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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 29, 2024
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 filerNon-accelerated filerSmaller reporting companyEmerging 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 29, 2024
Common Stock, $0.01 par value 27,777,572
Class A Stock, $0.01 par value 828,100
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1


SCHOLASTIC CORPORATION
 
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED February 29, 2024

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 29,February 28,February 29,February 28,
 2024202320242023
Revenues$323.7 $324.9 $1,114.8 $1,175.7 
Operating costs and expenses:    
  Cost of goods sold 148.7 161.1 512.8 566.0 
  Selling, general and administrative expenses194.8 178.0 592.1 554.4 
  Depreciation and amortization14.6 13.5 42.1 41.0 
  Asset impairments and write downs0.5  0.5  
Total operating costs and expenses358.6 352.6 1,147.5 1,161.4 
Operating income (loss)(34.9)(27.7)(32.7)14.3 
Interest income (expense), net0.6 1.4 2.4 2.3 
Other components of net periodic benefit (cost) (0.3)0.1 (0.8)0.2 
Earnings (loss) before income taxes(34.6)(26.2)(31.1)16.8 
Provision (benefit) for income taxes(8.1)(6.9)(7.3)6.1 
Net income (loss)(26.5)(19.3)(23.8)10.7 
Less: Net income (loss) attributable to noncontrolling interest (0.1) 0.1 
Net income (loss) attributable to Scholastic Corporation$(26.5)$(19.2)$(23.8)$10.6 
Basic and diluted earnings (loss) per share of Class A and Common Stock    
Basic $(0.91)$(0.57)$(0.80)$0.31 
Diluted $(0.91)$(0.57)$(0.80)$0.30 
See accompanying notes    


3


SCHOLASTIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - UNAUDITED
(Dollar amounts in millions)
 
 Three months endedNine months ended
February 29,February 28,February 29,February 28,
 2024202320242023
Net income (loss)$(26.5)$(19.3)$(23.8)$10.7 
Other comprehensive income (loss), net:   
   Foreign currency translation adjustments (0.4)(1.0)1.6 (7.6)
   Pension and postretirement adjustments (net of tax)0.2 (0.0)0.5 (0.1)
Total other comprehensive income (loss), net$(0.2)$(1.0)$2.1 $(7.7)
Comprehensive income (loss)$(26.7)$(20.3)$(21.7)$3.0 
Less: Net income (loss) attributable to noncontrolling interest (0.1) 0.1 
Comprehensive income (loss) attributable to Scholastic Corporation$(26.7)$(20.2)$(21.7)$2.9 
See accompanying notes

4


SCHOLASTIC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
(Dollar amounts in millions, except per share data)
February 29, 2024May 31, 2023February 28, 2023
 (unaudited)(audited)(unaudited)
ASSETS   
Current Assets:   
Cash and cash equivalents$110.4 $224.5 $198.8 
Accounts receivable, net253.0 278.0 261.7 
Inventories, net282.5 334.5 367.5 
Income tax receivable 29.9 8.9 28.5 
Prepaid expenses and other current assets52.9 47.0 71.4 
Total current assets728.7 892.9 927.9 
Noncurrent Assets:
Property, plant and equipment, net512.6 521.4 510.5 
Prepublication costs, net54.0 56.4 54.0 
Operating lease right-of-use assets, net91.6 85.7 75.3 
Royalty advances, net56.2 56.8 59.6 
Goodwill132.8 132.7 131.9 
Noncurrent deferred income taxes21.0 21.0 21.4 
Other assets and deferred charges118.3 99.8 96.9 
Total noncurrent assets986.5 973.8 949.6 
Total assets$1,715.2 $1,866.7 $1,877.5 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current Liabilities:   
Lines of credit and current portion of long-term debt$31.5 $6.0 $5.2 
Accounts payable126.1 170.9 158.4 
Accrued royalties75.1 52.8 83.2 
Deferred revenue193.8 169.1 203.0 
Other accrued expenses156.7 168.9 163.9 
Accrued income taxes2.7 13.4 1.4 
Operating lease liabilities22.6 21.2 21.8 
Total current liabilities608.5 602.3 636.9 
Noncurrent Liabilities:   
Operating lease liabilities79.4 73.8 62.8 
Other noncurrent liabilities29.7 26.1 27.9 
Total noncurrent liabilities109.1 99.9 90.7 
Commitments and Contingencies (see Note 5)
   
Stockholders’ Equity:   
Preferred Stock, $1.00 par value: Authorized, 2.0 shares; Issued and Outstanding, none
$ $ $ 
Class A Stock, $0.01 par value: Authorized, 3.2, 4.0, and 4.0 shares, respectively; Issued and Outstanding, 0.8, 1.7, and 1.7 shares, respectively
0.0 0.0 0.0 
Common Stock, $0.01 par value: Authorized, 70.0 shares; Issued, 42.9 shares; Outstanding, 27.8, 30.0, and 31.4 shares, respectively
0.4 0.4 0.4 
Additional paid-in capital603.0 632.2 630.6 
Accumulated other comprehensive income (loss)(53.7)(55.8)(53.1)
Retained earnings993.5 1,035.6 966.4 
Treasury stock, at cost: 15.1, 12.9 and 11.5 shares, respectively
(545.6)(449.5)(395.9)
Total stockholders’ equity of Scholastic Corporation997.6 1,162.9 1,148.4 
  Noncontrolling interest 1.6 1.5 
Total stockholders’ equity997.6 1,164.5 1,149.9 
Total liabilities and stockholders’ equity$1,715.2 $1,866.7 $1,877.5 
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, 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 

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, 20231.7 $0.0 30.0 $0.4 $632.2 $(55.8)$1,035.6 $(449.5)$1,162.9 $1.6 $1,164.5 
Net Income (loss)— — — — — — (74.2)— (74.2)— (74.2)
Foreign currency translation adjustment— — — — — 1.8 — — 1.8 — 1.8 
Pension and post-retirement adjustments (net of tax of $0.1)
— — — — — 0.2 — — 0.2 — 0.2 
Stock-based compensation— — — — 2.3 — — — 2.3 — 2.3 
Proceeds pursuant to stock-based compensation plans— — — — 3.0 — — — 3.0 — 3.0 
Purchases of treasury stock at cost— — (0.8)— — — — (36.2)(36.2)— (36.2)
Treasury stock issued pursuant to equity-based plans— — 0.1 — (4.3)— — 5.9 1.6 — 1.6 
Dividends ($0.20 per share)
— — — — — — (6.3)— (6.3)— (6.3)
Other (noncontrolling interest)— — — — (0.5)— — — (0.5)(1.6)(2.1)
Balance at August 31, 20231.7 $0.0 29.3 $0.4 $632.7 $(53.8)$955.1 $(479.8)$1,054.6 $ $1,054.6 
Net Income (loss)— — — — — — 76.9 — 76.9 — 76.9 
Foreign currency translation adjustment— — — — — 0.2 — — 0.2 — 0.2 
Pension and post-retirement adjustments (net of tax of $0.0)
— — — — — 0.1 — — 0.1 — 0.1 
Stock-based compensation— — — — 4.1 — — — 4.1 — 4.1 
Proceeds pursuant to stock-based compensation plans— — — — 0.6 — — — 0.6 — 0.6 
Purchases of treasury stock at cost— — (1.4)— — — — (52.3)(52.3)— (52.3)
Treasury stock issued pursuant to equity-based plans— — 0.3 — (6.6)— — 7.5 0.9 — 0.9 
Dividends ($0.20 per share)
— — — — — — (6.0)— (6.0)— (6.0)
Balance at November 30, 20231.7 $0.0 28.2 $0.4 $630.8 $(53.5)$1,026.0 $(524.6)$1,079.1 $ $1,079.1 
Net Income (loss)— — — — — — (26.5)— (26.5)— (26.5)
Foreign currency translation adjustment— — — — — (0.4)— — (0.4)— (0.4)
Pension and post-retirement adjustments (net of tax of $0.1)
— — — — — 0.2 — — 0.2 — 0.2 
Stock-based compensation— — — — 2.3 — — — 2.3 — 2.3 
Proceeds pursuant to stock-based compensation plans— — — — 2.5 — — — 2.5 — 2.5 
Purchases of treasury stock at cost— — (1.4)— — — — (54.2)(54.2)— (54.2)
Treasury stock issued pursuant to equity-based plans— — 0.1 — (4.0)— — 4.6 0.6 — 0.6 
Dividends ($0.20 per share)
— — — — — — (6.0)— (6.0)— (6.0)
Other (share conversion)(0.9)— 0.9 — (28.6)— — 28.6 — —  
Balance at February 29, 20240.8 $0.0 27.8 $0.4 $603.0 $(53.7)$993.5 $(545.6)$997.6 $ $997.6 
See accompanying notes
7


SCHOLASTIC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – UNAUDITED
(Dollar amounts in millions)
 
 Nine months ended
February 29,February 28,
 20242023
Cash flows - operating activities:  
Net income (loss) attributable to Scholastic Corporation$(23.8)$10.6 
Adjustments to reconcile Net income (loss) to net cash provided by (used in) operating activities:  
   Provision for losses on accounts receivable4.0 1.8 
   Provision for losses on inventory15.7 15.2 
   Provision for losses on royalty advances2.2 2.6 
   Amortization of prepublication costs19.9 18.5 
   Depreciation and amortization49.2 48.3 
   Amortization of pension and postretirement plans0.3 (0.3)
   Deferred income taxes0.2 (0.4)
   Stock-based compensation8.7 8.2 
   Income from equity-method investments(0.1)(1.5)
   Non cash write off related to asset impairments and write downs0.5  
Changes in assets and liabilities, net of amounts acquired:  
   Accounts receivable21.2 32.9 
   Inventories36.7 (105.4)
   Prepaid expenses and other current assets(5.8)(2.9)
   Income tax receivable (21.0)(1.8)
   Royalty advances(1.5)(13.4)
   Accounts payable(44.6)(2.7)
   Accrued income taxes(10.6)(1.1)
   Accrued royalties22.3 22.8 
   Deferred revenue24.7 31.0 
   Other accrued expenses (15.3)(30.5)
   Other, net 1.8 (3.0)
Net cash provided by (used in) operating activities84.7 28.9 
Cash flows - investing activities:  
Prepublication expenditures(17.2)(17.8)
Additions to property, plant and equipment (43.8)(36.8)
Other investment and acquisition-related payments(8.5)(10.7)
Net cash provided by (used in) investing activities(69.5)(65.3)
Cash flows - financing activities:  
Borrowings under lines of credit, credit agreement and revolving loan 52.9 2.5 
Repayments of lines of credit, credit agreement and revolving loan (27.5)(3.6)
Repayment of capital lease obligations(1.7)(1.7)
Reacquisition of common stock(143.0)(75.9)
Proceeds pursuant to stock-based compensation plans8.7 18.4 
Payment of dividends(18.9)(18.9)
Other0.1 (0.1)
Net cash provided by (used in) financing activities (129.4)(79.3)
Effect of exchange rate changes on cash and cash equivalents0.1 (2.1)
Net increase (decrease) in cash and cash equivalents(114.1)(117.8)
Cash and cash equivalents at beginning of period224.5 316.6 
Cash and cash equivalents at end of period$110.4 $198.8 
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 2024 relate to the twelve-month period ending May 31, 2024.

Noncontrolling Interest

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

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

Interim Financial Statements

The accompanying Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and Article 10 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information, and should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2023. 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
9

SCHOLASTIC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED
(Dollar amounts in millions, except per share data)
Royalty advance reserves and royalty expense accruals
Impairment testing for goodwill, intangible and other long-lived assets and investments
Assets and liabilities acquired in business combinations
Variable consideration related to anticipated returns
Allocation of transaction price to contractual performance obligations

New Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures.” This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This ASU will be effective for the Company's fiscal year 2025, and interim periods starting in fiscal year 2026. Early adoption is permitted. The amendments in this ASU are to be applied retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the impact of the disclosure requirements on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740)." The amendments in this update enhance the transparency and decision usefulness of income tax disclosures to provide information to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. The amendments in this ASU require more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This ASU will be effective for the Company's fiscal year 2026. Early adoption is permitted. The amendments are to be applied prospectively, but may be applied retrospectively to all prior periods presented in the financial statements. The Company is currently assessing the impact of the disclosure requirements on its consolidated financial statements.

Refer to the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2023, for more information on current applicable authoritative guidance and its impact on the Company's financial statements.


10

SCHOLASTIC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED
(Dollar amounts in millions, except per share data)
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 29,February 28,February 29,February 28,
2024202320242023
Book Clubs - U.S.$13.3 $27.7 $48.3 $91.6 
Book Fairs - U.S.102.7 103.5 372.1 372.6 
Trade - U.S.70.0 64.8 233.5 248.9 
Trade - International (1)
7.6 8.0 35.3 33.9 
Total Children's Book Publishing and Distribution$193.6 $204.0 $689.2 $747.0 
Education Solutions - U.S.$68.5 $70.0 $215.5 $223.2 
Total Education Solutions$68.5 $70.0 $215.5 $223.2 
International - Major Markets (2)
$48.0 $41.3 $171.2 $171.8 
International - Other Markets (3)
11.1 9.6 31.6 33.7 
Total International$59.1 $50.9 $202.8 $205.5 
Total (4)
$321.2 $324.9 $1,107.5 $1,175.7 
(1) Primarily includes foreign rights and certain product sales in the UK.
(2) Includes Canada, UK, Australia and New Zealand.
(3) Primarily includes markets in Asia.
(4) Total revenues of $323.7 and $1,114.8 for the three and nine months ended February 29, 2024, respectively, included rental income of $2.5 and $7.3, respectively, related to leased space in the Company's headquarters which was not allocated to a segment. Rental income of $1.5 and $4.6 for the three and nine months ended February 28, 2023, respectively, was recognized as a reduction to Selling, general and administrative expenses.

Estimated Returns

A liability for expected returns of $38.3, $34.9, and $44.8 is recorded within Other accrued expenses as of February 29, 2024, May 31, 2023, and February 28, 2023, respectively. In addition, a return asset of $4.4, $4.7, and $3.5 is recorded within Prepaid expenses and other current assets as of February 29, 2024, May 31, 2023, and February 28, 2023, respectively, for the recoverable cost of product estimated to be returned by customers.

Contract Liabilities

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

February 29, 2024May 31, 2023February 28, 2023
Book fairs incentive credits$109.9 $110.8 $105.2 
Magazines+ subscriptions30.5 5.0 30.7 
U.S. digital subscriptions16.8 22.8 25.2 
U.S. education-related (1)
10.6 9.8 13.5 
Media-related0.1 0.0 4.4 
Stored value programs
20.1 12.4 14.8 
Other (2)
12.1 8.3 9.2 
Total contract liabilities$200.1 $169.1 $203.0 
(1) Primarily includes contract liabilities related to contracts with school districts and professional services.
(2) Primarily includes contract liabilities related to various international products and services.

The Company's contract liabilities consist of advance billings and payments received from customers in excess of revenue recognized and revenue allocated to outstanding book fairs incentive credits. As of February 29, 2024, contract liabilities of $193.8 are recorded within Deferred revenue on the Company's Condensed
11

SCHOLASTIC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – UNAUDITED
(Dollar amounts in millions, except per share data)
Consolidated Balance Sheet and are classified as short term, as substantially all of the associated performance obligations are expected to be satisfied, and related revenue recognized, within one year. The remaining $6.3 of contract liabilities as of February 29, 2024 are recorded within Other noncurrent liabilities on the Company's Condensed Consolidated Balance Sheet as the associated performance obligations are expected to be satisfied, and related revenue recognized, in excess of one year. Contract liabilities of $169.1 and $203.0 as of May 31, 2023 and February 28, 2023, respectively, are recorded within Deferred revenue on the Company's Condensed Consolidated Balance Sheets. The Company recognized revenue which was included in the opening Deferred revenue balance in the amount of $33.0 and $113.7 for the three and nine months ended February 29, 2024, respectively, and $45.9 and $126.2 for the three and nine months ended February 28, 2023, respectively.

Allowance for Credit Losses

The Company recognizes an allowance for credit losses on customer receivables that are expected to be incurred over the lifetime of the receivable. Reserves for estimated credit losses are established at the time of sale and are based on relevant information about past events, current conditions, and supportable forecasts impacting its ultimate collectability, including specific reserves on a customer-by-customer basis, creditworthiness of the Company’s customers and prior collection experience. The Company reviews new information as it becomes available and makes adjustments to the reserves accordingly. 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.

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, 2023$16.7 
Provision (benefit)0.6 
Write-offs and other(0.2)
Balance as of August 31, 2023$17.1 
Provision (benefit)2.5 
Write-offs and other(3.4)
Balance as of November 30, 2023$16.2 
Provision (benefit)0.9 
Write-offs and other(1.5)
Balance as of February 29, 2024$15.6 


12

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

The Company categorizes its businesses into three reportable segments: Children’s Book Publishing and Distribution, Education Solutions and International.
 
Children’s Book Publishing and Distribution operates as an integrated business which includes the publication and distribution of children’s books, ebooks, media and interactive products primarily in the United States through its school reading events business, which includes the book clubs and book fairs channels, and through the trade channel. This segment is comprised of two operating segments.

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

International includes the publication and distribution of products and services outside the United States by the Company’s international operations and its export businesses. This segment is comprised of three operating segments.

The following table sets forth the Company's revenue and operating income (loss) by segment for the periods indicated:

Three months endedNine months ended
February 29,February 28,February 29,February 28,
 2024202320242023
Revenues
Children's Book Publishing and Distribution$193.6 $204.0 $689.2 $747.0 
Education Solutions68.5 70.0 215.5 223.2 
International59.1 50.9 202.8 205.5 
Total (1)
$321.2 $324.9 $1,107.5 $1,175.7 
Operating income (loss)
Children's Book Publishing and Distribution$(0.8)$1.9 $68.5 $85.0 
Education Solutions(0.8)0.7 (13.7)3.4 
International(5.9)(9.0)(6.1)(5.8)
Overhead (2)
(27.4)(21.3)(81.4)(68.3)