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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, 2023
Commission File No. 000-19860
 
SCHOLASTIC CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware13-3385513
(State or other jurisdiction of
incorporation or organization)
(IRS Employer Identification No.)
557 Broadway,
New York,New York10012
(Address of principal executive offices)(Zip Code)
 
Registrant’s telephone number, including area code (212) 343-6100
Title of ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, $0.01 par valueSCHLThe 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, 2023
Common Stock, $0.01 par value 31,391,956
Class A Stock, $0.01 par value 1,656,200
schl-20230228_g1.jpg
1

SCHOLASTIC CORPORATION
 
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED February 28, 2023

INDEX
Page
  
    
 
    
 
    
 
    
 
    
 
    
    
    
    
 
  
    

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 endedNine months ended
February 28,February 28,
 2023202220232022
Revenues$324.9 $344.5 $1,175.7 $1,128.5 
Operating costs and expenses:    
  Cost of goods sold 161.1 169.6 566.0 540.9 
  Selling, general and administrative expenses178.0 180.8 554.4 512.7 
  Depreciation and amortization13.5 13.6 41.0 43.0 
Total operating costs and expenses352.6 364.0 1,161.4 1,096.6 
Operating income (loss)(27.7)(19.5)14.3 31.9 
Interest income (expense), net1.4 (0.4)2.3 (2.2)
Other components of net periodic benefit (cost) 0.1 0.1 0.2 0.1 
Gain (loss) on sale of assets and other — — — 6.2 
Earnings (loss) before income taxes(26.2)(19.8)16.8 36.0 
Provision (benefit) for income taxes(6.9)(4.7)6.1 7.1 
Net income (loss)(19.3)(15.1)10.7 28.9 
Less: Net income (loss) attributable to noncontrolling interest(0.1)0.20.1 0.1 
Net income (loss) attributable to Scholastic Corporation$(19.2)$(15.3)$10.6 $28.8 
Basic and diluted earnings (loss) per share of Class A and Common Stock    
Basic $(0.57)$(0.44)$0.31 $0.83 
Diluted $(0.57)$(0.44)$0.30 $0.80 
See accompanying notes    


3

SCHOLASTIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - UNAUDITED
(Dollar amounts in millions)
 
 Three months endedNine months ended
February 28,February 28,
 2023202220232022
Net income (loss)$(19.3)$(15.1)$10.7 $28.9 
Other comprehensive income (loss), net:   
   Foreign currency translation adjustments (1.0)1.6 (7.6)(8.6)
   Pension and postretirement adjustments (net of tax)(0.0)0.0 (0.1)0.6 
Total other comprehensive income (loss), net$(1.0)$1.6 $(7.7)$(8.0)
Comprehensive income (loss)$(20.3)$(13.5)$3.0 $20.9 
Less: Net income (loss) attributable to noncontrolling interest(0.1)0.2 0.1 0.1 
Comprehensive income (loss) attributable to Scholastic Corporation$(20.2)$(13.7)$2.9 $20.8 
See accompanying notes

4

SCHOLASTIC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(Dollar amounts in millions, except per share data)
February 28, 2023May 31, 2022February 28, 2022
 (unaudited)(audited)(unaudited)
ASSETS   
Current Assets:   
Cash and cash equivalents$198.8 $316.6 $308.9 
Accounts receivable, net261.7 299.4 287.7 
Inventories, net367.5 281.4 299.4 
Income tax receivable 28.5 26.8 22.9 
Prepaid expenses and other current assets71.4 68.1 72.4 
Assets held for sale— 3.7 — 
Total current assets927.9 996.0 991.3 
Noncurrent Assets:
Property, plant and equipment, net510.5 517.0 520.7 
Prepublication costs, net54.0 55.5 58.3 
Operating lease right-of-use assets, net75.3 81.9 69.3 
Royalty advances, net59.6 49.2 53.2 
Goodwill131.9 125.3 125.7 
Noncurrent deferred income taxes21.4 21.5 25.3 
Other assets and deferred charges96.9 94.4 96.7 
Total noncurrent assets949.6 944.8 949.2 
Total assets$1,877.5 $1,940.8 $1,940.5 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current Liabilities:   
Lines of credit and current portion of long-term debt$5.2 $6.5 $13.7 
Accounts payable158.4 162.3 173.4 
Accrued royalties83.2 61.3 84.2 
Deferred revenue203.0 172.8 176.8 
Other accrued expenses163.9 193.3 184.8 
Accrued income taxes1.4 2.7 3.9 
Operating lease liabilities21.8 20.8 22.4 
Total current liabilities636.9 619.7 659.2 
Noncurrent Liabilities:   
Long-term debt— — — 
Operating lease liabilities62.8 69.8 57.1 
Other noncurrent liabilities27.9 32.9 38.9 
Total noncurrent liabilities90.7 102.7 96.0 
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, 31.4, 32.5, and 32.8 shares, respectively
0.4 0.4 0.4 
Additional paid-in capital630.6 627.0 626.9 
Accumulated other comprehensive income (loss)(53.1)(45.4)(42.7)
Retained earnings966.4 976.5 929.5 
Treasury stock, at cost: 11.5, 10.4 and 10.1 shares, respectively
(395.9)(341.5)(330.3)
Total stockholders’ equity of Scholastic Corporation1,148.4 1,217.0 1,183.8 
  Noncontrolling interest1.5 1.4 1.5 
Total stockholders’ equity1,149.9 1,218.4 1,185.3 
Total liabilities and stockholders’ equity$1,877.5 $1,940.8 $1,940.5 
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 StockCommon StockAdditional Paid-in CapitalAccumulated
Other Comprehensive
Income (Loss)		Retained
Earnings		Treasury Stock
At Cost		Total
Stockholders'
Equity of Scholastic Corporation		Noncontrolling InterestTotal
Stockholders'
Equity
 SharesAmountSharesAmount
Balance at June 1, 20211.7$0.0 32.7$0.4 $626.5 $(34.7)$916.4 $(327.8)$1,180.8 $1.5 $1,182.3 
Net Income (loss)— — — — — — (24.2)— (24.2)(0.2)(24.4)
Foreign currency translation adjustment— — — — — (5.8)— — (5.8)— (5.8)
Pension and post-retirement adjustments (net of tax of $0.1)
— — — — — 0.1 — — 0.1 — 0.1 
Stock-based compensation— — — — 1.5 — — — 1.5 — 1.5 
Proceeds pursuant to stock-based compensation plans— — — — 0.5 — — — 0.5 — 0.5 
Treasury stock issued pursuant to equity-based plans— — 0.1 — (0.9)— — 1.5 0.6 — 0.6 
Dividends ($0.15 per share)
— — — — — — (5.2)— (5.2)— (5.2)
Balance at August 31, 20211.7 $0.0 32.8 $0.4 $627.6 $(40.4)$887.0 $(326.3)$1,148.3 $1.3 $1,149.6 
Net Income (loss)— — — — — — 68.3 — 68.3 0.1 68.4 
Foreign currency translation adjustment— — — — — (4.4)— — (4.4)— (4.4)
Pension and post-retirement adjustments (net of tax of $(0.1))
— — — — — 0.5 — — 0.5 — 0.5 
Stock-based compensation— — — — 3.0 — — — 3.0 — 3.0 
Proceeds pursuant to stock-based compensation plans— — — — 2.5 — — — 2.5 — 2.5 
Purchases of treasury stock at cost— — (0.1)— — — — (4.2)(4.2)— (4.2)
Treasury stock issued pursuant to equity-based plans— — 0.2 — (8.0)— — 8.0 — — — 
Dividends ($0.15 per share)
— — — — — — (5.2)— (5.2)— (5.2)
Other (noncontrolling interest)— — — — — — — — — (0.2)(0.2)
Balance at November 30, 20211.7 $0.0 32.9 $0.4 $625.1 $(44.3)$950.1 $(322.5)$1,208.8 $1.2 $1,210.0 
Net Income (loss)— — — — — — (15.3)— (15.3)0.2 (15.1)
Foreign currency translation adjustment— — — — — 1.6 — — 1.6 — 1.6 
Pension and post-retirement adjustments (net of tax of $0.0)
— — — — — 0.0 — — — — — 
Stock-based compensation— — — — 1.6 — — — 1.6 — 1.6 
Proceeds pursuant to stock-based compensation plans— — — — 7.3 — — — 7.3 — 7.3 
Purchases of treasury stock at cost— — (0.4)— — — — (15.4)(15.4)— (15.4)
Treasury stock issued pursuant to equity-based plans— — 0.3 — (7.1)— — 7.6 0.5 — 0.5 
Dividends ($0.15 per share)
— — — — — — (5.3)— (5.3)— (5.3)
Other (noncontrolling interest)— — — — — — — — — 0.1 0.1 
Balance at February 28, 20221.7 $0.0 32.8 $0.4 $626.9 $(42.7)$929.5 $(330.3)$1,183.8 $1.5 $1,185.3 

6

 Class A StockCommon StockAdditional Paid-in CapitalAccumulated
Other Comprehensive
Income (Loss)		Retained
Earnings		Treasury Stock
At Cost		Total
Stockholders'
Equity of Scholastic Corporation		Noncontrolling InterestTotal
Stockholders'
Equity
 SharesAmountSharesAmount
Balance at June 1, 20221.7 $0.0 32.5 $0.4 $627.0 $(45.4)$976.5 $(341.5)$1,217.0 $1.4 $1,218.4 
Net Income (loss)— — — — — — (45.5)— (45.5)0.1 (45.4)
Foreign currency translation adjustment— — — — — (9.6)— — (9.6)— (9.6)
Pension and post-retirement adjustments (net of tax of $0.1)
— — — — — 0.0 — — 0.0 — 0.0 
Stock-based compensation— — — — 1.7 — — — 1.7 — 1.7 
Proceeds pursuant to stock-based compensation plans— — — — 11.6 — — — 11.6 — 11.6 
Purchases of treasury stock at cost— — (0.1)— — — — (5.1)(5.1)— (5.1)
Treasury stock issued pursuant to equity-based plans— — 0.3 — (10.8)— — 12.4 1.6 — 1.6 
Dividends ($0.20 per share)
— — — — — — (6.9)— (6.9)— (6.9)
Balance at August 31, 20221.7 $0.0 32.7 $0.4 $629.5 $(55.0)$924.1 $(334.2)$1,164.8 $1.5 $1,166.3 
Net Income (loss)— — — — — — 75.3 — 75.3 0.1 75.4 
Foreign currency translation adjustment— — — — — 3.0 — — 3.0 — 3.0 
Pension and post-retirement adjustments (net of tax of $0.0)
— — — — — (0.1)— — (0.1)— (0.1)
Stock-based compensation— — — — 4.2 — — — 4.2 — 4.2 
Proceeds pursuant to stock-based compensation plans— — — — 1.5 — — — 1.5 — 1.5 
Purchases of treasury stock at cost— — (0.6)— — — — (26.0)(26.0)— (26.0)
Treasury stock issued pursuant to equity-based plans— — 0.3 — (6.2)— — 7.0 0.8 — 0.8 
Dividends ($0.20 per share)
— — — — — — (7.0)— (7.0)— (7.0)
Balance at November 30, 20221.7 $0.0 32.4 $0.4 $629.0 $(52.1)$992.4 $(353.2)$1,216.5 $1.6 $1,218.1 
Net Income (loss)— — — — — (19.2)— (19.2)(0.1)(19.3)
Foreign currency translation adjustment— — — — — (1.0)— — (1.0)— (1.0)
Pension and post-retirement adjustments (net of tax of $0.1)
— — — — — 0.0 — — 0.0 — 0.0 
Stock-based compensation— — — — 2.3 — — — 2.3 — 2.3 
Proceeds pursuant to stock-based compensation plans— — — — 3.1 — — — 3.1 — 3.1 
Purchases of treasury stock at cost— — (1.1)— — — — (46.9)(46.9)— (46.9)
Treasury stock issued pursuant to equity-based plans— — 0.1 — (3.8)— — 4.2 0.4 — 0.4 
Dividends ($0.20 per share)
— — — — — — (6.8)— (6.8)— (6.8)
Balance at February 28, 20231.7 $0.0 31.4 $0.4 $630.6 $(53.1)$966.4 $(395.9)$1,148.4 $1.5 $1,149.9 
See accompanying notes
7

SCHOLASTIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – UNAUDITED
(Dollar amounts in millions)
 
 Nine months ended
February 28,February 28,
 20232022
Cash flows - operating activities:  
Net income (loss) attributable to Scholastic Corporation$10.6 $28.8 
Adjustments to reconcile Net income (loss) to net cash provided by (used in) operating activities:  
   Provision for losses on accounts receivable1.8 8.5 
   Provision for losses on inventory15.2 12.7 
   Provision for losses on royalty advances2.6 2.6 
   Amortization of prepublication costs18.5 19.9 
   Depreciation and amortization48.3 49.0 
   Amortization of pension and postretirement plans(0.3)(0.0)
   Deferred income taxes(0.4)(0.3)
   Stock-based compensation8.2 6.1 
   Income from equity-method investments(1.5)(1.6)
   (Gain) loss on sale of assets— (6.2)
Changes in assets and liabilities, net of amounts acquired:  
   Accounts receivable32.9 (43.4)
   Inventories(105.4)(46.2)
   Prepaid expenses and other current assets(2.9)(25.8)
   Income tax receivable (1.8)65.8 
   Royalty advances(13.4)(12.5)
   Accounts payable(2.7)37.2 
   Accrued income taxes(1.1)1.1 
   Accrued royalties22.8 39.5 
   Deferred revenue31.0 78.4 
   Other accrued expenses (30.5)(19.4)
   Other, net (3.0)(15.7)
Net cash provided by (used in) operating activities28.9 178.5 
Cash flows - investing activities:  
Prepublication expenditures(17.8)(13.0)
Additions to property, plant and equipment (36.8)(28.0)
Net proceeds from sale of assets — 10.4 
Other investment and acquisition-related payments(10.7)0.1 
Net cash provided by (used in) investing activities(65.3)(30.5)
Cash flows - financing activities:  
Borrowings under lines of credit, credit agreement and revolving loan 2.5 2.4 
Repayments of lines of credit, credit agreement and revolving loan (3.6)(178.2)
Repayment of capital lease obligations(1.7)(1.7)
Reacquisition of common stock(75.9)(19.5)
Proceeds pursuant to stock-based compensation plans18.4 9.6 
Payment of dividends(18.9)(15.5)
Other(0.1)— 
Net cash provided by (used in) financing activities (79.3)(202.9)
Effect of exchange rate changes on cash and cash equivalents(2.1)(2.7)
Net increase (decrease) in cash and cash equivalents(117.8)(57.6)
Cash and cash equivalents at beginning of period316.6 366.5 
Cash and cash equivalents at end of period$198.8 $308.9 
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 2023 relate to the twelve-month period ending May 31, 2023.

Noncontrolling Interest

The Company owns a 95.0% majority ownership interest in Make Believe Ideas Limited ("MBI"), a UK-based children's book publishing company. The founder and chief executive officer of MBI retains a 5.0% noncontrolling ownership interest in MBI. The Company fully consolidated MBI as of the acquisition date, and the 5.0% noncontrolling interest is classified within stockholder's equity.

Interim Financial Statements

The accompanying Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and Article 10 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information, and should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2022. 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 Solutions businesses operate on a school-year basis; therefore, the Company’s business is highly seasonal. As a result, the Company’s revenues in the first and third quarters of the fiscal year generally are lower than its revenues in the other two fiscal quarters. Typically, school-based channels and magazine revenues are minimal in the first quarter of the fiscal year as schools are not in session. Education channel revenues are generally higher in the fourth quarter. Trade sales can vary throughout the year due to varying release dates of published titles.

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 credit losses
•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
9
SCHOLASTIC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED
(Dollar amounts in millions, except per share data)
•Assets and liabilities acquired in business combinations
•Variable consideration related to anticipated returns
•Allocation of transaction price to contractual performance obligations

Sale of Long-lived Assets

There were no sales of long-lived assets during the second and third quarters of fiscal 2023. Refer to Note 4, Asset Write Down and Sale, for details regarding the disposition of the direct sales business in Asia completed during the first quarter of fiscal 2023.

During the second quarter of fiscal 2022, the Company sold a facility, which included office and warehouse space, located in Lake Mary, Florida as part of an initiative to rightsize its real estate footprint to reduce occupancy costs. The long-lived assets, which consisted of land, building, building improvements, furniture and fixtures, were included in the Children's Book Publishing and Distribution segment. These assets had a carrying value of $4.2 and were classified as held for sale as of the third quarter of fiscal 2021. The net proceeds from the sale were $10.4 and the Company recognized a gain on sale of $6.2. This amount is included within Gain (loss) on sale of assets and other within the Company's Condensed Consolidated Statements of Operations.

New Accounting Pronouncements

In December 2022, ASU No. 2022-6, "Reference Rate Reform (Topic 848): Deferral of the Sunset Date for Topic 848" was issued. Refer to the Current Fiscal Year Adoptions section below for further details. Refer to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2022 for more information on current applicable authoritative guidance and its impact on the Company's financial statements.

Current Fiscal Year Adoptions:

ASU No. 2021-8
The Company adopted ASU No. 2021-8, "Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers" (ASU 2021-8), in the beginning of the second quarter of fiscal 2023. The updates in this guidance seek to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the following: 1. Recognition of an acquired contract liability and 2. Payment terms and their effect on subsequent revenue recognized by the acquirer. The amendments in ASU 2021-8 improve comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. The amendments improve comparability by specifying for all acquired revenue contracts regardless of their timing of payment: (1) the circumstances in which the acquirer should recognize contract assets and contract liabilities that are acquired in a business combination and (2) how to measure those contract assets and contract liabilities. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The Company early adopted ASU 2021-8 and applied the amendments in accounting for the acquisition of Learning Ovations, Inc. during the second quarter of fiscal 2023, which was accounted for as a business combination under the acquisition method of accounting. The adoption of this ASU did not have a material impact to the Company's Condensed Consolidated Financial Statements.

ASU No. 2020-4 and ASU No. 2022-6
In March 2020, the FASB issued ASU No. 2020-4, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" (ASU 2020-4), and in December 2022, the FASB issued ASU No. 2022-6, "Reference Rate Reform (Topic 848): Deferral of the Sunset Date for Topic 848" (ASU 2022-6). ASU 2020-4 provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. This guidance is elective and applies to all entities that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2022-6 defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. During the third quarter of fiscal 2023, the Company adopted the expedient in accounting for the amendments to the Company's Credit Agreement which were made as a result of the replacement of LIBOR as a reference rate. Refer to Note 5, Debt, for further details regarding the interest
10
SCHOLASTIC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED
(Dollar amounts in millions, except per share data)
rate effected by these amendments, which will be applied prospectively. The adoption of these ASUs did not have a material impact to the Company's Condensed Consolidated Financial Statements.

2. REVENUES

Disaggregated Revenue Data

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

Three months endedNine months ended
February 28,February 28,
2023202220232022
Book Clubs - U.S.$27.7 $40.5 $91.6 $99.2 
Book Fairs - U.S.103.5 76.0 372.6 268.2 
Trade - U.S.64.8 77.1 248.9 266.6 
Trade - International(1)
8.0 7.4 33.9 35.3 
Total Children's Book Publishing and Distribution$204.0 $201.0 $747.0 $669.3 
Education Solutions - U.S.$70.0 $77.2 $223.2 $236.8 
Total Education Solutions$70.0 $77.2 $223.2 $236.8 
International - Major Markets(2)
$41.3 $48.8 $171.8 $175.1 
International - Other Markets(3)
9.6 17.5 33.7 47.3 
Total International$50.9 $66.3 $205.5 $222.4 
Total Revenues$324.9 $344.5 $1,175.7 $1,128.5 
(1) Primarily includes foreign rights and certain product sales in the UK.
(2) Includes Canada, UK, Australia and New Zealand.
(3) Primarily includes markets in Asia.

Estimated Returns

A liability for expected returns of $44.8, $42.2, and $48.8 is recorded within Other accrued expenses as of February 28, 2023, May 31, 2022, and February 28, 2022, respectively. In addition, a return asset of $3.5, $5.3, and $4.5 is recorded within Prepaid expenses and other current assets as of February 28, 2023, May 31, 2022, and February 28, 2022, respectively, for the recoverable cost of product estimated to be returned by customers.

Deferred Revenue

The following table presents further detail regarding the Company's deferred revenue balance as of the dates indicated:

February 28, 2023May 31, 2022February 28, 2022
Book fairs incentive credits$105.2 $100.1 $82.7 
Magazines+ subscriptions30.7 4.5 30.4 
U.S. digital subscriptions25.2 19.5 18.2 
U.S. education-related(1)
13.5 13.6 12.5 
Media-related4.4 15.8 11.6 
Stored value cards14.8 9.4 8.8 
Other(2)
9.2 9.9 12.6 
Total deferred revenue$203.0 $172.8 $176.8 
(1) Primarily includes deferred revenue related to contracts with school districts and professional services.
(2) Primarily includes deferred revenue related to various international products and services.

The Company's deferred revenue consists of contract liabilities for advance billings and payments received from customers in excess of revenue recognized and revenue allocated to outstanding book fairs incentive credits.