMPENSATION

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

Three months ended

Three months ended Six months ended

November 30, November 30,

2023 2022 2023 2022

Stock option expense $ 2.4 $ 2.4 $ 3.0 $ 3.0

3 unchanged sentences

Total stock-based compensation expense $ 4.1 $ 4.2 $ 6.4 $ 5.9

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

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

Three months ended

Three months ended Six months ended

November 30, November 30,

2023 2022 2023 2022

Common Stock issued pursuant to stock-based compensation plans (in millions) 0.3 0.3 0.4 0.6

3 unchanged sentences

Authorization Amount

July 2023 100.0

Total current Board authorizations $ 150.0

Less repurchases made under these authorizations $ ( 116.2 )

Remaining Board authorization at August 31, 2023 $ 85.7

Remaining Board authorization at August 31, 2023 represents the amount remaining under the current $ 100.0 Board authorization for Common share repurchases announced on July 19, 2023, 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 $ 36.2 , including excise tax on share repurchases of $ 0.3 , during the three months ende d August 31, 2023.

Remaining Board authorization at November 30, 2023 $ 33.8

Remaining Board authorization at November 30, 2023 represents the amount remaining under the current $ 100.0 Board authorization for Common share repurchases announced on July 19, 2023, which is available for further repurchases, from time to time as conditions allow, on the open market or through privately negotiated transactions.

See Note 18, "Subsequent Events", for additional Board authorization for Common share repurchases.

Repurchases of the Company's Common Stock were $ 52.3 and $ 88.5 , including excise tax on share repurchases of $ 0.4 and $ 0.7 , during the three and six months ende d November 30, 2023, respectively.

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

4 unchanged sentences

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

Three months ended August 31, 2023

Three months ended November 30, 2023

Foreign currency translation adjustments Retirement benefit plans Total

Beginning balance at June 1, 2023 $ ( 50.0 ) $ ( 5.8 ) $ ( 55.8 )

Beginning balance at September 1, 2023 $ ( 48.2 ) $ ( 5.6 ) $ ( 53.8 )

Other comprehensive income (loss) before reclassifications 0.2 — 0.2

4 unchanged sentences

Other comprehensive income (loss) 0.2 0.1 0.3

Ending balance at August 31, 2023 $ ( 48.2 ) $ ( 5.6 ) $ ( 53.8 )

Three months ended August 31, 2022

Ending balance at November 30, 2023 $ ( 48.0 ) $ ( 5.5 ) $ ( 53.5 )

Three months ended November 30, 2022

Foreign currency translation adjustments Retirement benefit plans Total

Beginning balance at June 1, 2022 $ ( 44.6 ) $ ( 0.8 ) $ ( 45.4 )

Beginning balance at September 1, 2022 $ ( 54.2 ) $ ( 0.8 ) $ ( 55.0 )

Other comprehensive income (loss) before reclassifications 3.0 — 3.0

4 unchanged sentences

Other comprehensive income (loss) 3.0 ( 0.1 ) 2.9

Ending balance at August 31, 2022 $ ( 54.2 ) $ ( 0.8 ) $ ( 55.0 )

Ending balance at November 30, 2022 $ ( 51.2 ) $ ( 0.9 ) $ ( 52.1 )

Six months ended November 30, 2023

Foreign currency translation adjustments Retirement benefit plans Total

Beginning balance at June 1, 2023 $ ( 50.0 ) $ ( 5.8 ) $ ( 55.8 )

Other comprehensive income (loss) before reclassifications 2.0 — 2.0

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

Amortization of net actuarial (gain) loss (net of tax of $ 0.0 )

Amortization of prior service (credit) cost (net of tax of $ 0.1 )

— ( 0.3 ) ( 0.3 )

Other comprehensive income (loss) 2.0 0.3 2.3

Ending balance at November 30, 2023 $ ( 48.0 ) $ ( 5.5 ) $ ( 53.5 )

Six months ended November 30, 2022

Foreign currency translation adjustments Retirement benefit plans Total

Beginning balance at June 1, 2022 $ ( 44.6 ) $ ( 0.8 ) $ ( 45.4 )

Other comprehensive income (loss) before reclassifications ( 6.6 ) — ( 6.6 )

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

Amortization of net actuarial (gain) loss (net of tax of $ 0.0 )

Amortization of prior service (credit) cost (net of tax of $ 0.1 )

— ( 0.3 ) ( 0.3 )

Other comprehensive income (loss) ( 6.6 ) ( 0.1 ) ( 6.7 )

Ending balance at November 30, 2022 $ ( 51.2 ) $ ( 0.9 ) $ ( 52.1 )

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

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

Three months ended Condensed Consolidated Statements of Operations line item

August 31, August 31,

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

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

2023 2022 2023 2022

Employee benefit plans:

8 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.

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(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.

13 unchanged sentences

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

For the fair value measurements employed by the Company for certain acquired intangible assets, the Company utilized internally-developed discounted cash flow forecasts.

See Note 7, Acquisitions, for further details regarding the acquired assets and fair value measurements employed.

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

INCOME TAXES AND OTHER TAXES

3 unchanged sentences

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.

The Company's interim effective tax rate, inclusive of discrete items, for the three month period ended August 31, 2023 was 24.3 %, compared to 21.6 %, for the prior fiscal year period.

The increase in the interim effective tax rate was primarily due to an excess tax benefit related to vested option exercises in the three months ended August 31, 2023.

The Company's interim effective tax rate, inclusive of discrete items, for the three and six month periods ended November 30, 2023 was 24.2 % and 22.9 %, respectively, compared to 25.3 % and 30.2 %, respectively, for the prior fiscal year period.

The interim effective tax rate for the six months ended November 30, 2023 varies from the statutory rate primarily due to the GILTI inclusion and state and local income taxes.

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

4 unchanged sentences

The fiscal 2021 and fiscal 2022 tax years remain subject to audit.

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

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 August 31, 2023 and August 31, 2022 were

$ 22.8 and $ 21.3 , respectively.

A net unrealized gain of $ 0.4 and $ 0.6 was recognized for the three months ended August 31, 2023 and August 31, 2022, respectively.

The notional values of the contracts as of November 30, 2023 and November 30, 2022 were $ 22.8 .

A net unrealized gain of $ 0.3 and $ 0.8 was recognized for the six months ended November 30, 2023 and November 30, 2022, respectively.

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

OTHER ACCRUED EXPENSES

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

August 31, 2023 May 31, 2023 August 31, 2022

November 30, 2023 May 31, 2023 November 30, 2022

Accrued payroll, payroll taxes and benefits $ 32.8 $ 29.2 $ 34.7

6 unchanged sentences

SUBSEQUENT EVENTS

On September 20, 2023, the Board declared a quarterly cash dividend of $ 0.20 per share on the Company’s Class A and Common Stock for the second quarter of fiscal 2024.

The dividend is payable on December 15, 2023 to shareholders of record as of the close of business on October 31, 2023.

On December 13, 2023, the Board declared a quarterly cash dividend of $ 0.20 per share on the Company’s Class A and Common Stock for the third quarter of fiscal 2024.

The dividend is payable on March 15, 2024 to shareholders of record as of the close of business on January 31, 2024.

On December 13, 2023, the Board also authorized an increase of $ 66.2 for Common share repurchases under the Company's share buy-back program, resulting in a current Board authorization of $ 100.0 , which includes $ 33.8 remaining from the previous Board authorization.

SCHOLASTIC CORPORATION

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

Overview and Outlook

Revenues for the second quarter ended November 30, 2023 were $562.6 million, compared to $587.9 million in the prior fiscal year quarter, a decrease of $25.3 million or 4%.

The Company reported net income per diluted share of Class A and Common Stock of $2.45 in the second quarter of fiscal 2024, compared to net income per diluted share of $2.12 in the prior fiscal year quarter.

During the second fiscal quarter, the Children's Book Publishing and Distribution segment achieved increased sales through the book fairs channel despite facing a complex environment in U.S.

schools, with fair count on track to reach nearly 90% of pre-pandemic levels.

The Company also began the process of repositioning its book clubs business by reducing unprofitable offers and promotional spending and implementing new customer-centric strategies.

The trade channel benefited from multiple frontlist titles, including Cat Kid Comic Club ® :

Influencers by Dav Pilkey, the new paperback edition of The Ballad of Songbirds and Snakes , Suzanne Collins' prequel to the Hunger Games ® series, the interactive edition of Harry Potter and the Prisoner of Azkaban ® and The Harry Potter Wizarding Almanac .

In Education Solutions , revenues were consistent year over year, reflecting the Company's unique ability to support literacy by providing children access to engaging book collections through state and district partnerships.

Internationally, the trade channels in Australia and New Zealand continued to be impacted by the softness in the overall retail market;

however, these revenue declines were partly offset by the book fairs and trade channels in the UK, which outperformed the prior year period.

Second quarter results came in below the Company's expectations for profit growth, reflecting lower participation and spending in its school reading events business, a trend that is expected to continue for the remainder of this school year.

The trade channel is expected to continue to benefit from new releases, including new titles from the Dog Man ® and Heartstopper TM series.

The Company remains committed to continue deploying capital to invest in growth and enhance shareholder returns.

Results of Operations

Revenues for the quarter ended November 30, 2023 decreased by $25.3 million to $562.6 million, compared to $587.9 million in the prior fiscal year quarter.

The Children's Book Publishing and Distribution segment revenues decreased by $25.5 million, primarily driven by lower book clubs channel sales, reflecting a planned reduction in unprofitable offers, as the business implements new customer-centric strategies and is integrated into the school reading events business, as well as lower media revenues compared to the the prior year which benefited from the release of the Eva the Owlet TM TV series, based on the Owl Diaries TM book series.

In the Education Solutions segment, revenues increased by $1.0 million primarily due to increased revenues from state-sponsored programs, partly offset by sales declines in supplemental instructional materials, largely related to shifting approaches to literacy instruction.

In local currency, International segment revenues decreased by $3.8 million, reflecting lower sales in Australia and New Zealand which were impacted by the continued softness in the overall retail market, partly offset by higher book fairs and trade channel revenues in the UK.

International segment revenues were impacted by favorable foreign exchange of $0.7 million in the quarter ended November 30, 2023.

Revenues for the six months ended November 30, 2023 decreased by $59.7 million to $791.1 million, compared to $850.8 million in the prior fiscal year period.

The Children's Book Publishing and Distribution segment revenues decreased by $47.4 million, primarily driven by lower book clubs channel revenues reflecting a planned reduction in unprofitable offers, coupled with lower trade channel revenues resulting from the continued softness in the retail book market and lower media revenues compared to the the prior year which benefited from the release of the Eva the Owlet TM TV series, based on the Owl Diaries TM book series.

In the Education Solutions segment, revenues decreased by $6.2 million primarily due to the timing of revenues from summer learning product offerings as the Company continues to experience a shift in sales from the first fiscal quarter into the fourth fiscal quarter, coupled with sales declines in supplemental instructional materials, largely related to shifting approaches to literacy instruction.

In local currency, the International segment revenues decreased by $10.2 million, primarily due to lower sales in Canada and Australia, primarily from the trade channels which continued to be impacted by the softness in the retail markets, partially offset by higher book fairs and trade channel revenues in the UK.

International segment revenues were also impacted by unfavorable foreign exchange of $0.7 million in the period ended November 30, 2023.

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