SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Quarterly Report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~February 28, 2018~~

August 31, 2023

Commission File No.

000-19860

SCHOLASTIC CORPORATION

(Exact name of Registrant as specified in its charter)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable ~~date.~~

SCHOLASTIC CORPORATION

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED ~~February 28, 2018~~August 31, 2023

INDEX

PART I - FINANCIAL INFORMATION



Item 1. Financial Statements



SCHOLASTIC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED (Dollar amounts in millions, except per share data)


	Three months ended						Nine months ended							Three months ended
	February 28,						February 28,							August 31,
	2018			2017			2018			2017				2023		2022
Revenues	$	344.7		$	336.2		$	1,132.2		$	1,242.0		Revenues	$	228.5	$	262.9
Operating costs and expenses:													Operating costs and expenses:
Cost of goods sold	166.4			160.3			535.6			601.3			Cost of goods sold		130.0		144.5
Selling, general and administrative expenses	186.2			191.1			572.0			587.2			Selling, general and administrative expenses		184.2		162.8
Depreciation and amortization	11.5			9.5			31.9			28.6			Depreciation and amortization		13.4		13.7
Asset impairments	4.3			—			11.0			—

Total operating costs and expenses	368.4			360.9			1,150.5			1,217.1			Total operating costs and expenses		327.6		321.0
Operating income (loss)	(23.7		)	(24.7		)	(18.3		)	24.9			Operating income (loss)		(99.1)		(58.1)
Interest income (expense), net	0.2			(0.3		)	0.5			(1.0		)	Interest income (expense), net		1.4		0.2
Other components of net periodic benefit (cost)	(39.8		)	1.1			(55.4		)	(0.2		)	Other components of net periodic benefit (cost)		(0.3)		0.0
Earnings (loss) from continuing operations before income taxes	(63.3		)	(23.9		)	(73.2		)	23.7

Earnings (loss) before income taxes													Earnings (loss) before income taxes		(98.0)		(57.9)
Provision (benefit) for income taxes	(14.1		)	(8.4		)	(17.4		)	10.8			Provision (benefit) for income taxes		(23.8)		(12.5)
Earnings (loss) from continuing operations	(49.2		)	(15.5		)	(55.8		)	12.9
Earnings (loss) from discontinued operations, net of tax	—			0.1			—			0.0
Net income (loss)	$	(49.2	)	$	(15.4	)	$	(55.8	)	$	12.9		Net income (loss)		(74.2)		(45.4)
Basic and diluted earnings (loss) per Share of Class A and Common Stock
Basic:
Earnings (loss) from continuing operations	$	(1.41	)	$	(0.45	)	$	(1.59	)	$	0.37
Earnings (loss) from discontinued operations, net of tax	$	—		$	0.01		$	—		$	0.00
Net income (loss)	$	(1.41	)	$	(0.44	)	$	(1.59	)	$	0.37
Diluted:
Earnings (loss) from continuing operations	$	(1.41	)	$	(0.45	)	$	(1.59	)	$	0.36
Earnings (loss) from discontinued operations, net of tax	$	—		$	0.01		$	—		$	0.00
Net income (loss)	$	(1.41	)	$	(0.44	)	$	(1.59	)	$	0.36
Dividends declared per Class A and Common Share	$	0.15		$	0.15		$	0.45		$	0.45
Less: Net income (loss) attributable to noncontrolling interest													Less: Net income (loss) attributable to noncontrolling interest		—		0.1
Net income (loss) attributable to Scholastic Corporation													Net income (loss) attributable to Scholastic Corporation	$	(74.2)	$	(45.5)
Basic and diluted earnings (loss) per share of Class A and Common Stock													Basic and diluted earnings (loss) per share of Class A and Common Stock
Basic													Basic	$	(2.35)	$	(1.33)
Diluted													Diluted	$	(2.35)	$	(1.33)

See accompanying notes



SCHOLASTIC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - UNAUDITED (Dollar amounts in millions)


	Three months ended						Nine months ended							Three months ended
	February 28,						February 28,							August 31,
	2018			2017			2018			2017				2023		2022
Net income (loss)	$	(49.2	)	$	(15.4	)	$	(55.8	)	$	12.9		Net income (loss)	$	(74.2)	$	(45.4)
Other comprehensive income (loss), net:													Other comprehensive income (loss), net:
Foreign currency translation adjustments (net of tax)	2.2			0.9			6.0			(6.1		)
Pension and post-retirement adjustments (net of tax)	22.2			0.7			31.7			2.1
Foreign currency translation adjustments													Foreign currency translation adjustments		1.8		(9.6)
Pension and postretirement adjustments (net of tax)													Pension and postretirement adjustments (net of tax)		0.2		0.0
Total other comprehensive income (loss), net	$	24.4		$	1.6		$	37.7		$	(4.0	)	Total other comprehensive income (loss), net	$	2.0	$	(9.6)
Comprehensive income (loss)	$	(24.8	)	$	(13.8	)	$	(18.1	)	$	8.9		Comprehensive income (loss)	$	(72.2)	$	(55.0)
Less: Net income (loss) attributable to noncontrolling interest													Less: Net income (loss) attributable to noncontrolling interest		—		0.1
Comprehensive income (loss) attributable to Scholastic Corporation													Comprehensive income (loss) attributable to Scholastic Corporation	$	(72.2)	$	(55.1)

See accompanying notes



SCHOLASTIC CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED (Dollar amounts in millions, except per share data)

February 28,
2018 May 31,
2017 February 28,
2017
(Unaudited) (Unaudited)
ASSETS

Current Assets:

Cash and cash equivalents $ 362.6
$ 444.1
$ 461.8
Accounts receivable, net 186.0
199.2
172.4
Inventories, net 356.9
282.5
351.2
Prepaid expenses and other current assets 100.1
44.3
68.8
Current assets of discontinued operations —
0.4
0.4
Total current assets 1,005.6
970.5
1,054.6
Property, plant and equipment, net 530.6
475.3
455.3
Prepublication costs, net 48.8
43.3
43.0
Royalty advances, net 50.3
41.8
48.7
Goodwill 119.1
118.9
116.2
Noncurrent deferred income taxes 17.8
53.7
68.5
Other assets and deferred charges 61.5
56.9
61.3
Total noncurrent assets 828.1
789.9
793.0
Total assets $ 1,833.7
$ 1,760.4
$ 1,847.6

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Lines of credit and current portion of long-term debt $ 7.7
$ 6.2
$ 5.8
Accounts payable 208.4
141.2
194.2
Accrued royalties 63.2
34.2
87.5
Deferred revenue 56.5
24.2
56.0
Other accrued expenses 162.6
178.0
161.8
Accrued income taxes 1.2
2.8
2.7
Current liabilities of discontinued operations —
0.5
0.1
Total current liabilities 499.6
387.1
508.1
Noncurrent Liabilities:

Other noncurrent liabilities 66.5
65.4
70.5
Total noncurrent liabilities 66.5
65.4
70.5

Commitments and Contingencies (see Note 5) —
—
—

Stockholders’ Equity:

Preferred Stock, $1.00 par value —
—
—
Class A Stock, $0.01 par value 0.0
0.0
0.0
Common Stock, $0.01 par value 0.4
0.4
0.4
Additional paid-in capital 614.6
606.8
604.7
Accumulated other comprehensive income (loss) (56.5 ) (94.2 ) (90.7 )
Retained earnings 1,019.6
1,091.2
1,057.1
Treasury stock at cost (310.5 ) (296.3 ) (302.5 )
Total stockholders’ equity 1,267.6
1,307.9
1,269.0
Total liabilities and stockholders’ equity $ 1,833.7
$ 1,760.4
$ 1,847.6

~~See accompanying notes~~

~~SCHOLASTIC CORPORATION~~
~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – UNAUDITED~~

~~(Dollar amounts in millions)~~

Nine months ended
February 28,
2018 2017
Cash flows - operating activities:

Net income (loss) (55.8 ) 12.9
Earnings (loss) from discontinued operations, net of tax —
0.0
Earnings (loss) from continuing operations (55.8 ) 12.9
Adjustments to reconcile earnings (loss) from continuing operations to net cash provided by (used in) operating activities of continuing operations:

   Provision for losses on accounts receivable 7.9
9.3
   Provision for losses on inventory 11.5
8.7
   Provision for losses on royalty advances 3.3
3.3
   Amortization of prepublication and production costs 16.4
17.2
   Depreciation and amortization 32.2
28.9
   Non-cash settlement of pension 55.0
—
   Amortization of pension and post-retirement actuarial gains and losses 1.8
3.1
   Deferred income taxes 15.5
0.1
   Stock-based compensation 9.1
8.7
   Income from equity investments (3.7 ) (4.9 )
   Non-cash write off related to asset impairments 11.0
—
Changes in assets and liabilities, net of amounts acquired:

   Accounts receivable 8.6
12.3
   Inventories (82.0 ) (91.1 )
   Prepaid expenses and other current assets (57.8 ) (4.6 )
   Royalty advances (11.5 ) (8.3 )
   Accounts payable 63.4
52.8
   Other accrued expenses (15.8 ) (13.6 )
   Accrued income taxes (1.8 ) 1.1
   Accrued royalties 28.1
56.3
   Deferred revenue 31.8
32.4
   Pension and post-retirement liabilities (3.9 ) (5.7 )
   Other noncurrent liabilities 1.6
(1.9 )
   Other, net 0.0
(2.6 )
Total adjustments 120.7
101.5
Net cash provided by (used in) operating activities of continuing operations 64.9
114.4
Net cash provided by (used in) operating activities of discontinued operations —
(1.0 )
Net cash provided by (used in) operating activities 64.9
113.4

Cash flows - investing activities:

Prepublication and production expenditures (22.4 ) (19.0 )
Additions to property, plant and equipment (92.4 ) (36.1 )
Other investment and acquisition related payments (2.0 ) (0.4 )
Net cash provided by (used in) investing activities of continuing operations (116.8 ) (55.5 )
Changes in restricted cash held in escrow for discontinued assets —
9.9
Net cash provided by (used in) investing activities (116.8 ) (45.6 )


	August 31, 2023		May 31, 2023		August 31, 2022
	(unaudited)		(audited)		(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	125.8	$	224.5	$	239.7
Accounts receivable, net		201.9		278.0		242.9
Inventories, net		353.2		334.5		379.1
Income tax receivable		33.4		8.9		40.4
Prepaid expenses and other current assets		70.4		47.0		89.4

Total current assets		784.7		892.9		991.5
Noncurrent Assets:
Property, plant and equipment, net		523.3		521.4		512.6
Prepublication costs, net		55.0		56.4		53.6
Operating lease right-of-use assets, net		96.4		85.7		77.9
Royalty advances, net		58.6		56.8		57.6
Goodwill		132.8		132.7		124.7
Noncurrent deferred income taxes		20.5		21.0		21.1
Other assets and deferred charges		101.0		99.8		92.7
Total noncurrent assets		987.6		973.8		940.2
Total assets	$	1,772.3	$	1,866.7	$	1,931.7

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Lines of credit and current portion of long-term debt	$	5.9	$	6.0	$	6.3
Accounts payable		167.7		170.9		208.9
Accrued royalties		72.0		52.8		85.0
Deferred revenue		171.1		169.1		182.6
Other accrued expenses		145.9		168.9		162.6
Accrued income taxes		13.2		13.4		1.7
Operating lease liabilities		22.9		21.2		21.2
Total current liabilities		598.7		602.3		668.3
Noncurrent Liabilities:
Long-term debt		—		—		—
Operating lease liabilities		83.1		73.8		65.8
Other noncurrent liabilities		35.9		26.1		31.3
Total noncurrent liabilities		119.0		99.9		97.1
Commitments and Contingencies (see Note 5)		—		—		—
Stockholders’ Equity:
Preferred Stock, $1.00 par value: Authorized, 2.0 shares; Issued and Outstanding, none	$	—	$	—	$	—
Class A Stock, $0.01 par value: Authorized, 4.0 shares; Issued and Outstanding, 1.7 shares		0.0		0.0		0.0
Common Stock, $0.01 par value: Authorized, 70.0 shares; Issued, 42.9 shares; Outstanding, 29.3, 30.0, and 32.7 shares, respectively		0.4		0.4		0.4
Additional paid-in capital		632.7		632.2		629.5
Accumulated other comprehensive income (loss)		(53.8)		(55.8)		(55.0)
Retained earnings		955.1		1,035.6		924.1
Treasury stock, at cost: 13.6, 12.9 and 10.2 shares, respectively		(479.8)		(449.5)		(334.2)
Total stockholders’ equity of Scholastic Corporation		1,054.6		1,162.9		1,164.8
Noncontrolling interest		—		1.6		1.5
Total stockholders’ equity		1,054.6		1,164.5		1,166.3
Total liabilities and stockholders’ equity	$	1,772.3	$	1,866.7	$	1,931.7

See accompanying notes



SCHOLASTIC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS –~~CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED ~~(Dollar amounts in millions)~~

Nine months ended
February 28, February 28,
2018 2017
Cash flows - financing activities:

Borrowings under lines of credit 40.4
25.9
Repayments of lines of credit (37.8 ) (26.4 )
Repayment of capital lease obligations (0.9 ) (0.8 )
Reacquisition of common stock (23.8 ) (6.0 )
Proceeds pursuant to stock-based compensation plans 8.9
18.4
Payment of dividends (15.8 ) (15.6 )
Other (1.2 ) (1.0 )
Net cash provided by (used in) financing activities (30.2 ) (5.5 )
Effect of exchange rate changes on cash and cash equivalents 0.6
(0.2 )
Net increase (decrease) in cash and cash equivalents (81.5 ) 62.1
Cash and cash equivalents at beginning of period 444.1
399.7
Cash and cash equivalents at end of period $ 362.6
$ 461.8

~~See accompanying notes~~

~~SCHOLASTIC CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED~~

(Dollar amounts in millions, except per share data)


	Class A Stock			Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings		Treasury Stock At Cost			Total Stockholders' Equity of Scholastic Corporation			Noncontrolling Interest		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at June 1, 2022	1.7	$	0.0	32.5	$	0.4		$	627.0		$	(45.4)	$	976.5		$	(341.5)		$	1,217.0	$	1.4	$	1,218.4
Net Income (loss)	—	—		—	—			—			—		(45.5)			—			(45.5)		0.1		(45.4)
Foreign currency translation adjustment	—	—		—	—			—			(9.6)		—			—			(9.6)		—		(9.6)
Pension and post-retirement adjustments (net of tax of $0.1)	—	—		—	—			—			0.0		—			—			0.0		—		0.0
Stock-based compensation	—	—		—	—			1.7			—		—			—			1.7		—		1.7
Proceeds pursuant to stock-based compensation plans	—	—		—	—			11.6			—		—			—			11.6		—		11.6
Purchases of treasury stock at cost	—	—		(0.1)	—			—			—		—			(5.1)			(5.1)		—		(5.1)
Treasury stock issued pursuant to equity-based plans	—	—		0.3	—			(10.8)			—		—			12.4			1.6		—		1.6
Dividends ($0.20 per share)	—	—		—	—			—			—		(6.9)			—			(6.9)		—		(6.9)

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



	Class A Stock			Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings		Treasury Stock At Cost			Total Stockholders' Equity of Scholastic Corporation			Noncontrolling Interest		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at June 1, 2023	1.7	$	0.0	30.0	$	0.4		$	632.2		$	(55.8)	$	1,035.6		$	(449.5)		$	1,162.9	$	1.6	$	1,164.5
Net Income (loss)	—	—		—	—			—			—		(74.2)			—			(74.2)				(74.2)
Foreign currency translation adjustment	—	—		—	—			—			1.8		—			—			1.8		—		1.8
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	—	—		—	—			3.0			—		—			—			3.0		—		3.0
Purchases of treasury stock at cost	—	—		(0.8)	—			—			—		—			(36.2)			(36.2)		—		(36.2)
Treasury stock issued pursuant to equity-based plans	—	—		0.1	—			(4.3)			—		—			5.9			1.6		—		1.6
Dividends ($0.20 per share)	—	—		—	—			—			—		(6.3)			—			(6.3)		—		(6.3)
Other (noncontrolling interest)	—	—		—	—			(0.5)			0.0		—			—			(0.5)		(1.6)		(2.1)
Balance at August 31, 2023	1.7	$	0.0	29.3	$	0.4		$	632.7		$	(53.8)	$	955.1		$	(479.8)		$	1,054.6	$	—	$	1,054.6

See accompanying notes


SCHOLASTIC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – UNAUDITED (Dollar amounts in millions)


	Three months ended
	August 31,		August 31,
	2023		2022
Cash flows - operating activities:
Net income (loss) attributable to Scholastic Corporation	$	(74.2)	$	(45.5)
Adjustments to reconcile Net income (loss) to net cash provided by (used in) operating activities:
Provision for losses on accounts receivable		0.6		(1.5)
Provision for losses on inventory		6.2		4.2
Provision for losses on royalty advances		0.9		0.9
Amortization of prepublication costs		6.7		6.3
Depreciation and amortization		15.8		16.2
Amortization of pension and postretirement plans		0.1		(0.1)
Deferred income taxes		0.5		0.1
Stock-based compensation		2.3		1.7
Income from equity-method investments		(0.2)		(0.1)


Changes in assets and liabilities, net of amounts acquired:
Accounts receivable		75.8		54.6
Inventories		(24.5)		(105.9)
Prepaid expenses and other current assets		(23.4)		(20.8)
Income tax receivable		(24.5)		(13.7)
Royalty advances		(2.6)		(9.7)
Accounts payable		(3.4)		48.9
Accrued income taxes		(0.1)		(0.9)
Accrued royalties		19.2		24.5
Deferred revenue		2.0		10.4
Other accrued expenses		(21.4)		(28.7)
Other, net		6.1		(1.2)
Net cash provided by (used in) operating activities		(38.1)		(60.3)

Cash flows - investing activities:
Prepublication expenditures		(5.4)		(4.8)
Additions to property, plant and equipment		(14.3)		(11.4)


Other investment and acquisition-related payments		(2.1)		—
Net cash provided by (used in) investing activities		(21.8)		(16.2)

Cash flows - financing activities:
Borrowings under lines of credit, credit agreement and revolving loan		0.7		1.2
Repayments of lines of credit, credit agreement and revolving loan		(0.9)		(1.3)
Repayment of capital lease obligations		(0.6)		(0.6)
Reacquisition of common stock		(35.9)		(4.7)
Proceeds pursuant to stock-based compensation plans		3.8		12.1
Payment of dividends		(6.5)		(5.1)
Other		0.1		—
Net cash provided by (used in) financing activities		(39.3)		1.6

Effect of exchange rate changes on cash and cash equivalents		0.5		(2.0)

Net increase (decrease) in cash and cash equivalents		(98.7)		(76.9)
Cash and cash equivalents at beginning of period		224.5		316.6
Cash and cash equivalents at end of period	$	125.8	$	239.7

See accompanying notes


SCHOLASTIC CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (Dollar amounts in millions, except per share data)

1. BASIS OF PRESENTATION

Principles of consolidation

The accompanying condensed consolidated interim financial statements (referred to as the “Financial Statements” herein) include the accounts of Scholastic Corporation (the “Corporation”) and all wholly-owned and majority-owned subsidiaries (collectively, “Scholastic” or the “Company”). Intercompany transactions are eliminated in consolidation. These financial statements have not been audited but reflect those adjustments consisting of normal recurring items that management considers necessary for a fair presentation of financial position, results of operations, comprehensive income (loss) and cash flows. These financial statements should be read in conjunction with the consolidated financial statements and related notes in the Annual Report on Form 10-K for the fiscal year ended May 31, 2017 (the “Annual Report”).

The Company’s fiscal year is not a calendar year. Accordingly, references in this document to fiscal ~~2017~~2024 relate to the twelve-month period ending May 31, 2024.

Noncontrolling Interest

On June 1, 2023, the Company acquired the remaining shares of Make Believe Ideas Limited ("MBI"), a UK-based children's book publishing company, which represented a 5.0% noncontrolling interest, increasing the Company's total ownership from 95.0% to 100%.

Prior to June 1, 2023, the founder and chief executive officer of MBI retained a 5.0% noncontrolling ownership interest in MBI. The Company fully consolidated MBI as of the acquisition date and the 5.0% noncontrolling interest was classified within stockholder's equity.

Interim Financial Statements

The accompanying Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and Article 10 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information, and should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, ~~2017. Certain reclassifications have been made to conform to~~2023. The Financial Statements presented in this Quarterly Report on Form 10-Q are unaudited; however, in the ~~current year presentation.~~opinion of management, the Financial Statements reflect all adjustments, consisting solely of normal, recurring adjustments, necessary for the fair presentation of the Financial Statements for the periods presented.

Seasonality

The Company’s Children’s Book Publishing and Distributionschool-based book ~~fair~~club and book ~~club~~fair channels and most of its Education Solutions businesses operate on a school-year basis; therefore, the Company’s business is highly seasonal. As a result, the Company’s revenues in the first and third quarters of the fiscal year generally are lower than its revenues in the other two fiscal quarters. Typically, school-based ~~channel~~channels and ~~classroom~~ magazine revenues are minimal in the first quarter of the fiscal year as schools are not in session. Education channel revenues are generally higher in the fourth quarter. Trade sales can vary ~~through~~throughout the year due to varying release dates of published titles. ~~The Company generally experiences a loss from operations in the first and third quarters of each fiscal year.~~

Use of estimates

The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and with the instructions to Form 10-Q and Regulation S-X. The preparation of these ~~financial statements~~Financial Statements involves the use of estimates and assumptions by management, which affects the amounts reported in the ~~condensed consolidated financial statements~~Financial Statements and accompanying notes. The Company bases its estimates on historical experience, current business factors, and various other assumptions believed to be reasonable under the circumstances, all of which are necessary, in order to form a basis for determining the carrying values of certain assets and liabilities. Actual results may differ from those estimates and assumptions. On an on-going basis, the Company evaluates the adequacy of its reserves and the estimates used in these calculations, including, but not limited to:

~~Accounts receivable reserves for returns~~

•Accounts receivable allowance for ~~doubtful accounts~~credit losses

•Pension and ~~other post-retirement obligations~~postretirement benefit plans

•Uncertain tax positions

•The timing and amount of future income taxes and related deductions

•Inventory reserves

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

~~Sales tax contingencies~~

~~Royalty advance reserves~~

~~Unredeemed incentive programs~~

~~Impairment testing for goodwill for assessment and measurement, intangibles and other long-lived assets and investments~~

~~Assets and liabilities acquired in business combinations~~

~~Revenues for fairs which have not reported final results~~



SCHOLASTIC CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (Dollar amounts in millions, except per share data)

•Sales tax contingencies

•Royalty advance reserves and royalty expense accruals

•Impairment testing for goodwill, intangible and other long-lived assets and investments

•Assets and liabilities acquired in business combinations

•Variable consideration related to anticipated returns

•Allocation of transaction price to contractual performance obligations

New Accounting Pronouncements

~~Forthcoming Adoptions:~~

~~Topic 606, Revenue from Contracts with Customers~~

In May 2014, the Financial Accounting Standards Board (the "FASB") announced that it is amending the FASB Accounting Standards Codification by issuing Accounting Standards Update (the "ASU") 2014-09, Topic 606, Revenue from Contracts with Customers (the "New Revenue Standard"). The amendments in this ASU provide a single model for use inThere were no new accounting for revenue arising from contracts with customers and supersede current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the ASU is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. New disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers are also required. In August 2015, the FASBpronouncements issued ASU 2015-14 which deferred the effective date of the New Revenue Standard. In 2016, the FASB issued ASU 2016-08, ASU 2016-10, ASU 2016-11, and ASU 2016-12 to clarify, among other things, the implementation guidance related to principal versus agent considerations, identifying performance obligations and accounting for licenses of intellectual property. The amendments in this update are to be applied on a retrospective basis, either to each prior reporting period presented or by presenting the cumulative effect of applying the update recognized at the date of initial application.

~~The New Revenue Standard will be effective for the Company~~ in the first quarter of fiscal ~~2019.~~2024 which would impact the Company. 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.

2. REVENUES

Disaggregated Revenue Data

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


	Three months ended
	August 31,
	2023		2022
Book Clubs - U.S.	$	2.6	$	6.3
Book Fairs - U.S.		27.3		28.3
Trade - U.S.		62.5		76.2
Trade - International (1)		10.4		13.9
Total Children's Book Publishing and Distribution	$	102.8	$	124.7

Education Solutions - U.S.	$	66.0	$	73.2
Total Education Solutions	$	66.0	$	73.2

International - Major Markets (2)	$	47.8	$	53.4
International - Other Markets (3)		9.4		11.6
Total International	$	57.2	$	65.0

Total (4)	$	226.0	$	262.9

(1) Primarily includes foreign rights and certain product sales in the UK.

(2) Includes Canada, UK, Australia and New Zealand.

(3) Primarily includes markets in Asia.

(4) Total revenues of $228.5 in fiscal 2024 include rental income of $2.5 related to leased space in the Company's headquarters which was not allocated to a segment. In fiscal 2023, rental income of $1.5 was recognized as a reduction to Selling, general and administrative expenses.

Estimated Returns

A liability for expected returns of $33.1, $34.9, and $41.5 is recorded within Other accrued expenses as of August 31, 2023, May 31, 2023, and August 31, 2022, respectively. In addition, a return asset of $5.4, $4.7, and $7.8 is recorded within Prepaid expenses and other current assets as of August 31, 2023, May 31, 2023, and August 31, 2022, respectively, for the recoverable cost of product estimated to be returned by customers.


SCHOLASTIC CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (Dollar amounts in millions, except per share data)

Contract Liabilities

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


	August 31, 2023		May 31, 2023		August 31, 2022
Book fairs incentive credits	$	96.1	$	110.8	$	84.4
Magazines+ subscriptions		24.2		5.0		24.7
U.S. digital subscriptions		26.8		22.8		23.8
U.S. education-related (1)		12.1		9.8		16.5
Media-related		0.0		0.0		15.6
Stored value cards		13.1		12.4		9.3
Other (2)		9.4		8.3		8.3
Total contract liabilities	$	181.7	$	169.1	$	182.6

(1) Primarily includes contract liabilities related to contracts with school districts and professional services.

(2) Primarily includes contract liabilities related to various international products and services.

The Company's contract liabilities consist of advance billings and payments received from customers in excess of revenue recognized and revenue allocated to outstanding book fairs incentive credits. As of August 31, 2023, contract liabilities of $171.1 are recorded within Deferred revenue on the Company's Condensed Consolidated Balance Sheet and are classified as short term, as substantially all of the associated performance obligations are expected to be satisfied, and related revenue recognized, within one year. The remaining $10.6 of contract liabilities as of August 31, 2023 are recorded within Other noncurrent liabilities on the Company's Condensed Consolidated Balance Sheet as the associated performance obligations are expected to be satisfied, and related revenue recognized, in excess of one year. Contract liabilities of $169.1 and $182.6 as of May 31, 2023 and August 31, 2022, respectively, are recorded within Deferred revenue on the Company's Condensed Consolidated Balance Sheets. The Company ~~is evaluating~~recognized revenue which was included in the ~~adoption methodology~~opening Deferred revenue balance in the amount of $32.3 for the three months ended August 31, 2023, and $30.8 for the impact on its consolidated financial position, results of operations and cash flows, including assessing the impact of the guidance across all of its revenue streams. This includes a review of current accounting policies and practices to identify potential differences that would result from applying the guidance. While this evaluation is in progress, and the impact is not fully assessed, the Company believes this standard will result in changes relating to the reporting periods in which certain revenues associated with incentive programs within the Company's school channels are recognized.three months ended August 31, 2022.

Allowance for CreditLosses

~~2. DISCONTINUED OPERATIONS~~

The Company ~~continuously evaluates~~recognizes an allowance for credit losses on customer receivables that are expected to be incurred over the lifetime of the receivable. Reserves for estimated credit losses are established at the time of sale and are based on relevant information about past events, current conditions, and supportable forecasts impacting its ~~portfolio~~ultimate collectability, including specific reserves on a customer-by-customer basis, creditworthiness of ~~businesses for both impairment~~the Company’s customers and ~~economic viability, as well as for possible strategic dispositions.~~prior collection experience. The Company ~~monitors~~reviews new information as it becomes available and makes adjustments to the ~~expected cash proceeds~~reserves accordingly. At the time the Company determines that a receivable balance, or any portion thereof, is deemed to be ~~realized from~~permanently uncollectible, the ~~disposition of discontinued operations’ assets, and adjusts asset values accordingly.~~balance is then written off.

~~During~~The following table presents the ~~three and nine month periods ended February 28, 2018,~~change in the ~~Company did not dispose of any components of~~allowance for credit losses, which is included in Accounts Receivable, net on the ~~business that would meet the criteria for discontinued operations reporting.~~Condensed Consolidated Balance Sheets:

As of May 31, 2017 and February 28, 2017, assets and liabilities of discontinued operations, and losses from discontinued operations for the three and nine month periods ended February 28, 2017 primarily related to insignificant continuing cash flows from passive activities.


	Allowance for Credit Losses
Balance as of June 1, 2023	$	16.7
Provision (benefit)		0.6
Write-offs and other		(0.2)
Balance as of August 31, 2023	$	17.1

3. SEGMENT INFORMATION

The Company categorizes its businesses into three reportable segments: Children’s Book Publishing and Distribution, ~~and~~Education ~~whichcomprise the Company's domestic operations~~; Solutions and International.

•Children’s Book Publishing and Distribution operates as an integrated business which includes the publication and distribution of children’s books, ebooks, media and interactive products primarily in the


SCHOLASTIC CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (Dollar amounts in millions, except per share data)

United States through its school reading events business, which includes book clubs and book fairs ~~in its school~~ channels, and through the trade channel. This segment is comprised of ~~three~~two operating segments.

•Education Solutions includes the publication and distribution to schools and libraries of children’s books, classroom magazines, print and digital supplemental and core classroom materials and related support services, and print and ~~on-line~~online reference and non-fiction products for grades pre-kindergarten to 12 in the United States. This segment is comprised of ~~two~~one operating ~~segments.~~

segment.

~~SCHOLASTIC CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED~~

~~(Dollar amounts in millions, except per share data)~~

•Internationalincludes the publication and distribution of products and services outside the United States by the Company’s international operations and its export ~~and foreign rights~~ businesses. This segment is comprised of three operating segments.

Children’s
Book
Publishing &
Distribution
Education
Overhead⁽¹⁾

Total
Domestic
International Total
Three months ended
February 28, 2018

Revenues $ 199.4
$ 61.7
$ —
$ 261.1
$ 83.6
$ 344.7
Bad debt 0.7
0.4
—
1.1
0.6
1.7
Depreciation and amortization ⁽²⁾
5.4
2.3
7.5
15.2
1.8
17.0
Asset impairments —
—
4.3
4.3
—
4.3
Segment operating income (loss) (0.9 ) (0.2 ) (23.3 ) (24.4 ) 0.7
(23.7 )
Expenditures for other non-current assets⁽³⁾
17.2
5.0
29.7
51.9
5.7
57.6
Three months ended
February 28, 2017

Revenues $ 199.0
$ 60.1
$ —
$ 259.1
$ 77.1
$ 336.2
Bad debt 0.1
0.4
—
0.5
1.1
1.6
Depreciation and amortization ⁽²⁾
5.3
2.1
6.0
13.4
1.6
15.0
Segment operating income (loss) 6.3
3.5
(30.8 ) (21.0 ) (3.7 ) (24.7 )
Expenditures for other non-current assets ⁽³⁾

14.9
2.8
13.9
31.6
2.5
34.1
The following table sets forth the Company's revenue and operating income (loss) by segment for the periods indicated:


	Three months ended
	August 31,
	2023		2022
Revenues
Children's Book Publishing and Distribution	$	102.8	$	124.7
Education Solutions		66.0		73.2
International		57.2		65.0
Total (1)	$	226.0	$	262.9

Operating income (loss)
Children's Book Publishing and Distribution	$	(41.5)	$	(30.1)
Education Solutions		(18.7)		(4.3)
International		(8.2)		(3.5)
Overhead (2)		(30.7)		(20.2)
Total	$	(99.1)	$	(58.1)

~~SCHOLASTIC CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED~~(1) Total revenues of $228.5 in fiscal 2024 include rental income of $2.5 related to leased space in the Company's headquarters which was not allocated to a segment. In fiscal 2023, rental income of $1.5 was recognized as a reduction to Selling, general and administrative expenses.

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

~~(Dollar amounts in millions, except per share data)~~

Children’s
Book
Publishing &
Distribution Education
Overhead ⁽¹⁾
Total
Domestic International Total
Nine months ended
February 28, 2018

Revenues $ 678.0
$ 177.6
$ —
$ 855.6
$ 276.6
$ 1,132.2
Bad debt expense 3.4
1.4

4.8
3.1
7.9
Depreciation and amortization ⁽²⁾
15.8
6.6
20.7
43.1
5.2
48.3
Asset impairments —
—
11.0
11.0
—
11.0
Segment operating income (loss) 55.3
(8.9 ) (77.3 ) (30.9 ) 12.6
(18.3 )
Segment assets at
February 28, 2018 494.8
179.1
886.1
1,560.0
273.7
1,833.7
Goodwill at February 28, 2018 40.9
68.2
—
109.1
10.0
119.1
Expenditures for other non-current assets⁽³⁾

44.9
12.5
78.4
135.8
10.7
146.5
Other non-current assets at
February 28, 2018 ⁽³⁾
152.0
99.7
466.5
718.2
75.5
793.7
Nine months ended
February 28, 2017

Revenues $ 769.3
$ 186.4
$ —
$ 955.7
$ 286.3
$ 1,242.0
Bad debt expense 3.3
0.9
—
4.2
5.1
9.3
Depreciation and amortization ⁽²⁾
16.6
6.2
17.4
40.2
5.6
45.8
Segment operating income (loss) 91.2
7.8
(91.3 ) 7.7
17.2
24.9
Segment assets at
February 28, 2017 478.4
158.8
948.7
1,585.9
261.3
1,847.2
Goodwill at February 28, 2017 40.9
65.4
—
106.3
9.9
116.2
Expenditures for other non-current assets⁽³⁾

52.2
7.8
28.5
88.5
8.5
97.0
Other non-current assets at
February 28, 2017 ⁽³⁾
146.9
83.7
398.6
629.2
66.4
695.6

~~(1)~~

Overhead includes all domestic corporate amounts not allocated to segments, including expenses and costs related to the management of corporate assets. Unallocated assets are principally comprised of deferred income taxes and property, plant and equipment related to the Company’s headquarters in the metropolitan New York area, its fulfillment and distribution facilities located in Missouri and its facility located in Connecticut.


~~(2)~~	~~Includes depreciation of property, plant and equipment and amortization of intangible assets and prepublication and production costs.~~

~~(3)~~

Other non-current assets include property, plant and equipment, prepublication assets, production assets, royalty advances, goodwill, intangible assets and investments. Expenditures for other non-current assets for the International reportable segment include expenditures for long-lived assets of $3.6 and $1.5 for the three months and $6.6 and $4.8 for the nine months ended February 28, 2018 and February 28, 2017, respectively. Other non-current assets for the International reportable segment include long-lived assets of $35.8 and $33.4 as of February 28, 2018 and February 28, 2017, respectively.

~~SCHOLASTIC CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED~~

~~(Dollar amounts in millions, except per share data)~~

4. DEBT

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

February 28, 2018 May 31, 2017 February 28, 2017
Revolving Loan $ —
$ —
$ —
Unsecured short term lines of credit (weighted average interest rates of 3.7%, 4.1% and 3.9%, respectively) 7.7
6.2
5.8
Total debt $ 7.7
$ 6.2
$ 5.8



	August 31, 2023		May 31, 2023		August 31, 2022
US Revolving Credit Agreement	$	—	$	—	$	—
Unsecured lines of credit		5.9		6.0		6.3
Total debt	$	5.9	$	6.0	$	6.3
Less lines of credit, short-term debt and current portion of long-term debt		(5.9)		(6.0)		(6.3)
Total long-term debt	$	—	$	—	$	—

~~The fair value of the Company's debt approximates the carrying value for all periods presented.~~ The Company's debt obligations as of ~~February 28, 2018,~~August 31, 2023 have maturities of one year or less.

~~Loan~~US Credit Agreement

On ~~January 5, 2017,~~October 27, 2021, Scholastic Corporation and its principal operating subsidiary, Scholastic Inc. ~~(each, a “Borrower” and together~~ , ~~the “Borrowers”)~~ entered into ~~a new~~an amended and restated 5-year credit ~~facility~~agreement with ~~certain~~a syndicate of banks and Bank of America, N.A., as administrative agent (the ~~“Loan~~“Credit Agreement”). The ~~Loan~~Credit Agreement ~~replaced the Company's then existing loan agreement~~provides for a $300.0 unsecured revolving credit facility and ~~has substantially similar terms, except that:~~


~~(i)~~	~~the borrowing limit was reduced to~~ ~~$375.0~~ ~~from~~ ~~$425.0~~;


~~(ii)~~	~~the “starter” basket for permitted payments of dividends and other payments in respect of capital stock was increased to~~ ~~$275.0~~ ~~from~~ ~~$75.0; and~~


~~(iii)~~	~~the maturity date was extended to~~ ~~January 5, 2022~~.

~~The Loan Agreement~~ allows the Company to borrow, repay or prepay and reborrow at any time prior to the ~~January 5, 2022~~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"). 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.

Under the ~~Loan~~Credit Agreement, interest on amounts borrowed thereunder is due and payable in arrears on the last day of the interest period (defined as the period commencing on the date of the advance and ending on the last day of the period selected by the Borrower at the time each advance is made). The interest pricing under the ~~Loan~~Credit Agreement is dependent upon the Borrower’s election of a rate that is either:

A•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 ~~for a one month interest period~~ plus 1%1.00% plus, in each case, an applicable ~~spread~~margin ranging from ~~0.175%~~0.35% to ~~0.60%~~0.75%, as determined by the Company’s prevailing ~~consolidated debt to total capital ratio.~~

Consolidated Leverage Ratio (as defined in the Credit Agreement);

- or -

A•a Eurodollar Rate equal to ~~the London interbank offered rate (LIBOR)~~SOFR (Daily Simple or Term), plus a SOFR adjustment of 0.10% per annum and an applicable ~~spread~~margin ranging from ~~1.175%~~1.35% to ~~1.60%~~1.75%, as determined by the Company’s prevailing ~~consolidated debt to total capital ratio.~~

Consolidated Leverage Ratio.

As of ~~February 28, 2018,~~August 31, 2023, the ~~indicated spread~~applicable margin on Base Rate Advances was ~~0.175%~~0.35% and the ~~indicated spread~~applicable margin on Eurodollar Advances was ~~1.175%~~1.35%, both based on the Company’s prevailing ~~consolidated debt to total capital ratio.~~Consolidated Leverage Ratio.

The ~~Loan~~Credit Agreement ~~also~~ provides for ~~the~~ payment of a ~~facility~~commitment fee in respect of the aggregate unused amount of revolving credit commitments ranging from 0.20% per annum to ~~0.40%~~0.30% per annum based upon the ~~Company’s~~Corporation’s then prevailing ~~consolidated debt to total capital ratio. At February 28, 2018,~~Consolidated Leverage Ratio. As of August 31, 2023, the ~~facility~~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. In addition, a portion of the revolving credit facility, up to a maximum of $15.0, is available for swingline loans. The ~~Loan~~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.

~~SCHOLASTIC CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED~~

~~(Dollar amounts in millions, except per share data)~~

As of ~~February 28, 2018,~~August 31, 2023, the Company had no outstanding borrowings under the ~~Loan~~Credit Agreement. At February 28, 2018, the Company had open standby letters of credit totaling $5.3 issued under certain credit lines, including $0.4 under the Loan Agreement and $4.9 under the domestic credit lines discussed below.

The ~~Loan~~Credit Agreement contains certain financial covenants ~~including~~related to leverage and interest coverage ~~and leverage ratio tests and certain~~ratios (as defined in the Credit Agreement), limitations on the amount of dividends and other distributions, and ~~at February 28, 2018,~~other limitations on fundamental changes to the Company or its business. The Company was in compliance with ~~these covenants.~~required covenants for all periods presented.

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

Lines of Credit

As of ~~February 28, 2018,~~August 31, 2023, the Company’s domestic credit lines available under unsecured money market bid rate credit lines totaled ~~$25.0.~~$10.0. There were no outstanding borrowings under these credit lines as of ~~February 28, 2018,~~August 31, 2023, May 31, ~~2017 or February 28, 2017.~~2023 and August 31, 2022. As of ~~February 28, 2018,~~August 31, 2023, availability under these unsecured money market bid rate credit lines totaled ~~$20.1.~~$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~~.lender.

As of ~~February 28, 2018,~~August 31, 2023, the Company had ~~equivalent~~ various local currency international credit lines totaling ~~$24.4~~$24.7 underwritten by banks primarily in the United States, Canada and the United Kingdom. Outstanding borrowings under these facilities were ~~equivalent to $7.7,~~$5.9 at ~~February 28, 2018~~August 31, 2023 at a weighted average interest rate of ~~3.7%~~4.4%, ~~$6.2~~compared to outstanding borrowings of$6.0 at May 31, ~~2017~~2023 at a weighted average interest rate of ~~4.1%~~4.9%, and ~~$5.8~~$6.3 at ~~February 28, 2017~~August 31, 2022 at a weighted average interest rate of ~~3.9%~~5.8%. As of ~~February 28, 2018,~~August 31, 2023, the ~~equivalent~~ amounts available under these facilities totaled ~~$16.7.~~$18.8. 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.

5. COMMITMENTS AND CONTINGENCIES

Legal Matters

Various claims and lawsuits arising in the normal course of business are pending against the Company. The Company accrues a liability for such matters when it is probable that a liability has occurred and the amount of such liability can be reasonably estimated. When only a range can be estimated, the most probable amount in the range is accrued unless no amount within the range is a better estimate than any other amount, in which case the minimum amount in the range is accrued. Legal costs associated with litigation ~~loss contingencies~~ are expensed in the period in which they are incurred. 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. ~~See Note 14, "Income Taxes and Other Taxes," for further discussion.~~

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)~~

6. 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
	August 31,
	2023		2022
Net income (loss) attributable to Class A and Common Stockholders	$	(74.2)	$	(45.5)
Weighted average Shares of Class A Stock and Common Stock outstanding for basic earnings (loss) per share (in millions)		31.6		34.3
Dilutive effect of Class A Stock and Common Stock potentially issuable pursuant to stock-based compensation plans (in millions)*		—		—
Adjusted weighted average Shares of Class A Stock and Common Stock outstanding for diluted earnings (loss) per share (in millions)		31.6		34.3
Earnings (loss) per share of Class A Stock and Common Stock:
Basic	$	(2.35)	$	(1.33)
Diluted	$	(2.35)	$	(1.33)
Anti-dilutive shares pursuant to stock-based compensation plans		0.7		0.5

Three months ended February 28, Nine months ended February 28,
2018 2017 2018 2017
Earnings (loss) from continuing operations attributable to Class A and Common Shares $ (49.2 ) $ (15.5 ) $ (55.8 ) $ 12.9
Earnings (loss) from discontinued operations attributable to Class A and Common Shares, net of tax —
0.1
—
0.0
Net income (loss) attributable to Class A and Common Shares $ (49.2 ) $ (15.4 ) $ (55.8 ) $ 12.9
Weighted average Shares of Class A Stock and Common Stock outstanding for basic earnings (loss) per share (in millions) 34.9
34.8
35.1
34.6
Dilutive effect of Class A Stock and Common Stock potentially issuable pursuant to stock-based compensation plans (in millions) —
—
—
0.7
Adjusted weighted average Shares of Class A Stock and Common Stock outstanding for diluted earnings (loss) per share (in millions) 34.9
34.8
35.1
35.3
Earnings (loss) per share of Class A Stock and Common Stock:

Basic earnings (loss) per share:

Earnings (loss) from continuing operations $ (1.41 ) $ (0.45 ) $ (1.59 ) $ 0.37
Earnings (loss) from discontinued operations, net of tax $ —
$ 0.01
$ —
$ 0.00
Net income (loss) $ (1.41 ) $ (0.44 ) $ (1.59 ) $ 0.37
Diluted earnings (loss) per share:

Earnings (loss) from continuing operations $ (1.41 ) $ (0.45 ) $ (1.59 ) $ 0.36
Earnings (loss) from discontinued operations, net of tax $ —
$ 0.01
$ —
$ 0.00
Net income (loss) $ (1.41 ) $ (0.44 ) $ (1.59 ) $ 0.36
* The Company experienced a net loss for all periods presented and therefore did not report any dilutive share impact

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


	August 31, 2023	August 31, 2022
Options outstanding pursuant to stock-based compensation plans (in millions)	3.0	3.3

February 28, 2018 February 28, 2017
Options outstanding pursuant to stock-based compensation plans (in millions) 3.1 2.9

~~Earnings from continuing operations exclude earnings of less than $0.1 for the nine months ended February 28, 2017, attributable to participating Restricted Stock Units (“RSUs”).~~

In a period in which the Company reports a discontinued operation, Earnings (loss) from continuing operations attributable to Class A and Common Shares is used as the “control number” in determining whether potentially dilutive common shares are dilutive or anti-dilutive. There were 1.5 million potentially anti-dilutive shares outstanding pursuant to compensation plans as of February 28, 2018.

A portion of the Company’s Restricted Stock Units ("RSUs") which are granted to employees participate in earnings through cumulative dividends payable to the employees upon vesting of the RSUs. Accordingly, the Company measures earnings per share based upon the lower of the Two-class method or the Treasury Stock method. Since, under the Two-class method, losses are not allocated to the participating securities, in periods of loss the Two-class method is not applicable.

As of ~~February 28, 2018, $13.4~~August 31, 2023, $85.7 remained available for future purchases of common shares under the repurchase authorization of the Board of Directors (the "Board") in effect on that date. See Note ~~11, “Treasury~~12, Treasury Stock,” for a more complete description of the Company’s share buy-back program.



SCHOLASTIC CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (Dollar amounts in millions, except per share data)

7. ACQUISITIONS

~~more complete description~~On June 1, 2023, the Company acquired the remaining shares of Make Believe Ideas Limited, a UK-based children's book publishing company for $2.1, increasing the Company's total ownership from 95.0% to 100%. The acquisition was accounted for as an equity transaction as there was no change in control. The carrying value of the ~~Company’s share buy-back program~~noncontrolling interest at the acquisition date was $1.6. The difference between the fair value of consideration paid and ~~see Note 17, "Subsequent Events" for information concerning a subsequent increase in~~ the ~~share repurchase authorization.~~carrying value was recognized as an adjustment to Additional paid-in capital of $0.5.

7.8. GOODWILL AND OTHER INTANGIBLES


	August 31, 2023		May 31, 2023		August 31, 2022
Gross beginning balance	$	132.7	$	164.9	$	164.9
Accumulated impairment		—		(39.6)		(39.6)
Beginning balance	$	132.7	$	125.3	$	125.3
Additions		—		7.6		—

Foreign currency translation		0.1		(0.2)		(0.6)



Ending balance	$	132.8	$	132.7	$	124.7

Nine months ended
February 28, 2018 Twelve months ended
May 31, 2017 Nine months ended
February 28, 2017
Beginning balance $ 118.9
$ 116.2
$ 116.2
Additions —
2.8
—
Foreign currency translation 0.2
(0.1 ) (0.0 )
Total goodwill $ 119.1
$ 118.9
$ 116.2

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

~~Accumulated goodwill impairment losses totaled $39.6 as of February 28, 2018, May 31, 2017 and February 28, 2017.~~

trademark and tradename rights. Intangible assets with definite lives consist principally of customer lists, intellectual property, ~~rights~~tradenames and other agreements. Intangible assets with definite lives are amortized over their estimated useful lives. The weighted-average remaining useful lives of all amortizable intangible assets is approximately ~~4.2~~5.3 years.

Included in “Other assets and deferred charges” on the Company’s condensed consolidated balance sheets were investments of $33.1, $28.6 and $27.1 at February 28, 2018, May 31, 2017 and February 28, 2017, respectively.

The Company's 48.5% equity interest in Make Believe Ideas Limited ("MBI"), a UK-based children's book publishing company, is accounted for using the equity method of accounting. Under the purchase agreement, and subject to its provisions, the Company will likely purchase the remaining outstanding shares in MBI following



SCHOLASTIC CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (Dollar amounts in millions, except per share data)

the completion of MBI's accounts for the calendar year 2018. The net carrying value of this investment was $11.2, $8.6 and $8.0 at February 28, 2018, May 31, 2017 and February 28, 2017, respectively. Equity method income from this investment is reported in the ~~International~~ ~~segment.~~

9.10. EMPLOYEE BENEFIT PLANS


	UK Pension Plan				US Postretirement Benefits
	Three months ended				Three months ended
	August 31,				August 31,
	2023		2022		2023		2022
Components of net periodic benefit cost:

Interest cost	$	0.4	$	0.3	$	0.1	$	0.1
Expected return on assets		(0.3)		(0.3)		—		—
Amortization of prior service (credit) loss		0.0		0.0		(0.2)		(0.2)

Amortization of net actuarial (gain) loss		0.3		0.1		—		—
Total	$	0.4	$	0.1	$	(0.1)	$	(0.1)

~~SCHOLASTIC CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED~~

~~(Dollar amounts in millions, except per share data)~~

On July 20, 2016, the Board approved the termination of the U.S. Pension Plan, in which all benefit accruals were previously frozen as of June 1, 2009. Based on the U.S. Pension Plan’s funded status and the frozen benefit, it was determined that the on-going costs of maintaining the U.S. Pension Plan were growing at a greater rate than the benefit delivered to the Company’s employees and former employees.

During the nine months ended February 28, 2018, the U.S. Pension Plan made $37.8 of lump sum benefit payments to vested plan participants in excess of interest costs. Then, on February 14, 2018, the Company agreed to purchase group annuity contracts for the remaining U.S. Pension Plan participants. The total cost of these contracts was $86.3, paid to the respective insurers on February 21, 2018, resulting in a final settlement charge. The net funded asset position of the U.S. Pension Plan had previously included the value of the insurance contracts and lump sums settled prior to the purchase of such contracts. The U.S. Pension Plan's asset balance was sufficient to fund the purchase of these insurance contracts as well as any remaining benefit obligations and plan-related operating expenses, with no additional cost to the Company as the plan sponsor.

As a result, a remeasurement was completed on the final settlement date and a pretax settlement charge of $55.0 was recognized in the Company's Condensed Consolidated Statement of Operations in Other components of net periodic benefit (cost) as part of Earnings (loss) from continuing operations before income taxes. The fair value of the U.S. Pension Plan assets as of February 20, 2018 was used in determining the appropriate unrecognized loss to be used in the pretax settlement charge.

The net funded asset position of the U.S. Pension Plan as of February 28, 2018 is estimated to be $2.3. This amount reflects an asset of $3.6 that will be used to pay approximately $1.3 of annuity benefit payments in the fourth quarter of fiscal 2018 and any plan-related expenses. There are no actuarial assumptions reflected in any U.S. Pension Plan estimates and there is no ongoing periodic benefit cost for the remainder of fiscal 2018. Any difference between actual payments made and the net funded asset position measured at February 28, 2018, will be treated as an actuarial gain/loss and will be fully recognized in Other components of net periodic benefit (cost) as part of Earnings (loss) from continuing operations before income taxes.


SCHOLASTIC CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (Dollar amounts in millions, except per share data)

~~10.~~11. STOCK-BASED COMPENSATION


	Three months ended
	August 31,
	2023		2022
Stock option expense	$	0.6	$	0.6
Restricted stock unit expense		1.5		1.0
Management stock purchase plan		0.0		0.0
Employee stock purchase plan		0.2		0.1
Total stock-based compensation expense	$	2.3	$	1.7

Three months ended February 28, Nine months ended February 28,
2018 2017 2018 2017
Stock option expense $ 0.8
$ 0.9
$ 6.2
$ 6.0
Restricted stock unit expense 0.6
0.6
2.0
2.0
Management stock purchase plan 0.1
0.1
0.7
0.5
Employee stock purchase plan 0.1
0.0
0.2
0.2
Total stock-based compensation expense $ 1.6
$ 1.6
$ 9.1
$ 8.7


	Three months ended
	August 31,
	2023	2022
Common Stock issued pursuant to stock-based compensation plans (in millions)	0.1	0.3

Three months ended February 28, Nine months ended February 28,
2018 2017 2018 2017
Common Stock issued pursuant to stock-based compensation plans (in millions) 0.2
0.4
0.4
0.7

~~SCHOLASTIC CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED~~

~~(Dollar amounts in millions, except per share data)~~

~~11.~~12. TREASURY STOCK


Authorization	Amount


March 2023	$	50.0
July 2023	$	100.0
Total current Board authorizations	$	150.0
Less repurchases made under these authorizations	$	(64.3)
Remaining Board authorization at August 31, 2023	$	85.7

Amount
July 2015 $ 50.0

Less repurchases made under the authorization as of February 28, 2018 (36.6 )
Remaining Board authorization at February 28, 2018 $ 13.4

~~On July 22, 2015, the Board authorized $50.0 for the share buy-back program, to be funded with available cash.~~

Repurchases of the Company's Common Stock were ~~$11.8 and $25.1~~ $36.2, including excise tax on share repurchases of $0.3, during the three ~~and nine~~ months ~~ended February 28, 2018, respectively. See Note 17, "Subsequent Events" for a description of the most recent share buy-back program authorization on March 21, 2018.~~ended August 31, 2023. The ~~Company’s~~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)

13. 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 August 31, 2023
	Foreign currency translation adjustments		Retirement benefit plans		Total
Beginning balance at June 1, 2023	$	(50.0)	$	(5.8)	$	(55.8)
Other comprehensive income (loss) before reclassifications		1.8		—		1.8
Less amount reclassified from Accumulated other comprehensive income (loss):
Amortization of net actuarial loss (net of tax of $0.0)		—		0.3		0.3
Amortization of prior service (credit) cost (net of tax of $0.1)		—		(0.1)		(0.1)


Other comprehensive income (loss)		1.8		0.2		2.0
Ending balance at August 31, 2023	$	(48.2)	$	(5.6)	$	(53.8)

	Three months ended August 31, 2022
	Foreign currency translation adjustments		Retirement benefit plans		Total
Beginning balance at June 1, 2022	$	(44.6)	$	(0.8)	$	(45.4)
Other comprehensive income (loss) before reclassifications		(9.6)		—		(9.6)
Less amount reclassified from Accumulated other comprehensive income (loss):
Amortization of net actuarial loss (net of tax of $0.0)		—		0.1		0.1

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

Other comprehensive income (loss)		(9.6)		0.0		(9.6)
Ending balance at August 31, 2022	$	(54.2)	$	(0.8)	$	(55.0)

~~SCHOLASTIC CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED~~

~~(Dollar amounts in millions, except per share data)~~

Nine months ended February 28, 2018
Foreign currency translation adjustments Retirement benefit plans Total
Beginning balance at June 1, 2017 $ (45.3 ) $ (48.9 ) $ (94.2 )
  Other comprehensive income (loss) before reclassifications (net of tax) 6.0
—
6.0
  Less amount reclassified from Accumulated other comprehensive income (loss):
Amortization (net of tax of $0.4) —
1.4
1.4
Settlement (net of tax of $22.0) —
33.0
33.0
Other reclassifications (net of tax benefit of $1.9) —
(2.7 ) (2.7 )
Other comprehensive income (loss) 6.0
31.7
37.7
Ending balance at February 28, 2018 $ (39.3 ) $ (17.2 ) $ (56.5 )

Nine months ended February 28, 2017
Foreign currency translation adjustments Retirement benefit plans Total
Beginning balance at June 1, 2016 $ (40.0 ) $ (46.7 ) $ (86.7 )
  Other comprehensive income (loss) before reclassifications (net of tax) (6.1 ) —
(6.1 )
  Less amount reclassified from Accumulated other comprehensive income (loss):
  Amortization (net of tax of $1.0) —
2.1
2.1
  Other comprehensive income (loss) (6.1 ) 2.1
(4.0 )
Ending balance at February 28, 2017 $ (46.1 ) $ (44.6 ) $ (90.7 )


	Three months ended				Condensed Consolidated Statements of Operations line item
	August 31,		August 31,
	2023		2022
Employee benefit plans:
Amortization of net actuarial loss	$	0.3	$	0.1		Other components of net periodic benefit (cost)
Amortization of prior service (credit) loss		(0.2)		(0.2)		Other components of net periodic benefit (cost)
Less: Tax effect		0.1		0.1		Provision (benefit) for income taxes
Total cost, net of tax	$	0.2	$	0.0

Three months ended February 28, Nine months ended February 28, Affected line items in the condensed consolidated statements of operations

2018
2017
2018
2017
Employee benefit plans:

Amortization of unrecognized gain (loss) $ 0.6
$ 1.0
$ 1.8
$ 3.1
Other components of net periodic benefit (cost)

Settlement charge 39.6
—
55.0
—
Other components of net periodic benefit (cost)
Other reclassifications, net (3.4 ) —
(4.6 ) —
Other components of net periodic benefit (cost)
Less: Tax effect (14.6 ) (0.3 ) (20.6 ) (1.0 )
Provision (benefit) for income taxes

Total cost, net of tax $ 22.2
$ 0.7
$ 31.6
$ 2.1

~~13.~~14. FAIR VALUE MEASUREMENTS

~~SCHOLASTIC CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED~~

~~(Dollar amounts in millions, except per share data)~~

•Level 2Observable inputs other than ~~unadjusted~~ quoted prices included in Level 1, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or liabilities ~~such as~~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.



		○	~~Quoted prices for similar assets or liabilities~~SCHOLASTIC CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED (Dollar amounts in ~~active markets~~
○	~~Quoted prices for identical or similar assets or liabilities in inactive markets~~
○	~~Inputs other than quoted prices that are observable for the asset or liability~~
○	~~Inputs that are derived principally from or corroborated by observable market data by correlation or other means~~millions, except per share data)

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

The Company’s financial assets and liabilities measured at fair value consisted of cash and cash equivalents, debt and foreign currency forward contracts. Cash and cash equivalents are comprised of bank deposits and short-term investments, such as money market funds, the fair value of which is based on quoted market prices, a Level 1 fair value measure. The Company employs Level 2 fair value measurements for the disclosure of the fair value of its various lines of ~~credit.~~credit and long term debt. The fair value of the Company's debt approximates the carrying value for all periods presented. The fair values of foreign currency forward contracts, used by the Company to manage the impact of foreign exchange rate changes, ~~to the financial statements,~~ are based on quotations from financial institutions, a Level 2 fair value measure. ~~See Note 15, “Derivatives and Hedging,” for a more complete description of fair value measurements employed.~~

Non-financial assets ~~and liabilities~~ for which the Company employs fair value measures on a non-recurring basis include:

•Long-lived assets, including held for sale

~~Investments~~•Operating lease right-of-use (ROU) assets

•Investments

•Assets acquired in a business combination

~~Goodwill, definite~~•Impairment assessment of goodwill and ~~indefinite-lived~~ intangible assets

~~Long-lived assets held for sale~~

Level 2 and ~~level~~Level 3 inputs are employed by the Company in the fair value measurement of these ~~assets and liabilities. For the fair value measurements employed by the Company for goodwill see Note 7, “Goodwill and Other Intangibles."~~assets. For the fair value measurements employed by the Company for certain property, plant and equipment, ~~production assets,~~ investments and prepublication assets, the Company ~~assesses~~assessed future expected cash flows attributable to these assets. See Note 9, Investments, for a more complete description of the fair value measurements employed.

~~14.~~15. INCOME TAXES AND OTHER TAXES

Income Taxes

In calculating the provision for income taxes on an interim basis, the Company uses an estimate of the annual effective tax rate based upon ~~the~~currently known facts and circumstances ~~known~~ and applies that rate to its year-to-date earnings or losses. The Company’s effective tax rate is based on expected income and statutory tax rates and takes into consideration permanent differences between financial statement and tax return income applicable to the Company in the various jurisdictions in which the Company operates. The effect of discrete items, such as changes in estimates, changes in ~~enacted tax laws or~~ rates or tax status, and unusual or infrequently occurring events, is recognized in the interim period in which the discrete item occurs. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or as the result of new judicial interpretations or regulatory or tax law changes.

The ~~Company’s annual effective tax rate, exclusive of discrete items, is expected to be approximately 33.9%. The~~Company's interim effective tax rate, inclusive of discrete items, ~~was 22.3% and 23.8%~~ for the three ~~and nine~~ month ~~periods~~

~~SCHOLASTIC CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED~~

~~(Dollar amounts in millions, except per share data)~~

period ended ~~February 28, 2018, respectively. On December 22, 2017,~~August 31, 2023 was 24.3%, compared to 21.6%, for the ~~Tax Cuts and Jobs Act (the "Act") was signed into law resulting in a significant change~~prior fiscal year period. The increase in the ~~framework for U.S. corporate taxes. The Act reduces the U.S. federal corporate~~interim effective tax rate ~~from 35%~~was primarily due to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. As a result, the Company's incomean excess tax benefit ~~for each of~~related to vested option exercises in the three ~~and nine month periods~~months ended February 28, 2018 includes expense related to the re-measurement of the Company's U.S. deferred tax balances of $8.3, based upon the Company's estimate of the amount and timing of future income taxes and related deductions. The Company does not expect to incur a one-time transition tax on earnings of foreign subsidiaries.August 31, 2023.

The re-measurement of the Company's U.S. deferred tax balances, any transition tax and interpretation of the new law is provisional subject to clarifications of the new legislation and final calculations. Any future changes to the Company’s provisional estimates, related to Act, will be reflected as a change in estimate in the period in which the change in estimate is made in accordance with Staff Accounting Bulletin No. 118, ~~Income Tax Accounting Implications of the Tax Cuts and Jobs Act~~ ~~("SAB 118"). SAB 118 allows for a measurement period of up to one year after the enactment date of the Act to finalize the recording of the related tax impacts.~~

~~The Act also subjects a U.S. shareholder to tax on global intangible low-taxed income ("GILTI") earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740,~~ ~~No. 5, Accounting for Global Intangible Low-Taxed Income~~, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred. The Company is still evaluating the effects of the GILTI provisions and has not yet determined an accounting policy or a reasonable estimate of a potential impact (if any). The Company has not reflected any adjustments related to GILTI in the financial statements.

The Company, including its domestic subsidiaries, files a consolidated U.S. income tax return, and also files tax returns in various states and other local jurisdictions. Also, certain subsidiaries of the Company file income tax returns in foreign jurisdictions. The Company is routinely audited by various tax authorities. 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. 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

The Company is subject to tax examinations for sales-based taxes. A number of these examinations are ongoing and, in certain cases, have resulted in assessments from taxing authorities. The Company assesses sales tax contingencies for each jurisdiction in which it operates, considering all relevant facts including statutes, regulations, case law and experience. ~~When~~Where a sales tax liability with respect to a ~~particular~~ jurisdiction is probable and can be reliably estimated for such jurisdiction, the Company has made accruals for these matters which are reflected in the Company’s ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements. These amounts are included in Selling, general and administrative expenses. Future developments relating to the foregoing could result in adjustments being made to these accruals.

The State of Wisconsin has assessed Scholastic Book Fairs, Inc. (“SBF”), a wholly owned subsidiary of the Company, $5.4, exclusive of penalties and interest, for sales tax in fiscal years 2004 through 2014. Based upon the facts and circumstances and the relevant laws in the State of Wisconsin, the Company does not believe these assessments are merited and has elected to litigate these assessments. While the Company believes it will prevail in this litigation and accordingly has not recognized a liability for these assessments, the results of litigation cannot be assured and it is reasonably possible that SBF could be found liable for all or a portion of the amounts assessed.

~~15.~~16. DERIVATIVES AND HEDGING

The Company enters into foreign currency derivative contracts to economically hedge the exposure to foreign currency fluctuations associated with the forecasted purchase of inventory, ~~and~~ the foreign exchange risk associated with certain receivables denominated in foreign currencies and certain future commitments for foreign expenditures. These derivative contracts are economic hedges and are not designated as cash flow hedges.

The Company marks-to-market these instruments and records the changes in the fair value of these items in Selling, general and administrative expenses ~~in the Condensed Consolidated Statement of Operations,~~ and it recognizes the unrealized gain or loss in ~~other~~Other current assets or Other current liabilities. In the fiscal quarter ended February 28, 2018, the Company settled an existing foreign currency derivative which resulted in net cash proceeds of $0.9. Income related to the foreign currency derivative was $0.3 and $0.6 for the three and nine

~~SCHOLASTIC CORPORATION~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED~~

~~(Dollar amounts in millions, except per share data)~~

~~months ended February 28, 2018, respectively, and $0.1 and $0.1 for the three and nine months ended February 28, 2017, respectively.~~ The notional values of the ~~open~~ contracts as of ~~February 28, 2018~~August 31, 2023 and ~~February 28, 2017~~August 31, 2022 were ~~$27.5~~

$22.8 and ~~$36.7,~~$21.3, respectively. ~~Unrealized losses~~A net unrealized gain of ~~$0.3~~$0.4 and ~~unrealized gains of $0.1 were~~$0.6 was recognized ~~at February 28, 2018 and February 28, 2017, respectively,~~ for the ~~nine month periods then ended.~~three months ended August 31, 2023 and August 31, 2022, respectively.

~~16.~~17. OTHER ACCRUED EXPENSES

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


	August 31, 2023		May 31, 2023		August 31, 2022
Accrued payroll, payroll taxes and benefits	$	34.5	$	29.2	$	36.8
Accrued bonus and commissions		13.0		31.2		12.2
Returns liability		33.1		34.9		41.5
Accrued other taxes		16.0		24.8		21.1
Accrued advertising and promotions		8.5		7.3		9.9
Other accrued expenses		40.8		41.5		41.1
Total accrued expenses	$	145.9	$	168.9	$	162.6

February 28, 2018 May 31, 2017 February 28, 2017
Accrued payroll, payroll taxes and benefits $ 44.8
$ 48.5
$ 45.0
Accrued bonus and commissions 19.9
33.8
20.1
Accrued other taxes 23.4
26.1
24.7
Accrued advertising and promotions 35.8
34.9
34.9
Accrued insurance 8.1
7.6
8.1
Other accrued expenses 30.6
27.1
29.0
Total accrued expenses $ 162.6
$ 178.0
$ 161.8

~~17.~~18. SUBSEQUENT EVENTS

On March 21, 2018, the Board authorized an additional $50.0 for repurchases of common stock under the Company’s stock repurchase program. Under this program, which will continue to be funded with available cash, the Company may purchase shares, from time to time as conditions allow, on the open market or in negotiated private transactions. This authorization increases the aggregate amount of shares, in dollar terms, which may be repurchased to $61.4 as of March 21, 2018, after giving effect to the remaining amounts available for share repurchases under previous authorizations.



SCHOLASTIC CORPORATION Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)

Overview and Outlook

First quarter ~~which reflects both continuing~~results reflect the Company's implementation of its newly integrated school reading events strategy while investing in other areas of its business for long-term growth. Within the Children's Book Publishing and ~~discontinued operations.~~

InDistribution segment, the ~~quarter ended February 28, 2018, operating results were mainly driven~~trade channel was impacted by ~~top line growth in each reportable segment. There was an unfavorable impact on margins~~the overall softness in the ~~quarter ended February 28, 2018 due~~retail book market resulting in lower backlist sales, partly offset by multiple frontlist bestsellers. In Education Solutions, revenues were lower year-over-year, primarily reflecting the shifting seasonality of this business to the ~~planned expansion~~fourth fiscal quarter, as well as the timing of revenues from state-sponsored programs. The International segment was also impacted by softness in the ~~Company's education sales teams~~retail market which resulted in lower trade channel revenues in major markets.

The Company is well-positioned to meet the ~~anticipated~~ demand for the ~~Company's comprehensive core literacy programs, higher licensing fees related~~current back-to-school season with a fair count goal of 90% of pre-pandemic levels. The integrated school reading events business has completed its reorganization and begun to implement new customer-centric strategies. Although the ~~roll-out~~trade channel may continue to be impacted by softness in the retail book market, it is expected to benefit from the release of a new ~~point-of-sale system for~~titles from the ~~Company's book fairs operations,~~Dog Man®, Cat Kid Comic Club®, and HeartstopperTM series, The Harry Potter Wizarding Almanac and the ~~effect~~new Goosebumps® TV series on Disney+® and Hulu®. Within Education Solutions, while the Company expects the continuance of ~~a beneficial inventory adjustment taken in~~ the ~~prior~~revenue shift trend centered on the fourth fiscal quarter, init continues to be well-positioned to meet the ~~book club channel. Unallocated overhead expenses benefited~~customized needs of educators throughout the year. In addition, the segment is expected to benefit from ~~lower salary-related expenses in~~ the ~~quarter ended February 28, 2018. The Company's effective federal tax rate decreased as a result of~~actions completed to streamline the ~~passage of tax reform, although~~organization and adjust the ~~full effect of the lower corporate tax rate will not be realized until next fiscal year.~~

Results of Operations –

Revenues for the quarter ended ~~February 28, 2018 increased~~August 31, 2023 decreased by $34.4 million to ~~$344.7~~$228.5 million, compared to ~~$336.2~~$262.9 million in the prior fiscal year quarter. The Children's Book Publishing and Distribution segment revenues increased $0.4 million, driven by higher book fairs revenues of $2.0 million and higher trade channel sales of $1.0 million, partially offset by lower sales of $2.6 million in the book club channel. The ~~Education~~ segment revenues increased $1.6 million, primarily driven by higher sales of classroom libraries and customized collections as well as an increase in custom and digital publishing in the consumer magazine channel. In local currency, the ~~International~~ segment revenues increased $1.7 million, primarily driven by higher local currency sales in Canada, UK, Australia and Asia markets. International revenues were also benefited by favorable foreign exchange translation of $4.8 million.


	Three months ended
	August 31,				August 31,
	2023				2022
($ amounts in millions)		$	% of Revenue			$	% of Revenue
Product, service and production costs and inventory reserves	$	72.8	31.8	%	$	82.4	31.4	%
Royalty costs		23.5	10.3	%		27.4	10.4	%
Prepublication amortization		7.0	3.1	%		6.4	2.4	%
Postage, freight, shipping, fulfillment and other		26.7	11.7	%		28.3	10.8	%
Total	$	130.0	56.9	%	$	144.5	55.0	%



SCHOLASTIC CORPORATION Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)

Three months ended February 28, Nine months ended February 28,
2018 2017 2018 2017
($ amounts in millions) $ % of Revenue $ % of Revenue $ % of Revenue $ % of Revenue
Product, service and production costs $ 86.1
25.0 % $ 81.5
24.2 % $ 283.2
25.0 % $ 303.8
24.4 %
Royalty costs 22.4
6.5 % 23.1
6.9 % 77.6
6.9 % 120.4
9.7 %
Prepublication and production amortization 5.5
1.6 % 5.6
1.7 % 16.3
1.4 % 17.2
1.4 %
Postage, freight, shipping, fulfillment and other 52.4
15.2 % 50.1
14.9 % 158.5
14.0 % 159.9
12.9 %
Total $ 166.4
48.3 % $ 160.3
47.7 % $ 535.6
47.3 % $ 601.3
48.4 %

Cost of goods sold for the quarter ended August 31, 2023 was $130.0 million, or 56.9% of revenues, compared to $144.5 million, or 55.0% of revenues, in the prior fiscal year quarter. The increase in Cost of goods sold as a percentage of ~~revenue~~revenues was primarily attributable to higher prepublication amortization as a result of the release of Ready4ReadingTM at the end of fiscal 2023 as well as higher fulfillment costs in Canada and the UK as a result of increased labor costs. Product costs were marginally unfavorable as a result of the higher costs associated with delivering professional learning services within Education Solutions, which were partially offset by lower production costs and favorable product mix in the domestic trade channel.

Selling, general and administrative expenses for the quarter ended ~~February 28, 2018~~August 31, 2023 increased to ~~48.3%~~$184.2 million, compared to $162.8 million in the prior fiscal year quarter. The $21.4 million increase was primarily attributable to higher labor and equipment costs in the U.S. book fairs channel to support the expected increase in fair count for fiscal 2024, in addition to higher severance expense from the Company's restructuring programs of $6.3 million related to reorganization efforts and cost-saving initiatives in the school reading events business, Education Solutions and in Canada. In addition, the Company continued to spend on investments in long-term growth opportunities within the Education Solutions segment.

Depreciation and amortization expenses for the quarter ended August 31, 2023 were $13.4 million compared to $13.7 million in the prior fiscal year quarter. The Company continues to shift spending to cloud computing arrangements in which the amortization expense is included in Selling, general and administrative expenses rather than Depreciation and amortization. Amortization related to cloud computing arrangements for the quarter ended August 31, 2023 was relatively consistent with the prior year period. There were no significant assets placed into service during the quarter ended August 31, 2023.

Interest income for the quarter ended August 31, 2023 was $1.7 million compared to $0.6 million in the prior fiscal year quarter. The $1.1 million increase was attributable to higher interest rates earned in the quarter ended August 31, 2023. The Company invests excess cash in short term investments which earn competitive interest rates that change directionally in relation to the Federal Funds rate. Interest expense for the quarter ended August 31, 2023 was $0.3 million compared to $0.4 million in the prior fiscal year quarter. There were no significant changes in average debt borrowings compared to the prior fiscal year quarter.

The Company's interim effective tax rate, inclusive of discrete items, for the quarter ended August 31, 2023 was 24.3%, compared to ~~47.7%~~21.6% for the prior fiscal year period.

Children’s Book Publishing and Distribution


	Three months ended August 31,
					$		%
($ amounts in millions)	2023		2022		Change		Change
Revenues	$	102.8	$	124.7	$	(21.9)	(17.6)	%
Cost of goods sold		63.3		77.1		(13.8)	(17.9)	%
Other operating expenses (1)		81.0		77.7		3.3	4.2	%

Operating income (loss)	$	(41.5)	$	(30.1)	$	(11.4)	(37.9)	%
Operating margin		NM		NM

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

Revenues for the quarter ended August 31, 2023 decreased by $21.9 million to $102.8 million, compared to $124.7 million in the prior fiscal year quarter. Trade channel revenues decreased $17.2 million reflecting the overall softness in the retail book market, driving lower revenues for backlist titles and offsetting strong sales from frontlist bestsellers including This Winter by Alice Oseman, The Bad Guys in Let the Games Begin! (The Bad Guys® #17) by Aaron Blabey, The Official Harry Potter Cookbook, and The Ballad of Songbirds and Snakes by


SCHOLASTIC CORPORATION Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)

Suzanne Collins in paperback. If the retail book market remains soft, the trade channel could continue to be negatively impacted during the remainder of fiscal 2024. In addition, lower media revenues contributed to the revenue decrease as the Company completed the delivery of episodes associated with the production of the animated series "Eva the Owlet"TM in fiscal 2023. Revenues from school reading events decreased $4.7 million primarily due to lower redemptions of book fair incentive program credits. Revenues from school reading events are generally not significant in the first fiscal quarter as most schools are not in session.

Cost of goods sold for the quarter ended August 31, 2023 was $63.3 million, or 61.6% of revenues, compared to $77.1 million, or 61.8% of revenues, in the prior fiscal year quarter. Cost of goods sold benefited from the mix of product sold in the quarter ended August 31, 2023 as compared to the prior fiscal year quarter, coupled with lower production costs.

Other operating expenses for the quarter ended August 31, 2023 increased to $81.0 million, compared to $77.7 million in the prior fiscal year quarter. Other operating expenses increased $3.3 million primarily driven by higher labor and equipment costs in the book fairs channel to support the expected increase in fair count for fiscal 2024, coupled with increased rent for warehouse space. This was partially offset by lower book clubs kit costs as a result of a change in the timing of the distribution of kits to schools.


	Three months ended August 31,
					$		%
($ amounts in millions)	2023		2022		Change		Change
Revenues	$	66.0	$	73.2	$	(7.2)	(9.8)	%
Cost of goods sold		32.6		30.4		2.2	7.2	%
Other operating expenses (1)		52.1		47.1		5.0	10.6	%

Operating income (loss)	$	(18.7)	$	(4.3)	$	(14.4)	NM
Operating margin		NM		NM

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

Revenues for the quarter ended August 31, 2023 decreased by $7.2 million to $66.0 million, compared to $73.2 million in the prior fiscal year quarter. The decrease in segment revenues was primarily driven by timing of revenues from sponsored programs and summer learning product offerings as the Company continues to experience a shift in sales into the fourth fiscal quarter. Partially offsetting the lower revenues, the segment benefited from increased revenues from the Scholastic Family and Community Engagement (FACE)TM and Literacy Partners initiatives as a result of continued growth in the funding for community and government programs to support childhood literacy, as well as higher revenues from professional learning services delivered during the quarter ended August 31, 2023.

Cost of goods sold for the quarter ended August 31, 2023 was $32.6 million, or 49.4% of revenues, compared to $30.4 million, or 41.5% of revenues, in the prior fiscal year quarter. The increase in Cost of goods sold as a percentage of revenues was primarily attributable to higher prepublication amortization as result of the release of Ready4ReadingTM at the end of fiscal 2023. In addition, the segment incurred higher product costs associated with the delivery of professional learning services during the quarter ended August 31, 2023.


SCHOLASTIC CORPORATION Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)


	Three months ended August 31,
					$		%
($ amounts in millions)	2023		2022		Change		Change
Revenues	$	57.2	$	65.0	$	(7.8)	(12.0)	%
Cost of goods sold		35.9		39.5		(3.6)	(9.1)	%
Other operating expenses (1)		29.5		29.0		0.5	1.7	%

Operating income (loss)	$	(8.2)	$	(3.5)	$	(4.7)	(134.3)	%
Operating margin		NM		NM

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

Cost of goods sold for the quarter ended August 31, 2023 was $35.9 million, or 62.8% of revenues, compared to $39.5 million, or 60.8% of revenues, in the prior fiscal year quarter. The increase in Cost of goods sold as a percentage of revenue was attributable to higher fulfillment costs, primarily in Canada and the UK, due to ~~a favorable inventory adjustment in the book club channel that yielded lower costs in the prior fiscal quarter.~~increased labor costs.

~~Cost of goods sold as a percentage of revenue~~Other operating expenses for the ~~nine months~~quarter ended ~~February 28, 2018 decreased to 47.3%,~~August 31, 2023 were $29.5 million, compared to ~~48.4%~~$29.0 million in the prior fiscal year ~~period. The decrease in Cost of goods sold as a percentage of revenue was~~quarter. Other operating expenses increased $0.5 million primarily ~~due to the lower royalty costs associated with the decrease in sales of Harry Potter themed titles and favorable product mix in~~driven by severance expense from restructuring programs within the book ~~fair~~clubs channel ~~partially offset by the unfavorable impact lower revenues had on fixed costs and the favorable inventory adjustment~~ in ~~the book club channel that yielded lower costs in the prior fiscal year period.~~

~~Selling, general and administrative expenses~~Canada of $1.2 million in the quarter ended ~~February 28, 2018 decreased to $186.2~~August 31, 2023, partially offset by favorable foreign exchange impact of $0.6 million.

Segment operating loss for the quarter ended August 31, 2023 was $8.2 million, compared to ~~$191.1~~$3.5 million in the prior fiscal year quarter. The ~~decrease~~$4.7 million increase in ~~expense~~operating loss was primarily ~~related~~driven by lower trade channel revenues in Canada and Australia, coupled with higher fulfillment costs due to ~~lower~~increased labor costs in Canada and the UK. In addition, the segment incurred severance expense ~~of $4.0 million related to cost saving initiatives and lower costs~~from restructuring programs in the book club channel as a result of lower marketing expenses, partially offset by increased salaries and related costs for the expansion of the sales and marketing organizations supporting curriculum publishing in the ~~Education~~ ~~segment.~~

Selling, general and administrative expenses in the nine months ended February 28, 2018 decreased to $572.0 million compared to $587.2 million in the prior fiscal year period. The decrease in expense was primarily related to lower medical claims experience and lower marketing expenses, partially offset by higher employee-related expenses for the expansion of the sales and marketing organizations supporting curriculum publishing. Selling, general and administrative expenses in the nine months ended February 28, 2018 also included $5.7 million in severance expense primarily in connection with the termination without cause of the Company's former chief financial officer, including $0.7 million in stock based compensation expense due to the accelerated vesting of awards. In the prior fiscal year period, severance expense of $8.3 million was related to cost savings initiatives.

Depreciation and amortization expenses in the quarter ended February 28, 2018 increased to $11.5 million, compared to $9.5 million in the prior fiscal year quarter. The increase was primarily attributable to capitalized strategic technology investments and assets related to the redesign and upgrade of the Company's headquarters in New York CityCanada which ~~were placed into service during the current fiscal year, resulting in an increase in depreciation expense.~~

Depreciation and amortization expenses in the nine months ended February 28, 2018 increased to $31.9 million, compared to $28.6 million in the prior fiscal year period. The increase was primarily attributable to capitalized strategic technology investments and assets related to the redesign and upgrade of the Company's headquarters in New York City which were placed into service during the current fiscal year, resulting in an increase in depreciation expense. A majority of the capital improvements to the Company's headquarters location in New York City are expected to ~~be completed this fiscal year and additional assets will be placed into service resulting in additional depreciation expense in future periods.~~drive greater operating efficiencies across North American operations.



SCHOLASTIC CORPORATION Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)

Asset impairments for the three and nine months ended February 28, 2018 were $4.3 million and $11.0 million, respectively, due to impairment charges related to the abandonment of legacy building improvements in connection with the Company's renovation of its headquarters in New York City.

Net interest income in the quarter ended February 28, 2018 was $0.2 million, compared to net interest expense of $0.3 million in the prior fiscal year quarter. The $0.5 million increase was primarily driven by higher interest rates associated with the Company's cash and cash equivalents balance, while interest expense remained relatively flat due to the absence of long-term debt.

Net interest income in the nine months ended February 28, 2018 increased to $0.5 million, compared to net interest expense of $1.0 million in the prior fiscal year period. The $1.5 million increase was primarily driven by higher interest rates associated with the Company's cash and cash equivalents balance, while interest expense remained relatively flat due to the absence of long-term debt.

For the three and nine months ended February 28, 2018, the Company recognized settlement charges of $39.6 million and $55.0 million, respectively, related to the settlement of the U.S Pension Plan and the related purchase of insurance company group annuity contracts. The U.S. Pension Plan's asset balance was sufficient to fund the purchase of these insurance contracts as well as any remaining benefit obligations and plan-related operating expenses, with no additional cost to the Company as the plan sponsor. The Company anticipates that any remaining benefit obligations and plan-related operating expenses will be distributed or satisfied over the remainder of the current fiscal year.

The Company’s effective tax rate for the third quarter of fiscal 2018 was 22.3%, compared to 35.1% in the prior fiscal year quarter. The Company’s effective tax rate for the nine month period ended February 28, 2018 was 23.8%, compared to 45.6% in the prior fiscal year period. On December 22, 2017, the framework for U.S. corporate taxes was significantly changed with the signing of the Tax Cuts and Jobs Act into law. As a result, the Company's marginal effective tax rate for the current fiscal year is expected to be reduced to 34.7%. For the three and nine months ended February 28, 2018, the Company had losses from operations and therefore the income tax benefit was unfavorably impacted by the reduction in rate and the related $8.3 million re-measurement of the U.S. deferred tax balances.

Net loss for the quarter ended February 28, 2018 increased by $33.8 million to $49.2 million, compared to $15.4 million in the prior fiscal year quarter. Loss per basic and diluted share of Class A Stock and Common Stock was $1.41 and $1.41, respectively, in the quarter ended February 28, 2018, compared to loss per basic and diluted share of $0.44 and $0.44, respectively, in the prior fiscal year quarter.

Net loss for the nine months ended February 28, 2018 was $55.8 million, compared to Net income of $12.9 million in the prior fiscal year period, resulting in an aggregate change of $68.7 million. Loss per basic and diluted share of Class A Stock and Common Stock was $1.59 and $1.59, respectively, in the period ended February 28, 2018, compared to Earnings per basic and diluted share of Class A Stock and Common Stock of $0.37 and $0.36, respectively, in the prior fiscal year period.

~~Results of Continuing Operations~~

~~Children’s Book Publishing and Distribution~~

* Other operating expenses include selling, general and administrative expenses, bad debt expenses and depreciation and amortization.

Cost of goods sold for the quarter ended February 28, 2018 was $91.0 million, or 46% of revenues, compared to $86.9 million, or 44% of revenues, in the prior fiscal year quarter. The increase in Cost of goods sold as a percent of revenues was primarily due to the favorable inventory adjustment in the book club channel that yielded lower costs in the prior fiscal quarter, as well as, unfavorable product mix in the trade channel, partially offset by favorable product mix in the book fair channel.

Cost of goods sold for the nine months ended February 28, 2018 was $293.6 million, or 43% of revenues, compared to $348.9 million, or 45% of revenues, in the prior fiscal year period. The decrease in Cost of goods sold as a percent of revenues was primarily due to lower royalty costs associated with the decrease in sales of Harry Potter themed titles and favorable product mix in the book fair channel, partially offset by the favorable inventory adjustment in the book club channel that yielded lower costs in the prior fiscal period.

Other operating expenses for the quarter ended February 28, 2018 increased to $109.3 million, compared to $105.8 million in the prior fiscal year quarter. The increase was driven by higher operating expenses in the book fair channel, primarily driven by costs related to the roll-out of a new point-of-sale system and higher book fair promotional expenses, partially offset by lower costs in the book club channel as a result of lower marketing expenses.

Other operating expenses for the nine months ended February 28, 2018 were $329.1 million, relatively flat compared to $329.2 million in the prior fiscal year period. This primarily related to lower costs in the book club channel as a result of lower marketing expenses, offset by the impact of the wage improvement program for employees in the U.S. distribution centers and higher costs related to the roll-out of the new point-of-sale system for the book fair channel.

Segment operating loss for the quarter ended February 28, 2018 was $0.9 million, compared to operating income of $6.3 million in the prior fiscal year quarter. This was primarily driven by higher operating expenses in the book fair channel, principally driven by costs related to the roll-out of the new point-of-sale system, and the favorable inventory adjustment in the book club channel that yielded lower costs in the prior fiscal quarter.

Segment operating income for the nine months ended February 28, 2018 decreased to $55.3 million, compared to $91.2 million in the prior fiscal year period. This was primarily driven by the lower sales in the trade channel

and higher operating expenses in the book fair channel, principally driven by costs related to the roll-out of a new point-of-sale system, partially offset by lower marketing expenses and improved efficiencies in customer service and fulfillment for the book clubs operations.

* Other operating expenses include selling, general and administrative expenses, bad debt expenses and depreciation and amortization.

Revenues for the nine months ended February 28, 2018 decreased to $177.6 million, compared to $186.4 million in the prior fiscal year period. The decrease was primarily the result of the timing of orders for customized curriculum product. Educational material sales are typically seasonal and are purchased toward the end of the standard U.S. school year in April, May and June. In addition, the magazine channel revenues were flat despite the absence of U.S. presidential election related materials in fiscal 2018.

Cost of goods sold for the quarter ended February 28, 2018 was $20.1 million, or 33% of revenues, compared to $19.6 million, or 33% of revenues, in the prior fiscal year quarter. Favorable product mix in the consumer magazine channel, associated with digital publishing sales, was offset by the costs associated with customized collections sales.

Cost of goods sold for the nine months ended February 28, 2018 was $61.9 million, or 35% of revenues, compared to $63.4 million, or 34% of revenues, in the prior fiscal year period. The increase in cost of goods sold as a percentage of revenues was primarily driven by unfavorable product mix within the education sales channels, as well as costs associated with new product releases.

Other operating expenses increased to $41.8 million for the quarter ended February 28, 2018, compared to $37.0 million in the prior fiscal year quarter. The increase primarily related to the higher employee-related expenses for the planned expansion of the sales and marketing organizations supporting curriculum publishing.

Other operating expenses increased to $124.6 million for the nine months ended February 28, 2018, compared to $115.2 million in the prior fiscal year period. The increase was mainly attributable to the higher employee-related expenses for the planned expansion of the sales and marketing organizations supporting curriculum publishing. Costs associated with the expanded sales and marketing organizations will impact operating expenses on an on-going basis.

Segment operating loss increased to $0.2 million for the quarter ended February 28, 2018, compared to $3.5 million in operating income in the prior fiscal year quarter. This was primarily driven by higher employee-related expenses for the expansion of the sales and marketing organizations supporting curriculum publishing.

Segment operating loss increased to $8.9 million for the nine months ended February 28, 2018, compared to $7.8 million in operating income in the prior fiscal year period. In the prior fiscal year, the education channel

realized strong sales in the first fiscal quarter, as a result of a backlog of orders at the end of fiscal 2016 which were shipped in early fiscal 2017. In addition, the operating loss in the nine months ended February 28, 2018 was impacted by higher employee-related expenses. Educational supplementary material sales are typically seasonal and are purchased toward the end of the standard U.S. school year in April, May and June.

* Other operating expenses include selling, general and administrative expenses, bad debt expenses, severance and depreciation and amortization.

Cost of goods sold for the quarter ended February 28, 2018 was $41.8 million, or 50% of revenues, compared to $40.9 million, or 53% of revenues, in the prior fiscal year quarter. Cost of goods sold as a percentage of revenues decreased primarily due to the favorable impact the higher revenues had on fixed costs, coupled with $0.5 million in fewer expenses due to costs incurred in the prior fiscal year quarter related to the wind-down of a technology distribution business in Australia.

Cost of goods sold for the nine months ended February 28, 2018 was $140.0 million, or 51% of revenues, compared to $149.7 million, or 52% of revenues, in the prior fiscal year period. Cost of goods sold as a percentage of revenues decreased primarily due to a decrease in royalty costs associated with lower volumes of Harry Potter related titles and Australia's exit of the low margin technology distribution business, net of exit costs of $0.5 million.

Other operating expenses for the quarter ended February 28, 2018 were $41.1 million, compared to $39.9 million in the prior fiscal year quarter. In local currencies, Other operating expenses decreased by $0.7 million.

~~The local currency decrease was primarily related to higher income attributable to certain non-controlling UK equity interests during the fiscal year quarter.~~

Other operating expenses for the nine months ended February 28, 2018 were $124.0 million, compared to $119.4 million in the prior fiscal year period. In local currencies, Other operating expenses increased by $0.3 million. The local currency increase was primarily related to lower income attributable to certain non-controlling UK equity interests.

Segment operating income for the quarter ended February 28, 2018 was $0.7 million, compared to segment operating loss of $3.7 million in the prior fiscal year quarter. This was primarily driven by the increase in sales during the quarter ended February 28, 2018.

Segment operating income for the nine months ended February 28, 2018 was $12.6 million, compared to segment operating income of $17.2 million in the prior fiscal year period. This was primarily driven by lower sales of Harry Potter related titles.

Unallocated overhead expense for the quarter ended ~~February 28, 2018 decreased~~August 31, 2023 increased by ~~$7.5~~$10.5 million to ~~$23.3~~$30.7 million, from ~~$30.8~~$20.2 million in the prior ~~fiscal~~ year quarter. The ~~decrease~~increase was primarily ~~driven by lower employee related expenses primarily due~~attributable to ~~$4.0~~higher employee-related costs, which included severance expense from its restructuring programs of $5.1 million ~~in lower severance expenses~~ related to ~~cost saving~~the reorganization efforts and cost-saving initiatives in the school reading events division and ~~a decrease in unallocated costs associated with the strategic technology initiatives,~~Education Solutions as well as higher medical expense. This was partially offset by ~~impairment expense~~higher rental income of ~~$4.3~~$1.0 million ~~related to legacy building improvements.~~

~~Unallocated overhead expense for the nine months ended February 28, 2018 decreased by $14.0 million to $77.3 million, from $91.3 million~~as a result of a new tenant leasing space in the prior fiscal year period. The decrease was primarily driven by lower employee-related expenses due in part to lower medical claims experience, as well as lower severance expenses of $2.4 million. Severance related expenses decreased to $5.7 million compared to $8.1 million in the prior fiscal year period. Severance related expenses in the nine months ended February 28, 2018 were primarily driven by the termination without cause of the Company's former chief financial officer, which resulted in $0.7 million in stock based compensation expense due to the accelerated vesting of awards. In addition, unallocated costs associated with the strategic technology initiatives decreased, partially offset by impairment expense of $11.0 million related to legacy building improvements. The Company expects costs associated with its strategic technology initiatives to continue into future fiscal years. A majority of the capital improvements to the Company's headquarters location in New York City are expected to be completed this fiscal year.headquarters.

The Company’s Children’s Book Publishing and Distributionschool-based book ~~fair~~club and book ~~club~~fair channels and most of its Education Solutions businesses operate on a school-year basis; therefore, the Company’s business is highly seasonal. As a result, the Company’s revenues in the first and third quarters of the fiscal year generally are lower than its revenues in the other two fiscal quarters. Typically, school-based channels and magazine revenues are minimal in the first quarter of the fiscal year as schools are not in session. Education channel revenues are generally higher in the fourth quarter. Trade sales can vary ~~through~~throughout the year due to varying release dates of published titles. ~~The Company generally experiences a loss from operations in the first and third quarters of each fiscal year.~~

~~SCHOLASTIC CORPORATION~~
~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)~~

Liquidity and Capital Resources

~~The Company’s cash and cash equivalents totaled $362.6 million at February 28, 2018, $444.1 million at May 31, 2017 and $461.8 million at February 28, 2017.~~ Cash ~~and cash equivalents held by the Company’s U.S. operations totaled $342.4 million at February 28, 2018, $430.5 million at May 31, 2017 and $439.9 million at February 28, 2017.~~

~~Cash provided~~used by operating activities was ~~$64.9~~$38.1 million for the ~~nine~~three months ended ~~February 28, 2018,~~August 31, 2023, compared to cash ~~provided~~used by operating activities of ~~$113.4~~$60.3 million for the prior fiscal year period, representing a decrease in cash ~~provided~~used by operating activities of ~~$48.5~~$22.2 million. The decrease in cash ~~provided~~used was primarily ~~due~~driven by lower inventory purchases as lead times have returned to ~~the decrease~~pre-pandemic levels resulting in ~~Net income when compared~~a return to ~~the success of Harry Potter themed titles~~historical purchasing patterns. This was partially offset by lower customer remittances on receivable balances in the ~~prior~~quarter ended August 31, 2023. The Company also paid higher severance in the quarter ended August 31, 2023 and increased spending on growth initiatives in Education Solutions as well as increased general expenses in the book fairs channel to support the expected increased fair count for fiscal ~~year period and the related decrease in customer remittances.~~2024.

Cash used in investing activities was ~~$116.8~~$21.8 million for the ~~nine~~three months ended ~~February 28, 2018,~~August 31, 2023, compared to ~~$45.6~~cash used in investing activities of $16.2 million in the prior fiscal year period, representing ~~higher~~an increase in cash used in investing activities of ~~$71.2~~$5.6 million. ~~Higher~~The increase in cash used was driven by higher capital ~~spending in the period ended February 28, 2018 resulted in an increased use~~expenditures of ~~cash of $59.7~~$2.9 million, primarily ~~due to increased spending~~ for ~~strategic technology initiatives~~new point-of-sale and ~~the investment plan to create premium retail space and modernize the Company's headquarters office space in New York City. This trend is expected to continue~~fleet equipment for the ~~current fiscal year period.~~book fairs channel, as well as increased prepublication spending of $0.6 million associated with digital product development in Education Solutions. In addition, the ~~prior fiscal year period included $9.9~~Company acquired the remaining shares of Make Believe Ideas Limited for $2.1 million ~~of cash released from~~during the ~~escrow established in connection with the sale of the Company's educational technology and services business.~~quarter ended August 31, 2023.

at August 31, 2022. Due to the seasonal nature of its business as discussed under “Seasonality” ~~above,~~, the Company usually experiences negative cash flows in the June through ~~October~~September time period. As a result of the Company’s business cycle, borrowings have historically increased during June, July and August, have generally peaked in September or October, and have been at their lowest point in May.


SCHOLASTIC CORPORATION Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)

~~SCHOLASTIC CORPORATION~~
~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)~~

New Accounting Pronouncements

~~Forward Looking~~Forward-Looking Statements




SCHOLASTIC CORPORATION Item 3. Quantitative and Qualitative Disclosures about Market Risk


($ amounts in millions)	Fiscal Year Maturity
	2024 (1)			2025		2026		2027		2028		Thereafter		Total		Fair Value at 08/31/2023
Debt Obligations
Lines of credit and current portion of long-term debt	$	5.9		$	—	$	—	$	—	$	—	$	—	$	5.9	$	5.9
Average interest rate	4.4		%	—		—		—		—		—

(1) Fiscal 2024 includes the remaining nine months of the current fiscal year ending May 31, 2024.

($ amounts in millions) Fiscal Year Maturity

2018 ⁽¹⁾
2019 2020 2021 2022 Thereafter Total Fair
Value @
2/28/2018
Debt Obligations

Lines of Credit and current
portion of long-term debt
$ 7.7
$ —
$ —
$ —
$ —
$ —
$ 7.7
$ 7.7
Average interest rate 3.7 % —
—
—
—
—




SCHOLASTIC CORPORATION Item 4. Controls and Procedures

PART II – OTHER INFORMATION

SCHOLASTIC CORPORATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information with respect to repurchases of shares of Common Stock by the Corporation during the three months ended ~~February 28, 2018:~~August 31, 2023:

Issuer Purchases of Equity Securities

(Dollars in millions, except per share amounts)

Period
Total number of
shares purchased

Average
price paid
per share

Total number of shares
purchased as part of publicly
announced plans or
programs

Maximum number of shares (or
approximate dollar value) that may yet be purchased under the plans or programs ⁽ⁱ⁾

December 1, 2017 through December 31, 2017 —
$ —
—
$ 25.3

January 1, 2018 through January 31, 2018 120,058
$ 38.95
120,058
$ 20.6

February 1, 2018 through February 28, 2018 193,916
$ 37.21
193,916
$ 13.4

Total 313,974
$ 37.88
313,974


Period	Total number of shares purchased	Average price paid per share	Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares (or approximate dollar value) that may yet be purchased under the plans or programs (i)
June 1 through June 30, 2023	55,291	$43.39	55,291	$19.2
July 1 through July 31, 2023	136,881	43.81	136,881	113.2
August 1 through August 31, 2023	626,255	43.94	626,255	85.7
Total	818,427		818,427	$85.7

(i) Represents the amount remaining at ~~February 28, 2018~~August 31, 2023 under the ~~$50 million~~current $100.0 Board authorization for Common share repurchases announced on July ~~22, 2015,~~19, 2023, which is available for further repurchases, from time to time as conditions allow, on the open market or through privately negotiated ~~private~~ transactions. See Note ~~11 and Note 17~~12 of Notes to ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements - unaudited in Item 1, “Financial Statements,” for a description of the Company’s share buy-back program and share repurchase ~~authorization made on March 21, 2018.~~authorizations.

SCHOLASTIC CORPORATION



31.1		Certification of the Chief Executive Officer of Scholastic Corporation filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Chief Financial Officer of Scholastic Corporation filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certifications of the Chief Executive Officer and Chief Financial Officer of Scholastic Corporation furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101.INS~~101		~~XBRL Instance Document~~Financial Statements from the Quarterly Report on Form 10-Q of the Company for the quarter ended August 31, 2023 formatted in Inline Extensible Business Reporting Language: (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Changes in Stockholders' Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements.

~~101.SCH~~104		~~XBRL Taxonomy Extension Schema Document~~Cover Page, formatted in Inline Extensible Business Reporting Language and contained in Exhibit 101.

~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Document~~

~~101.DEF~~	~~XBRL Taxonomy Extension Definitions Document~~

~~101.LAB~~	~~XBRL Taxonomy Extension Labels Document~~

~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Document~~

SCHOLASTIC CORPORATION

QUARTERLY REPORT ON FORM 10-Q, DATED ~~FEBRUARY 28, 2018~~August 31, 2023

* In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be “furnished” and not “filed.”

SCHOLASTIC CORPORATION

~~Chairman of the Board,~~

Chief Financial Officer

(Principal Financial Officer)



Delaware		13-3385513
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)
557 Broadway,
~~557 Broadway,~~ New York,	New York	10012
(Address of principal executive offices)		(Zip Code)


Title of Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, $0.01 par value	SCHL	The NASDAQ Stock Market LLC



Title of each class			Number of shares outstanding as of August 31, 2023
~~of each class~~Common Stock, $0.01 par value			~~as of February 28, 2018~~29,359,962

~~Common Stock, $.01 par value~~	~~33,078,234~~
Class A Stock, ~~$.01~~$0.01 par value		1,656,200



	February 28, 2018			May 31, 2017			February 28, 2017
	(Unaudited)						(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	362.6		$	444.1		$	461.8
Accounts receivable, net	186.0			199.2			172.4
Inventories, net	356.9			282.5			351.2
Prepaid expenses and other current assets	100.1			44.3			68.8
Current assets of discontinued operations	—			0.4			0.4
Total current assets	1,005.6			970.5			1,054.6
Property, plant and equipment, net	530.6			475.3			455.3
Prepublication costs, net	48.8			43.3			43.0
Royalty advances, net	50.3			41.8			48.7
Goodwill	119.1			118.9			116.2
Noncurrent deferred income taxes	17.8			53.7			68.5
Other assets and deferred charges	61.5			56.9			61.3
Total noncurrent assets	828.1			789.9			793.0
Total assets	$	1,833.7		$	1,760.4		$	1,847.6

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Lines of credit and current portion of long-term debt	$	7.7		$	6.2		$	5.8
Accounts payable	208.4			141.2			194.2
Accrued royalties	63.2			34.2			87.5
Deferred revenue	56.5			24.2			56.0
Other accrued expenses	162.6			178.0			161.8
Accrued income taxes	1.2			2.8			2.7
Current liabilities of discontinued operations	—			0.5			0.1
Total current liabilities	499.6			387.1			508.1
Noncurrent Liabilities:
Other noncurrent liabilities	66.5			65.4			70.5
Total noncurrent liabilities	66.5			65.4			70.5

Commitments and Contingencies (see Note 5)	—			—			—

Stockholders’ Equity:
Preferred Stock, $1.00 par value	—			—			—
Class A Stock, $0.01 par value	0.0			0.0			0.0
Common Stock, $0.01 par value	0.4			0.4			0.4
Additional paid-in capital	614.6			606.8			604.7
Accumulated other comprehensive income (loss)	(56.5		)	(94.2		)	(90.7		)
Retained earnings	1,019.6			1,091.2			1,057.1
Treasury stock at cost	(310.5		)	(296.3		)	(302.5		)
Total stockholders’ equity	1,267.6			1,307.9			1,269.0
Total liabilities and stockholders’ equity	$	1,833.7		$	1,760.4		$	1,847.6



	Children’s Book Publishing & Distribution			Education			Overhead⁽¹⁾			Total Domestic			International			Total
Three months ended February 28, 2018
Revenues	$	199.4		$	61.7		$	—		$	261.1		$	83.6		$	344.7
Bad debt	0.7			0.4			—			1.1			0.6			1.7
Depreciation and amortization ⁽²⁾	5.4			2.3			7.5			15.2			1.8			17.0
Asset impairments	—			—			4.3			4.3			—			4.3
Segment operating income (loss)	(0.9		)	(0.2		)	(23.3		)	(24.4		)	0.7			(23.7		)
Expenditures for other non-current assets⁽³⁾	17.2			5.0			29.7			51.9			5.7			57.6
Three months ended February 28, 2017
Revenues	$	199.0		$	60.1		$	—		$	259.1		$	77.1		$	336.2
Bad debt	0.1			0.4			—			0.5			1.1			1.6
Depreciation and amortization ⁽²⁾	5.3			2.1			6.0			13.4			1.6			15.0
Segment operating income (loss)	6.3			3.5			(30.8		)	(21.0		)	(3.7		)	(24.7		)
Expenditures for other non-current assets ⁽³⁾	14.9			2.8			13.9			31.6			2.5			34.1



	Children’s Book Publishing & Distribution		Education			Overhead ⁽¹⁾			Total Domestic			International		Total
Nine months ended February 28, 2018
Revenues	$	678.0	$	177.6		$	—		$	855.6		$	276.6	$	1,132.2
Bad debt expense	3.4		1.4						4.8			3.1		7.9
Depreciation and amortization ⁽²⁾	15.8		6.6			20.7			43.1			5.2		48.3
Asset impairments	—		—			11.0			11.0			—		11.0
Segment operating income (loss)	55.3		(8.9		)	(77.3		)	(30.9		)	12.6		(18.3		)
Segment assets at February 28, 2018	494.8		179.1			886.1			1,560.0			273.7		1,833.7
Goodwill at February 28, 2018	40.9		68.2			—			109.1			10.0		119.1
Expenditures for other non-current assets⁽³⁾	44.9		12.5			78.4			135.8			10.7		146.5
Other non-current assets at February 28, 2018 ⁽³⁾	152.0		99.7			466.5			718.2			75.5		793.7
Nine months ended February 28, 2017
Revenues	$	769.3	$	186.4		$	—		$	955.7		$	286.3	$	1,242.0
Bad debt expense	3.3		0.9			—			4.2			5.1		9.3
Depreciation and amortization ⁽²⁾	16.6		6.2			17.4			40.2			5.6		45.8
Segment operating income (loss)	91.2		7.8			(91.3		)	7.7			17.2		24.9
Segment assets at February 28, 2017	478.4		158.8			948.7			1,585.9			261.3		1,847.2
Goodwill at February 28, 2017	40.9		65.4			—			106.3			9.9		116.2
Expenditures for other non-current assets⁽³⁾	52.2		7.8			28.5			88.5			8.5		97.0
Other non-current assets at February 28, 2017 ⁽³⁾	146.9		83.7			398.6			629.2			66.4		695.6



	February 28, 2018		May 31, 2017		February 28, 2017
Revolving Loan	$	—	$	—	$	—
Unsecured short term lines of credit (weighted average interest rates of 3.7%, 4.1% and 3.9%, respectively)	7.7		6.2		5.8
Total debt	$	7.7	$	6.2	$	5.8



	Three months ended February 28,						Nine months ended February 28,
	2018			2017			2018			2017
Earnings (loss) from continuing operations attributable to Class A and Common Shares	$	(49.2	)	$	(15.5	)	$	(55.8	)	$	12.9
Earnings (loss) from discontinued operations attributable to Class A and Common Shares, net of tax	—			0.1			—			0.0
Net income (loss) attributable to Class A and Common Shares	$	(49.2	)	$	(15.4	)	$	(55.8	)	$	12.9
Weighted average Shares of Class A Stock and Common Stock outstanding for basic earnings (loss) per share (in millions)	34.9			34.8			35.1			34.6
Dilutive effect of Class A Stock and Common Stock potentially issuable pursuant to stock-based compensation plans (in millions)	—			—			—			0.7
Adjusted weighted average Shares of Class A Stock and Common Stock outstanding for diluted earnings (loss) per share (in millions)	34.9			34.8			35.1			35.3
Earnings (loss) per share of Class A Stock and Common Stock:
Basic earnings (loss) per share:
Earnings (loss) from continuing operations	$	(1.41	)	$	(0.45	)	$	(1.59	)	$	0.37
Earnings (loss) from discontinued operations, net of tax	$	—		$	0.01		$	—		$	0.00
Net income (loss)	$	(1.41	)	$	(0.44	)	$	(1.59	)	$	0.37
Diluted earnings (loss) per share:
Earnings (loss) from continuing operations	$	(1.41	)	$	(0.45	)	$	(1.59	)	$	0.36
Earnings (loss) from discontinued operations, net of tax	$	—		$	0.01		$	—		$	0.00
Net income (loss)	$	(1.41	)	$	(0.44	)	$	(1.59	)	$	0.36



	Nine months ended February 28, 2018		Twelve months ended May 31, 2017			Nine months ended February 28, 2017
Beginning balance	$	118.9	$	116.2		$	116.2
Additions	—		2.8			—
Foreign currency translation	0.2		(0.1		)	(0.0		)
Total goodwill	$	119.1	$	118.9		$	116.2



	U.S. Pension Plan						UK Pension Plan						Post-Retirement Benefits
	Three months ended February 28,						Three months ended February 28,						Three months ended February 28,
	2018			2017			2018			2017			2018		2017
Components of net periodic (benefit) cost:
Service cost	$	—		$	—		$	—		$	—		$	0.0	$	0.0
Interest cost	0.5			0.8			0.3			0.3			0.2		0.2
Expected return on assets	(1.1		)	(1.5		)	(0.3		)	(0.3		)	—		—
Benefit cost of settlement event	39.6			—			—			—			—		—
Amortization of (gain) loss	0.3			0.2			0.3			0.2			0.0		(1.0		)
Net periodic (benefit) cost	$	39.3		$	(0.5	)	$	0.3		$	0.2		$	0.2	$	(0.8	)



	Amount
July 2015	$	50.0
Less repurchases made under the authorization as of February 28, 2018	(36.6		)
Remaining Board authorization at February 28, 2018	$	13.4



	Three months ended February 28, 2018
	Foreign currency translation adjustments			Retirement benefit plans			Total
Beginning balance at December 1, 2017	$	(41.5	)	$	(39.4	)	$	(80.9	)
Other comprehensive income (loss) before reclassifications (net of tax)	2.2			—			2.2
Less amount reclassified from Accumulated other comprehensive income (loss):
Amortization (net of tax of $0.1)	—			0.5			0.5
Settlement (net of tax of $15.8)	—			23.8			23.8
Other reclassifications (net of tax benefit of $1.4)	—			(2.1		)	(2.1		)
Other comprehensive income (loss)	2.2			22.2			24.4
Ending balance at February 28, 2018	$	(39.3	)	$	(17.2	)	$	(56.5	)

	Three months ended February 28, 2017
	Foreign currency translation adjustments			Retirement benefit plans			Total
Beginning balance at December 1, 2016	$	(47.0	)	$	(45.3	)	$	(92.3	)
Other comprehensive income (loss) before reclassifications (net of tax)	0.9			—			0.9
Less amount reclassified from Accumulated other comprehensive income (loss):
Amortization (net of tax of $0.3)	—			0.7			0.7
Other comprehensive income (loss)	0.9			0.7			1.6
Ending balance at February 28, 2017	$	(46.1	)	$	(44.6	)	$	(90.7	)



	Nine months ended February 28, 2018
	Foreign currency translation adjustments			Retirement benefit plans			Total
Beginning balance at June 1, 2017	$	(45.3	)	$	(48.9	)	$	(94.2	)
Other comprehensive income (loss) before reclassifications (net of tax)	6.0			—			6.0
Less amount reclassified from Accumulated other comprehensive income (loss):
Amortization (net of tax of $0.4)	—			1.4			1.4
Settlement (net of tax of $22.0)	—			33.0			33.0
Other reclassifications (net of tax benefit of $1.9)	—			(2.7		)	(2.7		)
Other comprehensive income (loss)	6.0			31.7			37.7
Ending balance at February 28, 2018	$	(39.3	)	$	(17.2	)	$	(56.5	)

	Nine months ended February 28, 2017
	Foreign currency translation adjustments			Retirement benefit plans			Total
Beginning balance at June 1, 2016	$	(40.0	)	$	(46.7	)	$	(86.7	)
Other comprehensive income (loss) before reclassifications (net of tax)	(6.1		)	—			(6.1		)
Less amount reclassified from Accumulated other comprehensive income (loss):
Amortization (net of tax of $1.0)	—			2.1			2.1
Other comprehensive income (loss)	(6.1		)	2.1			(4.0		)
Ending balance at February 28, 2017	$	(46.1	)	$	(44.6	)	$	(90.7	)



	Three months ended February 28,						Nine months ended February 28,						Affected line items in the condensed consolidated statements of operations
	2018			2017			2018			2017
Employee benefit plans:
Amortization of unrecognized gain (loss)	$	0.6		$	1.0		$	1.8		$	3.1		Other components of net periodic benefit (cost)
Settlement charge	39.6			—			55.0			—			Other components of net periodic benefit (cost)
Other reclassifications, net	(3.4		)	—			(4.6		)	—			Other components of net periodic benefit (cost)
Less: Tax effect	(14.6		)	(0.3		)	(20.6		)	(1.0		)	Provision (benefit) for income taxes
Total cost, net of tax	$	22.2		$	0.7		$	31.6		$	2.1



($ amounts in millions)	Fiscal Year Maturity
	2018 ⁽¹⁾			2019		2020		2021		2022		Thereafter		Total		Fair Value @ 2/28/2018
Debt Obligations
Lines of Credit and current portion of long-term debt	$	7.7		$	—	$	—	$	—	$	—	$	—	$	7.7	$	7.7
Average interest rate	3.7		%	—		—		—		—		—


⁽¹⁾	~~Fiscal 2018 includes the remaining three months of the current fiscal year ending May 31, 2018.~~


Exhibit Number		Description of Document

31.1
~~Exhibit Number~~	~~Description of Document~~
~~31.1~~	Certification of the Chief Executive Officer of Scholastic Corporation filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Chief Financial Officer of Scholastic Corporation filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certifications of the Chief Executive Officer and Chief Financial Officer of Scholastic Corporation furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101.INS~~101		XBRL Instance Document *Financial Statements from the Quarterly Report on Form 10-Q of the Company for the quarter ended August 31, 2023 formatted in Inline Extensible Business Reporting Language: (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Changes in Stockholders' Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements.

~~101.SCH~~104		XBRL Taxonomy Extension Schema Document *Cover Page, formatted in Inline Extensible Business Reporting Language and contained in Exhibit 101.

~~101.CAL~~			XBRL Taxonomy Extension Calculation Document *

~~101.DEF~~	XBRL Taxonomy Extension Definitions Document *

~~101.LAB~~	XBRL Taxonomy Extension Labels Document *

~~101.PRE~~	XBRL Taxonomy Extension Presentation Document *



		SCHOLASTIC CORPORATION
		(Registrant)

Date: ~~March 23, 2018~~September 22, 2023	By:	/s/ ~~Richard Robinson~~Peter Warwick


		~~Richard Robinson~~Peter Warwick
		~~Chairman of the Board,~~ President and Chief Executive Officer (Principal Executive Officer)

Date: ~~March 23, 2018~~September 22, 2023	By:	/s/ Kenneth J. Cleary


		Kenneth J. Cleary
		Chief Financial Officer (Principal Financial Officer)