What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-03-20 compared with 2025-12-19 · 155 added, 144 removed, 106 unchanged (74% of the section changed)

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

Components of Cost of goods sold for the three and six months ended November 30, 2025 and November 30, 2024 are as follows:

Three months ended Six months ended

November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024

prior fiscal year period as a result of the sale and leaseback of the Company's headquarters in New York City as the Company no longer owns the leasable space.

Components of Cost of goods sold for the three and nine months ended February 28, 2026 and February 28, 2025 are as follows:

Three months ended Nine months ended

February 28, 2026 February 28, 2025 February 28, 2026 February 28, 2025

($ amounts in millions) % of Revenue % of Revenue % of Revenue % of Revenue

5 unchanged sentences

Total $ 150.3 45.7 % $ 154.6 46.1 % $ 499.4 45.2 % $ 511.5 45.8 %

Cost of goods sold for the quarter ended November 30, 2025 was $225.6 million, or 40.9% of revenues, compared to $228.6 million, or 42.0% of revenues, in the prior fiscal year quarter.

Cost of goods sold for the quarter ended February 28, 2026 was $150.3 million, or 45.7% of revenues, compared to $154.6 million, or 46.1% of revenues, in the prior fiscal year quarter.

The decrease in Cost of Goods sold as a percentage of revenues was primarily driven by improved utilization of inventory in the U.S.

book clubs channel which resulted in less excess and obsolete inventory and by lower inbound freight costs in the Company's international Major Markets.

book fairs channel which resulted in less excess and obsolete inventory, in addition to lower freight costs in the Company's international Major Markets.

Royalty costs were also lower as a result of a decrease in the mix of higher-royalty bearing titles sold in the U.S.

trade channel in the quarter ended February 28, 2026, partially offset by higher sales of royalty-bearing titles in Australia.

This was partially offset by increased tariff charges, primarily in the U.S.

book fairs channel.

The Company expects the newly imposed tariffs to continue to increase Cost of goods sold, particularly during the upcoming peak selling season for the book fairs channel in the fourth fiscal quarter.

Based on current anticipated revenues and tariff policy, the Company continues to expect approximately $10 million of incremental tariff expense for fiscal 2026.

Cost of goods sold for the six months ended November 30, 2025 was $349.1 million, or 44.9% of revenues, compared to $356.9 million, or 45.7% of revenues, in the prior fiscal year period.

book fairs channel, coupled with increased production costs from higher production services revenue in Entertainment and higher shipping and postage costs related to sponsored programs in Education Solutions .

Cost of goods sold for the nine months ended February 28, 2026 was $499.4 million, or 45.2% of revenues, compared to $511.5 million, or 45.8% of revenues, in the prior fiscal year period.

The decrease in Cost of goods sold as a percentage of revenues was primarily driven by improved utilization of inventory in the U.S.

book clubs channel which resulted in less excess and obsolete inventory and by lower inbound freight costs in the Company's international Major Markets.

This was partially offset by higher royalty costs as a result of an increase in the mix of higher-royalty bearing titles sold in the U.S.

trade channel in the period ended November 30, 2025 and increased tariff charges, primarily in the U.S.

book fairs and book clubs channels which resulted in less excess and obsolete inventory, in addition to lower freight costs in the Company's international Major Markets.

This was partially offset by increased tariff charges, primarily in the U.S.

book fairs channel.

Selling, general and administrative expenses for the quarter ended November 30, 2025 decreased to $217.5 million, compared to $224.9 million in the prior fiscal year quarter.

The $7.4 million decrease was primarily attributable to lower employee-related and external labor costs resulting from the Company's previous reorganization efforts and cost-saving initiatives and lower spending on general expenses.

In addition, the Company incurred lower severance expense of $1.3 million in the quarter ended November 30, 2025 related to cost-saving initiatives.

Selling, general and administrative expenses for the six months ended November 30, 2025 decreased to $394.7 million, compared to $407.0 million in the prior fiscal year period.

The $12.3 million decrease was primarily attributable to lower employee-related and external labor costs resulting from the Company's previous reorganization efforts and cost-saving initiatives and lower spending on general expenses.

This was partially offset by increased severance expense of $6.3 million in the period ended November 30, 2025 related to cost-saving initiatives.

Depreciation and amortization expense for the quarter ended November 30, 2025 was $16.5 million, which was comparable to $16.3 million in the prior fiscal year quarter.

There were no significant assets placed into service during the quarter ended November 30, 2025.

Depreciation and amortization expense for the six months ended November 30, 2025 was $32.8 million, compared to $31.6 million in the prior fiscal year period.

The $1.2 million increase in Depreciation and amortization expense was primarily due to new assets placed into service during the first quarter of fiscal 2026.

The Company is evaluating the potential impact of a recent U.S.

Supreme Court ruling pertaining to tariffs previously paid on imported products under the International Emergency Economic Powers Act (IEEPA).

The Company estimates that approximately $9 million of its tariff payments are subject to this ruling, however, no amounts have been recognized to date.

The ultimate timing and amount of any refund remain uncertain.

Selling, general and administrative expenses for the quarter ended February 28, 2026 increased to $192.8 million, compared to $187.5 million in the prior fiscal year quarter.

The $5.3 million increase was primarily attributable to higher rent expense as a result of the sale and leaseback of the Company's headquarters in New York City, partially offset by lower severance expense of $0.6 million in the quarter ended February 28, 2026 related to cost-saving initiatives.

Selling, general and administrative expenses for the nine months ended February 28, 2026 decreased to $587.5 million, compared to $594.5 million in the prior fiscal year period.

The $7.0 million decrease was primarily attributable to lower employee-related and external labor costs resulting from the Company's previous reorganization efforts and cost-saving initiatives and lower spending on general overhead expenses.

This was partially offset by increased severance expense related to cost-saving initiatives of $5.7 million in the period ended February 28, 2026 and higher rent expense as a result of the sale and leaseback of the Company's headquarters in New York City.

Depreciation and amortization expense for the quarter ended February 28, 2026 decreased by $4.0 million to $12.9 million, compared to $16.9 million in the prior fiscal year quarter.

Depreciation and amortization expense

SCHOLASTIC CORPORATION Item 2.

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

Asset impairments for the quarter ended November 30, 2025 were $8.6 million.

The Company recognized asset impairments of $3.4 million related to certain products within the Education Solutions segment and $5.2 million primarily related to certain film and television programs in development within the Entertainment segment.

Asset impairments for the six months ended November 30, 2025 were $9.4 million.

for the nine months ended February 28, 2026 decreased by $2.8 million to $45.7 million, compared to $48.5 million in the prior fiscal year period.

The decrease in Depreciation and amortization expense was primarily attributable to the sale of the Company's headquarters in New York City and distribution center in Jefferson City.

Asset impairments for the nine months ended February 28, 2026 were $9.4 million.

The Company recognized asset impairments of $3.4 million related to certain products within the Education Solutions segment, $5.2 million primarily related to certain film and television programs in development within the Entertainment segment and $0.8 million related to a product that is no longer being sold within the Children's Book Publishing and Distribution segment.

Interest expense for the three and six months ended November 30, 2025 was $5.6 million and $10.6 million, respectively, compared to $4.9 million and $8.7 million, respectively, in the prior fiscal year periods.

The increase in interest expense was due to increased borrowings under the U.S.

Credit Agreement during the period ended November 30, 2025.

Interest income for the three and six months ended November 30, 2025 was $0.6 million and $1.1 million, respectively, which was comparable to $0.5 million and $1.3 million, respectively, in the prior fiscal year periods.

Asset impairments for the three and nine months ended February 28, 2025 were $0.3 million and $0.4 million, respectively, primarily related to the early exit of leased office space within the Entertainment segment.

Interest expense for the three and nine months ended February 28, 2026 was $1.9 million and $12.5 million, respectively, compared to $4.7 million and $13.4 million, respectively, in the prior fiscal year periods.

The decrease in interest expense was due to repayments of borrowings under the U.S.

Credit Agreement during the period ended February 28, 2026.

Interest income for the three and nine months ended February 28, 2026 was $1.1 million and $2.2 million, compared to $0.4 million and $1.7 million, respectively, in the prior fiscal year periods.

The increase in interest income was attributable to higher average short term investment balances in the period ended February 28, 2026 resulting from the net proceeds received from the sale and leaseback transactions.

The Company invests excess cash in short term investments which earn competitive interest rates that change directionally in relation to the Federal Funds rate.

Subsequent to November 30, 2025, the Company entered into sale-leaseback agreements for its headquarters in New York City and primary distribution center in Jefferson City, Missouri which are expected to provide additional liquidity and may impact interest income and expense during the remainder of fiscal 2026.

Other non-operating expense for each of the three and six month periods ended November 30, 2025 was $1.6 million.

The Company incurred $1.6 million of costs related to the sale-leaseback transactions for the Company's headquarters in New York City and primary distribution center in Jefferson City, Missouri.

The Company's interim effective tax rate, inclusive of discrete items, for the three and six months ended November 30, 2025 was 26.4% and 28.0%, respectively, compared to 30.3% and 37.2%, respectively, for the prior fiscal year periods.

The interim effective tax rate for the six months ended November 30, 2025 varies from the statutory rate primarily due to non-deductible compensation for covered executive employees and expected state and local income tax.

Net income for the quarter ended November 30, 2025 increased by $7.1 million to $55.9 million, compared to $48.8 million in the prior fiscal year quarter.

Earnings per basic and diluted share of Class A and Common Stock were $2.21 and $2.17, respectively, for the fiscal quarter ended November 30, 2025, compared to $1.73 and $1.71, respectively, in the prior fiscal year quarter.

Net loss for the six months ended November 30, 2025 increased by $1.5 million to $15.2 million, compared to $13.7 million in the prior fiscal year period.

Loss per basic and diluted share of Class A and Common Stock was $0.60 for the period ended November 30, 2025, compared to $0.48 in the prior fiscal year period.

Gain on sale and leaseback transactions for the three and nine months ended February 28, 2026 was $119.8 million and $118.2 million, respectively.

During the third quarter of fiscal 2026, the Company completed the sale and leaseback transactions related to its headquarters in New York City and primary distribution center in Jefferson City, Missouri.

The Company recognized a pre-tax gain of $118.2 million, which included certain transaction costs of $1.6 million incurred during the second quarter of fiscal 2026.

The Company's interim effective tax rate, inclusive of discrete items, for the three and nine months ended February 28, 2026 was 31.9% and 33.1%, respectively, compared to 87.3% and 65.5%, respectively, for the prior fiscal year periods.

The interim effective tax rate for the nine months ended February 28, 2026 varies from the statutory rate primarily due to non-deductible compensation for covered executive employees and expected state and local income tax.

Net income for the quarter ended February 28, 2026 increased by $66.1 million to $62.5 million, compared to a net loss of $3.6 million in the prior fiscal year quarter.

Earnings per basic and diluted share of Class A and Common Stock were $2.61 and $2.55, respectively, for the fiscal quarter ended February 28, 2026, compared to a loss per basic and diluted share of $0.13 in the prior fiscal year quarter.

Net income for the nine months ended February 28, 2026 increased by $64.6 million to $47.3 million, compared to a net loss of $17.3 million in the prior fiscal year period.

Earnings per basic and diluted share of Class A and Common Stock was $1.91 and $1.87, respectively, for the period ended February 28, 2026, compared to a loss per basic and diluted share of $0.61 in the prior fiscal year period.

SCHOLASTIC CORPORATION

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

Children’s Book Publishing and Distribution

Three months ended November 30, Six months ended November 30,

Three months ended February 28, Nine months ended February 28,

($ amounts in millions)

8 unchanged sentences

NM Not meaningful

SCHOLASTIC CORPORATION

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

Revenues for the quarter ended November 30, 2025 increased by $13.9 million to $380.9 million, compared to $367.0 million in the prior fiscal year quarter.

Trade channel revenues increased $7.6 million, driven by new releases in the quarter ended November 30, 2025, which included the latest title in the Dog Man ® series, Dog Man #14:

Big Jim Believes, the interactive illustrated edition of Harry Potter and the Goblet of Fire, the collector’s edition of Suzanne Collins’ Sunrise on the Reaping and the illustrated edition of Catching Fire ® .

Revenues from School Reading Events also increased $6.3 million, driven by higher fair count and increased revenue per fair in the book fairs channel, partly offset by lower book clubs channel revenues primarily due to lower sponsor participation.

Revenues for the six months ended November 30, 2025 increased by $17.9 million to $490.3 million, compared to $472.4 million in the prior fiscal year period.

Revenues for the quarter ended February 28, 2026 decreased by $5.7 million to $197.6 million, compared to $203.3 million in the prior fiscal year quarter.

Trade channel revenues decreased $7.7 million, primarily due to the shift in timing of the Dog Man publication which occurred in the second fiscal quarter compared to the third fiscal quarter in the prior year.

Revenues from School Reading Events increased $2.0 million, driven by higher revenue per fair in the book fairs channel.

Revenues from the book clubs channel were relatively consistent with the prior fiscal year quarter.

Revenues for the nine months ended February 28, 2026 increased by $12.2 million to $687.9 million, compared to $675.7 million in the prior fiscal year period.

Revenues from School Reading Events increased $12.7 million, driven by higher fair count and increased revenue per fair in the book fairs channel, coupled with increased redemptions of book fair incentive program credits.

This was partially offset by lower book clubs channel revenues primarily due to lower sponsor participation.

Trade channel revenues also increased $7.2 million, with continued success in the Dog Man , Hunger Games ® and Harry Potter ® franchises, which included several new releases during the period ended November 30, 2025.

Cost of goods sold for the quarter ended November 30, 2025 was $146.5 million, or 38.5% of revenues, compared to $143.3 million, or 39.0% of revenues, in the prior fiscal year quarter.

The decrease in Cost of goods sold as a percentage of revenues was primarily driven by improved utilization of inventory in the book clubs channel which resulted in less excess and obsolete inventory, partially offset by increased tariff charges in the book fairs channel.

Cost of goods sold for the six months ended November 30, 2025 was $208.7 million, or 42.6% of revenues, compared to $202.2 million, or 42.8% of revenues, in the prior fiscal year period.

Cost of goods sold benefited from improved utilization of inventory in the book clubs channel resulting in less excess and obsolete inventory, which was substantially offset by higher royalty costs as a result of an increase in the mix of higher-royalty bearing titles sold in the trade channel in the period ended November 30, 2025 and increased tariff charges in the book fairs channel.

The Company expects the newly imposed tariffs to continue to increase Cost of goods sold, particularly during the upcoming peak selling season for the book fairs channel in the fourth fiscal quarter.

Other operating expenses for the quarter ended November 30, 2025 increased by $4.0 million to $125.6 million, compared to $121.6 million in the prior fiscal year quarter.

Other operating expenses for the six months ended November 30, 2025 increased by $2.4 million to $207.1 million, compared to $204.7 million in the prior fiscal year period.

Trade channel revenues were relatively consistent with the prior fiscal year period, decreasing $0.5 million, with continued success in the Hunger Games ® , Harry Potter ® and Dog Man franchises.

Cost of goods sold for the quarter ended February 28, 2026 was $83.7 million, or 42.4% of revenues, compared to $92.0 million, or 45.3% of revenues, in the prior fiscal year quarter.

The decrease in Cost of goods sold as a percentage of revenues was primarily driven by lower royalty costs as a result of a decrease in the mix of higher-royalty bearing titles sold in the trade channel in the quarter ended February 28, 2026, coupled with improved utilization of inventory in the book fairs channel which resulted in less excess and obsolete inventory.

This was partially offset by increased tariff charges, primarily in the book fairs channel.

Cost of goods sold for the nine months ended February 28, 2026 was $292.4 million, or 42.5% of revenues, compared to $294.2 million, or 43.5% of revenues, in the prior fiscal year period.

Cost of goods sold benefited from improved utilization of inventory in the book fairs and book clubs channels resulting in less excess and obsolete inventory, partially offset by increased tariff charges, primarily in the book fairs channel.

Other operating expenses for the quarter ended February 28, 2026 were $105.0 million which were comparable to $103.7 million in the prior fiscal year quarter.

Other operating expenses for the nine months ended February 28, 2026 increased by $3.7 million to $312.1 million, compared to $308.4 million in the prior fiscal year period.

The increase in Other operating expenses was primarily attributable to inflationary pressures and higher expected credit losses on customer receivables.

Asset impairments for the six months ended November 30, 2025 were $0.8 million.

Asset impairments for the nine months ended February 28, 2026 were $0.8 million.

During the first quarter of fiscal 2026, the Company recognized an asset impairment of $0.8 million related to a certain product that is no longer being sold.

Refer to Note 5, "Asset Write Down," of Notes to the Consolidated Financial Statements in Item 8, "Consolidated Financial Statements and Supplementary Data" for further details.

Segment operating income for the quarter ended November 30, 2025 increased by $6.7 million to $108.8 million, compared to $102.1 million in the prior fiscal year quarter.

Segment operating income for the six months ended November 30, 2025 increased by $8.2 million to $73.7 million, compared to $65.5 million in the prior fiscal year period.

The improvement was primarily attributable to increased revenues from the book fairs and trade channels.

Segment operating income for the quarter ended February 28, 2026 increased by $1.3 million to $8.9 million, compared to $7.6 million in the prior fiscal year quarter.

The improvement was primarily attributable to favorable cost of goods sold as a result of lower royalty costs in the trade channel, coupled with improved utilization of inventory in the book fairs channel which resulted in less excess and obsolete inventory.

SCHOLASTIC CORPORATION

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

Segment operating income for the nine months ended February 28, 2026 increased by $9.5 million to $82.6 million, compared to $73.1 million in the prior fiscal year period.

The improvement was primarily attributable to increased revenues from the book fairs channel, coupled with favorable cost of goods sold as a result of improved utilization of inventory in the book fairs and book clubs channels resulting in less excess and obsolete inventory.

SCHOLASTIC CORPORATION

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

Education Solutions

Three months ended November 30, Six months ended November 30,

Three months ended February 28, Nine months ended February 28,

($ amounts in millions) 2026 2025 Change Change 2026 2025 Change Change

3 unchanged sentences

38.1 41.1 (3.0) (7.3) % 119.8 130.8 (11.0) (8.4) %

Asset impairments 3.4 — 3.4 NM 3.4 — 3.4 NM

Operating income (loss) $ (4.7) $ (0.5) $ (4.2) NM $ (25.9) $ (17.5) $ (8.4) (48.0) %

Asset impairments — — — — % 3.4 — 3.4 NM

Operating income (loss) $ (5.2) $ (6.9) $ 1.7 24.6 % $ (31.1) $ (24.4) $ (6.7) (27.5) %

(1) Other operating expenses include selling, general and administrative expenses and depreciation and amortization.

NM Not meaningful

Revenues for the quarter ended November 30, 2025 decreased by $9.0 million to $62.2 million, compared to $71.2 million in the prior fiscal year quarter.

The decrease in segment revenues was primarily driven by delayed or reduced school funding which resulted in lower sales of supplemental programs, in addition to lower subscription revenues from Magazines+.

Revenues from sponsored programs were consistent with the prior fiscal year quarter.

Revenues for the six months ended November 30, 2025 decreased by $24.6 million to $102.3 million, compared to $126.9 million in the prior fiscal year period.

The decrease in segment revenues was primarily driven by delayed or reduced school funding which resulted in lower sales of supplemental programs.

In addition, lower subscription revenues from Magazines+ and the timing of revenues from sponsored programs in the first fiscal quarter contributed to the decrease in revenues from the prior fiscal year period.

Cost of goods sold for the quarter ended November 30, 2025 was $23.8 million, or 38.3% of revenues, which was comparable to $27.3 million, or 38.3% of revenues, in the prior fiscal year quarter.

Cost of goods sold for the six months ended November 30, 2025 was $43.1 million, or 42.1% of revenues, compared to $54.7 million, or 43.1% of revenues, in the prior fiscal year period.

Cost of goods sold as a percentage of revenues decreased due to lower product costs associated with the mix of products sold during the period ended November 30, 2025.

Other operating expenses for the quarter ended November 30, 2025 decreased by $4.7 million to $39.7 million, compared to $44.4 million in the prior fiscal year quarter.

Other operating expenses for the six months ended November 30, 2025 decreased by $8.0 million to $81.7 million, compared to $89.7 million in the prior fiscal year period.

Revenues for the quarter ended February 28, 2026 decreased by $1.1 million to $56.1 million, compared to $57.2 million in the prior fiscal year quarter.

The decrease in segment revenues was primarily driven by lower sales of supplemental curriculum products resulting from the continued challenging funding market for schools and school districts, coupled with lower subscription revenues from Magazines+.

This decline was partially offset by increased revenues from sponsored programs in the quarter ended February 28, 2026.

Revenues for the nine months ended February 28, 2026 decreased by $25.7 million to $158.4 million, compared to $184.1 million in the prior fiscal year period.

The decrease in segment revenues was primarily driven by lower sales of supplemental curriculum products due to the continued challenging funding market for schools and school districts, coupled with lower subscription revenues from Magazines+.

Revenues from sponsored programs were relatively consistent with the prior fiscal year period.

Cost of goods sold for the quarter ended February 28, 2026 was $23.2 million, or 41.4% of revenues, which was comparable to $23.0 million, or 40.2% of revenues, in the prior fiscal year quarter.

Cost of goods sold as a percentage of revenues increased due to higher shipping and postage costs related to sponsored programs.

Cost of goods sold for the nine months ended February 28, 2026 was $66.3 million, or 41.9% of revenues, compared to $77.7 million, or 42.2% of revenues, in the prior fiscal year period.

Cost of goods sold as a percentage of revenues decreased due to lower product costs associated with the mix of products sold during the period ended February 28, 2026, partially offset by higher shipping and postage costs related to sponsored programs.

Other operating expenses for the quarter ended February 28, 2026 decreased by $3.0 million to $38.1 million, compared to $41.1 million in the prior fiscal year quarter.

Other operating expenses for the nine months ended February 28, 2026 decreased by $11.0 million to $119.8 million, compared to $130.8 million in the prior fiscal year period.

The decrease in Other operating expenses was primarily attributable to lower employee-related and external labor costs and reduced spending on general overhead expenses.

Asset impairments for the three and six months ended November 30, 2025 were $3.4 million.

During the second quarter of fiscal 2026, the Company recognized an asset impairment of $3.4 million related to certain education products.

Asset impairments for the nine months ended February 28, 2026 were $3.4 million.

During the second quarter of fiscal 2026, the Company recognized asset impairments of $3.4 million related to certain education products.

Refer to Note 5, "Asset Write Down," of Notes to the Consolidated Financial Statements in Item 8, "Consolidated Financial Statements and Supplementary Data" for further details.

Segment operating loss for the quarter ended November 30, 2025 increased by $4.2 million to $4.7 million, compared to $0.5 million in the prior fiscal year quarter.

Segment operating loss for the six months ended November 30, 2025 increased by $8.4 million to $25.9 million, compared to $17.5 million in the prior fiscal year period.

The overall decline was driven by lower revenues and the asset impairments recognized during the period ended November 30, 2025, partially offset by lower employee-related and external labor costs as well as reduced spending on general overhead expenses.

Segment operating loss for the quarter ended February 28, 2026 decreased by $1.7 million to $5.2 million, compared to an operating loss of $6.9 million in the prior fiscal year quarter.

The improvement was primarily attributable to lower employee-related and external labor costs as well as reduced spending on general overhead expenses.

Segment operating loss for the nine months ended February 28, 2026 increased by $6.7 million to $31.1 million, compared to an operating loss of $24.4 million in the prior fiscal year period.

The overall decline was driven by lower revenues and the asset impairments recognized during the period ended February 28, 2026, partially offset by lower employee-related and external labor costs as well as reduced spending on general overhead expenses.

SCHOLASTIC CORPORATION

1 unchanged sentence

Entertainment

Three months ended November 30, Six months ended November 30,

Three months ended February 28, Nine months ended February 28,

($ amounts in millions) 2026 2025 Change Change 2026 2025 Change Change

9 unchanged sentences

Refer to Note 9 "Acquisitions," of Notes to the Consolidated Financial Statements in Item 8, "Consolidated Financial Statements and Supplementary Data" for further details regarding the acquisition of 9 Story.

Revenues for the quarter ended November 30, 2025 decreased by $1.7 million to $15.1 million, compared to $16.8 million in the prior fiscal year quarter.

The decrease in segment revenues was primarily driven by lower production revenues due to fewer episodic deliveries as compared to the prior fiscal year quarter and lower distribution revenues.

Revenues for the six months ended November 30, 2025 decreased by $4.7 million to $28.7 million, compared to $33.4 million in the prior fiscal year period.

The decrease in segment revenues was primarily driven by lower production revenues due to fewer episodic deliveries as compared to the prior fiscal year period and lower distribution revenues.

This was partially offset by increased production services revenues.

Cost of goods sold for the quarter ended November 30, 2025 was $8.8 million, or 58.3% of revenues, compared to $10.6 million, or 63.1% of revenues in the prior fiscal year quarter.

The decrease in Cost of goods sold as a percentage of revenues was primarily driven by the timing of distribution and participation expenses.

Cost of goods sold for the six months ended November 30, 2025 was $16.9 million, or 58.9% of revenues, compared to $18.9 million, or 56.6% of revenues in the prior fiscal year period.

The increase in Cost of goods sold as a percentage of revenues was primarily driven by the timing of distribution and participation expenses, and, to a lesser extent, the increase in production services revenues which have a higher cost compared to production revenues related to episodic deliveries.

Other operating expenses for the three and six months ended November 30, 2025 were $10.1 million and $19.6 million, respectively, which were comparable to $10.9 million and $19.7 million, respectively, in the prior fiscal year periods.

Asset impairments for the three and six months ended November 30, 2025 were $5.2 million.

Revenues for the quarter ended February 28, 2026 increased by $3.2 million to $16.0 million, compared to $12.8 million in the prior fiscal year quarter.

The increase in segment revenues was primarily driven by higher production revenues from services and an increase in episodic deliveries as compared to the prior fiscal year quarter.

Revenues for the nine months ended February 28, 2026 decreased by $1.5 million to $44.7 million, compared to $46.2 million in the prior fiscal year period.

The decrease in segment revenues was primarily driven by lower production revenues as a result of fewer episodic deliveries as compared to the prior fiscal year period and lower distribution revenues.

This was partially offset by increased revenues from production services.

Cost of goods sold for the quarter ended February 28, 2026 was $9.3 million, or 58.1% of revenues, compared to $7.2 million, or 56.3% of revenues, in the prior fiscal year quarter.

The increase in Cost of goods sold as a percentage of revenues was primarily driven by the revenue mix between production services and episodic deliveries as there is a higher cost associated with production services.

Cost of goods sold for the nine months ended February 28, 2026 was $26.2 million, or 58.6% of revenues, compared to $26.1 million, or 56.5% of revenues, in the prior fiscal year period.

The increase in Cost of goods sold as a percentage of revenues was primarily driven by the increase in production services revenues which have a higher cost compared to production revenues related to episodic deliveries.

Other operating expenses for the three and nine months ended February 28, 2026 were $10.2 million and $29.8 million, respectively, which were comparable to $9.2 million and $28.9 million, respectively, in the prior fiscal year periods.

Asset impairments for the nine months ended February 28, 2026 were $5.2 million.

During the second quarter of fiscal 2026, the Company recognized asset impairments of $4.9 million related to certain film and television programs in development and $0.3 million related to its ownership interest in a children's book publishing business located in the UK.

Refer to Note 5, "Asset Write Down," of Notes to the Consolidated Financial Statements in Item 8, "Consolidated Financial Statements and Supplementary Data" for further details.

Segment operating loss for the quarter ended November 30, 2025 was $9.0 million compared to $4.7 million in the prior fiscal year quarter.

The $4.3 million increase in operating loss was primarily driven by the asset impairments recognized during the quarter ended November 30, 2025.

Segment operating loss for the six months ended November 30, 2025 was $13.0 million compared to $5.2 million in the prior fiscal year period.

The $7.8 million increase in operating loss was primarily driven by lower production and distribution revenues, coupled with the asset impairments recognized during the period ended November 30, 2025.

Asset impairments for the three and nine months ended February 28, 2025 were $0.3 million.

The Company early exited certain leased office space as a result of which the Company recognized an impairment expense of $0.3 million in the third quarter of fiscal 2025, primarily related to the right-of-use asset associated with the operating leases.

Segment operating loss for the quarter ended February 28, 2026 was $3.5 million compared to $3.9 million in the prior fiscal year quarter.

The $0.4 million improvement was primarily driven by the increased revenues during the quarter ended February 28, 2026.

SCHOLASTIC CORPORATION

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

Segment operating loss for the nine months ended February 28, 2026 was $16.5 million compared to $9.1 million in the prior fiscal year period.

The $7.4 million increase in operating loss was primarily driven by lower production and distribution revenues, coupled with the asset impairments recognized during the period ended February 28, 2026.

International

Three months ended November 30, Six months ended November 30,

Three months ended February 28, Nine months ended February 28,

($ amounts in millions) 2026 2025 Change Change 2026 2025 Change Change

3 unchanged sentences

28.1 27.6 0.5 1.8 % 85.5 89.5 (4.0) (4.5) %

Operating income (loss) $ 12.4 $ 5.7 $ 6.7 117.5 % $ 8.2 $ (2.6) $ 10.8 NM

Operating income (loss) $ (4.7) $ (2.1) $ (2.6) (123.8) % $ 3.5 $ (4.7) $ 8.2 174.5 %

(1) Other operating expenses include selling, general and administrative expenses and depreciation and amortization.

NM Not meaningful

Revenues for the quarter ended November 30, 2025 increased by $2.8 million to $89.5 million, compared to $86.7 million in the prior fiscal year quarter.

Local currency revenues across the Company's foreign operations increased by $3.3 million, excluding unfavorable foreign exchange impact of $0.5 million.

In the U.K., local currency revenues increased $1.7 million, primarily within the trade channel which benefited from the latest Dog Man series release, Big Jim Believes .

In Australia and New Zealand, local currency revenues increased $0.9 million, primarily driven by increased education sales in New Zealand.

In Canada, local currency revenues increased $0.5 million, driven by increased trade channel sales as a result of the latest Dog Man series release, partially offset by lower book fairs channel sales due to teacher strikes in a certain province and lower book clubs channel sales due to lower sponsor participation.

Revenues for the quarter ended February 28, 2026 decreased by $0.6 million to $58.7 million, compared to $59.3 million in the prior fiscal year quarter.

Local currency revenues across the Company's foreign operations decreased by $4.1 million, excluding favorable foreign exchange impact of $3.5 million.

In the U.K., local currency revenues decreased $1.7 million, primarily within the trade channel reflecting the shift in timing of the Dog Man publication which occurred in the second fiscal quarter compared to the third quarter in the prior fiscal year.

In Canada, local currency revenues decreased $1.7 million, primarily driven by lower trade channel sales due, in part, to the timing of the Dog Man publication, partially offset by increased book fairs channel sales.

In Australia and New Zealand, local currency revenues decreased $0.9 million, primarily driven by lower education sales in New Zealand, partially offset by increased trade channel sales in Australia.

In Asia, local currency revenues were consistent with the prior year quarter, increasing $0.2 million.

In addition, export channel sales were consistent with the prior fiscal year quarter with an increase of $0.1 million compared to the prior fiscal year quarter.

Revenues for the six months ended November 30, 2025 increased by $5.4 million to $148.9 million, compared to $143.5 million in the prior fiscal year period.

Local currency revenues across the Company's foreign operations increased by $5.7 million, excluding unfavorable foreign exchange impact of $0.3 million.

In Australia and New Zealand, local currency revenues increased $2.5 million, primarily driven by increased trade channel sales in Australia and education sales in New Zealand.

In the U.K., local currency revenues increased $2.4 million, primarily attributable to increased sales from the trade channel, driven by the latest Dog Man series release, Big Jim Believes, and the continued benefit of Sunrise on the Reaping, as well as increased revenues from the book fairs channel .

In addition, export channel sales were consistent with the prior fiscal year quarter.

Revenues for the nine months ended February 28, 2026 increased by $4.8 million to $207.6 million, compared to $202.8 million in the prior fiscal year period.

Local currency revenues across the Company's foreign operations increased by $1.6 million, excluding favorable foreign exchange impact of $3.2 million.

In Asia, local currency revenues increased $1.8 million, primarily driven by increased trade and education sales, which included growth in India.

In addition, export channel sales increased $0.3 million compared to the prior fiscal year quarter.

The overall increase in segment revenues was partially offset by a $1.1 million decrease in local currency revenues in Canada, primarily driven by lower book clubs and book fairs channel sales.

Cost of goods sold for the quarter ended November 30, 2025 was $47.9 million, or 53.5% of revenues, compared to $48.9 million, or 56.4% of revenues, in the prior fiscal year quarter.

Cost of goods sold for the six months ended November 30, 2025 was $83.3 million, or 55.9% of revenues, compared to $84.2 million, or 58.7% of revenues.

Cost of goods sold as a percentage of revenues decreased as a result of lower inbound freight costs in the Company's Major Markets.

Other operating expenses for the quarter ended November 30, 2025 were $29.2 million, compared to $32.1 million in the prior fiscal year quarter.

The $2.9 million decrease was primarily driven by lower employee-related costs, primarily in Canada and Asia, which included lower severance expense of $1.0 million related to cost-saving initiatives, in addition to lower bad debt expenses in Asia.

Other operating expenses for the six months ended November 30, 2025 were $57.4 million, compared to $61.9 million in the prior fiscal year period.

The $4.5 million decrease was primarily driven by lower employee-related costs, primarily in Canada and Asia, which included lower severance expense of $0.9 million, in addition to lower bad debt expenses in Asia.

Segment operating income for the quarter ended November 30, 2025 was $12.4 million, compared to $5.7 million in the prior fiscal year quarter.

The $6.7 million improvement was primarily attributable to increased revenues in the Major Markets, coupled with improved margins driven by lower inbound freight costs and operational efficiencies.

In Australia and New Zealand, local currency revenues increased $1.6 million, primarily driven by increased trade channel sales in Australia, partially offset by lower education sales in New Zealand.

In the U.K., local currency revenues increased $0.7 million, primarily attributable to increased trade channel sales, coupled with increased book fairs channel sales on higher fair count.

In addition, export channel sales increased $0.3 million compared to the prior fiscal year period.

The overall increase in segment revenues was partially offset by a $2.8 million decrease in local currency revenues in Canada, primarily driven by lower book clubs and trade channel sales.

Cost of goods sold for the quarter ended February 28, 2026 was $35.3 million, or 60.1% of revenues, compared to $33.8 million, or 57.0% of revenues, in the prior fiscal year quarter.

The increase in Cost of goods sold as a percentage of revenues was driven by higher royalty costs in Australia due to an increase in the mix of higher-royalty bearing titles sold in the trade channel, partially offset by lower freight costs in the Company's Major Markets.

Cost of goods sold for the nine months ended February 28, 2026 was $118.6 million, or 57.1% of revenues, compared to $118.0 million, or 58.2% of revenues.

Cost of goods sold as a percentage of revenues decreased as a result of lower freight costs in the Company's Major Markets.

Other operating expenses for the quarter ended February 28, 2026 were $28.1 million, compared to $27.6 million in the prior fiscal year quarter.

Excluding unfavorable foreign exchange of $1.5 million, Operating expenses decreased $1.0 million primarily due to lower employee-related costs in Canada, the U.K.

Other operating expenses for the nine months ended February 28, 2026 were $85.5 million, compared to $89.5 million in the prior fiscal year period.

Excluding unfavorable foreign exchange of $1.5 million, Other operating expenses decreased $5.5 million primarily driven by lower employee-related costs, primarily in Canada, the U.K.

SCHOLASTIC CORPORATION

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

Segment operating income for the six months ended November 30, 2025 was $8.2 million, compared to an operating loss of $2.6 million in the prior fiscal year period.

The $10.8 million improvement was primarily attributable to increased revenues in the U.K, Australia and New Zealand, and Asia, coupled with improved margins driven by lower inbound freight costs and operational efficiencies.

Unallocated overhead expense for the quarter ended November 30, 2025 decreased by $3.3 million to $24.6 million, from $27.9 million in the prior fiscal year quarter.

The decrease was primarily attributable to lower employee-related costs resulting from the Company's previous reorganization efforts and cost-savings programs, coupled with higher rental income related to leased space in the Company's headquarters.

Unallocated overhead expense for the six months ended November 30, 2025 decreased by $1.7 million to $52.3 million, from $54.0 million in the prior fiscal year period.

This was partially offset by increased severance expense related to cost-savings initiatives of $7.6 million.

and Asia, which included lower severance expense of $1.0 million, in addition to lower bad debt expenses in Asia.

Segment operating loss for the quarter ended February 28, 2026 was $4.7 million, compared to an operating loss of $2.1 million in the prior fiscal year quarter.

The $2.6 million increase in operating loss was primarily attributable to lower revenues in Canada and New Zealand.

Segment operating income for the nine months ended February 28, 2026 was $3.5 million, compared to an operating loss of $4.7 million in the prior fiscal year period.

The $8.2 million improvement was primarily attributable to increased revenues in the U.K, Australia, and Asia, coupled with improved margins driven by lower freight costs and operational efficiencies.

Unallocated overhead expense for the quarter ended February 28, 2026 increased by $3.8 million to $22.4 million, from $18.6 million in the prior fiscal year quarter.

The increase was primarily attributable to the impact of the sale and leaseback transactions which resulted in lower rental income and higher rent expense, partially offset by lower depreciation expense.

Unallocated overhead expense for the nine months ended February 28, 2026 increased by $2.1 million to $74.7 million, from $72.6 million in the prior fiscal year period.

In addition, the Company incurred increased severance expense related to cost-savings initiatives of $7.6 million, which was partially offset by lower employee-related costs resulting from the Company's previous reorganization efforts and cost-savings programs.

SCHOLASTIC CORPORATION

7 unchanged sentences

Liquidity and Capital Resources

Cash used in operating activities was $8.6 million for the six months ended November 30, 2025, compared to cash provided by operating activities of $29.3 million for the prior fiscal year period, representing an increase in cash used in operating activities of $37.9 million.

The increase in cash used was primarily driven by higher severance and tax payments, higher interest payments related to the Company's borrowings, an additional contribution to the UK Pension Plan and the timing of payments of general operating expenses.

Cash used in investing activities was $29.2 million for the six months ended November 30, 2025, compared to cash used in investing activities of $217.2 million in the prior fiscal year period, representing a decrease in cash used in investing activities of $188.0 million.

The decrease in cash used was primarily driven by the cash paid for the 9 Story acquisition of $176.2 million, net of cash acquired, during the six months ended November 30, 2024, coupled with lower capital expenditures of $10.9 million.

Cash provided by financing activities was $13.9 million for the six months ended November 30, 2025, compared to cash provided by financing activities of $214.5 million for the prior fiscal year period, representing a decrease in cash provided by financing activities of $200.6 million.

The decrease in cash provided was primarily attributable to lower borrowings under the U.S.

Credit Agreement of $100.0 million in the six months ended November 30, 2025, compared to $250.0 million in the prior fiscal year quarter in which the Company incurred increased borrowings to fund the 9 Story acquisition, coupled with higher repayments of $75.0 million in the six months ended November 30, 2025.

Cash used in operating activities was $39.1 million for the nine months ended February 28, 2026, compared to cash provided by operating activities of $17.3 million for the prior fiscal year period, representing an increase in cash used in operating activities of $56.4 million.

The increase in cash used was primarily attributable to higher tax payments of approximately $38 million, largely due to the gain recognized on the sale and leaseback transactions, coupled with an additional contribution to the UK Pension Plan and higher severance payments.

Cash provided by investing activities was $406.0 million for the nine months ended February 28, 2026, compared to cash used in investing activities of $232.0 million in the prior fiscal year period, representing an increase in cash provided by investing activities of $638.0 million.

The increase in cash provided by investing activities was primarily driven by the pre-tax net proceeds of $452.4 million from the sale and leaseback transactions related to the Company's headquarters in New York City and primary distribution center in Jefferson City, Missouri during the nine months ended February 28, 2026, coupled with the cash paid for the 9 Story acquisition of $176.2 million, net of cash acquired, during the nine months ended February 28, 2025.

In addition, capital expenditures were lower by $6.5 million during the nine months ended February 28, 2026.

Cash used in financing activities was $386.9 million for the nine months ended February 28, 2026, compared to cash provided by financing activities of $197.6 million for the prior fiscal year period, representing an increase in cash used in financing activities of $584.5 million.

The increase in cash used was primarily attributable to net repayments on borrowings under the U.S.

Credit Agreement of $250.0 million in the nine months ended February 28, 2026 funded by the proceeds from the sale and leaseback transactions, compared to net borrowings of $275.0 million in the prior fiscal year period in which the Company incurred increased borrowings to fund the 9 Story acquisition.

In addition, the Company repurchased $127.2 million of common stock in the nine months ended February 28, 2026, compared to $40.0 million of common stock repurchases in the prior fiscal year period.

This was partially offset by an increase in net repayments of film related obligations of $17.7 million.

In addition, the Company did not repurchase common stock in the six months ended November 30, 2025, compared to $10.0 million of common stock repurchases in the prior fiscal year period.

Cash Position

The Company’s cash and cash equivalents totaled $99.3 million at November 30, 2025, $124.0 million at May 31, 2025 and $139.6 million at November 30, 2024.

The Company’s cash and cash equivalents totaled $104.6 million at February 28, 2026, $124.0 million at May 31, 2025 and $94.7 million at February 28, 2025.

Cash and cash equivalents held by the Company’s U.S.

operations totaled $46.2 million at November 30, 2025, $48.7 million at May 31, 2025 and $86.5 million at November 30, 2024.

operations totaled $41.6 million at February 28, 2026, $48.7 million at May 31, 2025 and $41.0 million at February 28, 2025.

Due to the seasonal nature of its business as discussed under “Seasonality”, the Company usually experiences negative cash flows in the June through September time period.

The Company’s operating philosophy is to use cash provided by operating activities to create value by paying down debt, reinvesting in existing businesses and, from time to time, making acquisitions that will complement its portfolio of businesses or acquiring other strategic assets, as well as engaging in shareholder enhancement initiatives such as share repurchases and dividend declarations.

Under the Company's open-market buy-back program, $70.0 million remained available for future purchases of common shares as of November 30, 2025.

Subsequent to November 30, 2025, the Board authorized an increase of $80.0 million for common stock repurchases, resulting in a current Board authorization of $150.0 million, which includes the remaining amount from the previous Board authorization.

The Company has maintained, and expects to maintain for the foreseeable future, sufficient liquidity to fund ongoing operations, including working capital requirements, pension contributions, postretirement benefits, debt service, planned capital expenditures and other investments, as well as dividends and share repurchases.

As of November 30, 2025, the Company’s primary sources of liquidity consisted of cash and cash equivalents of $99.3 million, cash from operations and the Company's U.S.

Credit Agreement.

See Note 6, "Debt," of Notes to

Under the Company's open-market buy-back program, $19.5 million remained available for future purchases of common shares as of February 28, 2026.

Subsequent to February 28, 2026, the Board authorized an increase of $297.0 million for common stock repurchases, resulting in a current Board authorization of $300.0 million, which includes the remaining amount from the previous Board authorization, less repurchases of $16.5 million made subsequent to February 28, 2026.

See Note 20, "Subsequent Events," of Notes to the Financial Statements - Unaudited in Item 1, "Financial Statements," for more information regarding the increased authorization.

SCHOLASTIC CORPORATION

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

the Financial Statements - Unaudited in Item 1, "Financial Statements," for more information regarding the U.S.

As of February 28, 2026, the Company’s primary sources of liquidity consisted of cash and cash equivalents of $104.6 million, cash from operations and the Company's U.S.

Credit Agreement.

See Note 6, "Debt," of Notes to the Financial Statements - Unaudited in Item 1, "Financial Statements," for more information regarding the U.S.

Credit Agreement.

The Company expects the U.S.

1 unchanged sentence

The Company's U.S.

Credit Agreement, less borrowings of $275.0 million and commitments of $0.4 million, has $124.6 million of availability at November 30, 2025.

Additionally, the Company has short-term credit facilities of $41.6 million, less current borrowings of $5.6 million and commitments of $3.6 million, resulting in $32.4 million of current availability under these facilities at November 30, 2025.

Credit Agreement, less commitments of $0.4 million, has $399.6 million of availability at February 28, 2026.

Additionally, the Company has short-term credit facilities of $38.1 million, less current borrowings of $5.6 million and commitments of $3.6 million, resulting in $28.9 million of current availability under these facilities at February 28, 2026.

Accordingly, the Company believes these sources of liquidity are sufficient to finance its currently anticipated ongoing operating needs, as well as its financing and investing activities.

The Company is party to the U.S.

11 unchanged sentences

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 2. Management’s Discussion and Analysis