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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
Quarterly Report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended
February 28, 2021
Commission File No. 000-19860
 
SCHOLASTIC CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 13-3385513
(State or other jurisdiction of
incorporation or organization)
(IRS Employer Identification No.)
557 Broadway,
New York, New York 10012
(Address of principal executive offices) (Zip Code)
 
Registrant’s telephone number, including area code (212) 343-6100
Title of Class Trading Symbol Name of Each Exchange on Which Registered
Common Stock, $0.01 par value SCHL The NASDAQ Stock Market LLC
 
    Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
Yes No
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

    Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes No
 
Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date:
Title of each class   Number of shares outstanding as of February 28, 2021
Common Stock, $.01 par value   32,671,931
Class A Stock, $.01 par value   1,656,200
SCHL-20210228_G1.JPG
1


SCHOLASTIC CORPORATION
 
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 2021

INDEX
Page
   
       
 
3
       
 
4
       
 
5
       
6
 
8
       
 
9
       
       
       
       
 
   
       

2


PART I - FINANCIAL INFORMATION
 
Item 1. Financial Statements
SCHOLASTIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED
(Dollar amounts in millions, except per share data)
 
  Three months ended Nine months ended
February 28, February 29, February 28, February 29,
  2021 2020 2021 2020
Revenues $ 277.5  $ 373.3  $ 898.9  $ 1,203.1 
Operating costs and expenses:        
  Cost of goods sold 146.0  183.0  468.5  584.4 
  Selling, general and administrative expenses 129.1  190.4  387.6  564.1 
  Depreciation and amortization 14.7  15.4  46.0  46.2 
Severance 1.0  4.5  18.3  10.7 
  Asset impairments and write downs 10.9  40.0  10.9  40.0 
Total operating costs and expenses 301.7  433.3  931.3  1,245.4 
Operating income (loss) (24.2) (60.0) (32.4) (42.3)
Interest income (expense), net (1.7) 0.3  (4.1) 1.0 
Other components of net periodic benefit (cost) 0.1  (0.4) (0.1) (1.0)
Gain (loss) on sale of assets and other 3.8  —  10.4  — 
Earnings (loss) before income taxes (22.0) (60.1) (26.2) (42.3)
Provision (benefit) for income taxes (8.0) (16.8) (7.6) (11.6)
Net income (loss) (14.0) (43.3) (18.6) (30.7)
Less: Net income (loss) attributable to noncontrolling interest (0.1) 0.0 0.0  0.1 
Net income (loss) attributable to Scholastic Corporation $ (13.9) $ (43.3) $ (18.6) $ (30.8)
Basic and diluted earnings (loss) per share of Class A and Common Stock        
Basic $ (0.41) $ (1.25) $ (0.54) $ (0.89)
Diluted $ (0.41) $ (1.25) $ (0.54) $ (0.89)
See accompanying notes    


3


SCHOLASTIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - UNAUDITED
(Dollar amounts in millions)
 
  Three months ended Nine months ended
February 28, February 29, February 28, February 29,
  2021 2020 2021 2020
Net income (loss) $ (14.0) $ (43.3) $ (18.6) $ (30.7)
Other comprehensive income (loss), net:      
   Foreign currency translation adjustments 6.3  (2.3) 17.4  (0.4)
   Pension and postretirement adjustments (net of tax) 0.0  0.3  5.5  0.7 
Total other comprehensive income (loss), net $ 6.3  $ (2.0) $ 22.9  $ 0.3 
Comprehensive income (loss) $ (7.7) $ (45.3) $ 4.3  $ (30.4)
Less: Net income (loss) attributable to noncontrolling interest (0.1) 0.0  0.0  0.1 
Comprehensive income (loss) attributable to Scholastic Corporation $ (7.6) $ (45.3) $ 4.3  $ (30.5)
See accompanying notes

4


SCHOLASTIC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(Dollar amounts in millions, except per share data)
  February 28, 2021 (unaudited) May 31, 2020 (audited) February 29, 2020 (unaudited)
ASSETS      
Current Assets:      
Cash and cash equivalents $ 353.2  $ 393.8  $ 263.8 
Accounts receivable, net 238.0  239.8  281.2 
Inventories, net 304.8  270.6  307.7 
Income tax receivable 101.3  90.0  30.2 
Prepaid expenses and other current assets 61.0  41.1  58.3 
Total current assets 1,058.3  1,035.3  941.2 
Noncurrent Assets:
Property, plant and equipment, net 561.4  576.9  579.1 
Prepublication costs, net 66.7  70.6  70.8 
Operating lease right-of-use assets, net 76.8  95.3  71.7 
Royalty advances, net 45.1  39.9  51.1 
Goodwill 126.0  124.9  125.3 
Noncurrent deferred income taxes 19.3  18.6  37.1 
Other assets and deferred charges 81.4  72.1  72.1 
Total noncurrent assets 976.7  998.3  1,007.2 
Total assets $ 2,035.0  $ 2,033.6  $ 1,948.4 
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current Liabilities:      
Lines of credit and current portion of long-term debt $ 190.7  $ 7.9  $ 9.7 
Accounts payable 134.3  153.6  187.9 
Accrued royalties 77.6  37.8  77.3 
Deferred revenue 121.9  116.5  158.1 
Other accrued expenses 177.6  161.5  170.9 
Accrued income taxes 3.6  1.4  3.7 
Operating lease liabilities 24.3  22.8  22.7 
Total current liabilities 730.0  501.5  630.3 
Noncurrent Liabilities:      
Long-term debt —  210.6  6.4 
Operating lease liabilities 67.3  75.7  52.0 
Other noncurrent liabilities 60.9  65.2  60.4 
Total noncurrent liabilities 128.2  351.5  118.8 
Commitments and Contingencies (see Note 6)      
Stockholders’ Equity:      
Preferred Stock, $1.00 par value: Authorized, 2.0 shares; Issued and Outstanding, none
$ —  $ —  $ — 
Class A Stock, $0.01 par value: Authorized, 4.0 shares; Issued and Outstanding, 1.7 shares
0.0  0.0  0.0 
Common Stock, $0.01 par value: Authorized, 70.0 shares; Issued, 42.9 shares; Outstanding, 32.7, 32.5, and 32.6 shares, respectively
0.4  0.4  0.4 
Additional paid-in capital 625.4  622.4  621.9 
Accumulated other comprehensive income (loss) (35.4) (58.3) (59.4)
Retained earnings 913.9  948.0  966.2 
Treasury stock, at cost: 10.2, 10.4 and 10.3 shares, respectively
(328.9) (333.3) (331.2)
Total stockholders’ equity of Scholastic Corporation 1,175.4  1,179.2  1,197.9 
  Noncontrolling interest 1.4  1.4  1.4 
Total stockholders’ equity 1,176.8  1,180.6  1,199.3 
Total liabilities and stockholders’ equity $ 2,035.0  $ 2,033.6  $ 1,948.4 
See accompanying notes
5


SCHOLASTIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED
(Dollar amounts in millions, except per share data)
  Class A Stock Common Stock Additional Paid-in Capital Accumulated
Other Comprehensive
Income (Loss)
Retained
Earnings
Treasury Stock
At Cost
Total
Stockholders'
Equity of Scholastic Corporation
Noncontrolling Interest Total
Stockholders'
Equity
  Shares Amount Shares Amount
Balance at June 1, 2019 1.7 $ 0.0  33.4 $ 0.4  $ 620.8  $ (59.7) $ 1,012.6  $ (302.6) $ 1,271.5  $ 1.3  $ 1,272.8 
Net Income (loss) —  —  —  —  —  —  (58.5) —  (58.5) 0.0  (58.5)
Foreign currency translation adjustment —  —  —  —  —  (2.0) —  —  (2.0) —  (2.0)
Pension and post-retirement adjustments (net of tax of $0.0)
—  —  —  —  —  0.2  —  —  0.2  —  0.2 
Stock-based compensation —  —  —  —  1.5  —  —  —  1.5  —  1.5 
Purchases of treasury stock at cost —  —  (0.3) —  —  —  —  (12.6) (12.6) —  (12.6)
Treasury stock issued pursuant to equity-based plans —  —  0.0  —  (0.1) —  —  0.6  0.5  —  0.5 
Dividends ($0.15 per share)
—  —  —  —  —  —  (5.2) —  (5.2) —  (5.2)
Balance at August 31, 2019 1.7  $ 0.0  33.1  $ 0.4  $ 622.2  $ (61.5) $ 948.9  $ (314.6) $ 1,195.4  $ 1.3  $ 1,196.7 
Net Income (loss) —  —  —  —  —  —  71.0  —  71.0  0.0  71.0 
Foreign currency translation adjustment —  —  —  —  —  3.9  —  —  3.9  —  3.9 
Pension and post-retirement adjustments (net of tax of $0.0)
—  —  —  —  —  0.2  —  —  0.2  —  0.2 
Stock-based compensation —  —  —  —  0.9  —  —  —  0.9  —  0.9 
Proceeds pursuant to stock-based compensation plans —  —  —  —  0.3  —  —  —  0.3  —  0.3 
Purchases of treasury stock at cost —  —  (0.1) —  —  —  —  (7.1) (7.1) —  (7.1)
Treasury stock issued pursuant to equity-based plans —  —  0.0  —  (2.1) —  —  2.7  0.6  —  0.6 
Dividends ($0.15 per share)
—  —  —  —  —  —  (5.2) —  (5.2) —  (5.2)
Balance at November 30, 2019 1.7  $ 0.0  33.0  $ 0.4  $ 621.3  $ (57.4) $ 1,014.7  $ (319.0) $ 1,260.0  $ 1.3  $ 1,261.3 
Net Income (loss) —  —  —  —  —  —  (43.3) —  (43.3) 0.1  (43.2)
Foreign currency translation adjustment —  —  —  —  —  (2.3) —  —  (2.3) —  (2.3)
Pension and post-retirement adjustments (net of tax of $0.0)
—  —  —  —  —  0.3  —  —  0.3  —  0.3 
Stock-based compensation —  —  —  —  0.7  —  —  —  0.7  —  0.7 
Proceeds pursuant to stock-based compensation plans —  —  —  —  0.4  —  —  —  0.4  —  0.4 
Purchases of treasury stock at cost —  —  (0.4) —  —  —  —  (13.0) (13.0) —  (13.0)
Treasury stock issued pursuant to equity-based plans —  —  0.0  —  (0.5) —  —  0.8  0.3  —  0.3 
Dividends ($0.15 per share)
—  —  —  —  —  —  (5.2) —  (5.2) —  (5.2)
Balance at February 29, 2020 1.7  $ 0.0  32.6  $ 0.4  $ 621.9  $ (59.4) $ 966.2  $ (331.2) $ 1,197.9  $ 1.4  $ 1,199.3 
See accompanying notes







6


SCHOLASTIC CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED (Dollar amounts in millions, except per share data)
  Class A Stock Common Stock Additional Paid-in Capital Accumulated
Other Comprehensive
Income (Loss)
Retained
Earnings
Treasury Stock
At Cost
Total
Stockholders'
Equity of Scholastic Corporation
Noncontrolling Interest Total
Stockholders'
Equity
  Shares Amount Shares Amount
Balance at June 1, 2020 1.7  $ 0.0  32.5  $ 0.4  $ 622.4  $ (58.3) $ 948.0  $ (333.3) $ 1,179.2  $ 1.4  $ 1,180.6 
Net Income (loss) —  —  —  —  —  —  (39.8) —  (39.8) 0.0  (39.8)
Foreign currency translation adjustment —  —  —  —  —  10.7  —  —  10.7  —  10.7 
Pension and post-retirement adjustments (net of tax of $0.0)
—  —  —  —  —  0.1  —  —  0.1  —  0.1 
Stock-based compensation —  —  —  —  0.6  —  —  —  0.6  —  0.6 
Treasury stock issued pursuant to equity-based plans —  —  0.0  —  (0.2) —  —  0.5  0.3  —  0.3 
Dividends ($0.15 per share)
—  —  —  —  —  —  (5.1) —  (5.1) —  (5.1)
Balance at August 31, 2020 1.7  $ 0.0  32.5  $ 0.4  $ 622.8  $ (47.5) $ 903.1  $ (332.8) $ 1,146.0  $ 1.4  $ 1,147.4 
Net Income (loss) —  —  —  —  —  —  35.1  —  35.1  0.1  35.2 
Foreign currency translation adjustment —  —  —  —  —  0.4  —  —  0.4  —  0.4 
Pension and post-retirement adjustments (net of tax of $1.8)
—  —  —  —  —  5.4  —  —  5.4  —  5.4 
Stock-based compensation —  —  —  —  3.0  —  —  —  3.0  —  3.0 
Treasury stock issued pursuant to equity-based plans —  —  0.1  —  (1.5) —  —  3.1  1.6  —  1.6 
Dividends ($0.15 per share)
—  —  —  —  —  —  (5.1) —  (5.1) —  (5.1)
Balance at November 30, 2020 1.7  $ 0.0  32.6  $ 0.4  $ 624.3  $ (41.7) $ 933.1  $ (329.7) $ 1,186.4  $ 1.5  $ 1,187.9 
Net Income (loss) —  —  —  —  —  (13.9) —  (13.9) (0.1) (14.0)
Foreign currency translation adjustment —  —  —  —  —  6.3  —  —  6.3  —  6.3 
Pension and post-retirement adjustments (net of tax of $0.1)
—  —  —  —  —  0.0  —  —  0.0  —  0.0 
Stock-based compensation —  —  —  —  1.5  —  —  —  1.5  —  1.5 
Treasury stock issued pursuant to equity-based plans —  —  0.1  —  (0.4) —  —  0.8  0.4  —  0.4 
Dividends ($0.15 per share)
—  —  —  —  —  —  (5.3) —  (5.3) —  (5.3)
Balance at February 28, 2021 1.7  $ 0.0  32.7  $ 0.4  $ 625.4  $ (35.4) $ 913.9  $ (328.9) $ 1,175.4  $ 1.4  $ 1,176.8 
See accompanying notes
7


SCHOLASTIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – UNAUDITED
(Dollar amounts in millions)
 
  Nine months ended
February 28, February 29,
  2021 2020
Cash flows - operating activities:    
Net income (loss) attributable to Scholastic Corporation $ (18.6) $ (30.8)
Adjustments to reconcile Net income (loss) to net cash provided by (used in) operating activities:    
   Provision for losses on accounts receivable 3.4  7.3 
   Provision for losses on inventory 10.4  13.7 
   Provision for losses on royalty advances 4.4  3.8 
   Amortization of prepublication costs 19.0  19.7 
   Depreciation and amortization 49.3  48.1 
   Amortization of pension and postretirement actuarial gains and losses 0.0  0.7 
   Deferred income taxes 0.1  (0.2)
   Stock-based compensation 5.1  3.1 
   Income from equity-method investments (6.1) (3.6)
   Non cash write off related to asset impairments and write downs 10.9  40.0 
   (Gain) loss on sale of assets (10.4) — 
Changes in assets and liabilities, net of amounts acquired:    
   Accounts receivable 5.0  (38.9)
   Inventories (36.4) (36.2)
   Prepaid expenses and other current assets (17.3) (16.0)
   Income tax receivable (11.1) (19.9)
   Royalty advances (8.4) (9.1)
   Accounts payable (21.0) (0.1)
   Accrued income taxes 1.9  2.3 
   Accrued royalties 38.3  35.6 
   Deferred revenue 3.6  27.5 
   Other assets and liabilities 14.4  (3.0)
Net cash provided by (used in) operating activities 36.5  44.0 
Cash flows - investing activities:    
Prepublication expenditures (15.3) (21.5)
Additions to property, plant and equipment (37.1) (48.4)
Net proceeds from sale of assets 17.4  — 
Acquisition of land —  (3.3)
Other investment and acquisition-related payments 0.1  (1.2)
Net cash provided by (used in) investing activities (34.9) (74.4)
Cash flows - financing activities:    
Borrowings under lines of credit, credit agreement and revolving loan 3.0  28.9 
Repayments of lines of credit, credit agreement and revolving loan (32.1) (19.7)
Repayment of capital lease obligations (1.7) (1.5)
Reacquisition of common stock —  (32.2)
Proceeds pursuant to stock-based compensation plans —  0.7 
Payment of dividends (15.4) (15.7)
Other —  (0.2)
Net cash provided by (used in) financing activities (46.2) (39.7)
Effect of exchange rate changes on cash and cash equivalents 4.0  (0.2)
Net increase (decrease) in cash and cash equivalents (40.6) (70.3)
Cash and cash equivalents at beginning of period 393.8  334.1 
Cash and cash equivalents at end of period $ 353.2  $ 263.8 
See accompanying notes

8

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

1. BASIS OF PRESENTATION
 
Principles of consolidation
 
The accompanying condensed consolidated interim financial statements (referred to as the “Financial Statements” herein) include the accounts of Scholastic Corporation (the “Corporation”) and all wholly-owned and majority-owned subsidiaries (collectively, “Scholastic” or the “Company”). Intercompany transactions are eliminated in consolidation.
 
The Company’s fiscal year is not a calendar year. Accordingly, references in this document to fiscal 2021 relate to the twelve-month period ending May 31, 2021. Certain prior period amounts have been reclassified to conform with the current year presentation.

Interim Financial Statements

The accompanying Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and Article 10 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information, and should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2020. The Financial Statements presented in this Quarterly Report on Form 10-Q are unaudited; however, in the opinion of management, the Financial Statements reflect all adjustments, consisting solely of normal, recurring adjustments, necessary for the fair presentation of the Financial Statements for the periods presented. 

Seasonality
 
The Company’s Children’s Book Publishing and Distribution school-based book club and book fair channels and most of its Education businesses operate on a school-year basis; therefore, the Company’s business is highly seasonal. As a result, the Company’s revenues in the first and third quarters of the fiscal year generally are lower than its revenues in the other two fiscal quarters. Typically, school-based channels and magazine revenues are minimal in the first quarter of the fiscal year as schools are not in session. Trade sales can vary throughout the year due to varying release dates of published titles. Presently, there remain many uncertainties concerning the timing of and any patterns which may emerge with respect to school instruction, whether in-school, remote or hybrid for the remaining school year, and the nature and continuing magnitude of the negative impact of COVID-19 into and beyond the fourth quarter of fiscal 2021.

Use of estimates
 
The preparation of these Financial Statements involves the use of estimates and assumptions by management, which affects the amounts reported in the Financial Statements and accompanying notes. The Company bases its estimates on historical experience, current business factors, and various other assumptions believed to be reasonable under the circumstances, all of which are necessary, in order to form a basis for determining the carrying values of certain assets and liabilities. Actual results may differ from those estimates and assumptions. On an on-going basis, the Company evaluates the adequacy of its reserves and the estimates used in these calculations, including, but not limited to:
Accounts receivable allowance for doubtful accounts
Pension and postretirement benefit plans
Uncertain tax positions
The timing and amount of future income taxes and related deductions
Inventory reserves
Cost of goods sold from book fair operations during interim periods based on estimated gross profit rates
Sales tax contingencies
Royalty advance reserves and royalty expense accruals
Impairment testing for goodwill, intangible and other long-lived assets and investments
Assets and liabilities acquired in business combinations
Variable consideration related to anticipated returns
Allocation of transaction price to performance obligations

9

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

Sale of Long-lived Assets

During the third quarter of fiscal 2021, the Company sold the UK distribution center located in Southam. The long-lived assets related to the Southam facility, which consisted of land, building and building improvements, were included in the International segment. The assets had a carrying value of $1.3 and were classified as held for sale as of the fiscal year ended May 31, 2020. The net proceeds from the sale were $5.1 and the Company recognized a gain on sale of $3.8. This amount is included within Gain (loss) on sale of assets and other within the Company's Condensed Consolidated Statements of Operations.

During the first quarter of fiscal 2021, the company-owned facility located in Danbury, Connecticut was sold and the Company relocated the book fairs warehousing and distribution operations conducted in Danbury to a warehouse in Allentown, Pennsylvania. The long-lived assets related to the Danbury facility, which consisted of land, building, and building improvements, were included in the Overhead segment. These assets had a carrying value of $5.7 and were classified as held for sale as of the fiscal year ended May 31, 2020. The net proceeds from the sale were $12.3 and the Company recognized a gain on sale of $6.6. This amount is included within Gain (loss) on sale of assets and other within the Company's Condensed Consolidated Statements of Operations.

Assets Held For Sale

During the third quarter of fiscal 2021, the Company committed to a plan to sell the office building located in Lake Mary, FL and relocate to a leased office space as part of the initiative to reduce future operating costs. These assets are included in the Children's Book Publishing and Distribution segment. During the third quarter of fiscal 2020, the Company committed to a plan to sell the UK distribution center located in Witney to consolidate the operations into a new facility in Warwickshire. These assets are included in the International segment. The Company expects the sale of these facilities to result in a gain on sale. The long-lived assets which consist of land, building, and building improvements are classified as held for sale. These assets are carried at the lower of carrying value or fair value less costs to sell and no additional depreciation is being recognized. As of February 28, 2021, the carrying amounts were $4.1 and $2.2 for the Lake Mary and Witney facilities, respectively, which are included in Property, plant and equipment, net within the Company's Condensed Consolidated Balance Sheets.

New Accounting Pronouncements

There were no new accounting pronouncements in the third fiscal quarter of 2021 which would impact the Company. Refer to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2020 for more information on current applicable authoritative guidance and its impact on the Company's financial statements.

Current Fiscal Year Adoptions:

ASU No. 2016-13
In June 2016, the FASB issued ASU No. 2016-13, "Measurement of Credit Losses on Financial Instruments" (ASU 2016-13). ASU 2016-13, which was further updated and clarified by the FASB through the issuance of additional related ASUs, amends the guidance surrounding measurement and recognition of credit losses on financial assets measured at amortized cost, including trade receivables and debt securities, by requiring recognition of an allowance for credit losses expected to be incurred over an asset's lifetime based on relevant information about past events, current conditions, and supportable forecasts impacting its ultimate collectability. This "expected loss" model may result in earlier recognition of credit losses than the current "as incurred" model, under which losses were recognized only upon an occurrence of an event that gave rise to the incurrence of a probable loss. The Company adopted ASU 2016-13 as of the beginning of the first quarter of fiscal 2021 which did not have a material impact on the Company’s Consolidated Financial Statements. Refer to Note 2, Revenues, for further discussion of the Company's accounting policy and disclosures related to the allowance for credit losses.

ASU No. 2017-04
In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which removes step two from the goodwill impairment test (comparison of implied fair value of goodwill with the carrying amount of that goodwill for a reporting unit). Instead, an entity will measure its goodwill impairment by the amount the carrying value exceeds the fair value of a reporting unit.
10

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

The Company adopted ASU 2017-04 as of the beginning of the first quarter of fiscal 2021 which resulted in no impact to the Company's Consolidated Financial Statements.

2. REVENUES

Disaggregated Revenue Data

The following table presents the Company’s disaggregated revenues by region and domestic channel:
Three months ended Nine months ended
February 28, February 29, February 28, February 29,
2021 2020 2021 2020
U.S. Book Clubs $ 35.0  $ 43.4  $ 107.7  $ 137.3 
U.S. Book Fairs 27.0  100.1  87.9  351.7 
U.S. Trade 74.7  70.4  256.9  231.6 
U.S. Education 66.2  74.3  187.0  192.5 
Non-U.S. Major Markets(1)
51.6  59.2  191.3  210.1 
Non-U.S. Other Markets(2)
23.0  25.9  68.1  79.9 
Total Revenues $ 277.5  $ 373.3  $ 898.9  $ 1,203.1 
(1) - Includes Canada, UK, Australia and New Zealand.
(2) - Primarily includes markets in Asia.

Estimated Returns

A liability for expected returns of $51.6, $43.5, and $40.6 is recorded within Other accrued expenses as of February 28, 2021, May 31, 2020, and February 29, 2020, respectively. In addition, a return asset of $3.9, $2.7, and $2.5 is recorded within Prepaid expenses and other current assets as of February 28, 2021, May 31, 2020, and February 29, 2020, respectively, for the recoverable cost of product estimated to be returned by customers.

Deferred Revenue

The Company's contract liabilities consist of advance billings and payments received from customers in excess of revenue recognized and revenue allocated to outstanding book fairs incentive credits. These liabilities are recorded within Deferred revenue on the Company's Condensed Consolidated Balance Sheets and are classified as short term, as substantially all of the associated performance obligations are expected to be satisfied, and related revenue recognized, within one year. The Company recognized revenue which was included in the opening deferred revenue balance in the amount of $15.5 and $33.0 for the three months ended February 28, 2021 and February 29, 2020, respectively, and $56.6 and $107.0 for the nine months ended February 28, 2021 and February 29, 2020, respectively.

Allowance for Credit Losses

The Company recognizes an allowance for credit losses on trade receivables that are expected to be incurred over the lifetime of the receivable. Reserves for estimated credit losses are established at the time of sale and are based on relevant information about past events, current conditions, and supportable forecasts impacting its ultimate collectability, including specific reserves on a customer-by-customer basis, creditworthiness of the Company’s customers and prior collection experience. At the time the Company determines that a receivable balance, or any portion thereof, is deemed to be permanently uncollectible, the balance is then written off.


11

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

The following table presents the change in the allowance for credit losses, which is included in Accounts Receivable, net on the Condensed Consolidated Balance Sheets:

Allowance for Credit Losses
Balance as of June 1, 2020 $ 19.9 
Current period provision 1.4 
Write-offs and other (0.4)
Balance as of August 31, 2020 $ 20.9 
Current period provision 2.1 
Write-offs and other (1.8)
Balance as of November 30, 2020 $ 21.2 
Current period provision (0.1)
Write-offs and other (2.1)
Balance as of February 28, 2021 $ 19.0 

3. SEGMENT INFORMATION

The Company categorizes its businesses into three reportable segments: Children’s Book Publishing and Distribution, Education and International.
 
Children’s Book Publishing and Distribution operates as an integrated business which includes the publication and distribution of children’s books, ebooks, media and interactive products 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, print and digital 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 three 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.


12

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

The following table sets forth information for the Company's segments for the fiscal quarters ended February 28, 2021 and February 29, 2020:
  Children’s
Book
Publishing &
Distribution
Education
Overhead (1)
Total
Domestic
International Total
Three months ended
February 28, 2021
           
Revenues $ 141.3  $ 66.3  $ —  $ 207.6  $ 69.9  $ 277.5 
Bad debt expense (0.5) 0.3  —  (0.2) 0.1  (0.1)
Depreciation and amortization (2)
6.2  3.1  11.2  20.5  1.7  22.2 
Asset impairments and write downs 2.4  —  8.5  10.9  —  10.9 
Segment operating income (loss) (6.6) 10.1  (26.6) (23.1) (1.1) (24.2)
Expenditures for other noncurrent assets (3)

9.3  3.7  8.8  21.8  2.5  24.3 
Three months ended
February 29, 2020
           
Revenues $ 220.2  $ 74.3  $ —  $ 294.5  $ 78.8  $ 373.3 
Bad debt expense 1.2  0.7  —  1.9  1.1  3.0 
Depreciation and amortization (2)
6.7  3.3  10.8  20.8  1.9  22.7 
Asset impairments and write downs —  —  40.0  40.0  —  40.0 
Segment operating income (loss) 2.2  9.8  (68.3) (56.3) (3.7) (60.0)
Expenditures for other noncurrent assets (3)
11.5  5.4  19.4  36.3  5.4  41.7 


13

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

The following table sets forth information for the Company's segments for the fiscal periods ended February 28, 2021 and February 29, 2020:

  Children’s
Book
Publishing &
Distribution
Education
Overhead (1)
Total
Domestic
International Total
Nine months ended
February 28, 2021
           
Revenues $ 472.5  $ 187.4  $ —  $ 659.9  $ 239.0  $ 898.9 
Bad debt expense (0.4) 1.7  —  1.3  2.1  3.4 
Depreciation and amortization (2)
19.4  9.5  34.6  63.5  4.8  68.3 
Asset impairments and write downs 2.4  —  8.5  10.9  —  10.9 
Segment operating income (loss) 1.9  19.8  (77.4) (55.7) 23.3  (32.4)
Segment assets at February 28, 2021 562.0  206.8  953.3  1,722.1  312.9  2,035.0 
Goodwill at February 28, 2021 47.6  68.3  —  115.9  10.1  126.0 
Expenditures for other noncurrent assets (3)

31.0  10.0  27.7  68.7  9.1  77.8 
Other noncurrent assets at February 28, 2021 168.7  124.1  482.9  775.7  88.3  864.0 
Nine months ended
February 29, 2020
           
Revenues $ 743.4  $ 192.6  $ —  $ 936.0  $ 267.1  $ 1,203.1 
Bad debt expense 2.8  1.5  —  4.3  3.0  7.3 
Depreciation and amortization (2)
19.9  9.8  32.7  62.4  5.4  67.8 
Asset impairments and write downs —  —  40.0  40.0  —  40.0 
Segment operating income (loss) 70.1  2.6  (119.3) (46.6) 4.3  (42.3)
Segment assets at February 29, 2020 594.1  208.5  853.9  1,656.5  291.9  1,948.4 
Goodwill at February 29, 2020 47.1  68.2  —  115.3  10.0  125.3 
Expenditures for other noncurrent assets (3)
40.2  15.0  37.6  92.8  18.1  110.9 
Other noncurrent assets at February 29, 2020 183.0  123.1  499.1  805.2  76.6  881.8 

(1)    Overhead includes all domestic corporate amounts not allocated to segments, including expenses and costs related to the management of corporate assets. Unallocated assets are principally comprised of deferred income taxes and property, plant and equipment related to the Company’s headquarters in the metropolitan New York area, its fulfillment and distribution facilities located in Missouri, and certain technology assets.
(2)    Includes depreciation of property, plant and equipment and amortization of intangible assets, prepublication costs, deferred financing costs and cloud computing costs.
(3)    Other noncurrent assets include property, plant and equipment, prepublication assets, cloud computing costs, royalty advances, goodwill, intangible assets and investments. Expenditures for other noncurrent assets for the International segment include expenditures for long-lived assets of $1.4 and $4.3 for the three months ended February 28, 2021 and February 29, 2020, respectively, and $4.9 and $14.2 for the nine months ended February 28, 2021 and February 29, 2020. Other noncurrent assets for the International segment include long-lived assets of $46.5 and $44.1 as of February 28, 2021 and February 29, 2020, respectively.

4. ASSET WRITE DOWN

During the third quarter of fiscal 2021, the Company committed to a plan to cease use of certain leased office space in New York City and consolidate into the company-owned New York headquarters building. The right-of-use (ROU) assets and the other long-lived assets associated with these operating leases are included in the Overhead segment. An impairment expense of $8.5 was recognized in the current period, of which $7.0 related to the ROU assets and $1.5 related to other long-lived assets, primarily leasehold improvements. Also during the third quarter of fiscal 2021, the Company committed to a plan to permanently close 12 of the 54 book fairs warehouses in the U.S. as part of a branch consolidation project. The ROU assets and the other long-lived assets
14

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

associated with these warehouse operating leases are included in the Children’s Book Publishing and Distribution segment. An impairment expense of $2.4 was recognized in the current period, primarily related to the ROU assets. The impact of the total $10.9 impairment was a loss per basic and diluted share of Class A and Common Stock of $0.23 in the three and nine month periods ended February 28, 2021.

During the third quarter of fiscal 2020, the Company implemented new systems, processes and a centralized management structure to better coordinate demand planning and procurement activity across North America, and optimized inventory utilization and management. As a result of the foregoing, the Company determined that substantial quantities of inventory were not required to meet future profitable demand, and were donated, liquidated or disposed. Accordingly, a $40.0 non cash write down was recognized in the prior period for this excess inventory and associated costs. The inventory cost, net of reserves, was $37.6. In addition, $1.6 and $0.8 of author advances and prepublication costs, respectively, were written down as they were directly related to the inventory. The related impact was a loss per basic and diluted share of Class A and Common Stock of $0.84 in the three and nine month periods ended February 29, 2020.

5. DEBT

The following table summarizes the carrying value of the Company's debt as of the dates indicated:
  February 28, 2021 May 31, 2020 February 29, 2020
US Revolving Loan $ 175.0  $ 200.0  $ — 
Unsecured lines of credit 8.5  7.9  9.7 
UK Loan 7.2  10.6  6.4 
Total debt $ 190.7  $ 218.5  $ 16.1 
Less lines of credit, short-term debt and current portion of long-term debt (190.7) (7.9) (9.7)
Total long-term debt $   $ 210.6  $ 6.4 

The Company's debt obligations as of February 28, 2021 have maturities of one year or less.

US Loan Agreement

Scholastic Corporation and Scholastic Inc. (each, a “Borrower” and together, the “Borrowers”) are parties to a 5-year credit facility with certain banks (the “Loan Agreement”) with a maturity date of January 5, 2022. The Loan Agreement allows the Company to borrow, repay or prepay and reborrow at any time prior to the maturity date. On December 16, 2020, the Company entered into an amendment to the Loan Agreement (the "Amendment") with a syndicate of banks and Bank of America, N.A., as administrative agent (the "Agent"). The Amendment was accounted for as a debt modification. The principal terms of the credit agreement, as modified, include the following:
the aggregate maximum commitments of the lenders is $250.0, a reduction from the $375.0 pre-amendment commitments, of which a maximum of $225.0 is available until the Company satisfies the pre-amendment covenants in the credit agreement;
the pre-amendment covenants include interest coverage and leverage ratio tests, in which the minimum interest coverage covenant is suspended until after the end of the Company’s fourth fiscal quarter ending May 31, 2021. In addition, the Company is subject to a new covenant requiring Consolidated Liquidity (as defined) of a minimum amount of $200.0;
the securitization of the Company’s inventory and accounts receivable;
a modified limitation on asset sales (not to exceed 10% of Consolidated Total Assets, as defined, excluding sale of collateral);
a facility fee rate of 0.40%;
a limitation on Acquisitions (as defined) to an aggregate amount of $25.0 per fiscal year;
the interest pricing is dependent upon the Borrower’s election of a rate that is either:
a Eurodollar Rate equal to the London interbank offered rate (LIBOR), subject to a minimum of 0.25%, plus a spread equal to 2.25%, until receipt of the Company's financial statements and related certificates for the fiscal year ending May 31, 2021, and a spread of 1.60% for any Eurodollar Rate Advance drawn after the delivery by the Company of its financial statements and related certificates for the fiscal year ending May 31, 2021;
- or -
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 1.00% plus, in each case, a spread equal to 1.25%, until receipt of the Company's financial statements and related certificates for the fiscal year ending May 31, 2021, and a spread of 0.60% for any Base Rate Advance drawn after the delivery by the Company of its financial statements and related certificates for the fiscal year ending May 31, 2021;
a limit on quarterly cash dividends of $5.2 per fiscal quarter plus the dollar amount of all cash dividends payable (at the rate applicable as of December 16, 2020) in such fiscal quarter in respect of capital stock of the Company issued after December 16, 2020 as a result of the regular vesting or exercise of issued and outstanding stock awards in the normal course of business. Other restricted payments (e.g., for share repurchases, etc.) are limited to the "builder basket" and leverage construct in the pre-amendment credit agreement together with an additional requirement that the Company have Consolidated Liquidity (as defined) that exceeds $300.0. Prior to the Agent's receipt of the Company's financial statements for the fiscal year ending May 31, 2021, use of this restricted payment basket (apart from dividends) is capped at $30.0;
a portion of the revolving credit facility, up to a maximum of $50.0, is available for the issuance of letters of credit. In addition, a portion of the revolving credit facility, up to a maximum of $15.0, is available for swingline loans.
Under the Loan Agreement, as amended, interest on amounts borrowed is due and payable in arrears on the last day of the interest period (defined as the period commencing on the date of the advance and ending on the last day of the period selected by the Borrower at the time each advance is made). As of February 28, 2021, the all-in borrowing rate on the outstanding borrowings was 2.50%.
As of February 28, 2021, the Company had outstanding borrowings of $175.0 under the Loan Agreement. As of the third quarter of fiscal 2021, all outstanding borrowings under the Loan Agreement are classified as current. The Company's current outstanding borrowings were incurred in the fourth quarter of fiscal 2020 as a precautionary measure due to the uncertainty resulting from the COVID-19 pandemic. While this obligation is not due until the January 5, 2022 maturity date, the Company may, from time to time, make payments to reduce this obligation when cash from operations becomes available for this purpose. The Company intends to extend the current Loan Agreement, or enter into a new long-term agreement, prior to its expiration on January 5, 2022. No borrowings were outstanding under the Loan Agreement as of February 29, 2020.

The Company was in compliance with required covenants for all periods presented. The Amendment suspended the minimum interest coverage covenant until after the end of the Company’s fourth fiscal quarter ending May 31, 2021.

At February 28, 2021, the Company had open standby letters of credit totaling $4.3 issued under certain credit lines, including $0.4 under the Loan Agreement and $3.9 under the domestic credit lines discussed below.

UK Loan Agreement

On January 24, 2020, Scholastic Limited UK entered into a term loan facility with a borrowing limit of £6.6 to fund the construction of the new UK facility in Warwickshire. The loan has a maturity date of July 31, 2021. Under the agreement, the principal balance is due in full in a single payment on the last day of the term and interest on the amount borrowed is due and payable quarterly. The interest is charged at 1.77% per annum over the Base Rate. The Base Rate is currently equal to 0.10% per annum and is subject to change. As of February 28, 2021, the Company had $4.4 outstanding on the loan and $4.7 remaining available credit under this facility.

On September 23, 2019, Scholastic Limited UK entered into a term loan agreement to borrow £2.0 to fund a land purchase in connection with the construction of the new UK facility in Warwickshire. The loan has a maturity date of July 31, 2021. Under the agreement, the principal balance is due in full in a single payment on the last day of the term and interest on the amount borrowed is due and payable quarterly. The interest is charged at 1.77% per annum over the Base Rate. The Base Rate is currently equal to 0.10% per annum and is subject to change. As of February 28, 2021, the Company had $2.8 outstanding on the loan.

Lines of Credit

As of February 28, 2021, the Company’s domestic credit lines available under unsecured money market bid rate credit lines totaled $10.0. There were no outstanding borrowings under these credit lines as of February 28, 2021, May 31, 2020 and February 29, 2020. As of February 28, 2021, availability under these unsecured money market bid rate credit lines totaled $6.1. All loans made under these credit lines are at the sole discretion of the lender and at an interest rate and term agreed to at the time each loan is made, but not to exceed 365 days. These credit lines may be renewed, if requested by the Company, at the option of the lender.

As of February 28, 2021, the Company had various local currency international credit lines totaling $31.9 underwritten by banks primarily in the United States, Canada and the United Kingdom. Outstanding borrowings under these facilities were $8.5 at February 28, 2021 at a weighted average interest rate of 4.6%, $7.9 at May 31, 2020 at a weighted average interest rate of 4.6%, and $9.7 at February 29, 2020 at a weighted average interest rate of 4.6%. As of February 28, 2021, the amounts available under these facilities totaled $23.4. These credit lines are typically available for overdraft borrowings or loans up to 364 days and may be renewed, if requested by the Company, at the sole option of the lender.

6. COMMITMENTS AND CONTINGENCIES
COVID-19
The COVID-19 pandemic and actions taken, or which may be taken in the future following any easing of current restrictions based on the future course of the pandemic, by governments, businesses and individuals to limit the spread of the virus may continue to have an adverse effect on the Company’s results of operations and financial condition.

The Company is not currently aware of any loss contingencies related to the foregoing that would require recognition in the third quarter of fiscal 2021.

Legal Matters
Various claims and lawsuits arising in the normal course of business are pending against the Company. The Company accrues a liability for such matters when it is probable that a liability has occurred and the amount of such liability can be reasonably estimated. When only a range can be estimated, the most probable amount in the range is accrued unless no amount within the range is a better estimate than any other amount, in which case the minimum amount in the range is accrued. Legal costs associated with litigation are expensed in the period in which they are incurred. The Company does not expect, in the case of those various claims and lawsuits arising in the normal course of business where a loss is considered probable or reasonably possible, that the reasonably possible losses from such claims and lawsuits (either individually or in the aggregate) would have a material adverse effect on the Company’s consolidated financial position or results of operations.


15

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

7. EARNINGS (LOSS) PER SHARE
 
The following table summarizes the reconciliation of the numerators and denominators for the basic and diluted earnings (loss) per share computation for the periods indicated:
  Three months ended Nine months ended
  February 28, February 29, February 28, February 29,
2021 2020 2021 2020
Net income (loss) attributable to Class A and Common Stockholders $ (13.9) $ (43.3) $ (18.6) $ (30.8)
Weighted average Shares of Class A Stock and Common Stock outstanding for basic earnings (loss) per share (in millions) 34.3  34.5  34.3 34.8
Dilutive effect of Class A Stock and Common Stock potentially issuable pursuant to stock-based compensation plans (in millions) * —  —  —  — 
Adjusted weighted average Shares of Class A Stock and Common Stock outstanding for diluted earnings (loss) per share (in millions) 34.3  34.5  34.3 34.8
Earnings (loss) per share of Class A Stock and Common Stock:        
Basic $ (0.41) $ (1.25) $ (0.54) $ (0.89)
Diluted $ (0.41) $ (1.25) $ (0.54) $ (0.89)
* The Company experienced a net loss for all periods presented and therefore did not report any dilutive share impact.

The Company experienced a loss for the three and nine month periods ended February 28, 2021 and February 29, 2020 and therefore did not allocate any loss to the participating restricted stock units.

The following table sets forth options outstanding pursuant to stock-based compensation plans as of the dates indicated: 
  February 28, 2021 February 29, 2020
Options outstanding pursuant to stock-based compensation plans (in millions) 5.1  3.0 

On October 1, 2020, the Company made an additional stock option grant to employees as a non-cash incentive.

There were 2.5 million of potentially anti-dilutive shares pursuant to stock-based compensation plans as of February 28, 2021.

A portion of the Company’s Restricted Stock Units ("RSUs") which are granted to employees participate in earnings through cumulative dividends which are payable and non-forfeitable to the employees upon vesting of the RSUs. Accordingly, the Company measures earnings per share based upon the lower of the Two-class method or the Treasury Stock method.

As of February 28, 2021, $67.3 remained available for future purchases of common shares under the repurchase authorization of the Board of Directors (the "Board") in effect on that date, subject to temporary limitations under the amended credit agreement as defined in Note 5, Debt. See Note 12, Treasury Stock, for a more complete description of the Company’s share buy-back program.

8. GOODWILL AND OTHER INTANGIBLES

The Company assesses goodwill and other intangible assets with indefinite lives for impairment annually or more frequently if indicators arise. The Company monitors impairment indicators in light of changes in market conditions, near and long-term demand for the Company’s products and other relevant factors.


16

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

The following table summarizes the activity in Goodwill for the periods indicated: 
February 28, 2021 May 31, 2020 February 29, 2020
Gross beginning balance $ 164.5  $ 164.8  $ 164.8 
Accumulated impairment (39.6) (39.6) (39.6)
Beginning balance $ 124.9  $ 125.2  $ 125.2 
Additions —  —  — 
Foreign currency translation 1.1  (0.3) 0.1 
Ending balance $ 126.0  $ 124.9  $ 125.3 

There were no impairment charges related to Goodwill in any of the periods presented.

The following table summarizes the activity in other intangibles included in Other assets and deferred charges on the Company’s Financial Statements for the periods indicated:
February 28, 2021 May 31, 2020 February 29, 2020
Beginning balance - Other intangibles subject to amortization $ 10.5  $ 12.2  $ 12.2 
Additions —  1.6  1.6 
Adjustments (0.5) —  — 
Amortization expense (1.7) (3.2) (2.4)
Foreign currency translation 0.5  (0.1) 0.1 
Total other intangibles subject to amortization, net of accumulated amortization of $31.8, $30.1 and $29.3, respectively
$ 8.8  $ 10.5  $ 11.5 
Total other intangibles not subject to amortization $ 2.1  $ 2.1  $ 2.1 
Total other intangibles $ 10.9  $ 12.6  $ 13.6 

There were no additions to intangible assets within the nine months ended February 28, 2021.

In fiscal 2020, the Company purchased a U.S.-based book fair business resulting in $1.6 of amortizable intangible assets. During the third quarter of fiscal 2021, the Company recorded a purchase accounting adjustment which decreased the amortizable intangible assets acquired by $0.5.

Intangible assets with indefinite lives consist principally of trademark and tradename rights. Intangible assets with definite lives consist principally of customer lists, intellectual property, tradenames and other agreements. Intangible assets with definite lives are amortized over their estimated useful lives. The weighted-average remaining useful lives of all amortizable intangible assets is approximately 4.5 years.

There were no impairment charges related to Intangible assets in any of the periods presented.

9. INVESTMENTS

Investments are included in Other assets and deferred charges on the Condensed Consolidated Balance Sheets. The following table summarizes the Company’s investments as of the dates indicated:
February 28, 2021 May 31, 2020 February 29, 2020 Segment
Equity method investments $ 33.8  $ 25.0  $ 26.4  International
Other equity investments 6.0  6.0  6.0  Children's Book Publishing & Distribution
Total Investments $ 39.8  $ 31.0  $ 32.4 

The Company’s 26.2% equity interest in a children’s book publishing business located in the UK is accounted for using the equity method of accounting. Equity method income from this investment is reported in the International segment.
17

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


The Company has a 4.6% ownership interest in a financing and production company that makes film, television, and digital programming designed for the youth market. This equity investment does not have a readily determinable fair value and the Company has elected to apply the measurement alternative and report this investment at cost, less impairment on the Company's Consolidated Balance Sheets. There have been no impairments or adjustments to the carrying value of this investment.

Income from equity investments is reported in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations and totaled $0.7 and $0.6 for the three months ended February 28, 2021 and February 29, 2020, respectively, and $6.1 and $3.6 for the nine months ended February 28, 2021 and February 29, 2020, respectively.

10. EMPLOYEE BENEFIT PLANS

The following table sets forth the components of net periodic benefit cost for the periods indicated under the Company’s defined benefit pension plan of Scholastic Ltd., an indirect subsidiary of Scholastic Corporation located in the United Kingdom (the “UK Pension Plan”), and the postretirement benefits plan, consisting of certain healthcare and life insurance benefits provided by the Company to its eligible retired United States-based employees (the “US Postretirement Benefits”), for the periods indicated:
  UK Pension Plan US Postretirement Benefits
Three months ended Three months ended
February 28, February 29, February 28, February 29,
  2021 2020 2021 2020
Components of net periodic benefit cost:    
Interest cost $ 0.2  $ 0.2  $ 0.0  $ 0.2 
Expected return on assets (0.2) (0.3) —  — 
Net amortization of prior service (credit) cost 0.0  0.0  (0.2) 0.0 
Amortization of (gains) losses 0.1  0.3  0.0  — 
Total $ 0.1  $ 0.2  $ (0.2) $ 0.2 
  UK Pension Plan US Postretirement Benefits
Nine months ended Nine months ended
February 28, February 29, February 28, February 29,
  2021 2020 2021 2020
Components of net periodic benefit cost:    
Interest cost $ 0.5 $ 0.6 $ 0.2 $ 0.5
Expected return on assets (0.6) (0.8) —  — 
Net amortization of prior service (credit) cost 0.0 0.0 (0.4) (0.1)
Amortization of (gains) losses 0.4 0.8 0.0 
Total $ 0.3 $ 0.6 $ (0.2) $ 0.4

The Company’s funding practice with respect to the UK Pension Plan is to contribute on an annual basis at least the minimum amounts required by applicable law. For the nine months ended February 28, 2021, the Company contributed $0.9 to the UK Pension Plan. The Company expects, based on actuarial calculations, to contribute cash of approximately $1.0 to the UK Pension Plan for the fiscal year ending May 31, 2021.

In the second quarter of fiscal 2021, the Company announced a change in benefits for certain US postretirement benefit plan participants. Beginning January 1, 2021, the plan will establish Health Reimbursement Accounts (HRAs) to provide these participants with additional flexibility to choose healthcare options based on individual needs. As a result of this change, the Company remeasured its Postretirement Benefit obligation as of November 30, 2020, and recognized a reduction of $7.6 to its benefit obligation and a reduction to its accumulated comprehensive loss of $7.6 in the second quarter of fiscal 2021. The related prior service credit will be amortized as a Component of net periodic benefit (cost) over the average remaining life expectancy of plan participants of approximately 12 years.
18

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

11. STOCK-BASED COMPENSATION