What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-03-22 compared with 2023-12-15 · 182 added, 131 removed, 584 unchanged (35% 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 29, February 28, February 29, February 28,

2024 2023 2024 2023

4 unchanged sentences

Depreciation and amortization 14.6 13.5 42.1 41.0

Asset impairments and write downs 0.5 — 0.5 —

Total operating costs and expenses 358.6 352.6 1,147.5 1,161.4

14 unchanged sentences

(Dollar amounts in millions)

Three months ended Six months ended

November 30, November 30,

Three months ended Nine months ended

February 29, February 28, February 29, February 28,

2024 2023 2024 2023

11 unchanged sentences

(Dollar amounts in millions, except per share data)

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

February 29, 2024 May 31, 2023 February 28, 2023

(unaudited) (audited) (unaudited)

27 unchanged sentences

Noncurrent Liabilities:

Long-term debt — — —

Operating lease liabilities 79.4 73.8 62.8

7 unchanged sentences

Class A Stock, $ 0.01 par value:

Authorized, 4.0 shares;

Issued and Outstanding, 1.7 shares

Authorized, 3.2 , 4.0 , and 4.0 shares, respectively;

Issued and Outstanding, 0.8 , 1.7 , and 1.7 shares, respectively

Common Stock, $ 0.01 par value:

48 unchanged sentences

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

Net Income (loss) — — — — — — ( 19.2 ) — ( 19.2 ) ( 0.1 ) ( 19.3 )

Foreign currency translation adjustment — — — — — ( 1.0 ) — — ( 1.0 ) — ( 1.0 )

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

— — — — — 0.0 — — 0.0 — 0.0

Stock-based compensation — — — — 2.3 — — — 2.3 — 2.3

Proceeds pursuant to stock-based compensation plans — — — — 3.1 — — — 3.1 — 3.1

Purchases of treasury stock at cost — — ( 1.1 ) — — — — ( 46.9 ) ( 46.9 ) — ( 46.9 )

Treasury stock issued pursuant to equity-based plans — — 0.1 — ( 3.8 ) — — 4.2 0.4 — 0.4

Dividends ($ 0.20 per share)

— — — — — — ( 6.8 ) — ( 6.8 ) — ( 6.8 )

Balance at February 28, 2023 1.7 $ 0.0 31.4 $ 0.4 $ 630.6 $ ( 53.1 ) $ 966.4 $ ( 395.9 ) $ 1,148.4 $ 1.5 $ 1,149.9

Class A Stock Common Stock Additional Paid-in Capital Accumulated

31 unchanged sentences

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

Net Income (loss) — — — — — — ( 26.5 ) — ( 26.5 ) — ( 26.5 )

Foreign currency translation adjustment — — — — — ( 0.4 ) — — ( 0.4 ) — ( 0.4 )

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

— — — — — 0.2 — — 0.2 — 0.2

Stock-based compensation — — — — 2.3 — — — 2.3 — 2.3

Proceeds pursuant to stock-based compensation plans — — — — 2.5 — — — 2.5 — 2.5

Purchases of treasury stock at cost — — ( 1.4 ) — — — — ( 54.2 ) ( 54.2 ) — ( 54.2 )

Treasury stock issued pursuant to equity-based plans — — 0.1 — ( 4.0 ) — — 4.6 0.6 — 0.6

Dividends ($ 0.20 per share)

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

Other (share conversion) ( 0.9 ) — 0.9 — ( 28.6 ) — — 28.6 — — —

Balance at February 29, 2024 0.8 $ 0.0 27.8 $ 0.4 $ 603.0 $ ( 53.7 ) $ 993.5 $ ( 545.6 ) $ 997.6 $ — $ 997.6

See accompanying notes

2 unchanged sentences

(Dollar amounts in millions)

Six months ended

November 30, November 30,

Nine months ended

February 29, February 28,

Cash flows - operating activities:

10 unchanged sentences

Income from equity-method investments ( 0.1 ) ( 1.5 )

Non cash write off related to asset impairments and write downs 0.5 —

Changes in assets and liabilities, net of amounts acquired:

23 unchanged sentences

Payment of dividends ( 18.9 ) ( 18.9 )

Other 0.1 ( 0.1 )

Net cash provided by (used in) financing activities ( 129.4 ) ( 79.3 )

56 unchanged sentences

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

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740)." The amendments in this update enhance the transparency and decision usefulness of income tax disclosures to provide information to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows.

The amendments in this ASU require more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

This ASU will be effective for the Company's fiscal year 2026.

Early adoption is permitted.

The amendments are to be applied prospectively, but may 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.

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

Disaggregated Revenue Data

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 29, February 28, February 29, February 28,

2024 2023 2024 2023

19 unchanged sentences

(3) Primarily includes markets in Asia.

(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.

(4) Total revenues of $ 323.7 and $ 1,114.8 for the three and nine months ended February 29, 2024, respectively, included rental income of $ 2.5 and $ 7.3 , respectively, related to leased space in the Company's headquarters which was not allocated to a segment.

Rental income of $ 1.5 and $ 4.6 for the three and nine months ended February 28, 2023, respectively, was recognized as a reduction to Selling, general and administrative expenses.

Estimated Returns

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

A liability for expected returns of $ 38.3 , $ 34.9 , and $ 44.8 is recorded within Other accrued expenses as of February 29, 2024, May 31, 2023, and February 28, 2023, respectively.

In addition, a return asset of $ 4.4 , $ 4.7 , and $ 3.5 is recorded within Prepaid expenses and other current assets as of February 29, 2024, May 31, 2023, and February 28, 2023, respectively, for the recoverable cost of product estimated to be returned by customers.

Contract Liabilities

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

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

February 29, 2024 May 31, 2023 February 28, 2023

Book fairs incentive credits $ 109.9 $ 110.8 $ 105.2

10 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 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.

As of February 29, 2024, contract liabilities of $ 193.8 are recorded within Deferred revenue on the Company's Condensed

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

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 $ 6.3 of contract liabilities as of February 29, 2024 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 $ 203.0 as of May 31, 2023 and February 28, 2023, 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 $ 33.0 and $ 113.7 for the three and nine months ended February 29, 2024, respectively, and $ 45.9 and $ 126.2 for the three and nine months ended February 28, 2023, respectively.

Allowance for Credit Losses

12 unchanged sentences

Balance as of November 30, 2023 $ 16.2

Provision (benefit) 0.9

Write-offs and other ( 1.5 )

Balance as of February 29, 2024 $ 15.6

SCHOLASTIC CORPORATION

11 unchanged sentences

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

Three months ended Six months ended

November 30, November 30,

Three months ended Nine months ended

February 29, February 28, February 29, February 28,

2024 2023 2024 2023

9 unchanged sentences

Total $ ( 34.9 ) $ ( 27.7 ) $ ( 32.7 ) $ 14.3

(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.

(1) Total revenues of $ 323.7 and $ 1,114.8 for the three and nine months ended February 29, 2024, respectively, included rental income of $ 2.5 and $ 7.3 , respectively, related to leased space in the Company's headquarters which was not allocated to a segment.

Rental income of $ 1.5 and $ 4.6 for the three and nine months ended February 28, 2023, 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:

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

February 29, 2024 May 31, 2023 February 28, 2023

US Revolving Credit Agreement $ 25.0 $ — $ —

3 unchanged sentences

Total long-term debt $ — $ — $ —

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

The Company's debt obligations as of February 29, 2024 have maturities of one year or less.

SCHOLASTIC CORPORATION

2 unchanged sentences

US Credit Agreement

On October 27, 2021, Scholastic Corporation and its principal operating subsidiary, Scholastic Inc., entered into an amended and restated 5-year credit agreement with a syndicate of banks and Bank of America, N.A., as administrative agent (the “Credit Agreement”).

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.

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").

On February 28, 2023, the Company entered into the First and Second Amendments to the Credit Agreement (collectively the "Amendments").

The Amendments, among other things, (i) adjusted the credit spread adjustment for SOFR (the secured overnight financing rate as administered by the Federal Reserve Bank of New York) to 0.10 % (10 basis points) and (ii) transitioned the reference rate under the Credit Agreement for borrowings from LIBOR (the London interbank offered rate) to SOFR, together with various other conforming changes to accommodate such replacement.

1 unchanged sentence

The interest pricing under the Credit Agreement is dependent upon the Borrower’s election of a rate that is either:

• a Base Rate equal to the higher of (i) the prime rate, (ii) the prevailing Federal Funds rate plus 0.50 % or (iii) the Eurodollar Rate plus 1.00 % plus, in each case, an applicable margin ranging from 0.35 % to 0.75 %, as determined by the Company’s prevailing Consolidated Leverage Ratio (as defined in the Credit Agreement);

• 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 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.

• a Base Rate equal to the higher of (i) the prime rate, (ii) the prevailing Federal Funds rate plus 0.50 % or (iii) the Term SOFR Rate plus 1.00 % plus, in each case, an applicable margin ranging from 0.35 % to 0.75 %, as determined by the Company’s prevailing Consolidated Leverage Ratio (as defined in the Credit Agreement);

• a SOFR rate (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 February 29, 2024, the applicable margin on Base Rate Advances was 0.35 % and the applicable margin on SOFR 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, 2023, the commitment fee rate was 0.20 %.

As of February 29, 2024, 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, 2023, the Company had no outstanding borrowings under the Credit Agreement.

As of February 29, 2024, outstanding borrowings under the Credit Agreement were $ 25.0 at an all-in borrowing rate of 6.77 %.

As of May 31, 2023 and February 28, 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 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.

At February 29, 2024, 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

2 unchanged sentences

Lines of Credit

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 .

As of February 29, 2024, 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 29, 2024, May 31, 2023 and February 28, 2023.

As of February 29, 2024, 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 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 .

As of February 29, 2024, the Company had various local currency international credit lines totaling $ 23.6 underwritten by banks primarily in the United States, Canada and the United Kingdom.

Outstanding borrowings under these facilities were $ 6.5 at February 29, 2024 at a weighted average interest rate of 3.8 %, compared to outstanding borrowings of $ 6.0 at May 31, 2023 at a weighted average interest rate of 4.9 %, and $ 5.2 at February 28, 2023 at a weighted average interest rate of 5.0 %.

As of February 29, 2024, the amounts available under these facilities totaled $ 17.1 .

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.

6 unchanged sentences

The Company does not expect, in the case of those various claims and lawsuits arising in the normal course of business where a loss is considered probable or reasonably possible, that the reasonably possible losses from such claims and lawsuits (either individually or in the aggregate) would have a material adverse effect on the Company’s consolidated financial position or results of operations.

During the third quarter of fiscal 2023, the Company received $ 5.0 in recoveries from its insurance programs related to photo litigation settlements accrued and paid in prior periods.

The recoveries were recognized as an offset to the legal settlements and reflected in Selling, general and administrative expenses in the Company's Condensed Consolidated Statement of Operations for the quarter ended February 28, 2023.

The Company expects to receive additional recoveries from its insurance programs related to an intellectual property legal settlement accrued during fiscal 2021, however, it is premature to determine with any level of probability or accuracy the amount of those recoveries at this time.

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

EARNINGS (LOSS) PER SHARE

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 29, February 28, February 29, February 28,

2024 2023 2024 2023

8 unchanged sentences

1.1 0.7 0.7 0.6

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(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

February 29, 2024 February 28, 2023

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

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.

As of February 29, 2024, $ 46.0 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.

6 unchanged sentences

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 receivables acquired had a fair value of $ 0.1 and were collected as of the end of the first quarter of fiscal 2024.

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.

3 unchanged sentences

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.

The transaction was not

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

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:

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

February 29, 2024 May 31, 2023 February 28, 2023

Gross beginning balance $ 172.3 $ 164.9 $ 164.9

6 unchanged sentences

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:

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

February 29, 2024 May 31, 2023 February 28, 2023

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

8 unchanged sentences

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

During the third quarter of fiscal 2024, the Company acquired $ 0.2 of certain amortizable intangible assets of a U.S.- based children's book publishing business.

These intangible assets are amortized over the estimated useful life of 5 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.

5 unchanged sentences

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:

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

February 29, 2024 May 31, 2023 February 28, 2023 Segment

Equity method investments $ 30.8 $ 31.6 $ 31.1 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 $ 0.1 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)

Income (loss) from equity investments is reported in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and totaled a loss of $ 0.2 and income of $ 0.1 for the three and nine months ended February 29, 2024, respectively, and income of $ 0.2 and $ 1.5 for the three and nine months ended February 28, 2023, respectively.

The Company received dividends of $ 1.3 in the three and nine month period ended February 29, 2024.

The Company did not receive any dividends in the three and nine month period ended February 28, 2023.

EMPLOYEE BENEFIT PLANS

2 unchanged sentences

Three months ended Three months ended

November 30, November 30,

February 29, February 28, February 29, February 28,

2024 2023 2024 2023

5 unchanged sentences

Total $ 0.5 $ 0.1 $ ( 0.2 ) $ ( 0.2 )

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

UK Pension Plan US Postretirement Benefits

Six months ended Six months ended

November 30, November 30,

Nine months ended Nine months ended

February 29, February 28, February 29, February 28,

2024 2023 2024 2023

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, 2023, the Company contributed $ 0.6 to the UK Pension Plan.

For the nine months ended February 29, 2024, the Company contributed $ 0.9 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.

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 29, February 28, February 29, February 28,

2024 2023 2024 2023

4 unchanged sentences

Total stock-based compensation expense $ 2.3 $ 2.3 $ 8.7 $ 8.2

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 Six months ended

November 30, November 30,

Three months ended Nine months ended

February 29, February 28, February 29, February 28,

2024 2023 2024 2023

2 unchanged sentences

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

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

The table below represents the Board authorization at the dates indicated:

Authorization Amount

July 2023 100.0

December 2023 66.2

Total current Board authorizations $ 166.2

Less repurchases made under these authorizations $ ( 120.2 )

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.

Remaining Board authorization at February 29, 2024 $ 46.0

Remaining Board authorization at February 29, 2024 represents the amount remaining under the current $ 66.2 Board authorization for Common share repurchases announced on December 13, 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.

Repurchases of the Company's Common Stock were $ 54.2 and $ 142.7 , including excise tax on share repurchases of $ 0.2 and $ 0.9 , during the three and nine months ended February 29, 2024, respectively.

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

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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, 2023

Three months ended February 29, 2024

Foreign currency translation adjustments Retirement benefit plans Total

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

Beginning balance at December 1, 2023 $ ( 48.0 ) $ ( 5.5 ) $ ( 53.5 )

Other comprehensive income (loss) before reclassifications ( 0.4 ) — ( 0.4 )

4 unchanged sentences

Other comprehensive income (loss) ( 0.4 ) 0.2 ( 0.2 )

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

Three months ended November 30, 2022

Ending balance at February 29, 2024 $ ( 48.4 ) $ ( 5.3 ) $ ( 53.7 )

Three months ended February 28, 2023

Foreign currency translation adjustments Retirement benefit plans Total

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

Beginning balance at December 1, 2022 $ ( 51.2 ) $ ( 0.9 ) $ ( 52.1 )

Other comprehensive income (loss) before reclassifications ( 1.0 ) — ( 1.0 )

4 unchanged sentences

Other comprehensive income (loss) ( 1.0 ) 0.0 ( 1.0 )

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

Six months ended November 30, 2023

Ending balance at February 28, 2023 $ ( 52.2 ) $ ( 0.9 ) $ ( 53.1 )

SCHOLASTIC CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED

(Dollar amounts in millions, except per share data)

Nine months ended February 29, 2024

Foreign currency translation adjustments Retirement benefit plans Total

6 unchanged sentences

Other comprehensive income (loss) 1.6 0.5 2.1

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

Six months ended November 30, 2022

Ending balance at February 29, 2024 $ ( 48.4 ) $ ( 5.3 ) $ ( 53.7 )

Nine months ended February 28, 2023

Foreign currency translation adjustments Retirement benefit plans Total

6 unchanged sentences

Other comprehensive income (loss) ( 7.6 ) ( 0.1 ) ( 7.7 )

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)

Ending balance at February 28, 2023 $ ( 52.2 ) $ ( 0.9 ) $ ( 53.1 )

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 29, February 28, February 29, February 28,

2024 2023 2024 2023

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.

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.

15 unchanged sentences

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 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's interim effective tax rate, inclusive of discrete items, for the three and nine month periods ended February 29, 2024 was 23.4 % and 23.5 %, respectively, compared to 26.3 % and 36.3 %, respectively, for the prior fiscal year period.

The interim effective tax rate for the nine months ended February 29, 2024 varies from the statutory rate primarily due to state & local income tax.

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

3 unchanged sentences

The Company was previously under audit for the fiscal 2015 through fiscal 2020 tax years and the examination was completed in fiscal 2023 with no impact to the financial results.

During the third quarter of fiscal 2023, the Company received a federal tax refund of $ 9.8 , inclusive of interest, which was released due to the completion of the IRS examination.

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 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)

The notional values of the contracts as of February 29, 2024 and February 28, 2023 were $ 22.8 and $ 22.8 , respectively.

A net unrealized gain of $ 0.2 and $ 0.6 was recognized for the nine months ended February 29, 2024 and February 28, 2023, respectively.

OTHER ACCRUED EXPENSES

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

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

February 29, 2024 May 31, 2023 February 28, 2023

Accrued payroll, payroll taxes and benefits $ 32.7 $ 29.2 $ 31.6

6 unchanged sentences

SUBSEQUENT EVENTS

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.

On March 11, 2024, the Company signed a definitive agreement to invest in 9 Story Media Group ("9 Story"), a leading creator, producer and distributor of premium animated and live-action children's content.

Under the terms of the definitive agreement with 9 Story, Scholastic will acquire 100 % of the economic interests and a minority of voting rights in 9 Story for approximately $ 186 million, subject to customary purchase price adjustments.

The investment has been approved by both companies' boards of directors and the shareholders of 9 Story.

Subject to receipt of a satisfactory opinion by the Minister of Canadian Heritage and other customary closing conditions, the transaction is expected to close in the first quarter of fiscal 2025.

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

The dividend is payable on June 17, 2024 to shareholders of record as of the close of business on April 30, 2024.

The Board also authorized an increase of $ 54.6 for Common share repurchases under the Company's share buy-back program, resulting in a current Board authorization of $ 100.0 , which includes $ 46.0 remaining from the previous Board authorization less share repurchases of $ 0.6 subsequent to February 29, 2024.

SCHOLASTIC CORPORATION

1 unchanged sentence

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.

Revenues for the third quarter ended February 29, 2024 were $323.7 million, compared to $324.9 million in the prior fiscal year quarter, a decrease of $1.2 million.

The Company reported net loss per diluted share of Class A and Common Stock of $0.91 in the third quarter of fiscal 2024, compared to net loss per diluted share of $0.57 in the prior fiscal year quarter.

During the third fiscal quarter, trade channel revenues benefited from multiple new releases, which expanded the Company's presence on bestseller lists, including Heroes:

A Novel of Pearl Harbor by Alan Gratz and the latest titles in our popular graphic novel series Heartstopper TM by Alice Oseman, Wings of Fire TM by Tui Sutherland, Amulet by Kazi Kibuishi and The Baby-Sitters Club ® by Ann Martin.

Looking ahead, the next title in Dav Pilkey’s Dog Man ® series went on sale on March 19th.

Following the success of the Goosebumps ® TV series which debuted last fall, Disney announced it has greenlit a second season of the hit series for Disney+ ® .

On March 11th, the Company signed a definitive agreement to invest in 9 Story Media Group ("9 Story").

This strategic combination with a leading creator, producer and distributor of premium animated and live-action children’s content will significantly grow the Company's footprint in children’s media as well as opportunities to build and monetize Scholastic’s trusted global brand, best-selling publishing and unique distribution channels, reaching kids where they are and creating more value for our shareholders.

On a consolidated basis, the Company experienced modest revenue declines and higher expected losses in the seasonally small third quarter, in-line with expectations, reflecting the continued impact of the currently complex environment in U.S.

schools on the School Reading Events and Education divisions.

The Company remains committed to executing on a long-term strategy, investing in content and capabilities to drive growth, maintaining a strong and efficient balance sheet, and returning capital to shareholders.

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.

Revenues for the quarter ended February 29, 2024 decreased by $1.2 million to $323.7 million, compared to $324.9 million in the prior fiscal year quarter.

The Children's Book Publishing and Distribution segment revenues decreased by $10.4 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.

These decreases were offset by increased trade publishing revenues driven by higher sales in both backlist and frontlist titles from book series, including Heartstopper , Wings of Fire , Amulet , and The Baby-Sitters Club .

In the Education Solutions segment, revenues were relatively consistent with the prior period, down $1.5 million, as the third fiscal quarter is a lower volume period due to the seasonality of the school markets.

In local currency, International segment revenues increased by $8.2 million, primarily reflecting higher trade channel sales in the UK and Canada as well as higher book fairs revenues in Canada.

The net foreign exchange impact on the International segment revenues was not significant in the quarter ended February 29, 2024.

Revenues for the nine months ended February 29, 2024 decreased by $60.9 million to $1,114.8 million, compared to $1,175.7 million in the prior fiscal year period.

The Children's Book Publishing and Distribution segment revenues decreased by $57.8 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 softness in the retail book market in the first half of the fiscal year and lower media revenues due to the prior period release of the " Eva the Owlet" TV series, based on the Owl Diaries book series.

In the Education Solutions segment, revenues decreased by $7.7 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.

In local currency, the International segment revenues decreased by $2.0 million, primarily due to lower sales in Australia, primarily from the trade channel which continued to be impacted by the softness in the retail markets, partially offset by higher revenues in Canada driven by improved book fair performance and increased revenues in the U.K.

primarily driven by the trade channel.

International segment revenues were also impacted by unfavorable foreign exchange of $0.7 million in the period ended February 29, 2024.

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