Delaware
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13-3385513
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(State or other jurisdiction of
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(IRS Employer Identification No.)
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incorporation or organization)
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557 Broadway, New York, New York
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10012
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(Address of principal executive offices)
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(Zip Code)
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Title of class
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Name of Each Exchange on Which Registered
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Common Stock, $0.01 par value
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The NASDAQ Stock Market LLC
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x
Large accelerated filer
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o
Accelerated filer
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o
Non-accelerated filer
(
Do not check if a smaller reporting company)
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o
Smaller reporting company
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o
Emerging growth company
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Table of Contents
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(Amounts in millions)
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|||||||
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2017
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2016
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2015
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||||||
Children’s Book Publishing and Distribution
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$
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1,052.1
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$
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1,000.9
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$
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957.8
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Education
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312.7
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299.7
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276.8
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|||
International
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376.8
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372.2
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401.2
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Total
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$
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1,741.6
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$
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1,672.8
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$
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1,635.8
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•
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Prepublication costs.
Prepublication costs are incurred in all of the Company’s reportable segments. Prepublication costs include costs incurred to create and develop the art, prepress, editorial, digital conversion and other content required for the creation of the master copy of a book or other media.
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•
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Royalty advances.
Royalty advances are incurred in all of the Company’s reportable segments, but are most prevalent in the
Children’s Book Publishing and Distribution
segment and enable the Company to obtain contractual commitments from authors to produce Content. The Company regularly provides authors with advances against expected future royalty payments, often before the books are written. Upon publication and sale of the books or other media, the authors generally will not receive further royalty payments until the contractual royalties earned from sales of such books or other media exceed such advances. The Company values its position in the market as the largest publisher and distributor of children's books in obtaining Content, and the Company’s experienced editorial staff aggressively acquires Content from both new and established authors.
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•
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Acquired intangible assets.
The Company may acquire fully or partially developed Content from third parties via acquisitions of entities or outright purchase of the rights to Content.
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Name
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Age
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Employed by
Registrant Since
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Previous Position(s) Held
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Richard Robinson
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80
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1962
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Chairman of the Board (since 1982), President (since 1974) and Chief Executive Officer (since 1975).
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Maureen O’Connell
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55
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2007
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Executive Vice President, Chief Administrative Officer and Chief Financial Officer (since 2007).
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Iole Lucchese
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50
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1991
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Executive Vice President (since 2016), Chief Strategy Officer (since 2014); President, Scholastic Canada (2015-2016);
and Co-President, Scholastic Canada (2003-2015).
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Judith A. Newman
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59
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1993
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Executive Vice President and President, Book Clubs (since 2014), Book Clubs and eCommerce (2011-2014), Book Clubs (2005-2011) and Scholastic At Home (2005-2006); Senior Vice President and President, Book Clubs and Scholastic At Home (2004-2005); and Senior Vice President, Book Clubs (1997-2004).
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Alan Boyko
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63
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1988
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President, Scholastic Book Fairs, Inc. (since 2005).
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Andrew S. Hedden
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76
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2008
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Executive Vice President, General Counsel and Secretary (since 2008) and member of the Board of Directors (since 1991).
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Period
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Total number of
shares purchased |
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Average
price paid per share |
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Total number of shares purchased as part of publicly
announced plans or programs |
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Maximum number of shares (or approximate dollar value in millions) that may yet be purchased under the plans or programs (i)
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||||||
March 1, 2017 through March 31, 2017
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—
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$
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—
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—
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$
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39.5
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April 1, 2017 through April 30, 2017
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—
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$
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—
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—
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$
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39.5
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May 1, 2017 through May 31, 2017
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23,375
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$
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41.57
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23,375
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$
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38.6
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Total
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23,375
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$
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41.57
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23,375
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$
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38.6
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Fiscal year ending May 31,
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||||||||||||||||||||||
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2012
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2013
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2014
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2015
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2016
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2017
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||||||||||||
Scholastic Corporation
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$
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100.00
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$
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114.05
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$
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122.45
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$
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173.67
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$
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154.83
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$
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171.05
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NASDAQ Composite Index
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100.00
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122.23
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150.06
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179.32
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175.01
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219.24
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||||||
Peer Group
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100.00
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106.27
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122.79
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138.76
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97.51
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81.03
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(1)
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In fiscal 2017, the Company recognized pretax exit costs related to its software distribution business in Australia of
$0.5
. In fiscal 2015, the Company recognized a pretax charge of
$1.5
related to a warehouse optimization project in Canada and a
$0.4
pretax charge related to unabsorbed burden associated with the former educational technology and services business. In fiscal 2014, the Company recognized a pretax charge of
$2.4
for royalties related to Storia
®
operating system-specific apps that are no longer supported due to the transition to a Storia streaming model and a
$0.3
pretax charge related to unabsorbed burden associated with the former educational technology and services business. In fiscal 2013, the Company recognized a pretax charge for costs related to unabsorbed burden associated with the former educational technology and services business of
$0.9
.
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(2)
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In fiscal 2016, the Company recognized a pretax charge of
$1.5
related to a branch consolidation project in the Company's book fairs operations. In fiscal 2015, the Company recognized a pretax charge of
$15.4
related to unabsorbed burden associated with the former educational technology and services business, a pretax pension settlement charge of
$4.3
, and a
$0.4
pretax charge related to the relocation of the Company's Klutz
®
division. In fiscal 2014, the Company recognized a pretax charge of
$15.9
related to unabsorbed burden associated with the former educational technology and services business, a pretax pension settlement charge of
$1.7
and a pretax charge of
$1.0
related to Storia operating system-specific apps. In fiscal 2013, the Company recognized a pretax charge of
$16.5
related to unabsorbed burden associated with the former educational technology and services business and a pretax charge of
$4.0
related to asset impairments.
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(3)
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In fiscal 2017, the Company recognized pretax severance expense of $
12.9
as part of cost reduction programs. In fiscal 2016, the Company recognized pretax severance expense of
$9.5
as part of cost reduction and restructuring programs. In fiscal 2015, the Company recognized pretax severance expense of
$8.9
as part of cost reduction and restructuring programs. In fiscal 2014, the Company recognized pretax severance expense of
$9.9
as part of a cost savings initiative. In fiscal 2013, the Company recognized pretax severance expense of
$9.4
as part of a cost savings initiative.
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(4)
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In fiscal 2017, the Company recognized a pretax impairment charge related to certain website development assets
of
$5.7
and certain legacy prepublication assets of
$1.1
. In fiscal 2016, the Company recognized a pretax impairment charge of
$7.5
related to legacy building improvements in connection with the Company's headquarters renovation and a pretax charge of
$6.9
for certain legacy prepublication assets. In fiscal 2015, the Company recognized a pretax impairment charge of
$8.3
in connection with the restructuring of the Company's media and entertainment businesses, a
$4.6
pretax impairment charge related to the discontinuation of certain outdated technology platforms, and a
$2.9
pretax impairment charge associated with the closure of the retail store located at the Company headquarters in New York City. In fiscal 2014, the Company recognized a pretax impairment charge of
$14.6
for assets related to Storia operating system-specific apps and a pretax impairment charge of
$13.4
related to goodwill associated with the book clubs reporting unit in the
Children's Book Publishing and Distribution
segment.
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(5)
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In fiscal 2016, the Company recognized a pretax gain of
$2.2
on the sale of a China-based cost method investment. In fiscal 2015, the Company recognized a pretax gain of
$0.6
on the sale of a UK-based cost method investment. In fiscal 2014, the Company recognized a pretax loss of $1.0 and
$4.8
related to a U.S.-based equity method investment and a UK-based cost method investment, respectively.
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(6)
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In fiscal 2014, the Company recognized previously unrecognized tax positions resulting in a benefit of
$13.8
, inclusive of interest, as a result of a settlement with the Internal Revenue Service related to the audits for the fiscal years ended May 31, 2007, 2008 and 2009.
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2017
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2016
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2015
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|||||||||||||||
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$
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%
(1)
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$
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%
(1)
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$
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%
(1)
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|||||||||
Revenues:
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|||
Children’s Book Publishing and Distribution
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$
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1,052.1
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60.4
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$
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1,000.9
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59.8
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$
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957.8
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58.6
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Education
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312.7
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18.0
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299.7
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17.9
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276.8
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16.9
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|||
International
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376.8
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21.6
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372.2
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22.3
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401.2
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24.5
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|
|||
Total revenues
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1,741.6
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|
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100.0
|
|
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1,672.8
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100.0
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1,635.8
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100.0
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|
|||
Cost of goods sold
(2)
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814.5
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46.8
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762.3
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45.6
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758.5
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46.4
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|||
Selling, general and administrative expenses (exclusive of depreciation and amortization)
(3)
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777.8
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44.6
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777.7
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46.5
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771.1
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|
|
47.1
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|
|||
Depreciation and amortization
|
38.7
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|
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2.2
|
|
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38.9
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|
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2.3
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|
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47.9
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|
|
2.9
|
|
|||
Severance
(4)
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14.9
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|
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0.9
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|
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11.9
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0.7
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|
|
9.6
|
|
|
0.6
|
|
|||
Asset impairments
(5)
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6.8
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|
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0.4
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|
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14.4
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|
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0.9
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|
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15.8
|
|
|
1.0
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|
|||
Operating income
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88.9
|
|
|
5.1
|
|
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67.6
|
|
|
4.0
|
|
|
32.9
|
|
|
2.0
|
|
|||
Interest income
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1.4
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|
|
0.1
|
|
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1.1
|
|
|
0.1
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|
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0.3
|
|
|
0.0
|
|
|||
Interest expense
|
(2.4
|
)
|
|
(0.2
|
)
|
|
(2.2
|
)
|
|
(0.1
|
)
|
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(3.8
|
)
|
|
(0.2
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)
|
|||
Gain (loss) on investments and other
(6)
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—
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|
|
—
|
|
|
2.2
|
|
|
0.1
|
|
|
0.5
|
|
|
0.0
|
|
|||
Earnings (loss) from continuing operations before income taxes
|
87.9
|
|
|
5.0
|
|
|
68.7
|
|
|
4.1
|
|
|
29.9
|
|
|
1.8
|
|
|||
Provision (benefit) for income taxes
|
35.4
|
|
|
2.0
|
|
|
24.7
|
|
|
1.5
|
|
|
14.4
|
|
|
0.9
|
|
|||
Earnings (loss) from continuing operations
|
52.5
|
|
|
3.0
|
|
|
44.0
|
|
|
2.6
|
|
|
15.5
|
|
|
0.9
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|
|||
Earnings (loss) from discontinued operations, net of tax
|
(0.2
|
)
|
|
(0.0
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)
|
|
(3.5
|
)
|
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(0.2
|
)
|
|
279.1
|
|
|
17.1
|
|
|||
Net income (loss)
|
$
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52.3
|
|
|
3.0
|
|
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$
|
40.5
|
|
|
2.4
|
|
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$
|
294.6
|
|
|
18.0
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
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|
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|
|||
Basic:
|
|
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|
|
|
|
|
|
|
|
|
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|
|||
Earnings (loss) from continuing operations
|
$
|
1.51
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|
|
|
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$
|
1.29
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|
|
|
|
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$
|
0.47
|
|
|
|
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Earnings (loss) from discontinued operations
|
$
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(0.00
|
)
|
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|
|
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$
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(0.11
|
)
|
|
|
|
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$
|
8.53
|
|
|
|
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Net income (loss)
|
$
|
1.51
|
|
|
|
|
|
$
|
1.18
|
|
|
|
|
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$
|
9.00
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|
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Diluted:
|
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|
|
|
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|
|||
Earnings (loss) from continuing operations
|
$
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1.48
|
|
|
|
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$
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1.26
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|
|
|
|
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$
|
0.46
|
|
|
|
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Earnings (loss) from discontinued operations
|
$
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(0.01
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)
|
|
|
|
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$
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(0.10
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)
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|
|
|
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$
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8.34
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|
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|
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Net income (loss)
|
$
|
1.47
|
|
|
|
|
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$
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1.16
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|
|
|
|
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$
|
8.80
|
|
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(1)
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Represents percentage of total revenues.
|
(2)
|
In fiscal 2017, the Company recognized pretax exit costs related to its software distribution business in Australia of
$0.5
. In fiscal 2015, the Company recognized a pretax charge of
$1.5
related to a warehouse optimization project in Canada and a
$0.4
pretax charge related to unabsorbed burden associated with the former educational technology and services business.
|
(3)
|
In fiscal 2016, the Company recognized a pretax charge of
$1.5
related to a branch consolidation project in the Company's book fairs operations. In fiscal 2015, the Company recognized a pretax charge of
$15.4
related to unabsorbed burden associated with the former educational technology and services business, a pretax pension settlement charge of
$4.3
, and a
$0.4
pretax charge related to the relocation of the Company's Klutz
®
division.
|
(4)
|
In fiscal 2017, the Company recognized pretax severance expense of
$12.9
as part of cost reduction programs. In fiscal 2016, the Company recognized pretax severance expense of
$9.5
as part of cost reduction and restructuring programs. In fiscal 2015, the Company recognized pretax severance expense of
$8.9
as part of cost reduction and restructuring programs.
|
(5)
|
In fiscal 2017, the Company recognized pretax impairment charges related to certain website development assets of
$5.7
and certain legacy prepublication assets of
$1.1
. In fiscal 2016, the Company recognized a pretax impairment charge of
$7.5
related to legacy building improvements in connection with the Company's headquarters renovation and a pretax charge of
$6.9
for certain legacy prepublication assets. In fiscal 2015, the Company recognized a pretax impairment charge of
$8.3
in connection with the
|
(6)
|
In fiscal 2016, the Company recognized a pretax gain of
$2.2
on the sale of a China-based cost method investment. In fiscal 2015, the Company recognized a pretax gain of
$0.6
on the sale of a UK-based cost method investment.
|
($ amounts in millions)
|
|
|
|
|
|
|
|
|
2017 compared to 2016
|
|
2016 compared to 2015
|
|||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
$ change
|
|
% change
|
|
$ change
|
|
% change
|
|||||||||||||||
Revenues
|
$
|
1,052.1
|
|
|
$
|
1,000.9
|
|
|
$
|
957.8
|
|
|
$
|
51.2
|
|
|
5.1
|
%
|
|
$
|
43.1
|
|
|
4.5
|
%
|
|||
Cost of goods sold
|
462.1
|
|
|
415.9
|
|
|
407.1
|
|
|
46.2
|
|
|
11.1
|
|
|
8.8
|
|
|
2.2
|
|
||||||||
Other operating expenses *
|
446.9
|
|
|
464.4
|
|
|
445.9
|
|
|
(17.5
|
)
|
|
(3.8
|
)
|
|
18.5
|
|
|
4.1
|
|
||||||||
Asset impairments
|
—
|
|
|
—
|
|
|
10.2
|
|
|
—
|
|
|
N/A
|
|
|
(10.2
|
)
|
|
(100.0
|
)
|
||||||||
Operating income (loss)
|
$
|
143.1
|
|
|
$
|
120.6
|
|
|
$
|
94.6
|
|
|
$
|
22.5
|
|
|
18.7
|
%
|
|
$
|
26.0
|
|
|
27.5
|
%
|
|||
Operating margin
|
|
13.6
|
%
|
|
|
12.0
|
%
|
|
|
9.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
($ amounts in millions)
|
|
|
|
|
|
|
2017 compared to 2016
|
|
2016 compared to 2015
|
|||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
$ change
|
|
% change
|
|
$ change
|
|
% change
|
|||||||||||||||
Revenues
|
$
|
312.7
|
|
|
$
|
299.7
|
|
|
$
|
276.8
|
|
|
$
|
13.0
|
|
|
4.3
|
%
|
|
$
|
22.9
|
|
|
8.3
|
%
|
|||
Cost of goods sold
|
103.2
|
|
|
101.5
|
|
|
96.0
|
|
|
1.7
|
|
|
1.7
|
|
|
5.5
|
|
|
5.7
|
|
||||||||
Other operating expenses *
|
157.7
|
|
|
148.5
|
|
|
141.4
|
|
|
9.2
|
|
|
6.2
|
|
|
7.1
|
|
|
5.0
|
|
||||||||
Asset impairments
|
1.1
|
|
|
6.9
|
|
|
—
|
|
|
(5.8
|
)
|
|
(84.1
|
)
|
|
6.9
|
|
|
100.0
|
|
||||||||
Operating income (loss)
|
$
|
50.7
|
|
|
$
|
42.8
|
|
|
$
|
39.4
|
|
|
$
|
7.9
|
|
|
18.5
|
%
|
|
$
|
3.4
|
|
|
8.6
|
%
|
|||
Operating margin
|
|
16.2
|
%
|
|
|
14.3
|
%
|
|
|
14.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
($ amounts in millions)
|
|
|
|
|
|
|
2017 compared to 2016
|
|
2016 compared to 2015
|
|||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
$ change
|
|
% change
|
|
$ change
|
|
% change
|
|||||||||||||||
Revenues
|
$
|
376.8
|
|
|
$
|
372.2
|
|
|
$
|
401.2
|
|
|
$
|
4.6
|
|
|
1.2
|
%
|
|
$
|
(29.0
|
)
|
|
(7.2
|
)%
|
|||
Cost of goods sold
|
197.2
|
|
|
194.4
|
|
|
201.7
|
|
|
2.8
|
|
|
1.4
|
|
|
(7.3
|
)
|
|
(3.6
|
)
|
||||||||
Other operating expenses *
|
160.9
|
|
|
166.4
|
|
|
176.2
|
|
|
(5.5
|
)
|
|
(3.3
|
)
|
|
(9.8
|
)
|
|
(5.6
|
)
|
||||||||
Asset impairments
|
—
|
|
|
—
|
|
|
2.7
|
|
|
—
|
|
|
N/A
|
|
|
(2.7
|
)
|
|
(100.0
|
)
|
||||||||
Operating income (loss)
|
$
|
18.7
|
|
|
$
|
11.4
|
|
|
$
|
20.6
|
|
|
$
|
7.3
|
|
|
64.0
|
%
|
|
$
|
(9.2
|
)
|
|
(44.7
|
)%
|
|||
Operating margin
|
|
5.0
|
%
|
|
|
3.1
|
%
|
|
|
5.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ amounts in millions
|
|
|||||||||||
|
Payments Due By Period
|
||||||||||||||||||
Contractual Obligations
|
1 Year or Less
|
|
Years 2-3
|
|
Years 4-5
|
|
After Year 5
|
|
Total
|
||||||||||
Minimum print quantities
|
$
|
45.5
|
|
|
$
|
93.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
138.9
|
|
Royalty advances
|
8.4
|
|
|
8.2
|
|
|
2.7
|
|
|
0.1
|
|
|
19.4
|
|
|||||
Lines of credit and short-term debt
|
6.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.2
|
|
|||||
Capital leases
(1)
|
1.4
|
|
|
2.5
|
|
|
2.1
|
|
|
2.5
|
|
|
8.5
|
|
|||||
Pension and post-retirement plans
(2)
|
130.9
|
|
|
6.5
|
|
|
6.8
|
|
|
17.9
|
|
|
162.1
|
|
|||||
Operating leases
|
30.0
|
|
|
36.6
|
|
|
16.3
|
|
|
7.6
|
|
|
90.5
|
|
|||||
Total
|
$
|
222.4
|
|
|
$
|
147.2
|
|
|
$
|
27.9
|
|
|
$
|
28.1
|
|
|
$
|
425.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ amounts in millions
|
|
|||||||||||||||||
|
|
Fiscal Year Maturity
|
|
|
|
Fair Value
|
|||||||||||||||||||||||||
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
Thereafter
|
|
Total
|
|
2017
|
||||||||||||||||
Debt Obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Lines of credit and current portion of long-term debt
|
|
$
|
6.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
6.2
|
|
|
$
|
6.2
|
|
Average interest rate
|
|
4.1
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
The following consolidated financial statement schedule for the years ended May 31, 2017, 2016 and 2015 is filed with this annual report on Form 10-K:
|
|
|
|
|
|
|
|
(Amounts in millions, except per share data)
For fiscal years ended May 31,
|
|
|||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Revenues
|
$
|
1,741.6
|
|
|
$
|
1,672.8
|
|
|
$
|
1,635.8
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|||
Cost of goods sold
|
814.5
|
|
|
762.3
|
|
|
758.5
|
|
|||
Selling, general and administrative expenses
|
777.8
|
|
|
777.7
|
|
|
771.1
|
|
|||
Depreciation and amortization
|
38.7
|
|
|
38.9
|
|
|
47.9
|
|
|||
Severance
|
14.9
|
|
|
11.9
|
|
|
9.6
|
|
|||
Asset impairments
|
6.8
|
|
|
14.4
|
|
|
15.8
|
|
|||
Total operating costs and expenses
|
1,652.7
|
|
|
1,605.2
|
|
|
1,602.9
|
|
|||
Operating income
|
88.9
|
|
|
67.6
|
|
|
32.9
|
|
|||
Interest income
|
1.4
|
|
|
1.1
|
|
|
0.3
|
|
|||
Interest expense
|
(2.4
|
)
|
|
(2.2
|
)
|
|
(3.8
|
)
|
|||
Gain (loss) on investments and other
|
—
|
|
|
2.2
|
|
|
0.5
|
|
|||
Earnings (loss) from continuing operations before income taxes
|
87.9
|
|
|
68.7
|
|
|
29.9
|
|
|||
Provision (benefit) for income taxes
|
35.4
|
|
|
24.7
|
|
|
14.4
|
|
|||
Earnings (loss) from continuing operations
|
52.5
|
|
|
44.0
|
|
|
15.5
|
|
|||
Earnings (loss) from discontinued operations, net of tax
|
(0.2
|
)
|
|
(3.5
|
)
|
|
279.1
|
|
|||
Net income (loss)
|
$
|
52.3
|
|
|
$
|
40.5
|
|
|
$
|
294.6
|
|
Basic and diluted earnings (loss) per share of Class A and Common Stock
|
|
|
|
|
|
|
|
|
|||
Basic:
|
|
|
|
|
|
|
|
|
|||
Earnings (loss) from continuing operations
|
$
|
1.51
|
|
|
$
|
1.29
|
|
|
$
|
0.47
|
|
Earnings (loss) from discontinued operations
|
$
|
(0.00
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
8.53
|
|
Net income (loss)
|
$
|
1.51
|
|
|
$
|
1.18
|
|
|
$
|
9.00
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|||
Earnings (loss) from continuing operations
|
$
|
1.48
|
|
|
$
|
1.26
|
|
|
$
|
0.46
|
|
Earnings (loss) from discontinued operations
|
$
|
(0.01
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
8.34
|
|
Net income (loss)
|
$
|
1.47
|
|
|
$
|
1.16
|
|
|
$
|
8.80
|
|
Dividends declared per common share
|
$
|
0.600
|
|
|
$
|
0.600
|
|
|
$
|
0.600
|
|
|
(Amounts in millions)
For fiscal years ended May 31,
|
|
|||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net income (loss)
|
$
|
52.3
|
|
|
$
|
40.5
|
|
|
$
|
294.6
|
|
Other comprehensive income (loss), net:
|
|
|
|
|
|
|
|
|
|||
Foreign currency translation adjustments
|
(5.3
|
)
|
|
(8.1
|
)
|
|
(15.3
|
)
|
|||
Pension and post-retirement adjustments:
|
|
|
|
|
|
|
|
|
|||
Amortization of prior service credit
|
—
|
|
|
(0.0
|
)
|
|
(0.2
|
)
|
|||
Net actuarial gain (loss) associated with benefit plans
|
(2.2
|
)
|
|
(1.6
|
)
|
|
(6.3
|
)
|
|||
Total other comprehensive income (loss)
|
$
|
(7.5
|
)
|
|
$
|
(9.7
|
)
|
|
$
|
(21.8
|
)
|
Comprehensive income (loss)
|
$
|
44.8
|
|
|
$
|
30.8
|
|
|
$
|
272.8
|
|
(Amounts in millions)
Balances at May 31,
|
|
||||||
ASSETS
|
2017
|
|
2016
|
||||
Current Assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
444.1
|
|
|
$
|
399.7
|
|
Restricted cash held in escrow
|
—
|
|
|
9.9
|
|
||
Accounts receivable, net
|
199.2
|
|
|
196.3
|
|
||
Inventories, net
|
282.5
|
|
|
271.2
|
|
||
Prepaid expenses and other current assets
|
44.3
|
|
|
72.5
|
|
||
Current assets of discontinued operations
|
0.4
|
|
|
0.5
|
|
||
Total current assets
|
970.5
|
|
|
950.1
|
|
||
Noncurrent Assets:
|
|
|
|
|
|
||
Property, plant and equipment, net
|
475.3
|
|
|
437.6
|
|
||
Prepublication costs, net
|
43.3
|
|
|
41.8
|
|
||
Royalty advances, net
|
41.8
|
|
|
44.0
|
|
||
Goodwill
|
118.9
|
|
|
116.2
|
|
||
Noncurrent deferred income taxes
|
53.7
|
|
|
68.5
|
|
||
Other assets and deferred charges
|
56.9
|
|
|
54.9
|
|
||
Total noncurrent assets
|
789.9
|
|
|
763.0
|
|
||
Total assets
|
$
|
1,760.4
|
|
|
$
|
1,713.1
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Lines of credit and current portion of long-term debt
|
$
|
6.2
|
|
|
$
|
6.3
|
|
Accounts payable
|
141.2
|
|
|
138.2
|
|
||
Accrued royalties
|
34.2
|
|
|
31.6
|
|
||
Deferred revenue
|
24.2
|
|
|
23.5
|
|
||
Other accrued expenses
|
178.0
|
|
|
175.9
|
|
||
Accrued income taxes
|
2.8
|
|
|
1.6
|
|
||
Current liabilities of discontinued operations
|
0.5
|
|
|
1.2
|
|
||
Total current liabilities
|
387.1
|
|
|
378.3
|
|
||
Noncurrent Liabilities:
|
|
|
|
|
|
||
Other noncurrent liabilities
|
65.4
|
|
|
77.2
|
|
||
Total noncurrent liabilities
|
65.4
|
|
|
77.2
|
|
||
Commitments and Contingencies:
|
|
|
|
|
|
||
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
|
|
||
Common Stock, $0.01 par value: Authorized, 70.0 shares; Issued, 42.9 shares; Outstanding, 33.4 and 32.7 shares, respectively
|
0.4
|
|
|
0.4
|
|
||
Additional paid-in capital
|
606.8
|
|
|
600.7
|
|
||
Accumulated other comprehensive income (loss)
|
(94.2
|
)
|
|
(86.7
|
)
|
||
Retained earnings
|
1,091.2
|
|
|
1,059.8
|
|
||
Treasury stock at cost
|
(296.3
|
)
|
|
(316.6
|
)
|
||
Total stockholders’ equity
|
1,307.9
|
|
|
1,257.6
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,760.4
|
|
|
$
|
1,713.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
|
|||||||||||||||||||
|
Class A Stock
|
Common Stock
|
Additional Paid-in Capital
|
Accumulated
Other Comprehensive
Income (Loss)
|
Retained
Earnings
|
Treasury Stock
At Cost
|
Total
Stockholders'
Equity
|
|||||||||||||||||||||||||
|
Shares
|
|
Amount
|
Shares
|
|
Amount
|
||||||||||||||||||||||||||
Balance at May 31, 2014
|
1.7
|
|
|
$
|
0.0
|
|
30.6
|
|
|
$
|
0.4
|
|
|
$
|
580.8
|
|
|
$
|
(55.2
|
)
|
|
$
|
765.1
|
|
|
$
|
(375.7
|
)
|
|
$
|
915.4
|
|
Net Income (loss)
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
294.6
|
|
|
—
|
|
|
294.6
|
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15.3
|
)
|
|
—
|
|
|
—
|
|
|
(15.3
|
)
|
|||||||
Pension and post-retirement adjustments (net of tax of $(2.5))
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.5
|
)
|
|
—
|
|
|
—
|
|
|
(6.5
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
11.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.3
|
|
|||||||
Proceeds pursuant to stock-based compensation plans
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
28.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28.1
|
|
|||||||
Purchases of treasury stock at cost
|
—
|
|
|
—
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.5
|
)
|
|
(3.5
|
)
|
|||||||
Treasury stock issued pursuant to equity-based plans
|
—
|
|
|
—
|
|
1.0
|
|
|
—
|
|
|
(28.7
|
)
|
|
—
|
|
|
—
|
|
|
29.3
|
|
|
0.6
|
|
|||||||
Dividends
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19.8
|
)
|
|
—
|
|
|
(19.8
|
)
|
|||||||
Balance at May 31, 2015
|
1.7
|
|
|
$
|
0.0
|
|
31.5
|
|
|
$
|
0.4
|
|
|
$
|
591.5
|
|
|
$
|
(77.0
|
)
|
|
$
|
1,039.9
|
|
|
$
|
(349.9
|
)
|
|
$
|
1,204.9
|
|
Net Income (loss)
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40.5
|
|
|
—
|
|
|
40.5
|
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.1
|
)
|
|
—
|
|
|
—
|
|
|
(8.1
|
)
|
|||||||
Pension and post-retirement adjustments (net of tax of $(1.8))
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
9.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.7
|
|
|||||||
Proceeds pursuant to stock-based compensation plans
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
47.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47.2
|
|
|||||||
Purchases of treasury stock at cost
|
—
|
|
|
—
|
|
(0.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14.4
|
)
|
|
(14.4
|
)
|
|||||||
Treasury stock issued pursuant to equity-based plans
|
—
|
|
|
—
|
|
1.6
|
|
|
—
|
|
|
(47.7
|
)
|
|
—
|
|
|
—
|
|
|
47.7
|
|
|
0.0
|
|
|||||||
Dividends
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20.6
|
)
|
|
—
|
|
|
(20.6
|
)
|
|||||||
Balance at May 31, 2016
|
1.7
|
|
|
$
|
0.0
|
|
32.7
|
|
|
$
|
0.4
|
|
|
$
|
600.7
|
|
|
$
|
(86.7
|
)
|
|
$
|
1,059.8
|
|
|
$
|
(316.6
|
)
|
|
$
|
1,257.6
|
|
Net Income (loss)
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
52.3
|
|
|
—
|
|
|
52.3
|
|
|||||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5.3
|
)
|
|
—
|
|
|
—
|
|
|
(5.3
|
)
|
|||||||
Pension and post-retirement adjustments (net of tax of $0.4)
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
10.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.1
|
|
|||||||
Proceeds pursuant to stock-based compensation plans
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
22.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22.5
|
|
|||||||
Purchases of treasury stock at cost
|
—
|
|
|
—
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.9
|
)
|
|
(6.9
|
)
|
|||||||
Treasury stock issued pursuant to equity-based plans
|
—
|
|
|
—
|
|
0.9
|
|
|
—
|
|
|
(26.5
|
)
|
|
—
|
|
|
—
|
|
|
27.2
|
|
|
0.7
|
|
|||||||
Dividends
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20.9
|
)
|
|
—
|
|
|
(20.9
|
)
|
|||||||
Balance at May 31, 2017
|
1.7
|
|
|
$
|
0.0
|
|
33.4
|
|
|
$
|
0.4
|
|
|
$
|
606.8
|
|
|
$
|
(94.2
|
)
|
|
$
|
1,091.2
|
|
|
$
|
(296.3
|
)
|
|
$
|
1,307.9
|
|
|
|
|
(Amounts in millions)
Years ended May 31,
|
|
|||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows - operating activities:
|
|
|
|
|
|
|
|
|
|||
Net income (loss)
|
$
|
52.3
|
|
|
$
|
40.5
|
|
|
$
|
294.6
|
|
Earnings (loss) from discontinued operations, net of tax
|
(0.2
|
)
|
|
(3.5
|
)
|
|
279.1
|
|
|||
Earnings (loss) from continuing operations
|
52.5
|
|
|
44.0
|
|
|
15.5
|
|
|||
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
|
11.0
|
|
|
12.3
|
|
|
10.6
|
|
|||
Provision for losses on inventory
|
16.0
|
|
|
12.0
|
|
|
21.7
|
|
|||
Provision for losses on royalty advances
|
4.3
|
|
|
4.1
|
|
|
3.6
|
|
|||
Amortization of prepublication and production costs
|
23.3
|
|
|
26.4
|
|
|
30.4
|
|
|||
Depreciation and amortization
|
39.1
|
|
|
39.3
|
|
|
48.3
|
|
|||
Amortization of pension and post-retirement actuarial gains and losses
|
2.1
|
|
|
4.4
|
|
|
6.9
|
|
|||
Deferred income taxes
|
15.5
|
|
|
18.8
|
|
|
(3.5
|
)
|
|||
Stock-based compensation
|
10.1
|
|
|
9.7
|
|
|
8.8
|
|
|||
Income from equity investments
|
(5.3
|
)
|
|
(3.5
|
)
|
|
(2.0
|
)
|
|||
Non cash write off related to asset impairments
|
6.8
|
|
|
14.4
|
|
|
15.8
|
|
|||
Unrealized (gain) loss on investments
|
—
|
|
|
(2.2
|
)
|
|
(0.6
|
)
|
|||
Changes in assets and liabilities, net of amounts acquired:
|
|
|
|
|
|
|
|
|
|||
Accounts receivable
|
(15.2
|
)
|
|
(18.7
|
)
|
|
1.6
|
|
|||
Inventories
|
(29.4
|
)
|
|
(27.8
|
)
|
|
(33.4
|
)
|
|||
Prepaid expenses and other current assets
|
24.9
|
|
|
(34.4
|
)
|
|
(0.3
|
)
|
|||
Royalty advances
|
(2.3
|
)
|
|
(9.1
|
)
|
|
(6.2
|
)
|
|||
Accounts payable
|
(6.0
|
)
|
|
(12.7
|
)
|
|
12.1
|
|
|||
Other accrued expenses
|
3.1
|
|
|
2.8
|
|
|
5.3
|
|
|||
Accrued income taxes
|
1.2
|
|
|
(155.2
|
)
|
|
(24.6
|
)
|
|||
Accrued royalties
|
2.9
|
|
|
5.2
|
|
|
(3.1
|
)
|
|||
Deferred revenue
|
0.8
|
|
|
2.2
|
|
|
2.2
|
|
|||
Pension and post-retirement obligations
|
(5.3
|
)
|
|
(2.1
|
)
|
|
(2.2
|
)
|
|||
Other noncurrent liabilities
|
(3.7
|
)
|
|
0.4
|
|
|
2.5
|
|
|||
Other, net
|
(4.2
|
)
|
|
1.7
|
|
|
(1.1
|
)
|
|||
Total adjustments
|
89.7
|
|
|
(112.0
|
)
|
|
92.8
|
|
|||
Net cash provided by (used in) operating activities of continuing operations
|
142.2
|
|
|
(68.0
|
)
|
|
108.3
|
|
|||
Net cash provided by (used in) operating activities of discontinued operations
|
(0.8
|
)
|
|
(10.9
|
)
|
|
58.6
|
|
|||
Net cash provided by (used in) operating activities
|
141.4
|
|
|
(78.9
|
)
|
|
166.9
|
|
|||
Cash flows - investing activities:
|
|
|
|
|
|
|
|
|
|||
Prepublication and production expenditures
|
(26.9
|
)
|
|
(25.2
|
)
|
|
(29.0
|
)
|
|||
Additions to property, plant and equipment
|
(65.7
|
)
|
|
(35.6
|
)
|
|
(30.3
|
)
|
|||
Proceeds from sale of assets
|
—
|
|
|
3.3
|
|
|
0.7
|
|
|||
Loan to investee
|
—
|
|
|
—
|
|
|
(3.0
|
)
|
|||
Repayment of loan to investee
|
—
|
|
|
—
|
|
|
4.8
|
|
|||
Other investment and acquisition related payments
|
(10.1
|
)
|
|
(3.7
|
)
|
|
(8.3
|
)
|
|||
Other
|
—
|
|
|
—
|
|
|
1.1
|
|
|||
Net cash provided by (used in) investing activities of continuing operations
|
(102.7
|
)
|
|
(61.2
|
)
|
|
(64.0
|
)
|
|||
Working capital adjustment/Proceeds from sale of discontinued assets
|
—
|
|
|
(2.9
|
)
|
|
577.7
|
|
|||
Changes in restricted cash held in escrow for discontinued assets
|
9.9
|
|
|
24.6
|
|
|
(34.5
|
)
|
|||
Other cash provided by (used in) investing activities of discontinued operations
|
—
|
|
|
—
|
|
|
(33.9
|
)
|
|||
Net cash provided by (used in) investing activities
|
(92.8
|
)
|
|
(39.5
|
)
|
|
445.3
|
|
|
|
|
(Amounts in millions)
Years ended May 31,
|
|
|||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows - financing activities:
|
|
|
|
|
|
|
|
|
|||
Net (repayments) borrowings under credit agreement and revolving loan
|
—
|
|
|
—
|
|
|
(120.0
|
)
|
|||
Borrowings under lines of credit
|
28.3
|
|
|
39.0
|
|
|
350.9
|
|
|||
Repayments of lines of credit
|
(28.5
|
)
|
|
(36.5
|
)
|
|
(359.9
|
)
|
|||
Repayment of capital lease obligations
|
(1.1
|
)
|
|
(0.8
|
)
|
|
(0.2
|
)
|
|||
Reacquisition of common stock
|
(6.9
|
)
|
|
(14.4
|
)
|
|
(3.5
|
)
|
|||
Proceeds pursuant to stock-based compensation plans
|
25.4
|
|
|
45.3
|
|
|
26.0
|
|
|||
Payment of dividends
|
(20.8
|
)
|
|
(20.5
|
)
|
|
(19.7
|
)
|
|||
Other
|
(0.5
|
)
|
|
(0.1
|
)
|
|
2.1
|
|
|||
Net cash provided by (used in) financing activities of continuing operations
|
(4.1
|
)
|
|
12.0
|
|
|
(124.3
|
)
|
|||
Net cash provided by (used in) financing activities of discontinued operations
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|||
Net cash provided by (used in) financing activities
|
(4.1
|
)
|
|
12.0
|
|
|
(124.5
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(0.1
|
)
|
|
(0.7
|
)
|
|
(1.8
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
44.4
|
|
|
(107.1
|
)
|
|
485.9
|
|
|||
Cash and cash equivalents at beginning of period
|
399.7
|
|
|
506.8
|
|
|
20.9
|
|
|||
Cash and cash equivalents at end of period
|
$
|
444.1
|
|
|
$
|
399.7
|
|
|
$
|
506.8
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Supplemental Information:
|
|
|
|
|
|
|
|
|
|||
Income taxes payments (refunds), net
|
$
|
3.0
|
|
|
$
|
183.3
|
|
|
$
|
34.2
|
|
Interest paid
|
1.4
|
|
|
1.6
|
|
|
3.2
|
|
|||
Non cash: Property, plant and equipment additions accrued in accounts payable
|
14.4
|
|
|
—
|
|
|
—
|
|
•
|
Accounts receivable reserves for returns
|
•
|
Accounts receivable allowance for doubtful accounts
|
•
|
Pension and other post-retirement obligations
|
•
|
Uncertain tax positions
|
•
|
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 fair results
|
|
2017
|
|
2016
|
|
2015
|
||||||
Estimated fair value of stock options granted
|
$
|
12.70
|
|
|
$
|
14.78
|
|
|
$
|
11.41
|
|
Assumptions:
|
|
|
|
|
|
|
|
|
|||
Expected dividend yield
|
1.5
|
%
|
|
1.4
|
%
|
|
1.8
|
%
|
|||
Expected stock price volatility
|
36.6
|
%
|
|
38.2
|
%
|
|
38.2
|
%
|
|||
Risk-free interest rate
|
1.5
|
%
|
|
1.9
|
%
|
|
2.2
|
%
|
|||
Average expected life of options
|
6 years
|
|
|
6 years
|
|
|
6 years
|
|
|
Ed Tech
|
|
All Other
|
|
Total
|
||||||
Revenues
|
$
|
0.0
|
|
|
$
|
0.4
|
|
|
$
|
0.4
|
|
Operating costs and expenses
|
0.8
|
|
|
0.1
|
|
|
0.9
|
|
|||
Interest income (expense)
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|||
Earnings (loss) before income taxes
|
$
|
(0.8
|
)
|
|
$
|
0.4
|
|
|
$
|
(0.4
|
)
|
Provision (benefit) for income taxes
|
(0.3
|
)
|
|
0.1
|
|
|
(0.2
|
)
|
|||
Earnings (loss) from discontinued operations, net of tax
|
$
|
(0.5
|
)
|
|
$
|
0.3
|
|
|
$
|
(0.2
|
)
|
|
Ed Tech
|
|
All Other
|
|
Total
|
||||||
Revenues
|
$
|
0.0
|
|
|
$
|
0.8
|
|
|
$
|
0.8
|
|
Operating costs and expenses
(1)
|
1.5
|
|
|
1.2
|
|
|
2.7
|
|
|||
Interest income (expense)
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|||
Gain (loss) on sale
|
(2.9
|
)
|
|
—
|
|
|
(2.9
|
)
|
|||
Earnings (loss) before income taxes
|
$
|
(4.4
|
)
|
|
$
|
(0.3
|
)
|
|
$
|
(4.7
|
)
|
Provision (benefit) for income taxes
|
(1.1
|
)
|
|
(0.1
|
)
|
|
(1.2
|
)
|
|||
Earnings (loss) from discontinued operations, net of tax
|
$
|
(3.3
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
(3.5
|
)
|
|
Ed Tech
|
|
All Other
|
|
Total
|
||||||
Revenues
|
$
|
217.4
|
|
|
$
|
11.7
|
|
|
$
|
229.1
|
|
Operating costs and expenses
(1)
|
208.8
|
|
|
14.5
|
|
|
223.3
|
|
|||
Interest income (expense)
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|||
Gain (loss) on sale
|
454.0
|
|
|
—
|
|
|
454.0
|
|
|||
Earnings (loss) before income taxes
|
$
|
462.6
|
|
|
$
|
(2.7
|
)
|
|
$
|
459.9
|
|
Provision (benefit) for income taxes
|
181.8
|
|
|
(1.0
|
)
|
|
180.8
|
|
|||
Earnings (loss) from discontinued operations, net of tax
|
$
|
280.8
|
|
|
$
|
(1.7
|
)
|
|
$
|
279.1
|
|
|
2017
|
|
2016
|
||||
Accounts receivable, net
|
$
|
0.0
|
|
|
$
|
0.0
|
|
Prepaid expenses and other current assets
|
0.4
|
|
|
0.5
|
|
||
Current assets of discontinued operations
|
$
|
0.4
|
|
|
$
|
0.5
|
|
|
|
|
|
||||
Accounts payable
|
—
|
|
|
0.0
|
|
||
Accrued royalties
|
0.5
|
|
|
0.0
|
|
||
Other accrued expenses
|
—
|
|
|
1.2
|
|
||
Current liabilities of discontinued operations
|
$
|
0.5
|
|
|
$
|
1.2
|
|
•
|
Children’s Book Publishing and Distribution
operates as an integrated business which includes the publication and distribution of children’s books, ebooks, media and interactive products in the United States through its book clubs and book fairs in its school channels and through the trade channel. This segment is comprised of three operating segments.
|
•
|
Education
includes the publication and distribution to schools and libraries of children’s books, classroom magazines, supplemental and core classroom materials and related support services, and print and on-line reference and non-fiction products for grades pre-kindergarten to 12 in the United States. This segment is comprised of two operating segments.
|
•
|
International
includes 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
(1)
|
|
Education
(1)
|
|
Overhead
(1) (2)
|
|
Total
Domestic
|
|
International
(1)
|
|
Total
|
||||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues
|
$
|
1,052.1
|
|
|
$
|
312.7
|
|
|
$
|
—
|
|
|
$
|
1,364.8
|
|
|
$
|
376.8
|
|
|
$
|
1,741.6
|
|
Bad debts
|
4.2
|
|
|
1.1
|
|
|
—
|
|
|
5.3
|
|
|
5.7
|
|
|
11.0
|
|
||||||
Depreciation and amortization
(3)
|
22.5
|
|
|
8.5
|
|
|
23.6
|
|
|
54.6
|
|
|
7.4
|
|
|
62.0
|
|
||||||
Asset impairments
|
—
|
|
|
1.1
|
|
|
5.7
|
|
|
6.8
|
|
|
—
|
|
|
6.8
|
|
||||||
Segment operating income (loss)
|
143.1
|
|
|
50.7
|
|
|
(123.6
|
)
|
|
70.2
|
|
|
18.7
|
|
|
88.9
|
|
||||||
Segment assets at May 31, 2017
|
395.7
|
|
|
200.6
|
|
|
922.2
|
|
|
1,518.5
|
|
|
241.5
|
|
|
1,760.0
|
|
||||||
Goodwill at May 31, 2017
|
40.9
|
|
|
68.0
|
|
|
—
|
|
|
108.9
|
|
|
10.0
|
|
|
118.9
|
|
||||||
Expenditures for other non-current assets
(4)
|
63.6
|
|
|
21.8
|
|
|
54.5
|
|
|
139.9
|
|
|
11.5
|
|
|
151.4
|
|
||||||
Other non-current assets at May 31, 2017
(4)
|
140.2
|
|
|
93.9
|
|
|
418.2
|
|
|
652.3
|
|
|
67.1
|
|
|
719.4
|
|
||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues
|
$
|
1,000.9
|
|
|
$
|
299.7
|
|
|
$
|
—
|
|
|
$
|
1,300.6
|
|
|
$
|
372.2
|
|
|
$
|
1,672.8
|
|
Bad debts
|
5.6
|
|
|
1.8
|
|
|
—
|
|
|
7.4
|
|
|
4.9
|
|
|
12.3
|
|
||||||
Depreciation and amortization
(3)
|
26.5
|
|
|
11.8
|
|
|
19.0
|
|
|
57.3
|
|
|
8.0
|
|
|
65.3
|
|
||||||
Asset impairments
|
—
|
|
|
6.9
|
|
|
7.5
|
|
|
14.4
|
|
|
—
|
|
|
14.4
|
|
||||||
Segment operating income (loss)
|
120.6
|
|
|
42.8
|
|
|
(107.2
|
)
|
|
56.2
|
|
|
11.4
|
|
|
67.6
|
|
||||||
Segment assets at May 31, 2016
|
394.4
|
|
|
172.8
|
|
|
898.0
|
|
|
1,465.2
|
|
|
247.4
|
|
|
1,712.6
|
|
||||||
Goodwill at May 31, 2016
|
40.9
|
|
|
65.4
|
|
|
—
|
|
|
106.3
|
|
|
9.9
|
|
|
116.2
|
|
||||||
Expenditures for other non-current assets
(4)
|
46.3
|
|
|
9.1
|
|
|
26.6
|
|
|
82.0
|
|
|
13.8
|
|
|
95.8
|
|
||||||
Other non-current assets at May 31, 2016
(4)
|
144.4
|
|
|
82.6
|
|
|
379.2
|
|
|
606.2
|
|
|
66.6
|
|
|
672.8
|
|
||||||
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Revenues
|
$
|
957.8
|
|
|
$
|
276.8
|
|
|
$
|
—
|
|
|
$
|
1,234.6
|
|
|
$
|
401.2
|
|
|
$
|
1,635.8
|
|
Bad debts
|
5.3
|
|
|
1.9
|
|
|
—
|
|
|
7.2
|
|
|
3.4
|
|
|
10.6
|
|
||||||
Depreciation and amortization
(3)
|
35.4
|
|
|
13.2
|
|
|
21.3
|
|
|
69.9
|
|
|
8.4
|
|
|
78.3
|
|
||||||
Asset impairments
|
10.2
|
|
|
—
|
|
|
2.9
|
|
|
13.1
|
|
|
2.7
|
|
|
15.8
|
|
||||||
Segment operating income (loss)
|
94.6
|
|
|
39.4
|
|
|
(121.7
|
)
|
|
12.3
|
|
|
20.6
|
|
|
32.9
|
|
||||||
Segment assets at May 31, 2015
|
378.3
|
|
|
178.3
|
|
|
1,014.6
|
|
|
1,571.2
|
|
|
248.0
|
|
|
1,819.2
|
|
||||||
Goodwill at May 31, 2015
|
40.9
|
|
|
65.4
|
|
|
—
|
|
|
106.3
|
|
|
10.0
|
|
|
116.3
|
|
||||||
Expenditures for other non-current assets
(4)
|
51.7
|
|
|
11.1
|
|
|
11.6
|
|
|
74.4
|
|
|
21.1
|
|
|
95.5
|
|
||||||
Other non-current assets at May 31, 2015
(4)
|
140.2
|
|
|
92.9
|
|
|
378.5
|
|
|
611.6
|
|
|
68.5
|
|
|
680.1
|
|
(1)
|
As discussed in Note 2, “Discontinued Operations,” the Company closed or sold several operations during the fourth quarter of fiscal 2015. All of these businesses are classified as discontinued operations in the Company’s financial statements and, as such, are not reflected in this table.
|
(2)
|
Overhead includes all domestic corporate amounts not allocated to operating 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, its facility located in Connecticut and unabsorbed burden associated with the former educational technology and services business.
|
(3)
|
Includes depreciation of property, plant and equipment and amortization of intangible assets and prepublication and production costs.
|
(4)
|
Other non-current assets include property, plant and equipment, prepublication, production, royalty advances, goodwill, intangibles and investments. Expenditures for other non-current assets for the
International
reportable segment include expenditures for long-lived assets of
$6.7
,
$10.3
and
$9.6
for the fiscal years ended May 31, 2017, 2016 and 2015, respectively. Other non-current assets for the
International
reportable segment include long-lived assets of
$33.4
,
$35.3
and
$37.3
at May 31, 2017, 2016, and 2015, respectively.
|
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||
|
2017
|
|
2016
|
||||||||||||
Loan Agreement:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Revolving Loan (interest rate of n/a and n/a, respectively)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Unsecured Lines of Credit (weighted average interest rates of 4.1% and 4.4%, respectively)
|
6.2
|
|
|
6.2
|
|
|
6.3
|
|
|
6.3
|
|
||||
Total debt
|
$
|
6.2
|
|
|
$
|
6.2
|
|
|
$
|
6.3
|
|
|
$
|
6.3
|
|
Less lines of credit and current portion of long-term debt
|
(6.2
|
)
|
|
(6.2
|
)
|
|
(6.3
|
)
|
|
(6.3
|
)
|
||||
Total long-term debt
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
(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
.
|
•
|
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%
plus, in each case, an applicable spread ranging from
0.175%
to
0.60%
, as determined by the Company’s prevailing consolidated debt to total capital ratio.
|
•
|
A Eurodollar Rate equal to the London interbank offered rate (LIBOR) plus an applicable spread ranging from
1.175%
to
1.60%
, as determined by the Company’s prevailing consolidated debt to total capital ratio.
|
|
Operating Leases
|
Capital Leases
|
||||
2018
|
$
|
30.0
|
|
$
|
1.4
|
|
2019
|
21.0
|
|
1.3
|
|
||
2020
|
15.6
|
|
1.2
|
|
||
2021
|
9.7
|
|
1.1
|
|
||
2022
|
6.6
|
|
1.0
|
|
||
Thereafter
|
7.6
|
|
2.5
|
|
||
Total minimum lease payments
|
$
|
90.5
|
|
$
|
8.5
|
|
Less minimum sublease income and lease payments to be received
|
41.2
|
|
—
|
|
||
Minimum lease payments, net of sublease income
|
$
|
49.3
|
|
$
|
8.5
|
|
Less amount representing interest
|
|
(0.9
|
)
|
|||
Present value of net minimum capital lease payments
|
|
7.6
|
|
|||
Less current maturities of capital lease obligations
|
|
1.1
|
|
|||
Long-term capital lease obligations
|
|
$
|
6.5
|
|
|
Royalty Advances
|
|
Minimum Print Quantities
|
||||
2018
|
$
|
8.4
|
|
|
$
|
45.5
|
|
2019
|
6.3
|
|
|
46.3
|
|
||
2020
|
1.9
|
|
|
47.1
|
|
||
2021
|
2.3
|
|
|
—
|
|
||
2022
|
0.4
|
|
|
—
|
|
||
Thereafter
|
0.1
|
|
|
—
|
|
||
Total commitments
|
$
|
19.4
|
|
|
$
|
138.9
|
|
|
2017
|
|
2016
|
||||
Land
|
$
|
77.5
|
|
|
$
|
77.4
|
|
Buildings
|
239.7
|
|
|
240.4
|
|
||
Capitalized software
|
202.0
|
|
|
196.0
|
|
||
Furniture, fixtures and equipment
|
224.7
|
|
|
221.5
|
|
||
Building and leasehold improvements
|
176.9
|
|
|
141.7
|
|
||
Total at cost
|
920.8
|
|
|
877.0
|
|
||
Less: Accumulated depreciation and amortization
|
(445.5
|
)
|
|
(439.4
|
)
|
||
Property, plant and equipment, net
|
$
|
475.3
|
|
|
$
|
437.6
|
|
|
2017
|
|
2016
|
||||
Gross beginning balance
|
$
|
155.8
|
|
|
$
|
155.9
|
|
Accumulated impairment
|
(39.6
|
)
|
|
(39.6
|
)
|
||
Beginning balance
|
116.2
|
|
|
116.3
|
|
||
Additions
|
2.8
|
|
|
—
|
|
||
Foreign currency translation
|
(0.1
|
)
|
|
(0.1
|
)
|
||
Gross ending balance
|
158.5
|
|
|
155.8
|
|
||
Accumulated impairment
|
(39.6
|
)
|
|
(39.6
|
)
|
||
Ending balance
|
$
|
118.9
|
|
|
$
|
116.2
|
|
|
2017
|
|
2016
|
||||
Other intangibles subject to amortization - beginning balance
|
$
|
4.7
|
|
|
$
|
4.7
|
|
Additions
|
7.0
|
|
|
2.4
|
|
||
Amortization expense
|
(2.5
|
)
|
|
(2.2
|
)
|
||
Foreign currency translation
|
(0.2
|
)
|
|
(0.2
|
)
|
||
Total other intangibles subject to amortization, net of accumulated amortization of $22.0 and $19.5, respectively
|
$
|
9.0
|
|
|
$
|
4.7
|
|
|
|
|
|
||||
Total other intangibles not subject to amortization
|
$
|
2.1
|
|
|
$
|
2.1
|
|
Total other intangibles
|
$
|
11.1
|
|
|
$
|
6.8
|
|
2018
|
$
|
2.0
|
|
2019
|
1.9
|
|
|
2020
|
1.9
|
|
|
2021
|
1.6
|
|
|
2022
|
1.4
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
United States
|
$
|
78.7
|
|
|
$
|
62.1
|
|
|
$
|
27.4
|
|
Non-United States
|
9.2
|
|
|
6.6
|
|
|
2.5
|
|
|||
Total
|
$
|
87.9
|
|
|
$
|
68.7
|
|
|
$
|
29.9
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Federal
|
|
|
|
|
|
|
|
|
|||
Current
|
$
|
8.3
|
|
|
$
|
(4.0
|
)
|
|
$
|
3.3
|
|
Deferred
|
17.7
|
|
|
19.2
|
|
|
5.3
|
|
|||
Total federal
|
$
|
26.0
|
|
|
$
|
15.2
|
|
|
$
|
8.6
|
|
State and local
|
|
|
|
|
|
|
|
|
|||
Current
|
$
|
1.8
|
|
|
$
|
4.1
|
|
|
$
|
1.2
|
|
Deferred
|
2.2
|
|
|
1.8
|
|
|
0.9
|
|
|||
Total state and local
|
$
|
4.0
|
|
|
$
|
5.9
|
|
|
$
|
2.1
|
|
Non-United States
|
|
|
|
|
|
|
|
|
|||
Current
|
$
|
5.4
|
|
|
$
|
4.1
|
|
|
$
|
4.7
|
|
Deferred
|
—
|
|
|
(0.5
|
)
|
|
(1.0
|
)
|
|||
Total non-United States
|
$
|
5.4
|
|
|
$
|
3.6
|
|
|
$
|
3.7
|
|
Total
|
|
|
|
|
|
|
|
|
|||
Current
|
$
|
15.5
|
|
|
$
|
4.2
|
|
|
$
|
9.2
|
|
Deferred
|
19.9
|
|
|
20.5
|
|
|
5.2
|
|
|||
Total current and deferred
|
$
|
35.4
|
|
|
$
|
24.7
|
|
|
$
|
14.4
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Computed federal statutory provision
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
|||
State income tax provision, net of federal income tax benefit
|
3.3
|
|
|
3.7
|
|
|
4.2
|
|
|||
Difference in effective tax rates on earnings of foreign subsidiaries
|
0.0
|
|
|
1.2
|
|
|
3.7
|
|
|||
Charitable contributions
|
(0.3
|
)
|
|
(0.4
|
)
|
|
(1.1
|
)
|
|||
Tax credits
|
(0.5
|
)
|
|
(0.3
|
)
|
|
(0.5
|
)
|
|||
Valuation allowances
|
0.1
|
|
|
(0.7
|
)
|
|
2.4
|
|
|||
Uncertain Positions
|
2.9
|
|
|
3.9
|
|
|
11.5
|
|
|||
Other - net
|
(0.2
|
)
|
|
(6.4
|
)
|
|
(7.0
|
)
|
|||
Effective tax rates
|
40.3
|
%
|
|
36.0
|
%
|
|
48.2
|
%
|
|||
Total provision for income taxes
|
$
|
35.4
|
|
|
$
|
24.7
|
|
|
$
|
14.4
|
|
|
2017
|
|
2016
|
||||
Deferred tax assets
|
|
|
|
|
|
||
Tax uniform capitalization
|
$
|
9.5
|
|
|
$
|
6.2
|
|
Prepublication expenses
|
14.8
|
|
|
26.4
|
|
||
Inventory reserves
|
24.6
|
|
|
25.1
|
|
||
Allowance for doubtful accounts
|
3.3
|
|
|
4.2
|
|
||
Other reserves
|
26.0
|
|
|
26.3
|
|
||
Post-retirement, post-employment and pension obligations
|
12.5
|
|
|
15.9
|
|
||
Tax carryforwards
|
31.1
|
|
|
32.2
|
|
||
Lease accounting
|
(0.4
|
)
|
|
(0.4
|
)
|
||
Other - net
|
10.2
|
|
|
12.0
|
|
||
Gross deferred tax assets
|
131.6
|
|
|
147.9
|
|
||
Valuation allowance
|
(26.8
|
)
|
|
(28.4
|
)
|
||
Total deferred tax assets
|
$
|
104.8
|
|
|
$
|
119.5
|
|
Deferred tax liabilities
|
|
|
|
|
|
||
Prepaid expenses
|
(0.4
|
)
|
|
(0.6
|
)
|
||
Depreciation and amortization
|
(50.7
|
)
|
|
(50.4
|
)
|
||
Total deferred tax liability
|
$
|
(51.1
|
)
|
|
$
|
(51.0
|
)
|
Total net deferred tax assets
|
$
|
53.7
|
|
|
$
|
68.5
|
|
Gross unrecognized benefits at May 31, 2014
|
$
|
14.4
|
|
Decreases related to prior year tax positions
|
(0.7
|
)
|
|
Increase related to prior year tax positions
|
—
|
|
|
Increases related to current year tax positions
|
3.6
|
|
|
Settlements during the period
|
—
|
|
|
Lapse of statute of limitation
|
—
|
|
|
Gross unrecognized benefits at May 31, 2015
|
$
|
17.3
|
|
Decreases related to prior year tax positions
|
(6.2
|
)
|
|
Increase related to prior year tax positions
|
4.3
|
|
|
Increases related to current year tax positions
|
5.4
|
|
|
Settlements during the period
|
(2.9
|
)
|
|
Lapse of statute of limitation
|
—
|
|
|
Gross unrecognized benefits at May 31, 2016
|
$
|
17.9
|
|
Decreases related to prior year tax positions
|
(6.3
|
)
|
|
Increase related to prior year tax positions
|
0.1
|
|
|
Increases related to current year tax positions
|
3.0
|
|
|
Settlements during the period
|
(0.6
|
)
|
|
Lapse of statute of limitation
|
—
|
|
|
Gross unrecognized benefits at May 31, 2017
|
$
|
14.1
|
|
|
Class A Stock
|
|
Common Stock
|
|
Preferred Stock
|
|||
Authorized
|
4,000,000
|
|
|
70,000,000
|
|
|
2,000,000
|
|
Reserved for Issuance
|
244,506
|
|
|
6,822,489
|
|
|
—
|
|
Outstanding
|
1,656,200
|
|
|
33,383,303
|
|
|
—
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Total intrinsic value of stock options exercised
|
$
|
11.0
|
|
|
$
|
14.6
|
|
|
$
|
5.8
|
|
Stock-based compensation cost (pretax)
|
$
|
10.1
|
|
|
$
|
9.7
|
|
|
$
|
11.3
|
|
Tax benefits related to stock-based compensation cost
|
$
|
0.8
|
|
|
$
|
1.8
|
|
|
$
|
2.1
|
|
Weighted average grant date fair value per option
|
$
|
12.70
|
|
|
$
|
14.78
|
|
|
$
|
11.41
|
|
|
Options
|
|
Weighted
Average
Exercise Price
|
|
Average Remaining
Contractual
Term (in years)
|
|
Aggregate
Intrinsic Value
|
|||||
Outstanding at May 31, 2016
|
3,025,046
|
|
|
$
|
32.10
|
|
|
|
|
|
|
|
Granted
|
522,761
|
|
|
$
|
39.39
|
|
|
|
|
|
|
|
Exercised
|
(833,046
|
)
|
|
$
|
30.97
|
|
|
|
|
|
|
|
Expired, cancellations and forfeitures
|
(20,937
|
)
|
|
$
|
38.68
|
|
|
|
|
|
|
|
Outstanding at May 31, 2017
|
2,693,824
|
|
|
$
|
33.81
|
|
|
6.3
|
|
$
|
24.0
|
|
Exercisable at May 31, 2017
|
1,446,554
|
|
|
$
|
30.14
|
|
|
4.6
|
|
$
|
18.0
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
RSUs granted
|
|
52,331
|
|
|
|
74,536
|
|
|
|
66,146
|
|
Weighted average grant date price per unit
|
$
|
39.22
|
|
|
$
|
43.10
|
|
|
$
|
33.80
|
|
|
2017
|
|
2016
|
2015
|
||||||
MSPP Stock Units allocated
|
|
42,565
|
|
|
|
58,633
|
|
|
67,027
|
|
Purchase price per unit
|
$
|
28.49
|
|
|
$
|
30.38
|
|
$
|
23.79
|
|
|
Stock Units/RSUs
|
|
Weighted
Average grant
date fair value
|
|||
Nonvested as of May 31, 2016
|
273,263
|
|
|
$
|
23.79
|
|
Granted
|
94,896
|
|
|
$
|
26.14
|
|
Vested
|
(58,084
|
)
|
|
$
|
35.67
|
|
Forfeited
|
—
|
|
|
$
|
—
|
|
Nonvested as of May 31, 2017
|
310,075
|
|
|
$
|
22.28
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Shares issued
|
|
42,799
|
|
|
|
43,141
|
|
|
|
55,501
|
|
Weighted average purchase price per share
|
$
|
35.58
|
|
|
$
|
33.65
|
|
|
$
|
31.98
|
|
Authorization
|
Amount
|
|
||
July 2015
|
50.0
|
|
|
|
Less repurchases made under the authorization as of May 31, 2017
|
(11.4
|
)
|
|
|
Remaining Board authorization at May 31, 2017
|
$
|
38.6
|
|
|
|
U.S. Pension Plan
|
|
UK Pension Plan
|
|
Post-Retirement Benefits
|
|||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||
Weighted average assumptions used to determine benefit obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Discount rate
|
2.4
|
%
|
|
3.5
|
%
|
|
3.8
|
%
|
|
2.5
|
%
|
|
3.5
|
%
|
|
3.5
|
%
|
|
3.7
|
%
|
|
3.7
|
%
|
|
3.8
|
%
|
||
Rate of compensation increase
|
—
|
|
|
—
|
|
|
—
|
|
|
4.1
|
%
|
|
3.8
|
%
|
|
4.1
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Weighted average assumptions used to determine net periodic benefit cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Discount rate
|
3.5
|
%
|
|
3.8
|
%
|
|
3.9
|
%
|
|
3.5
|
%
|
|
3.5
|
%
|
|
4.2
|
%
|
|
3.7
|
%
|
|
3.8
|
%
|
|
4.0
|
%
|
||
Expected short-term return on plan assets
|
4.8
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
Expected long-term return on plan assets
|
—
|
|
|
4.8
|
%
|
|
5.4
|
%
|
|
3.9
|
%
|
|
4.2
|
%
|
|
5.1
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Rate of compensation increase
|
—
|
|
|
—
|
|
|
—
|
|
|
3.8
|
%
|
|
4.1
|
%
|
|
4.2
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
U.S. Pension Plan
|
|
UK Pension Plan
|
|
Post-Retirement Benefits
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Benefit obligation at beginning of year
|
$
|
125.0
|
|
|
$
|
130.0
|
|
|
$
|
39.8
|
|
|
$
|
43.1
|
|
|
$
|
38.3
|
|
|
$
|
36.3
|
|
Service cost
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.0
|
|
|
0.0
|
|
||||||
Interest cost
|
3.2
|
|
|
4.6
|
|
|
1.2
|
|
|
1.5
|
|
|
0.9
|
|
|
1.4
|
|
||||||
Plan participants’ contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.3
|
|
||||||
Actuarial losses (gains)
|
9.2
|
|
|
1.2
|
|
|
6.3
|
|
|
(1.5
|
)
|
|
(8.2
|
)
|
|
3.0
|
|
||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
(4.3
|
)
|
|
(2.3
|
)
|
|
—
|
|
|
—
|
|
||||||
Benefits paid, including expenses
|
(9.6
|
)
|
|
(10.8
|
)
|
|
(1.3
|
)
|
|
(1.0
|
)
|
|
(2.4
|
)
|
|
(2.7
|
)
|
||||||
Benefit obligation at end of year
|
$
|
127.8
|
|
|
$
|
125.0
|
|
|
$
|
41.7
|
|
|
$
|
39.8
|
|
|
$
|
28.8
|
|
|
$
|
38.3
|
|
|
U.S. Pension Plan
|
|
UK Pension Plan
|
|
Post-Retirement Benefits
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
Change in plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of year
|
$
|
135.1
|
|
|
$
|
143.2
|
|
|
$
|
29.1
|
|
|
$
|
30.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actual return on plan assets
|
7.0
|
|
|
2.6
|
|
|
3.5
|
|
|
(0.0
|
)
|
|
—
|
|
|
—
|
|
||||||
Employer contributions
|
—
|
|
|
—
|
|
|
1.1
|
|
|
1.3
|
|
|
2.2
|
|
|
2.4
|
|
||||||
Benefits paid, including expenses
|
(9.6
|
)
|
|
(10.7
|
)
|
|
(1.3
|
)
|
|
(1.0
|
)
|
|
(2.4
|
)
|
|
(2.7
|
)
|
||||||
Plan participants’ contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.3
|
|
||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
(3.2
|
)
|
|
(1.7
|
)
|
|
—
|
|
|
—
|
|
||||||
Fair value of plan assets at end of year
|
$
|
132.5
|
|
|
$
|
135.1
|
|
|
$
|
29.2
|
|
|
$
|
29.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
U.S. Pension Plan
|
|
UK Pension Plan
|
|
Post-Retirement Benefits
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
Current assets
|
$
|
4.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-current assets
|
—
|
|
|
10.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Current liabilities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
(2.6
|
)
|
||||||
Non-current liabilities
|
—
|
|
|
—
|
|
|
(12.5
|
)
|
|
(10.7
|
)
|
|
(26.7
|
)
|
|
(35.7
|
)
|
||||||
Net funded balance
|
$
|
4.7
|
|
|
$
|
10.1
|
|
|
$
|
(12.5
|
)
|
|
$
|
(10.7
|
)
|
|
$
|
(28.8
|
)
|
|
$
|
(38.3
|
)
|
|
2017
|
|
2016
|
||||||||||||||||||||||||||||
|
U.S. Pension Plan
|
|
UK Pension
Plan |
|
Post -
Retirement Benefits |
|
Total
|
|
U.S. Pension Plan
|
|
UK Pension
Plan |
|
Post -
Retirement Benefits |
|
Total
|
||||||||||||||||
Net actuarial gain (loss)
|
$
|
(51.3
|
)
|
|
$
|
(16.3
|
)
|
|
$
|
(3.3
|
)
|
|
$
|
(70.9
|
)
|
|
$
|
(44.0
|
)
|
|
$
|
(13.2
|
)
|
|
$
|
(11.9
|
)
|
|
$
|
(69.1
|
)
|
Amount recognized in
Accumulated comprehensive
income (loss) before tax
|
$
|
(51.3
|
)
|
|
$
|
(16.3
|
)
|
|
$
|
(3.3
|
)
|
|
$
|
(70.9
|
)
|
|
$
|
(44.0
|
)
|
|
$
|
(13.2
|
)
|
|
$
|
(11.9
|
)
|
|
$
|
(69.1
|
)
|
|
U.S. Pension Plan
|
|
UK Pension Plan
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Projected benefit obligations
|
$
|
127.8
|
|
|
$
|
125.0
|
|
|
$
|
41.7
|
|
|
$
|
39.8
|
|
Accumulated benefit obligations
|
127.8
|
|
|
125.0
|
|
|
40.9
|
|
|
39.1
|
|
||||
Fair value of plan assets
|
132.5
|
|
|
135.1
|
|
|
29.2
|
|
|
29.1
|
|
|
U.S. Pension Plan
|
|
UK Pension Plan
|
|
Post - Retirement Benefits
|
||||||||||||||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||
Components of net (benefit)
cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
|
$
|
0.0
|
|
Interest cost
|
3.2
|
|
|
4.6
|
|
|
5.0
|
|
|
1.2
|
|
|
1.5
|
|
|
1.7
|
|
|
0.9
|
|
|
1.4
|
|
|
1.3
|
|
|||||||||
Expected return on assets
|
(6.1
|
)
|
|
(6.5
|
)
|
|
(7.8
|
)
|
|
(1.0
|
)
|
|
(1.3
|
)
|
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Net amortization and
deferrals
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|||||||||
Lump sum settlement
charge
|
—
|
|
|
—
|
|
|
4.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Amortization of net actuarial
loss
|
0.9
|
|
|
0.8
|
|
|
0.7
|
|
|
0.8
|
|
|
0.9
|
|
|
0.7
|
|
|
0.4
|
|
|
2.8
|
|
|
1.3
|
|
|||||||||
Net periodic (benefit) cost
|
$
|
(2.0
|
)
|
|
$
|
(1.1
|
)
|
|
$
|
2.2
|
|
|
$
|
1.0
|
|
|
$
|
1.1
|
|
|
$
|
0.9
|
|
|
$
|
1.3
|
|
|
$
|
4.1
|
|
|
$
|
2.4
|
|
|
U.S. Pension Plan
|
|
UK Pension Plan
|
||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Equity securities
|
13.4
|
%
|
|
28.3
|
%
|
|
38.8
|
%
|
|
36.8
|
%
|
Debt securities
|
76.5
|
%
|
|
69.2
|
%
|
|
32.8
|
%
|
|
33.8
|
%
|
Real estate
|
—
|
%
|
|
—
|
%
|
|
6.9
|
%
|
|
7.5
|
%
|
Other
|
10.1
|
%
|
|
2.5
|
%
|
|
21.5
|
%
|
|
21.9
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
Assets at Fair Value as of May 31, 2017
|
||||||||||||||||||||||||||
|
U.S.
Pension Plan |
|
UK
Pension Plan |
|
U.S.
Pension Plan |
|
UK
Pension Plan |
|
U.S.
Pension Plan |
|
UK
Pension Plan |
|
Total
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
18.4
|
|
|
$
|
0.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18.9
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
U.S.
(1)
|
12.7
|
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13.7
|
|
|||||||
International
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
10.3
|
|
|
—
|
|
|
—
|
|
|
10.3
|
|
|||||||
Pooled, Common and
Collective Funds
(3)
|
—
|
|
|
—
|
|
|
101.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
101.4
|
|
|||||||
Fixed Income
(4)
|
—
|
|
|
—
|
|
|
—
|
|
|
9.6
|
|
|
—
|
|
|
—
|
|
|
9.6
|
|
|||||||
Annuities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.8
|
|
|
5.8
|
|
|||||||
Real estate
(5)
|
—
|
|
|
—
|
|
|
—
|
|
|
2.0
|
|
|
—
|
|
|
—
|
|
|
2.0
|
|
|||||||
Total
|
$
|
31.1
|
|
|
$
|
1.5
|
|
|
$
|
101.4
|
|
|
$
|
21.9
|
|
|
$
|
—
|
|
|
$
|
5.8
|
|
|
$
|
161.7
|
|
|
Assets at Fair Value as of May 31, 2016
|
||||||||||||||||||||||||||
|
U.S.
Pension Plan |
|
UK
Pension Plan |
|
U.S.
Pension Plan |
|
UK
Pension Plan |
|
U.S.
Pension Plan |
|
UK
Pension Plan |
|
Total
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
||||||||||||||||||||
Cash and cash equivalents
|
$
|
3.3
|
|
|
$
|
0.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4.2
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
U.S.
(1)
|
34.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34.1
|
|
|||||||
International
(2)
|
4.2
|
|
|
—
|
|
|
—
|
|
|
10.7
|
|
|
—
|
|
|
—
|
|
|
14.9
|
|
|||||||
Pooled, Common and
Collective Funds
(3)
|
—
|
|
|
—
|
|
|
93.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
93.5
|
|
|||||||
Fixed Income
(4)
|
—
|
|
|
—
|
|
|
—
|
|
|
9.8
|
|
|
—
|
|
|
—
|
|
|
9.8
|
|
|||||||
Annuities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.5
|
|
|
5.5
|
|
|||||||
Real estate
(5)
|
—
|
|
|
—
|
|
|
—
|
|
|
2.2
|
|
|
—
|
|
|
—
|
|
|
2.2
|
|
|||||||
Total
|
$
|
41.6
|
|
|
$
|
0.9
|
|
|
$
|
93.5
|
|
|
$
|
22.7
|
|
|
$
|
—
|
|
|
$
|
5.5
|
|
|
$
|
164.2
|
|
(1)
|
Funds which invest in a diversified portfolio of publicly traded U.S. common stocks of large-cap, medium-cap and small-cap companies. There are no restrictions on these investments.
|
(2)
|
Funds which invest in a diversified portfolio of publicly traded common stock of non-U.S. companies, primarily in Europe and Asia. There are no restrictions on these investments.
|
(3)
|
Funds which invest in bond index funds available to certain qualified retirement plans but not traded openly in any public exchanges.
|
(4)
|
Funds which invest in a diversified portfolio of publicly traded government bonds, corporate bonds and mortgage-backed securities. There are no restrictions on these investments.
|
(5)
|
Represents assets of a non-U.S. entity plan invested in a fund whose underlying investments are comprised of properties. The fund has publicly available quoted market prices and there are no restrictions on these investments.
|
Balance at May 31, 2015
|
$
|
6.1
|
|
Actual Return on Plan Assets:
|
|
|
|
Relating to assets still held at May 31, 2016
|
0.0
|
|
|
Relating to assets sold during the year
|
—
|
|
|
Purchases, sales and settlements, net
|
(0.3
|
)
|
|
Transfers in and/or out of Level 3
|
—
|
|
|
Foreign currency translation
|
(0.3
|
)
|
|
Balance at May 31, 2016
|
$
|
5.5
|
|
Actual Return on Plan Assets:
|
|
|
|
Relating to assets still held at May 31, 2017
|
1.2
|
|
|
Relating to assets sold during the year
|
—
|
|
|
Purchases, sales and settlements, net
|
(0.3
|
)
|
|
Transfers in and/or out of Level 3
|
—
|
|
|
Foreign currency translation
|
(0.6
|
)
|
|
Balance at May 31, 2017
|
$
|
5.8
|
|
|
|
U.S.
Pension Plan |
|
UK
Pension Plan |
|
Post - Retirement
|
||||||||||
|
|
Pension
Benefits
|
|
Benefit
Payments
|
|
Medicare
Subsidy
Receipts
|
||||||||||
2018
|
|
$
|
127.8
|
|
|
$
|
0.8
|
|
|
$
|
2.3
|
|
|
$
|
0.2
|
|
2019
|
|
—
|
|
|
1.0
|
|
|
2.3
|
|
|
0.2
|
|
||||
2020
|
|
—
|
|
|
0.9
|
|
|
2.3
|
|
|
0.3
|
|
||||
2021
|
|
—
|
|
|
1.0
|
|
|
2.3
|
|
|
0.3
|
|
||||
2022
|
|
—
|
|
|
1.3
|
|
|
2.2
|
|
|
0.3
|
|
||||
2023-2027
|
|
—
|
|
|
7.3
|
|
|
10.6
|
|
|
1.3
|
|
|
2017
|
|
2016
|
||
Health care cost trend rate assumed for the next fiscal year
|
7.0
|
%
|
|
7.0
|
%
|
Rate to which the cost trend is assumed to decline (the ultimate trend rate)
|
5.0
|
%
|
|
5.0
|
%
|
Year that the rate reaches the ultimate trend rate
|
2024
|
|
|
2024
|
|
|
2017
|
|
2016
|
||||
Total service and interest cost - 1% increase
|
$
|
0.1
|
|
|
$
|
0.2
|
|
Total service and interest cost - 1% decrease
|
(0.1
|
)
|
|
(0.1
|
)
|
||
Post-retirement benefit obligation - 1% increase
|
3.0
|
|
|
4.3
|
|
||
Post-retirement benefit obligation - 1% decrease
|
(2.6
|
)
|
|
(3.7
|
)
|
|
2017
|
|
2016
|
||||
Beginning balance
|
$
|
4.4
|
|
|
$
|
2.0
|
|
Accruals
|
14.9
|
|
|
11.9
|
|
||
Payments
|
(12.7
|
)
|
|
(9.5
|
)
|
||
Ending balance
|
$
|
6.6
|
|
|
$
|
4.4
|
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||
|
Pension
Plans |
|
Post -
Retirement Benefits |
|
Pension
Plans |
|
Post -
Retirement Benefits |
|
Pension
Plans |
|
Post -
Retirement Benefits |
||||||||||||
Service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.0
|
|
|
$
|
—
|
|
|
$
|
0.0
|
|
Net amortization and deferrals
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.2
|
)
|
||||||
Lump sum settlement charge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.3
|
|
|
—
|
|
||||||
Amortization of net actuarial loss
|
1.7
|
|
|
0.4
|
|
|
1.7
|
|
|
2.8
|
|
|
1.4
|
|
|
1.3
|
|
||||||
Tax benefit
|
(0.4
|
)
|
|
(0.1
|
)
|
|
(0.3
|
)
|
|
(1.1
|
)
|
|
(2.0
|
)
|
|
(0.4
|
)
|
||||||
Amounts reclassified from Accumulated other
comprehensive income (loss) |
$
|
1.3
|
|
|
$
|
0.3
|
|
|
$
|
1.4
|
|
|
$
|
1.6
|
|
|
$
|
3.7
|
|
|
$
|
0.7
|
|
|
Foreign currency translation adjustments
|
|
Pension
Plans |
|
Post -
Retirement Benefits |
|
Total
|
||||||||
Balance at May 31, 2015
(1)
|
$
|
(31.9
|
)
|
|
$
|
(38.0
|
)
|
|
$
|
(7.1
|
)
|
|
$
|
(77.0
|
)
|
Other comprehensive income (loss) before reclassifications
|
(8.1
|
)
|
|
(2.8
|
)
|
|
$
|
(1.8
|
)
|
|
$
|
(12.7
|
)
|
||
Less: amount reclassified from Accumulated other
comprehensive income (loss) (net of taxes) |
|
|
|
|
|
|
|
||||||||
Lump Sum Settlement charge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Amortization of net actuarial loss
|
—
|
|
|
1.4
|
|
|
1.6
|
|
|
3.0
|
|
||||
Net prior service credit
|
—
|
|
|
—
|
|
|
(0.0
|
)
|
|
(0.0
|
)
|
||||
Other comprehensive income (loss)
|
(8.1
|
)
|
|
(1.4
|
)
|
|
(0.2
|
)
|
|
(9.7
|
)
|
||||
Balance at May 31, 2016
(1)
|
$
|
(40.0
|
)
|
|
$
|
(39.4
|
)
|
|
$
|
(7.3
|
)
|
|
$
|
(86.7
|
)
|
Other comprehensive income (loss) before reclassifications
|
$
|
(5.3
|
)
|
|
$
|
(8.8
|
)
|
|
$
|
5.0
|
|
|
$
|
(9.1
|
)
|
Less: amount reclassified from Accumulated other
comprehensive income (loss) (net of taxes) |
|
|
|
|
|
|
|
||||||||
Lump Sum Settlement charge
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Amortization of net actuarial loss
|
—
|
|
|
1.3
|
|
|
0.3
|
|
|
1.6
|
|
||||
Net prior service credit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other comprehensive income (loss)
|
(5.3
|
)
|
|
(7.5
|
)
|
|
5.3
|
|
|
(7.5
|
)
|
||||
Balance at May 31, 2017
(1)
|
$
|
(45.3
|
)
|
|
$
|
(46.9
|
)
|
|
$
|
(2.0
|
)
|
|
$
|
(94.2
|
)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Earnings (loss) from continuing operations attributable to Class A and Common Shares
|
$
|
52.4
|
|
|
$
|
43.9
|
|
|
$
|
15.4
|
|
Earnings (loss) from discontinued operations attributable to Class A and Common Shares, net of tax
|
(0.2
|
)
|
|
(3.5
|
)
|
|
279.1
|
|
|||
Net income (loss) attributable to Class A and Common Shares
|
52.2
|
|
|
40.4
|
|
|
294.5
|
|
|||
Weighted average Shares of Class A Stock and Common Stock
outstanding for basic earnings (loss) per share (in millions)
|
34.7
|
|
|
34.1
|
|
|
32.7
|
|
|||
Dilutive effect of Class A Stock and Common Stock potentially issuable pursuant to stock-based compensation plans (in millions)
|
0.7
|
|
|
0.8
|
|
|
0.7
|
|
|||
Adjusted weighted average Shares of Class A Stock and Common Stock outstanding for diluted earnings (loss) per share (in millions)
|
35.4
|
|
|
34.9
|
|
|
33.4
|
|
|||
|
|
|
|
|
|
|
|
|
|||
Earnings (loss) per share of Class A Stock and Common Stock
|
|
|
|
|
|
||||||
Basic earnings (loss) per share:
|
|
|
|
|
|
||||||
Earnings (loss) from continuing operations
|
$
|
1.51
|
|
|
$
|
1.29
|
|
|
$
|
0.47
|
|
Earnings (loss) from discontinued operations, net of tax
|
$
|
(0.00
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
8.53
|
|
Net income (loss)
|
$
|
1.51
|
|
|
$
|
1.18
|
|
|
$
|
9.00
|
|
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|||
Earnings (loss) from continuing operations
|
$
|
1.48
|
|
|
$
|
1.26
|
|
|
$
|
0.46
|
|
Earnings (loss) from discontinued operations, net of tax
|
$
|
(0.01
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
8.34
|
|
Net income (loss)
|
$
|
1.47
|
|
|
$
|
1.16
|
|
|
$
|
8.80
|
|
|
2017
|
|
2016
|
Options outstanding pursuant to stock-based compensation plans (in millions)
|
2.7
|
|
3.0
|
|
2017
|
|
2016
|
||||
|
|
|
|
||||
Accrued payroll, payroll taxes and benefits
|
$
|
48.5
|
|
|
$
|
44.9
|
|
Accrued bonus and commissions
|
33.8
|
|
|
28.2
|
|
||
Accrued other taxes
|
26.1
|
|
|
30.4
|
|
||
Accrued advertising and promotions
|
34.9
|
|
|
35.7
|
|
||
Accrued insurance
|
7.6
|
|
|
7.7
|
|
||
Other accrued expenses
|
27.1
|
|
|
29.0
|
|
||
Total accrued expenses
|
$
|
178.0
|
|
|
$
|
175.9
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Advertising expense
|
$
|
121.0
|
|
|
$
|
127.3
|
|
|
$
|
129.7
|
|
Amortization of prepublication and production costs
|
23.3
|
|
|
26.4
|
|
|
30.4
|
|
|||
Foreign currency transaction gain (loss)
|
1.0
|
|
|
(0.5
|
)
|
|
0.1
|
|
|||
Purchases related to contractual commitments for minimum print quantities
|
53.1
|
|
|
48.7
|
|
|
68.2
|
|
|
2017
|
|
2016
|
||||
Royalty advances allowance for reserves
|
$
|
93.8
|
|
|
$
|
90.1
|
|
Accounts receivable reserve for returns
|
36.3
|
|
|
32.1
|
|
||
Accounts receivable allowance for doubtful accounts
|
13.7
|
|
|
16.1
|
|
||
Unredeemed credits issued in conjunction with the Company’s school-based book club and book fair operations (included in other accrued expenses)
|
8.7
|
|
|
8.9
|
|
•
|
Level 1
Unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.
|
•
|
Level 2
Observable inputs other than unadjusted quoted prices in active markets for identical assets or liabilities such as
|
◦
|
Quoted prices for similar assets or liabilities 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
|
•
|
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.
|
•
|
Long-lived assets
|
•
|
Investments
|
•
|
Assets acquired in a business combination
|
•
|
Goodwill, definite and indefinite-lived intangible assets
|
•
|
Long-lived assets held for sale
|
|
Net carrying
value as of |
|
Fair value measured and recognized using
|
|
Impairment losses
for fiscal year ended
|
|
Additions due to other investments and acquisitions
|
||||||||||||||||
|
May 31, 2017
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
May 31, 2017
|
|
|||||||||||||
Goodwill
|
$
|
2.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2.8
|
|
|
$
|
—
|
|
|
$
|
2.8
|
|
Prepublication assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.1
|
|
|
—
|
|
||||||
Property, plant and equipment, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.7
|
|
|
—
|
|
||||||
Intangible assets
|
6.8
|
|
|
|
|
|
|
|
|
7.0
|
|
|
—
|
|
|
7.0
|
|
|
Net carrying
value as of |
|
Fair value measured and recognized using
|
|
Impairment losses
for fiscal year ended
|
|
Additions due to other investments and acquisitions
|
||||||||||||||||
|
May 31, 2016
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
May 31, 2016
|
|
|||||||||||||
Property, plant and equipment, net
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7.5
|
|
|
$
|
—
|
|
Prepublication assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6.9
|
|
|
—
|
|
||||||
Intangible assets
|
1.9
|
|
|
—
|
|
|
—
|
|
|
2.4
|
|
|
—
|
|
|
2.4
|
|
|
Net carrying
value as of |
|
Fair value measured and
recognized using |
|
Impairment losses
for fiscal year ended
|
|
Additions due to other investments and acquisitions
|
||||||||||||||||
|
May 31, 2015
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
May 31, 2015
|
|
|||||||||||||
Goodwill
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5.4
|
|
|
$
|
—
|
|
Property, plant and equipment, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.5
|
|
|
—
|
|
||||||
Prepublication assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.9
|
|
|
—
|
|
Supplementary Financial Information
|
|
|
Summary of Quarterly Results of Operations
(Unaudited, amounts in millions except per share data)
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
|
Fiscal
Year
Ended
May 31,
|
||||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenues
|
$
|
282.7
|
|
|
$
|
623.1
|
|
|
$
|
336.2
|
|
|
$
|
499.6
|
|
|
$
|
1,741.6
|
|
Cost of goods sold
|
169.7
|
|
|
271.3
|
|
|
160.3
|
|
|
213.2
|
|
|
814.5
|
|
|||||
Earnings (loss) from continuing operations
|
(39.5
|
)
|
|
67.9
|
|
|
(15.5
|
)
|
|
39.6
|
|
|
52.5
|
|
|||||
Earnings (loss) from discontinued operations, net of tax
|
(0.1
|
)
|
|
0.0
|
|
|
0.1
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
|||||
Net income (loss)
|
(39.6
|
)
|
|
67.9
|
|
|
(15.4
|
)
|
|
39.4
|
|
|
52.3
|
|
|||||
Earnings (loss) per share of Class A and Common Stock:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Basic:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Earnings (loss) from continuing operations
(1)
|
(1.15
|
)
|
|
1.96
|
|
|
(0.45
|
)
|
|
1.13
|
|
|
1.51
|
|
|||||
Earnings (loss) from discontinued operations, net of tax
(1)
|
(0.00
|
)
|
|
0.00
|
|
|
0.01
|
|
|
(0.01
|
)
|
|
(0.00
|
)
|
|||||
Net income (loss)
(1)
|
(1.15
|
)
|
|
1.96
|
|
|
(0.44
|
)
|
|
1.12
|
|
|
1.51
|
|
|||||
Diluted:
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) from continuing operations
(1)
|
(1.15
|
)
|
|
1.92
|
|
|
(0.45
|
)
|
|
1.11
|
|
|
1.48
|
|
|||||
Earnings (loss) from discontinued operations, net of tax
(1)
|
(0.00
|
)
|
|
0.00
|
|
|
0.01
|
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|||||
Net income (loss)
(1)
|
(1.15
|
)
|
|
1.92
|
|
|
(0.44
|
)
|
|
1.10
|
|
|
1.47
|
|
|||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenues
|
$
|
191.2
|
|
|
$
|
601.8
|
|
|
$
|
366.0
|
|
|
$
|
513.8
|
|
|
$
|
1,672.8
|
|
Cost of goods sold
|
114.5
|
|
|
257.1
|
|
|
178.0
|
|
|
212.7
|
|
|
762.3
|
|
|||||
Earnings (loss) from continuing operations
|
(48.9
|
)
|
|
65.2
|
|
|
(7.2
|
)
|
|
34.9
|
|
|
44.0
|
|
|||||
Earnings (loss) from discontinued operations, net of tax
|
(0.5
|
)
|
|
(0.3
|
)
|
|
(1.8
|
)
|
|
(0.9
|
)
|
|
(3.5
|
)
|
|||||
Net income (loss)
|
(49.4
|
)
|
|
64.9
|
|
|
(9.0
|
)
|
|
34.0
|
|
|
40.5
|
|
|||||
Earnings (loss) per share of Class A and Common Stock:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Basic:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Earnings (loss) from continuing operations
(1)
|
(1.46
|
)
|
|
1.90
|
|
|
(0.21
|
)
|
|
1.02
|
|
|
1.29
|
|
|||||
Earnings (loss) from discontinued operations, net of tax
(1)
|
(0.02
|
)
|
|
(0.01
|
)
|
|
(0.05
|
)
|
|
(0.03
|
)
|
|
(0.11
|
)
|
|||||
Net income (loss)
(1)
|
(1.48
|
)
|
|
1.89
|
|
|
(0.26
|
)
|
|
0.99
|
|
|
1.18
|
|
|||||
Diluted:
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings (loss) from continuing operations
(1)
|
(1.46
|
)
|
|
1.85
|
|
|
(0.21
|
)
|
|
1.00
|
|
|
1.26
|
|
|||||
Earnings (loss) from discontinued operations, net of tax
(1)
|
(0.02
|
)
|
|
(0.01
|
)
|
|
(0.05
|
)
|
|
(0.03
|
)
|
|
(0.10
|
)
|
|||||
Net income (loss)
(1)
|
(1.48
|
)
|
|
1.84
|
|
|
(0.26
|
)
|
|
0.97
|
|
|
1.16
|
|
(a)(1)
|
Financial Statements:
|
|
|
|
The following Consolidated Financial Statements are included in Part II, Item 8, “Consolidated Financial Statements and Supplementary Data”:
|
|
|
|
Consolidated Statements of Operations for the years ended May 31, 2017, 2016 and 2015
|
|
|
|
Consolidated Statements of Comprehensive Income (Loss) for the years ended May 31, 2017, 2016 and 2015
|
|
|
|
Consolidated Balance Sheets at May 31, 2017 and 2016
|
|
|
|
Consolidated Statement of Changes in Stockholders’ Equity for the years ended May 31, 2017, 2016 and 2015
|
|
|
|
Consolidated Statements of Cash Flows for the years ended May 31, 2017, 2016 and 2015
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
(a)(2)
|
Supplementary Financial Information - Summary of Quarterly Results of Operations Financial Statement Schedule.
|
|
|
and (c)
|
|
|
|
|
The following consolidated financial statement schedule is included with this report: Schedule II-Valuation and Qualifying Accounts and Reserves.
|
|
|
|
All other schedules have been omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the Consolidated Financial Statements or the Notes thereto.
|
|
|
(a)(3) and (b)
|
|
|
|
|
Exhibits:
|
|
|
2.1
|
Stock and Asset Purchase Agreement dated as of April 23, 2015, by and among Houghton Mifflin Harcourt Publishing Company, as Purchaser, Scholastic Corporation, as Parent Seller, and Scholastic Inc., as Seller (incorporated by reference to the Corporation's Annual Report on Form 10-K as filed with the SEC on July 29, 2015, SEC File No. 000-19860) (the "2015 10-K").
|
|
|
3.1
|
Amended and Restated Certificate of Incorporation of the Corporation, as amended to date (incorporated by reference to the Corporation’s Quarterly Report on Form 10-Q as filed with the SEC on October 5, 2006, SEC File No. 000-19860) (the “August 31, 2006 10-Q”).
|
|
|
3.2
|
Bylaws of the Corporation, amended and restated as of December 12, 2007 (incorporated by reference to the Corporation’s Current Report on Form 8-K as filed with the SEC on December 14, 2007, SEC File No. 000-19860).
|
|
|
10.1*
|
Scholastic Corporation Management Stock Purchase Plan, amended and restated effective as of September 23, 2008 (incorporated by reference to the Corporation’s Annual Report on Form 10-K as filed with the SEC on July 30, 2009, SEC File No. 000-19860) (the “2009 10-K”), together with Amendment No. 1 to the Scholastic Corporation Management Stock Purchase Plan, effective as of September 21, 2011 (incorporated by reference to Appendix B to the Corporation’s definitive Proxy Statement as filed with the SEC on August 9, 2011, SEC File No. 000-19860).
|
|
|
10.2*
|
Scholastic Corporation Director’s Deferred Compensation Plan, amended and restated effective as of September 23, 2008 (incorporated by reference to the 2009 10-K).
|
|
|
10.3*
|
Scholastic Corporation 2007 Outside Directors Stock Incentive Plan (the “2007 Directors’ Plan”) effective as of September 23, 2008 (incorporated by reference to the 2009 10-K) and the Amended and Restated Scholastic Corporation 2007 Outside Directors Stock Incentive Plan (incorporated by reference to the Corporation’s Quarterly Report on Form 10-Q as filed with the SEC on January 2, 2013, SEC File No. 000-19860) (“the November 30, 2012 10-Q”), and Amendment No. 1, effective as of May 21, 2013 (incorporated by reference to the 2013 10-K), and Amendment No. 2, effective as of December 16, 2015 (incorporated by reference to the Corporation's Quarterly Report on Form 10-Q as filed with the SEC on December 18, 2015, SEC FIle No. 000-19860).
|
|
|
10.4*
|
Form of Stock Option Agreement under the 2007 Directors’ Plan (incorporated by reference to the Corporation’s Quarterly Report on Form 10-Q as filed with the SEC on January 9, 2008, SEC File No. 000-19860) (the “November 30, 2007 10-Q”) and the Form of Stock Option Agreement under the 2007 Directors’ Plan, effective as of September 19, 2012 (incorporated by reference to the November 30, 2012 10-Q).
|
|
|
10.5*
|
Form of Restricted Stock Unit Agreement under the 2007 Directors’ Plan effective as of September 23, 2008 (incorporated by reference to the 2009 10-K) and the Form of Restricted Stock Unit Agreement, effective as of September 19, 2012 (incorporated by reference to the November 30, 2012 10-Q).
|
|
|
10.6*
|
Scholastic Corporation 2001 Stock Incentive Plan, amended and restated as of July 21, 2009 (the “2001 Plan”) (incorporated by reference to the Corporation’s Quarterly Report on Form 10-Q as filed with the SEC on October 10, 2009, SEC File No. 000-19860) (the “August 31, 2009 10-Q”), and Amendment No. 1 to the Amended and Restated Scholastic Corporation 2001 Stock Incentive Plan (incorporated by reference to the 2013 10-K).
|
|
|
10.7*
|
Form of Non-Qualified Stock Option Agreement under the 2001 Plan (incorporated by reference to the August 31, 2009 10-Q).
|
|
|
10.8*
|
Scholastic Corporation 2004 Class A Stock Incentive Plan (the “Class A Plan”) (incorporated by reference to Appendix A to the Corporation’s definitive Proxy Statement as filed with the SEC on August 2, 2004, SEC File No. 000-19860), Amendment No. 1, effective as of May 25, 2006 (incorporated by reference to the 2006 10-K), Amendment No. 2, dated July 18, 2006 (incorporated by reference to Appendix C to the Corporation’s definitive Proxy Statement as filed with the SEC on August 22, 2006, SEC File No. 000-19860), and Amendment No. 3, dated as of March 20, 2007 (incorporated by reference to the February 28, 2007 10-Q).
|
|
|
10.9*
|
Form of Class A Option Agreement under the Class A Plan (incorporated by reference to the Corporation’s Annual Report on Form 10-K as filed with the SEC on August 8, 2005, SEC File No. 000-19860).
|
|
|
10.10*
|
Scholastic Corporation 2011 Stock Incentive Plan (incorporated by reference to the November 30, 2011 10-Q) Amendment No. 1 to the Scholastic Corporation 2011 Stock Incentive Plan (incorporated by reference to the 2013 10-K) and Amendment No. 2 to the Scholastic Corporation 2011 Stock Incentive Plan (incorporated by reference to the Corporation's Quarterly Report on Form 10-Q as filed with the SEC on December 22, 2014, SEC File No. 000-19860).
|
|
|
10.11*
|
Form of Restricted Stock Unit Agreement under the Scholastic Corporation 2011 Stock Incentive Plan (incorporated by reference to the November 30, 2011 10-Q).
|
|
|
10.12*
|
Form of Stock Option Agreement under the Scholastic Corporation 2011 Stock Incentive Plan (incorporated by reference to the November 30, 2011 10-Q).
|
|
|
10.13*
|
Severance Agreement, dated September 26, 2013, between Scholastic Corporation and Maureen O’Connell (incorporated by reference to the Corporation’s Form 10-Q as filed with the SEC on December 19, 2013, SEC File No. 000-19860) (the “November 30, 2013 Form 10-Q”).
|
|
|
10.14*
|
Scholastic Corporation 2013 Executive Performance Incentive Plan (incorporated by reference to the November 30, 2013 Form 10-Q).
|
'10.15
|
Credit Agreement, dated as of January 5, 2017, among the Corporation and Scholastic Inc., as borrowers, the Initial Lenders named therein, Bank of America, N.A., as administrative agent, Merrill Lynch, Pierce, Fenner and Smith Incorporated and Well Fargo Securities, LLC as joint lead arrangers and joint bookrunners, Wells Fargo N.A., Capital One N.A., Fifth Third Bank and HSBC Bank USA, N.A., as syndicate agents, and Branch Banking and Trust Company, as documentation agent.
|
|
|
21
|
Subsidiaries of the Corporation, as of May 31, 2017.
|
|
|
23
|
Consent of Ernst & Young LLP.
|
|
|
31.1
|
Certification of the Chief Executive Officer of the Corporation filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2
|
Certification of the Chief Financial Officer of the Corporation filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32
|
Certifications of the Chief Executive Officer and the Chief Financial Officer of the Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
101.INS
|
XBRL Instance Document **
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document **
|
|
|
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 **
|
|
|
*
|
The referenced exhibit is a management contract or compensation plan or arrangement described in Item 601(b) (10) (iii) of Regulation S-K.
|
|
|
**
|
In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Annual Report on Form 10-K shall be deemed to be “furnished” and not “filed.”
|
Dated:
|
July 24, 2017
|
SCHOLASTIC CORPORATION
|
|
|
|
|
|
By: /s/ Richard Robinson
|
|
|
Richard Robinson, Chairman of the Board,
President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Richard Robinson
|
|
Chairman of the Board, President and
Chief Executive Officer and Director
(principal executive officer)
|
|
July 24, 2017
|
Richard Robinson
|
|
|
||
|
|
|
|
|
/s/ Maureen O’Connell
|
|
Executive Vice President, Chief Administrative
Officer and Chief Financial Officer
(principal financial officer)
|
|
July 24, 2017
|
Maureen O’Connell
|
|
|
||
|
|
|
|
|
/s/ Kenneth Cleary
|
|
Senior Vice President, Chief Accounting Officer
(principal accounting officer)
|
|
July 24, 2017
|
Kenneth Cleary
|
|
|
||
|
|
|
|
|
/s/ Andrés Alonso
|
|
Director
|
|
July 24, 2017
|
Andrés Alonso
|
|
|
|
|
|
|
|
|
|
/s/ James W. Barge
|
|
Director
|
|
July 24, 2017
|
James W. Barge
|
|
|
||
|
|
|
|
|
/s/ Marianne Caponnetto
|
|
Director
|
|
July 24, 2017
|
Marianne Caponnetto
|
|
|
||
|
|
|
|
|
/s/ John L. Davies
|
|
Director
|
|
July 24, 2017
|
John L. Davies
|
|
|
||
|
|
|
|
|
/s/ Andrew S. Hedden
|
|
Director
|
|
July 24, 2017
|
Andrew S. Hedden
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Peter Warwick
|
|
Director
|
|
July 24, 2017
|
Peter Warwick
|
|
|
||
|
|
|
|
|
/s/ Margaret A. Williams
|
|
Director
|
|
July 24, 2017
|
Margaret A. Williams
|
|
|
||
|
|
|
|
|
/s/ David J. Young
|
|
Director
|
|
July 24, 2017
|
David J. Young
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
|
|||||||
|
|
|
|
|
|
|
Years ended May 31,
|
|
||||||||
|
Balance at Beginning
of Year
|
|
Expensed
|
|
Write-Offs and Other
|
|
Balance at End of Year
|
|||||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Allowance for doubtful accounts
|
$
|
16.1
|
|
|
$
|
11.0
|
|
|
$
|
13.4
|
|
|
|
$
|
13.7
|
|
Reserve for returns
|
32.1
|
|
|
80.4
|
|
|
76.2
|
|
(1)
|
|
36.3
|
|
||||
Reserves for obsolescence
|
73.9
|
|
|
16.0
|
|
|
18.0
|
|
|
|
71.9
|
|
||||
Reserve for royalty advances
|
90.1
|
|
|
4.3
|
|
|
0.6
|
|
|
|
93.8
|
|
||||
2016
|
|
|
|
|
|
|
|
|
|
|||||||
Allowance for doubtful accounts
|
$
|
14.9
|
|
|
$
|
12.3
|
|
|
$
|
11.1
|
|
|
|
$
|
16.1
|
|
Reserve for returns
|
27.9
|
|
|
56.6
|
|
|
52.4
|
|
(1)
|
|
32.1
|
|
||||
Reserves for obsolescence
|
81.1
|
|
|
12.0
|
|
|
19.2
|
|
|
|
73.9
|
|
||||
Reserve for royalty advances
|
86.8
|
|
|
4.1
|
|
|
0.8
|
|
|
|
90.1
|
|
||||
2015
|
|
|
|
|
|
|
|
|
|
|||||||
Allowance for doubtful accounts
|
$
|
15.6
|
|
|
$
|
10.6
|
|
|
$
|
11.3
|
|
|
|
$
|
14.9
|
|
Reserve for returns
|
27.0
|
|
|
53.9
|
|
|
53.0
|
|
(1)
|
|
27.9
|
|
||||
Reserves for obsolescence
|
81.8
|
|
|
21.7
|
|
|
22.4
|
|
|
|
81.1
|
|
||||
Reserve for royalty advances
|
85.3
|
|
|
3.6
|
|
|
2.1
|
|
|
|
86.8
|
|
(1)
|
Represents actual returns charged to the reserve
|
ARTICLE I
|
DEFINITIONS AND ACCOUNTING TERMS 1
|
SECTION 1.01
|
Certain Defined Terms 1
|
SECTION 1.02
|
Computation of Time Periods; Other Interpretive Provisions 16
|
SECTION 1.03
|
Accounting Terms 17
|
SECTION 1.04
|
Letter of Credit Amounts 18
|
ARTICLE II
|
AMOUNTS AND TERMS OF THE ADVANCES 18
|
SECTION 2.01
|
Commitments 18
|
SECTION 2.02
|
Making the Revolving Credit Advances 18
|
SECTION 2.03
|
[Reserved.] 20
|
SECTION 2.04
|
Swingline Advances 20
|
SECTION 2.05
|
Termination or Reduction of the Commitments 22
|
SECTION 2.06
|
Repayment of Revolving Credit Advances, Swingline Advances and Letter of Credit Advances; Evidence of Debt 23
|
SECTION 2.07
|
Interest on Revolving Credit Advances, Swingline Advances and Letter of Credit Advances 23
|
SECTION 2.08
|
Interest Rate Determination 24
|
SECTION 2.09
|
Optional Conversion of Revolving Credit Advances 25
|
SECTION 2.10
|
Prepayments of Revolving Credit Advances 26
|
SECTION 2.11
|
Increased Costs; Reserves on Eurodollar Rate Advances 27
|
SECTION 2.12
|
Illegality 28
|
SECTION 2.13
|
Payments and Computations 29
|
SECTION 2.14
|
Taxes 30
|
SECTION 2.15
|
Sharing of Payments, Etc 35
|
SECTION 2.16
|
Letters of Credit 35
|
SECTION 2.17
|
Use of Proceeds 43
|
SECTION 2.18
|
Increase in the Aggregate Commitments 43
|
SECTION 2.19
|
Obligations and Communications of the Borrowers 45
|
SECTION 2.20
|
Subrogation and Contribution 45
|
SECTION 2.21
|
Fees 45
|
SECTION 2.22
|
Defaulting Lenders 46
|
SECTION 2.23
|
Mitigation Obligations; Replacement of Lenders 48
|
SECTION 2.24
|
Cash Collateral 48
|
ARTICLE III
|
CONDITIONS TO EFFECTIVENESS AND LENDING 49
|
SECTION 3.01
|
Conditions Precedent to Effectiveness 49
|
SECTION 3.02
|
Conditions Precedent to each Borrowing, each Issuance and Renewal of Letters of Credit and each Increase Date 51
|
SECTION 3.03
|
Determinations Under Section 3.01 51
|
ARTICLE IV
|
REPRESENTATIONS AND WARRANTIES 51
|
SECTION 4.01
|
Representations and Warranties of the Borrowers 51
|
ARTICLE V
|
COVENANTS OF THE BORROWERS 53
|
SECTION 5.01
|
Affirmative Covenants 53
|
SECTION 5.02
|
Negative Covenants 56
|
SECTION 5.03
|
Financial Covenants 59
|
ARTICLE VI
|
EVENTS OF DEFAULT 59
|
SECTION 6.01
|
Events of Default 59
|
SECTION 6.02
|
Application of Funds 61
|
ARTICLE VII
|
THE AGENT 62
|
SECTION 7.01
|
Appointment and Authority 62
|
SECTION 7.02
|
Rights as a Lender 63
|
SECTION 7.03
|
Exculpatory Provisions 63
|
SECTION 7.04
|
Reliance by Agent 64
|
SECTION 7.05
|
Delegation of Duties 64
|
SECTION 7.06
|
Resignation of Agent 64
|
SECTION 7.07
|
Non-Reliance on Agent and Other Lenders 66
|
SECTION 7.08
|
No Other Duties, Etc 66
|
SECTION 7.09
|
Agent May File Proofs of Claim 66
|
ARTICLE VIII
|
MISCELLANEOUS 67
|
SECTION 8.01
|
Amendments, Etc 67
|
SECTION 8.02
|
Notices, Etc 68
|
SECTION 8.03
|
No Waiver; Remedies; Enforcement 69
|
SECTION 8.04
|
Costs and Expenses; Indemnity 70
|
SECTION 8.05
|
Right of Set-off 72
|
SECTION 8.06
|
Binding Effect 72
|
SECTION 8.07
|
Assignments and Participations 72
|
SECTION 8.08
|
Treatment of Certain Information; Confidentiality 77
|
SECTION 8.09
|
No Advisory or Fiduciary Responsibility 78
|
SECTION 8.10
|
Governing Law; Jurisdiction, Etc 78
|
SECTION 8.11
|
Execution in Counterparts; Electronic Execution 79
|
SECTION 8.12
|
Waiver of Jury Trial 80
|
SECTION 8.13
|
USA Patriot Act 80
|
SECTION 8.14
|
Replacement of Lenders 80
|
SECTION 8.15
|
Survival of Representations and Warranties 81
|
SECTION 8.16
|
Payments Set Aside 81
|
SECTION 8.17
|
Acknowledgement and Consent to Bail-In of EEA Financial Institutions 81
|
Schedule 1.01(a)
|
– Certain Addresses for Notices
|
Schedule 2.16(h)
|
– Existing Letter of Credit
|
Schedule 4.01(i)
|
– Subsidiaries
|
Schedule 5.02(a)
|
– Existing Liens
|
Exhibit A
|
– Form of Revolving Credit Note
|
Exhibit B-1
|
– Form of Notice of Revolving Credit Borrowing
|
Exhibit B-2
|
– Form of Notice of Swingline Borrowing
|
Exhibit C
|
– Form of Assignment and Assumption
|
Exhibit D
|
– Form of Opinion of Counsel for the Borrowers
|
Exhibit E
|
– Form of Financial Covenants Compliance Certificate
|
Exhibit F
|
– List of Closing Documents
|
Exhibit G
|
– Administrative Questionnaire
|
Consolidated Debt Ratio
|
Eurodollar Spread
|
Base Rate Spread
|
Facility Fee Rate
|
Level 1
Less than 0.20 to 1.0 |
1.175%
|
0.175%
|
0.20%
|
Level 2
Greater than or equal to 0.20 to 1.0 but less than 0.30 to 1.0 |
1.25%
|
0.25%
|
0.25%
|
Level 3 Greater than or equal to 0.30 to 1.0 but less than 0.40 to 1.0
|
1.325%
|
0.325%
|
0.30%
|
Level 4 Greater than or equal to 0.40 to 1.0 but less than 0.50 to 1.0
|
1.40%
|
0.40%
|
0.35%
|
Level 5 Greater than or equal to 0.50 to 1.0
|
1.60%
|
0.60%
|
0.40%
|
By:
/s/ Erik M. Truette
|
Name: Erik M. Truette
|
By:
/s/ Jana L. Baker
|
Name: Jana L. Baker
|
By:
/s/ Cora Phelan
|
Name: Cora Phelan
|
By:
/s/ Keith Hughes
|
Name: Keith Hughes
|
By:
/s/ Clare Freimuth
|
Name: Clare Freimuth
|
By:
/s/ Craig W. Trautwein
|
Name: Craig Trautwein
|
By:
/s/ Varun Gupta
|
Name: Varun Gupta
|
By:
/s/ Danny K. Sung
|
Name: Danny K. Sung
|
By:
/s/ Robert Moravec
|
Name: Robert Moravec
|
By:
/s/ William A. Demilt Jr.
|
Name: William A Demilt Jr.
|
By:
/s/ Sneha Manohar
|
|
Name of Initial Lender
|
Revolving Credit
Commitment
|
|
|
Bank of America, N.A.
|
$71,000,000.00
|
Wells Fargo Bank, National Association
|
$65,000,000.00
|
Branch Banking and Trust Company
|
$60,000,000.00
|
Fifth Third Bank
|
$43,000,000.00
|
Capital One National Association
|
$43,000,000.00
|
HSBC Bank USA, National Association
|
$33,000,000.00
|
The Governor and Company of the Bank of Ireland
|
$25,000,000.00
|
Citibank, N.A.
|
$25,000,000.00
|
HSBC Bank plc
|
$10,000,000.00
|
|
|
Total
|
$375,000,000.00
|
Borrowers:
Scholastic Corporation 557 Broadway
New York, New York 10012
Attention: Gil A. Dickoff, Senior Vice President and Treasurer
Facsimile: (212) 343-6685
Email: GDickoff@scholastic.com
Scholastic Inc. 557 Broadway
New York, New York 10012
Attention: Gil A. Dickoff, Senior Vice President and Treasurer
Facsimile: (212) 343-6685
Email: GDickoff@scholastic.com
And, in the case of an Event of Default, with a copy to:
Scholastic Corporation 557 Broadway
New York, New York 10012 Attention: General Counsel Facsimile: (212) 343-6685
Email: AHedden@scholastic.com
And to:
Scholastic Inc. 557 Broadway
New York, New York 10012 Attention: General Counsel Facsimile: (212) 343-6685
Email: AHedden@scholastic.com
|
Administrative Agent:
For payments and Requests for Credit Extensions
Bank of America, N.A. 101 N. Tryon Street Charlotte, NC 28255-0001 NC1-001-05-46
Attn: Rita Quesada-Rodgers Phone: (980) 386-9371
Email: rita.quesada-rodgers@ba
ml.com
Fax Number: (704) 409-0023
Account No.: 1366072250600
Ref: Scholastic Corporation ABA# 026009593
Other Notices for Administrative Agent
Bank of America, N.A. Agency Management 900 W. Trade Street Charlotte, NC 28255
Phone: (980) 386-2359
Fax Number: (704) 409-0883 Attention: Cynthia Jordan
|
|
|
L/C Issuer:
Bank of America, N.A. Trade Operations
Mail Code: PA6-580-02-30
1 Fleet Way
Scranton, PA 18507
Phone: (570) 496-9619
|
Swingline Lender:
Bank of America, N.A. 101 N. Tryon Street Charlotte, NC 28255-0001 NC1-001-05-46
Attn: Rita Quesada-Rodgers Phone: (980) 386-9371
|
Type
|
Beneficiary
|
Amount
|
Standby (Insurance Related)
|
State of New York as liquidator of Atlantic Mutual
|
$390,000
1
|
Scholastic Inc.
|
New York
|
Scholastic Book Clubs, Inc. Missouri
|
|
Scholastic Operations Group L.L.C. Delaware
|
|
Scholastic Entertainment Inc. New York
|
|
SE Distribution Inc. Delaware
|
|
524 Films L.L.C. Delaware
|
|
Listen Inn LLC (formerly Retroranch L.L.C.) Delaware
|
|
Scholastic Interactive LLC New York
|
|
Storyflix Inc New York
|
|
Scholastic UK Group L.L.C. Delaware
|
|
Scholastic UK Ltd. England
|
|
Scholastic Book Clubs Ltd. (formerly Red House England
|
|
Scholastic Ltd. England
|
|
Scholastic Ireland Ltd. Ireland
|
|
Troubadour Ltd. England
|
|
Weston Woods Studios, Inc. Delaware
|
|
Georgetown Studios, Inc. Connecticut
|
|
Children’s Music Library, Inc. New York
|
|
The Scholastic Store, Inc. New York
|
|
Scholastic Interactive Xchange, Inc. Delaware
|
|
Scholastic Distribution Services L.L.C. Delaware
|
|
Soup2Nuts Inc. Delaware
|
|
RetroRanch Inc. (formerly Science Court Inc.) Delaware
|
|
Klutz California
|
|
Sandvik Publishing Ltd. Nevada
|
|
Teacher’s Friend Publications, Inc. California
|
|
Scholastic Export Inc. Delaware
|
|
Learned Realty LLC New York
|
|
Scholastic Book Fairs, Inc. Delaware
|
|
BTBCAT, INC. Delaware
|
|
Scholastic 557 Broadway, LLC Delaware
|
|
Scholastic Storia Inc. Delaware
|
|
Scholastic Australia Pty. Ltd. Australia
|
|
Bookshelf Publishing Australia Pty. Ltd. Australia
|
|
Troll School Book Clubs and Fairs Australia Pty. Ltd. Australia
|
|
Iread Pty Ltd. Australia
|
|
Oldmeadow Booksellers (Aust.) Pty. Ltd. Australia
|
|
Scholastic Canada Ltd. Canada
|
|
Scholastic Bookfairs Canada Inc. Canada
|
|
Scholastic Hong Kong Limited Hong Kong
|
|
Scholastic India Private Limited
1
India
|
|
Scholastic Mexico S. de R. L. de C.V. Mexico
|
|
Scholastic New Zealand Ltd. New Zealand
|
|
Scholastic Argentina S.R.L. Argentina
|
|
Scholastic Education Information Consulting (Shanghai) Co., China
Ltd.
|
|
Scholastic International IT Support Centre Private Limited
2
India
|
|
Scholastic Education International (Singapore) Private Limited Singapore
|
|
Grolier Incorporated Delaware
|
|
Scholastic at Home Inc. (formerly Grolier Enterprises Inc.) Delaware
|
1
|
1% owned by Scholastic Export Inc.
|
2
|
1% owned by Scholastic Export Inc.
|
Scholastic Distribution Services L.L.P
3
|
Delaware
|
Grolier Interactive Inc. Delaware
|
|
Scholastic Library Publishing, Inc. Delaware
|
|
Grolier Reading Programs Inc. Delaware
|
|
Grolier (New York) Incorporated Delaware
|
|
Orchard Books, Inc. New York
|
|
Publishers World Trade Corporation Delaware
|
|
Grolier International, Inc. Delaware
|
|
Grolier Overseas Incorporated Delaware
|
|
Grolier International Finance Inc. (Philippines)
4
Philippines
|
|
Grolier (Malaysia) SDN BHD Malaysia
|
|
Grolier International Private Limited (India) India
|
|
Grolier Direct Marketing Pty. Ltd. Australia
|
|
Grolier Limited (Canada) Canada
|
|
Caribe Grolier, Inc. Puerto Rico
|
|
Grolier Credit Services (U.K.) Limited England
|
|
Grolier International Limited (U.K.) England
|
|
Grolier Limited England
|
|
Transtutor Limited England
|
|
!
|
|
Waverley House Limited England
|
3
|
60% owned
|
Holder
|
Debtor
|
Underlying Agreement
|
UCC Financing Statements
|
De Lage Landen Financial Services, Inc.
|
Scholastic Corporation
|
Equipment Leasing Transaction
|
Delaware UCC #2012
5011392
|
CIT Finance LLC
|
Scholastic Corporation
|
Equipment Leasing Transaction
|
Delaware UCC # 20142279768
|
Konica Minolta Premier Finance
|
Scholastic Inc.
|
Premier Lease Agreement No. 7716719-001
|
New York UCC #
201510296216160
(continution of UCC # 201103295319241)
|
IBM Credit LLC
|
Scholastic Inc.
|
IBM Credit Agreement No. H26907
|
New York UCC # 201210016100212
|
Konica Minolta Business Solutions, USA INC
|
Scholastic Inc.
|
Lease Agreement
|
New York UCC # 201303215296718
|
IBM Credit LLC
|
Scholastic Inc.
|
IBM Credit Agreement No. H45758
|
New York UCC # 201307175768263
|
Connext Financial /Bank of the West
|
Scholastic Inc.
|
Lease Agreement No. 002996-001
|
New York UCC # 201309185993634 (assigned to Bank of the West) by UCC
# 201310016043577)
|
Element Financial Corp.
|
Scholastic Inc.
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Equipment Leasing Konica KC554e including attachments and accessories
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New York UCC # 201503195280182
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Date
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Amount of Advance
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Amount of Principal Paid or Prepaid
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Unpaid Principal Balance
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Notation Made By
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(iii)
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The aggregate amount of the Proposed Revolving Credit Borrowing is
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By
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Title:
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(ii)
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The aggregate amount of the proposed Swingline Advance is
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By
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Title:
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1.
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Assignor[s]:
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2.
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Assignee[s]:
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3.
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Borrowers: Scholastic Inc., a New York corporation, and Scholastic Corporation, a Delaware corporation
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4.
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Agent: Bank of America, N.A., as the administrative agent under the Credit Agreement
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5.
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Credit Agreement: Credit Agreement, dated as of January 5, 2017 among the Borrowers, the Lenders and Bank of America, N.A., as Agent, Lender, Issuing Bank, and Swingline Lender
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6.
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Assigned Interest:
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3
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List each Assignee, as appropriate.
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5
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Amounts in this column and in the column immediately to the right to be adjusted by the
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8
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To be added only if the consent of the Agent is required by the terms of the Credit Agreement.
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2.
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Payments. From and after the Effective Date, the Agent shall make all payments in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and other amounts) to [the][the relevant] Assignor for amounts which have accrued to but excluding the Effective Date and to [the][the relevant] Assignee for amounts which have accrued from and after the Effective Date.
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3.
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General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by fax transmission or other electronic mail transmission (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of New York.
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(b)
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no event has occurred and is continuing that constitutes a Default; and
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1.
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Credit Agreement
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2.
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Revolving Credit Notes in favor of each Lender
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3.
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Secretary’s Certificate of each Borrower attaching
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(a)
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Recently certified certificate of incorporation
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(b)
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Bylaws
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(c)
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Resolutions
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(d)
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Certificate of Good Standing
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(e)
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Certificate of Incumbency
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4.
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Officer’s Closing Certificate
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5.
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Legal Opinion
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Scholastic Inc.
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New York
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Scholastic Book Clubs, Inc.
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Missouri
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Scholastic Operations Group L.L.C.
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Delaware
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Scholastic Entertainment Inc.
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New York
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SE Distribution Inc.
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Delaware
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524 Films L.L.C.
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Delaware
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Listen Inn LLC (formerly Retroranch L.L.C.)
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Delaware
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Scholastic Interactive LLC
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New York
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Scholastic UK Group L.L.C.
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Delaware
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Scholastic UK Ltd.
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England
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Scholastic Book Clubs Ltd. (formerly Red House
Books Ltd.)
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England
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Scholastic Ltd.
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England
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Scholastic Ireland Ltd.
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Ireland
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Troubadour Ltd
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England
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Chicken House Publishing Ltd.
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England
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Weston Woods Studios, Inc.
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Delaware
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Georgetown Studios, Inc.
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Connecticut
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Children’s Music Library, Inc.
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New York
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The Scholastic Store, Inc.
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New York
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Scholastic Interactive Xchange, Inc.
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Delaware
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Scholastic Distribution Services L.L.C.
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Delaware
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Soup2Nuts Inc.
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Delaware
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RetroRanch Inc. (formerly Science Court Inc.)
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Delaware
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Klutz
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California
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Teacher’s Friend Publications, Inc.
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California
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Scholastic Export Inc.
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Delaware
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Learned Realty LLC
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New York
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Scholastic Book Fairs, Inc.
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Delaware
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Scholastic 557 Broadway, LLC
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Delaware
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Scholastic Storia Inc.
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Delaware
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Scholastic Australia Pty. Ltd.
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Australia
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Iread Pty Ltd.
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Australia
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Oldmeadow Booksellers (Aust.) Pty. Ltd.
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Australia
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Scholastic Canada Ltd.
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Canada
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Scholastic Bookfairs Canada Inc.
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Canada
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Ooka Island Inc.
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Canada
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Scholastic India Private Limited
1
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India
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Scholastic Mexico S. de R. L. de C.V.
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Mexico
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Scholastic New Zealand Ltd.
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New Zealand
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Scholastic Argentina S.R.L.
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Argentina
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Scholastic Education Information Consulting (Shanghai) Co., Ltd.
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China
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Scholastic International IT Support Centre Private Limited
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India
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Scholastic Education International (Singapore) Private Limited
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Singapore
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Grolier Incorporated
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Delaware
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Scholastic at Home Inc. (formerly Grolier Enterprises Inc.)
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Delaware
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Scholastic Distribution Services L.L.P
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Delaware
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Scholastic Library Publishing, Inc.
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Delaware
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Orchard Books, Inc.
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New York
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Grolier International, Inc.
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Delaware
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Grolier International Finance Inc. (Philippines)
2
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Philippines
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Grolier (Malaysia) SDN BHD
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Malaysia
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Grolier International Private Limited (India)
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India
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Grolier Overseas Incorporated
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Delaware
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Grolier Direct Marketing Pty. Ltd.
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Australia
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Grolier Limited (Canada)
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Canada
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Caribe Grolier, Inc.
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Puerto Rico
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Grolier Credit Services (U.K.) Limited
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England
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Grolier International Limited (U.K.)
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England
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Grolier Limited
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England
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Transtutor Limited
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England
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Just Books! Limited
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England
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Waverley House Limited
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England
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(1)
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Registration Statements on Form S-8 (File Nos. 333-62297 and 333-110302) pertaining to the Scholastic Corporation 1997 Outside Director's Stock Option Plan
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(2)
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Registration Statements on Form S-8 (File Nos. 333-68181, 333-159589, 333-110301 and 333-214036) pertaining to the Scholastic Corporation Employee Stock Purchase Plan
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(3)
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Registration Statements on Form S-8 (File Nos. 33-48655, 33-69058 and 33-91090) pertaining to the Scholastic Corporation 401(k) Savings and Retirement Plan
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(4)
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Registration Statements on Form S-8 (File Nos. 333-68185 and 333-178243) pertaining to the Scholastic Corporation Management Stock Purchase Plan
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(5)
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Registration Statements on Form S-8 (File Nos. 333-77010 and 333-148599) pertaining to the Scholastic Corporation 2001 Stock Incentive Plan
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(6)
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Registration Statement on Form S-8 (File No. 333-148600) pertaining to the Scholastic Corporation 2007 Outside Directors Stock Incentive Plan, and
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(7)
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Registration Statements on Form S-8 (File Nos. 333-178246 and 333-200539) pertaining to the Scholastic Corporation 2011 Stock Incentive Plan
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1.
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I have reviewed this Annual Report on Form 10-K of Scholastic Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Richard Robinson
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Richard Robinson
Chairman of the Board,
President and Chief Executive Officer
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1.
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I have reviewed this Annual Report on Form 10-K of Scholastic Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Maureen O’Connell
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Maureen O’Connell
Executive Vice President, Chief Administrative Officer and Chief Financial Officer
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1.
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The Company’s Annual Report on Form 10-K for the year ended May 31, 2017 (the “Form 10-K”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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2.
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Information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Dated: July 24, 2017
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/s/ Richard Robinson
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Richard Robinson
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Chief Executive Officer
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Dated: July 24, 2017
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/s/ Maureen O’Connell
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Maureen O’Connell
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Chief Financial Officer
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