NEW YORK, March 23, 2017 /PRNewswire/ -- Scholastic
Corporation (NASDAQ: SCHL), the global children's publishing,
education and media company, today reported financial results for
the Company's fiscal 2017 third quarter ended February 28, 2017.
Revenue as reported in the third quarter was $336.2 million, compared to $366.0 million a year ago, a decrease of 8%
versus the prior year period. The operating loss for the third
quarter of fiscal year 2017 increased to $23.6 million compared to an operating loss of
$16.4 million in the prior year
period. The third quarter is a lower revenue quarter for the
Company in which it typically records a loss.
The Company reported a third quarter loss per share from
continuing operations of $0.45,
versus a loss of $0.21 in the prior
year period. The results for the third quarter of 2017 and 2016
reflect one-time expenses of $0.09
per share and $0.15 per share,
respectively. Excluding these one-time items, third quarter loss
per share from continuing operations was $0.36 versus $0.06
in the prior year period.
The Company was able to largely offset the profit impact of
lower revenues in book clubs and trade by planned cost reductions
across the business. Internationally, sales gains in Asia and the export business were more than
offset by lower revenues in the Company's major markets, primarily
the result of the planned exit from a software distribution
business in Australia. Increased
overhead costs in the quarter were mainly the result of the
Company's investments in strategic technology systems and new
enterprise applications to manage marketing and web content,
e-commerce, digital applications, analytics, product and customer
data management, supply chain, and new financial systems.
"In the third quarter, we controlled costs effectively,
protecting profits despite reduced sales in clubs, while trade
sales returned to more normal levels after an exceptional first
half driven by new Harry Potter
publishing. Our program to better match our fair resources to each
school's size and interests resulted in a significant improvement
in the seasonal operating loss in fairs. Results in Education were
on track for the year and we are sharply focused on the fourth
quarter sales of comprehensive core curriculum literacy solutions,
which are proving to be preferred over traditional textbooks by
many teachers and districts," commented Richard Robinson, Chairman, President and Chief
Executive Officer. "Our multi-year strategic investment plan in
transformative technology systems is progressing and has resulted
in higher overhead expense in the quarter, as anticipated. These
investments in new enterprise systems and improved processes will
affect every aspect of Scholastic's business, lowering costs and
enabling the use of data-driven insights to develop closer
relationships with our individual customers, schools and districts.
As we are making these important strategic investments, we
also remain on track to deliver positive free cash flow for the
thirteenth consecutive year, excluding taxes paid last year on the
sale of the educational technology business."
Cash Flow and Cash Position
Net cash provided by operating activities was $39.2 million in the current fiscal quarter
compared to $26.4 million in the
third quarter of fiscal 2016, an increase of $12.8 million. During the third quarter, the
Company generated free cash flow (as defined in the accompanying
tables) of $16.6 million, compared to
$9.6 million in the prior year
period. At quarter-end, cash and cash equivalents exceeded the
Company's total debt by $456.0
million, as compared to $343.7
million a year ago.
The Company distributed $5.2
million in dividends during the third quarter.
One-Time Items
Non-recurring items reflected in the Company's pre-tax results
for the third quarter included $4.4
million for a one-time severance charge associated with the
Company's cost reduction programs and $0.5
million in exit costs related to the wind-down of its
software distribution business in Australia. Non-recurring items reflected in
the prior year period's pre-tax results totaled $8.3 million and included the non-cash write-down
of certain legacy prepublication assets for $6.9 million in the Company's Education segment,
as well as $1.4 million of one-time
severance expense associated with the Company's cost reduction
programs.
Fiscal 2017 Outlook Affirmed
Scholastic affirmed its fiscal 2017 outlook for total revenue of
$1.7 to $1.8 billion and earnings per
diluted share from continuing operations in the range of
$1.60 to $1.70, excluding one-time
items. The Company continues to expect free cash flow in the range
of $40 to $50 million.
Third Quarter Results
Children's Book Publishing and Distribution. Segment
revenue in the third quarter was $199.0
million, compared to $219.8
million in the prior year period, a decrease of $20.8 million, or 9%. The decline in revenue
resulted from lower orders and reduced sales of media titles in
clubs, as well as a significant decline in adult coloring book
sales in trade and, as planned, fewer book fairs held in the
quarter. Overall segment operating income was $6.3 million, versus $8.2
million in the prior year period, a decline of $1.9 million. The decline in operating income was
primarily the result of the lower revenues in the quarter and the
expected impact of wage improvement programs at the Company's
warehouse, distribution and customer service centers, partially
offset by lower catalog and promotion costs in book clubs and
productivity improvements in book fairs fulfillment operations.
Top-selling titles in the quarter included Dog Man
Unleashed by Dav Pilkey,
along with the original Dog Man book released earlier in the
fall, and Wings of Fire: Talons of Power, the ninth book in
the series.
Education. Segment revenue in the quarter fell 6% to
$60.1 million, compared to
$63.9 million in the prior year
period, primarily as a result of lower sales of classroom books,
where the pipeline has shifted to the fourth quarter, partially
offset by higher professional development and services revenue.
Segment operating income was $3.5
million, compared to an operating loss of $2.4 million in the prior year period, which
included non-cash pre-tax charges of $6.9
million for the write-down of certain legacy prepublication
assets. Excluding these one-time charges in the prior year period,
operating income fell by $1.0
million. The lower profits were mainly attributable to lower
revenues, partially offset by lower digital manufacturing
costs.
International. Segment revenue in the third quarter was
$77.1 million, compared to
$82.3 million in the prior year
period. Excluding the foreign exchange translation impact of
$1.3 million in the quarter, revenue
was $78.4 million, a decrease of
$3.9 million, or 5%. Lower sales in
the Company's major markets, where the Company's exit from a low
margin software distribution business in Australia reduced revenues by $4.9 million in the quarter, were partially
offset by revenue gains in Asia
and export. The segment recorded an operating loss in the quarter
of $3.9 million, including a one-time
pre-tax charge of $0.5 million
related to the wind-down of the software distribution business in
Australia, compared to an
operating loss of $1.7 million in the
prior year period, which included $0.2
million of one-time expenses for restructuring severance.
Excluding these one-time charges in the prior year period,
operating income fell by $1.9 million
as a result of the lower sales, as well as higher royalty and bad
debt expense in Asia.
Other Financial Results. Corporate overhead in the third
quarter was $25.1 million, excluding
one-time items of $4.4 million,
compared to $19.3 million the prior
year period, after excluding $1.2
million in one-time items. The increase in corporate
overhead charges in the current quarter was primarily the result of
higher spending on technology transformations and higher
facilities-related spend, both as anticipated.
As previously announced, the Company's Board of Directors
declared a quarterly cash dividend of $0.15 per share on the Company's Class A and
Common Stock for the fourth quarter of fiscal 2017. The dividend is
payable on June 15, 2017 to
shareholders of record as of the close of business on April 28, 2017.
Also as previously announced during the quarter, the Company
entered into a new 5-year $375
million committed credit agreement with a syndicate of banks
in place of a credit agreement that was set to expire in
December 2017. The new agreement has
substantially similar terms and conditions but allows for an
increase in the Company's capacity for dividends and other
distributions in respect of its capital stock.
Capital Investment Update
The Company is in the second year of a previously announced
multi-year technology investment program, involving the replacement
of core systems, to effectively leverage the Company's unique
market position and distribution channels. The Company has
successfully shifted business applications out of data centers and
into the Cloud, replaced e-commerce systems, and implemented new
foundational services technology. Investments in customer data and
analytics, and the consolidation of product master data, are on
track, as well as the merging of discrete web content management
systems into a single platform. In addition, the design work has
begun on a new ERP platform to manage the Company's financial and
supply chain systems globally. The technology investments are
designed to enable the Company to better utilize data to go to
market, simplify and standardize business processes across
divisions, communicate with customers, and share in common
investments for the benefit of all business groups.
The Company's investment in its SoHo headquarters building is
progressing on plan as it constructs new premium retail space to
augment future rental income streams and increase the capacity of
the offices to accommodate all New
York staff, reducing its reliance on costly external leased
space. Negotiations with high credit quality retail tenants are
underway and the Company expects to be in a position to announce a
15-year lease with a valued retail tenant for its new 557
Broadway-facing retail space within the next few months.
Year-to-Date Results
For the first nine months of fiscal 2017, revenue was
$1,242.0 million, compared to
$1,159.0 million in the prior year
period, an increase of $83.0 million,
or 7%. Year-to-date sales have been adversely impacted by
$6.1 million in translation losses as
a result of the strong U.S. dollar. Excluding the effect of foreign
exchange, revenues increased 8% versus the prior year period.
Earnings per diluted share from continuing operations in the first
nine months of the fiscal year were $0.36, compared to $0.26 a year ago, including one-time charges of
$0.15 and $0.22 per diluted share, respectively.
Net cash provided by operating activities was $113.4 million in the first nine months of the
current fiscal year compared to net cash used in operating
activities of $151.6 million in the
same period last year. The Company had free cash flow of
$58.3 million, compared to a free
cash use (as defined in the accompanying tables) of $191.8 million in the previous year, which
included taxes and other payments related to the sale of the
Company's former educational technology business.
Additional Information
To supplement our financial statements presented in accordance
with GAAP, we include certain non-GAAP calculations and
presentations. Please refer to the non-GAAP financial tables
attached to this press release for supporting details on special
one-time items and other financial measures included in this
release. This information should be considered as supplemental in
nature and not as a substitute for the related financial
information prepared in accordance with GAAP.
Conference Call
The Company will hold a conference call to discuss its results
at 8:30 am ET today, March 23, 2017. Scholastic's Chairman, President
and CEO, Richard Robinson, and
Executive Vice President, CAO and CFO, Maureen O'Connell, will moderate the call.
The conference call and accompanying slides will be webcast and
accessible through the Investor Relations section of Scholastic's
website, scholastic.com. Participation by telephone will be
available by dialing (877) 654-5161 from within the U.S. or +1
(678) 894-3064 internationally. Shortly following the call, an
archived webcast and accompanying slides from the conference call
will also be posted at investor.scholastic.com. An audio-only
replay of the call will be available until Friday, March 31, 2017 by dialing (855) 859-2056
from within the U.S. or +1 (404) 537-3406 internationally, and
entering access code 81124320.
About Scholastic
Scholastic Corporation (NASDAQ: SCHL) is the world's largest
publisher and distributor of children's books, a leading provider
of print and digital instructional materials for pre-K to grade 12,
and a producer of educational and entertaining children's media.
The Company creates quality books and ebooks, print and
technology-based learning programs, classroom magazines and other
products that, in combination, offer schools customized solutions
to support children's learning both at school and at home. The
Company also makes quality, affordable books available to all
children through school-based book clubs and book fairs. With a 96
year history of service to schools and families, Scholastic
continues to carry out its commitment to "Open a World of Possible"
for all children. Learn more at www.scholastic.com.
Forward-Looking Statements
This news release contains certain forward-looking statements.
Such forward-looking statements are subject to various risks and
uncertainties, including the conditions of the children's book and
educational materials markets and acceptance of the Company's
products within those markets, and other risks and factors
identified from time to time in the Company's filings with the
Securities and Exchange Commission. Actual results could differ
materially from those currently anticipated.
SCHL: Financial
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SCHOLASTIC
CORPORATION
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CONSOLIDATED
STATEMENTS OF OPERATIONS
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(UNAUDITED)
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(Amounts in
millions except per share data)
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THREE MONTHS
ENDED
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NINE MONTHS
ENDED
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02/28/17
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02/29/16
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02/28/17
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02/29/16
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Revenues
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$336.2
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$366.0
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$1,242.0
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$1,159.0
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Operating costs and
expenses:
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Cost of goods sold
(1)
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160.3
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178.0
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601.3
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549.6
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Selling, general and
administrative expenses (2)
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188.4
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185.2
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578.1
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554.1
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Bad debt
expense
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1.6
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3.1
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9.3
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8.9
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Depreciation and
amortization
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9.5
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9.2
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28.6
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30.3
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Asset impairments
(3)
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-
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6.9
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-
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6.9
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Total operating costs
and expenses
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359.8
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382.4
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1,217.3
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1,149.8
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Operating income
(loss)
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(23.6)
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(16.4)
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24.7
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9.2
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Interest expense,
net
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0.3
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0.2
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1.0
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0.8
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(Gain) loss on
investments (4)
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-
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-
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-
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(2.2)
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Earnings (loss) from
continuing operations before income taxes
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(23.9)
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(16.6)
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23.7
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10.6
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Provision (benefit)
for income taxes
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(8.4)
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(9.4)
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10.8
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1.5
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Earnings (loss) from
continuing operations
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(15.5)
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(7.2)
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12.9
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9.1
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Earnings (loss) from
discontinued operations, net of tax
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0.1
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(1.8)
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0.0
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(2.6)
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Net income
(loss)
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($15.4)
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($9.0)
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$12.9
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$6.5
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Basic and diluted
earnings (loss) per Share of Class A and Common Stock:
(5)
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Basic:
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Earnings (loss) from
continuing operations
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(0.45)
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(0.21)
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0.37
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0.27
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Earnings (loss) from
discontinued operations, net of tax
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0.01
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(0.05)
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0.00
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(0.08)
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Net income
(loss)
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(0.44)
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(0.26)
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0.37
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0.19
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Diluted:
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Earnings (loss) from
continuing operations
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(0.45)
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(0.21)
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0.36
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0.26
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Earnings (loss) from
discontinued operations, net of tax
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0.01
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(0.05)
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0.00
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(0.07)
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Net income
(loss)
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(0.44)
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(0.26)
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0.36
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0.19
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Basic weighted
average shares outstanding
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34,781
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34,301
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34,596
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33,983
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Diluted weighted
average shares outstanding
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34,781
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34,301
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35,336
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34,912
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(1)
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In the three and nine
months ended February 28, 2017, the Company recognized pretax exit
costs related to its software distribution business in Australia of
$0.5.
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(2)
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In the three and nine
months ended February 28, 2017, the Company recognized pretax
severance expense as part of cost reduction programs of $4.4 and
$8.3, respectively. In the three and nine months ended
February 29, 2016, the Company recognized pretax severance expense
as part of cost reduction programs of $1.4 and $4.3,
respectively. In the nine months ended February 29, 2016, the
Company recognized a pretax charge related to a warehouse
optimization project in the Company's book fairs operations of $1.5
and pretax transaction costs of $0.4.
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(3)
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In the three and nine
months ended February 29, 2016, the Company recognized pretax
impairment charges related to certain legacy prepublication assets
of $6.9.
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(4)
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In the nine months
ended February 29, 2016, the Company recognized a pretax gain on
sale of investment of $2.2 related to an investment in
China.
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(5)
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Earnings (loss) per
share are calculated on non-rounded net income (loss) and shares
outstanding. Recalculating earnings per share based on numbers
rounded to millions may not yield the results as
presented.
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SCHOLASTIC
CORPORATION
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RESULTS OF
CONTINUING OPERATIONS - SEGMENTS
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(UNAUDITED)
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(Amounts in
millions)
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THREE MONTHS
ENDED
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NINE MONTHS
ENDED
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02/28/17
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02/29/16
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Change
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02/28/17
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02/29/16
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Change
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Children's Book
Publishing and Distribution
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Revenue
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Book Clubs
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$60.3
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$72.5
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($12.2)
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(17%)
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$176.3
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$200.9
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($24.6)
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(12%)
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Book Fairs
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89.5
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90.3
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(0.8)
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(1%)
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328.4
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334.3
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(5.9)
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(2%)
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Consolidated
Trade
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49.2
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57.0
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(7.8)
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(14%)
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264.6
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166.0
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98.6
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59%
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Total
revenue
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199.0
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219.8
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(20.8)
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(9%)
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769.3
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701.2
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68.1
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10%
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Operating income
(loss)
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6.3
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8.2
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(1.9)
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(23%)
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91.2
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62.6
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28.6
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46%
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Operating
margin
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3.2%
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3.7%
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11.9%
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8.9%
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Education
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Revenue
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60.1
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63.9
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(3.8)
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(6%)
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186.4
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186.7
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(0.3)
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(0%)
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Operating income
(loss)
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3.5
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(2.4)
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5.9
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7.8
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3.7
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4.1
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111%
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Operating
margin
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5.8%
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-
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4.2%
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2.0%
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International
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Revenue
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77.1
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82.3
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(5.2)
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(6%)
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286.3
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271.1
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15.2
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6%
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Operating income
(loss)
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(3.9)
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(1.7)
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(2.2)
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16.5
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7.1
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9.4
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132%
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Operating
margin
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-
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-
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5.8%
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2.6%
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Overhead
expense
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29.5
|
20.5
|
|
(9.0)
|
(44%)
|
|
90.8
|
64.2
|
|
(26.6)
|
(41%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
($23.6)
|
($16.4)
|
|
($7.2)
|
|
|
$24.7
|
$9.2
|
|
$15.5
|
168%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHOLASTIC
CORPORATION
|
|
SUPPLEMENTAL
INFORMATION
|
|
(UNAUDITED)
|
|
(Amounts in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED
BALANCE SHEET ITEMS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
02/28/17
|
02/29/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
Operations
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$461.8
|
$351.9
|
|
|
|
|
|
|
|
|
Restricted
cash
|
0.0
|
17.3
|
|
|
|
|
|
|
|
|
Accounts receivable,
net
|
172.4
|
188.1
|
|
|
|
|
|
|
|
|
Inventories,
net
|
351.2
|
333.1
|
|
|
|
|
|
|
|
|
Accounts
payable
|
194.2
|
196.4
|
|
|
|
|
|
|
|
|
Accrued
royalties
|
87.5
|
52.8
|
|
|
|
|
|
|
|
|
Lines of credit,
short-term debt and current portion of long-term debt
|
5.8
|
8.2
|
|
|
|
|
|
|
|
|
Long-term debt,
excluding current portion
|
0.0
|
0.0
|
|
|
|
|
|
|
|
|
Total debt
|
5.8
|
8.2
|
|
|
|
|
|
|
|
|
Total capital lease
obligations
|
7.8
|
8.8
|
|
|
|
|
|
|
|
|
Net debt
(1)
|
(456.0)
|
(343.7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued
Operations
|
|
|
|
|
|
|
|
|
|
|
Total assets of
discontinued operations
|
0.4
|
0.6
|
|
|
|
|
|
|
|
|
Total liabilities of
discontinued operations
|
0.1
|
1.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
1,269.0
|
1,226.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED
CASH FLOW ITEMS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
NINE MONTHS
ENDED
|
|
|
|
|
02/28/17
|
02/29/16
|
|
|
02/28/17
|
02/29/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
(used in) operating activities
|
$39.2
|
$26.4
|
|
|
$113.4
|
($151.6)
|
|
|
|
|
Less: Additions to property, plant
and equipment
|
16.6
|
10.0
|
|
|
36.1
|
22.0
|
|
|
|
|
Pre-publication and production costs
|
6.0
|
6.8
|
|
|
19.0
|
18.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow (use)
(2) (3)
|
$16.6
|
$9.6
|
|
|
58.3
|
(191.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Net debt is defined
by the Company as lines of credit and short-term debt plus
long-term-debt, net of cash and cash equivalents. The Company
utilizes this non-GAAP financial measure, and believes it is useful
to investors, as an indicator of the Company's effective leverage
and financing needs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
Free cash flow (use)
is defined by the Company as net cash provided by or used in
operating activities (which includes royalty advances), reduced by
spending on property, plant and equipment and pre-publication and
production costs. The Company believes that this non-GAAP financial
measure is useful to investors as an indicator of cash flow
available for debt repayment and other investing activities, such
as acquisitions. The Company utilizes free cash flow as a
further indicator of operating performance and for planning
investing activities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
|
Free cash flow (use)
includes discontinued operations for the three and nine months
ended February 28, 2017 and February 29, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SCHOLASTIC
CORPORATION
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS SUPPLEMENTAL
|
|
(UNAUDITED)
|
|
(Amounts in
millions except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS
ENDED
|
|
|
|
|
|
|
Reported
|
One-time
|
Excluding
|
|
|
Reported
|
One-time
|
Excluding
|
|
|
|
|
|
|
|
02/28/17
|
items
|
One-time
items
|
|
|
02/29/16
|
items
|
One-time
items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$336.2
|
$0.0
|
$336.2
|
|
|
$366.0
|
$0.0
|
$366.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
(1)
|
|
160.3
|
(0.5)
|
159.8
|
|
|
178.0
|
-
|
178.0
|
|
|
|
|
|
Selling, general and
administrative expenses (2)
|
|
188.4
|
(4.4)
|
184.0
|
|
|
185.2
|
(1.4)
|
183.8
|
|
|
|
|
|
Bad debt
expense
|
|
1.6
|
-
|
1.6
|
|
|
3.1
|
-
|
3.1
|
|
|
|
|
|
Depreciation and
amortization
|
|
9.5
|
-
|
9.5
|
|
|
9.2
|
-
|
9.2
|
|
|
|
|
|
Asset impairments
(3)
|
|
-
|
-
|
-
|
|
|
6.9
|
(6.9)
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs
and expenses
|
|
359.8
|
(4.9)
|
354.9
|
|
|
382.4
|
(8.3)
|
374.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
(23.6)
|
4.9
|
(18.7)
|
|
|
(16.4)
|
8.3
|
(8.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
0.3
|
-
|
0.3
|
|
|
0.2
|
-
|
0.2
|
|
|
|
|
(Gain) loss on
investments (4)
|
|
-
|
-
|
-
|
|
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations before income taxes
|
|
(23.9)
|
4.9
|
(19.0)
|
|
|
(16.6)
|
8.3
|
(8.3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit)
for income taxes
|
|
(8.4)
|
1.9
|
(6.5)
|
|
|
(9.4)
|
3.3
|
(6.1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
|
(15.5)
|
3.0
|
(12.5)
|
|
|
(7.2)
|
5.0
|
(2.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
discontinued operations, net of tax
|
|
0.1
|
-
|
0.1
|
|
|
(1.8)
|
-
|
(1.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
($15.4)
|
$3.0
|
($12.4)
|
|
|
($9.0)
|
$5.0
|
($4.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
diluted share from continuing operations
|
|
(0.45)
|
0.09
|
(0.36)
|
|
|
(0.21)
|
0.15
|
(0.06)
|
|
|
|
|
Earnings (loss) per
diluted share from discontinued operations, net of tax
|
0.01
|
-
|
0.01
|
|
|
(0.05)
|
-
|
(0.05)
|
|
|
|
|
Net income (loss) per
diluted share
|
|
(0.44)
|
0.09
|
(0.35)
|
|
|
(0.26)
|
0.15
|
(0.11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NINE MONTHS
ENDED
|
|
|
|
|
|
|
Reported
|
One-time
|
Excluding
|
|
|
Reported
|
One-time
|
Excluding
|
|
|
|
|
|
|
|
02/28/17
|
items
|
One-time
items
|
|
|
02/29/16
|
items
|
One-time
items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$1,242.0
|
$0.0
|
$1,242.0
|
|
|
$1,159.0
|
$0.0
|
$1,159.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
(1)
|
|
601.3
|
(0.5)
|
600.8
|
|
|
549.6
|
-
|
549.6
|
|
|
|
|
|
Selling, general and
administrative expenses (2)
|
|
578.1
|
(8.3)
|
569.8
|
|
|
554.1
|
(6.2)
|
547.9
|
|
|
|
|
|
Bad debt
expense
|
|
9.3
|
-
|
9.3
|
|
|
8.9
|
-
|
8.9
|
|
|
|
|
|
Depreciation and
amortization
|
|
28.6
|
-
|
28.6
|
|
|
30.3
|
-
|
30.3
|
|
|
|
|
|
Asset impairments
(3)
|
|
-
|
-
|
-
|
|
|
6.9
|
(6.9)
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs
and expenses
|
|
1,217.3
|
(8.8)
|
1,208.5
|
|
|
1,149.8
|
(13.1)
|
1,136.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
|
24.7
|
8.8
|
33.5
|
|
|
9.2
|
13.1
|
22.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
1.0
|
-
|
1.0
|
|
|
0.8
|
-
|
0.8
|
|
|
|
|
(Gain) loss on
investments (4)
|
|
-
|
-
|
-
|
|
|
(2.2)
|
-
|
(2.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations before income taxes
|
|
23.7
|
8.8
|
32.5
|
|
|
10.6
|
13.1
|
23.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit)
for income taxes
|
|
10.8
|
3.4
|
14.2
|
|
|
1.5
|
5.2
|
6.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
continuing operations
|
|
12.9
|
5.4
|
18.3
|
|
|
9.1
|
7.9
|
17.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from
discontinued operations, net of tax
|
|
0.0
|
-
|
0.0
|
|
|
(2.6)
|
-
|
(2.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$12.9
|
$5.4
|
$18.3
|
|
|
$6.5
|
$7.9
|
$14.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
diluted share from continuing operations
|
|
0.36
|
0.15
|
0.51
|
|
|
0.26
|
0.22
|
0.48
|
|
|
|
|
Earnings (loss) per
diluted share from discontinued operations, net of tax
|
0.00
|
-
|
0.00
|
|
|
(0.07)
|
-
|
(0.07)
|
|
|
|
|
Net income (loss) per
diluted share
|
|
0.36
|
0.15
|
0.51
|
|
|
0.19
|
0.22
|
0.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
In the three and nine
months ended February 28, 2017, the Company recognized pretax exit
costs related to its software distribution business in Australia of
$0.5.
|
|
|
(2)
|
In the three and nine
months ended February 28, 2017, the Company recognized pretax
severance expense as part of cost reduction programs of $4.4 and
$8.3, respectively. In the three and nine months ended
February 29, 2016, the Company recognized pretax severance expense
as part of cost reduction programs of $1.4 and $4.3,
respectively. In the nine months ended February 29, 2016, the
Company recognized a pretax charge related to a warehouse
optimization project in the Company's book fairs operations of $1.5
and pretax transaction costs of $0.4.
|
|
|
(3)
|
In the three and nine
months ended February 29, 2016, the Company recognized pretax
impairment charges related to certain legacy prepublication assets
of $6.9.
|
|
|
(4)
|
In the nine months
ended February 29, 2016, the Company recognized a pretax gain on
sale of investment of $2.2 related to an investment in
China.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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SCHOLASTIC
CORPORATION
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RESULTS OF
CONTINUING OPERATIONS - SEGMENT SUPPLEMENTAL
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(UNAUDITED)
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(Amounts in
millions except per share data)
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THREE MONTHS
ENDED
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Reported
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One-time
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Excluding
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Reported
|
One-time
|
Excluding
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|
|
|
|
|
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|
02/28/17
|
items
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One-time
items
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|
02/29/16
|
items
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One-time
items
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|
|
|
|
|
|
|
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|
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Children's Book
Publishing and Distribution
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Revenue
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Book Clubs
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$60.3
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|
$60.3
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$72.5
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$72.5
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Book Fairs
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89.5
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|
89.5
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90.3
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90.3
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Consolidated
Trade
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49.2
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49.2
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|
57.0
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|
57.0
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|
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|
|
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Total
revenue
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|
199.0
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|
199.0
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|
219.8
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|
219.8
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|
|
|
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Operating income
(loss) (1)
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6.3
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-
|
6.3
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|
8.2
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-
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8.2
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Operating
margin
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3.2%
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3.2%
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3.7%
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3.7%
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Education
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Revenue
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60.1
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|
60.1
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|
63.9
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|
63.9
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|
|
|
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Operating income
(loss) (2)
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3.5
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-
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3.5
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(2.4)
|
6.9
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4.5
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|
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Operating
margin
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5.8%
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5.8%
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-
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7.0%
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International
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Revenue
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77.1
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|
77.1
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82.3
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82.3
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Operating income
(loss) (3)
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(3.9)
|
0.5
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(3.4)
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(1.7)
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0.2
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(1.5)
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|
|
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Operating
margin
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-
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|
-
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|
|
-
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|
-
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|
|
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|
|
|
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Overhead
expense (4)
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29.5
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(4.4)
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25.1
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20.5
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(1.2)
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19.3
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Operating income
(loss)
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($23.6)
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$4.9
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($18.7)
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($16.4)
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$8.3
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($8.1)
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NINE MONTHS
ENDED
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Reported
|
One-time
|
Excluding
|
|
|
Reported
|
One-time
|
Excluding
|
|
|
|
|
|
|
|
|
02/28/17
|
items
|
One-time
items
|
|
|
02/29/16
|
items
|
One-time
items
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
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Children's Book
Publishing and Distribution
|
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|
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|
|
|
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|
|
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|
|
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Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
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Book Clubs
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$176.3
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$176.3
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$200.9
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$200.9
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Book Fairs
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328.4
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328.4
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334.3
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334.3
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Consolidated
Trade
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264.6
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|
264.6
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166.0
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166.0
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Total
revenue
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769.3
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769.3
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|
701.2
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701.2
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|
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Operating income
(loss) (1)
|
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91.2
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|
91.2
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62.6
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1.5
|
64.1
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|
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Operating
margin
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11.9%
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11.9%
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8.9%
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9.1%
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Education
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Revenue
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186.4
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|
186.4
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|
186.7
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|
186.7
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Operating income
(loss) (2)
|
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7.8
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|
7.8
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3.7
|
6.9
|
10.6
|
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Operating
margin
|
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4.2%
|
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4.2%
|
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2.0%
|
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5.7%
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Revenue
|
|
286.3
|
|
286.3
|
|
|
271.1
|
|
271.1
|
|
|
|
|
|
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Operating income
(loss) (3)
|
|
16.5
|
0.7
|
17.2
|
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|
7.1
|
0.2
|
7.3
|
|
|
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Operating
margin
|
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5.8%
|
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6.0%
|
|
|
2.6%
|
|
2.7%
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
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Overhead
expense (4)
|
|
90.8
|
(8.1)
|
82.7
|
|
|
64.2
|
(4.5)
|
59.7
|
|
|
|
|
|
|
|
|
|
|
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|
|
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Operating income
(loss)
|
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$24.7
|
$8.8
|
$33.5
|
|
|
$9.2
|
$13.1
|
$22.3
|
|
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|
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(1)
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In the nine months
ended February 29, 2016, the Company recognized a pretax charge
related to a warehouse optimization project in the Company's book
fairs operations of $1.5.
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(2)
|
In the three and nine
months ended February 29, 2016, the Company recognized a pretax
impairment charge associated with certain legacy prepublication
assets of $6.9.
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(3)
|
In the three and nine
months ended February 28, 2017, the Company recognized pretax exit
costs related to its software distribution business in Australia of
$0.5. In the nine months ended February 28, 2017, the Company
recognized pretax severance expense as part of cost reduction
programs of $0.2. In the three and nine months ended February
29, 2016, the Company recognized pretax severance expense as part
of cost reduction programs of $0.2.
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(4)
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In the three and nine
months ended February 28, 2017, the Company recognized pretax
severance expense as part of cost reduction programs of $4.4 and
$8.1, respectively. In the three and nine months ended
February 29, 2016, the Company recognized pretax severance expense
as part of cost reduction programs of $1.2 and $4.1,
respectively. In the nine months ended February 29, 2016, the
Company recognized pretax transaction costs of
$0.4.
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To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/scholastic-reports-fiscal-2017-third-quarter-results-300428270.html
SOURCE Scholastic Corporation