2019 | 2018 | 2017 | |||||||||
United States | $ | 8.7 | $ | (18.4 | ) | $ | 78.7 | ||||
Non-United States | 17.3 | 16.9 | 9.2 | ||||||||
Total | $ | 26.0 | $ | (1.5 | ) | $ | 87.9 |
2019 | 2018 | 2017 | |||||||||
Current | |||||||||||
Federal | $ | (0.2 | ) | $ | (3.6 | ) | $ | 8.3 | |||
State and local | 4.8 | 0.7 | 1.8 | ||||||||
Non-United States | 2.8 | 4.9 | 5.4 | ||||||||
Total Current | $ | 7.4 | $ | 2.0 | $ | 15.5 | |||||
Deferred | |||||||||||
Federal | $ | 1.1 | $ | 5.0 | $ | 17.7 | |||||
State and local | 3.1 | (3.5 | ) | 2.2 | |||||||
Non-United States | (1.2 | ) | — | — | |||||||
Total Deferred | $ | 3.0 | $ | 1.5 | $ | 19.9 | |||||
Total Current and Deferred | $ | 10.4 | $ | 3.5 | $ | 35.4 |
2019 | 2018 | 2017 | |||||||||
Computed federal statutory provision | 21.0 | % | 29.2 | % | 35.0 | % | |||||
State income tax provision, net of federal income tax benefit | 25.7 | 37.1 | 3.3 | ||||||||
Difference in effective tax rates on earnings of foreign subsidiaries | 2.3 | (1.3 | ) | — | |||||||
GILTI inclusion | 3.4 | — | — | ||||||||
Charitable contributions | (0.6 | ) | 28.6 | (0.3 | ) | ||||||
Tax credits | (3.1 | ) | 42.8 | (0.5 | ) | ||||||
Valuation allowances | 2.3 | 68.1 | 0.1 | ||||||||
Uncertain positions | (6.3 | ) | 110.3 | 2.9 | |||||||
Remeasurement of deferred tax balances | — | (371.3 | ) | — | |||||||
Permanent differences | 0.1 | (177.6 | ) | (0.3 | ) | ||||||
Other - net | (4.8 | ) | 0.8 | 0.1 | |||||||
Effective tax rates | 40.0 | % | (233.3 | )% | 40.3 | % | |||||
Total provision for income taxes | $ | 10.4 | $ | 3.5 | $ | 35.4 |
2019 | 2018 | ||||||
Deferred tax assets: | |||||||
Tax uniform capitalization | $ | 12.8 | $ | 9.6 | |||
Prepublication expenses | 1.2 | 0.7 | |||||
Inventory reserves | 15.1 | 15.0 | |||||
Allowance for doubtful accounts | 1.9 | 2.2 | |||||
Deferred revenue | 23.5 | — | |||||
Other reserves | 17.2 | 16.9 | |||||
Postretirement, post employment and pension obligations | 6.0 | 7.1 | |||||
Tax carryforwards | 31.8 | 26.9 | |||||
Other - net | 13.7 | 13.7 | |||||
Gross deferred tax assets | $ | 123.2 | $ | 92.1 | |||
Valuation allowance | (25.7 | ) | (25.1 | ) | |||
Total deferred tax assets | $ | 97.5 | $ | 67.0 | |||
Deferred tax liabilities: | |||||||
Prepaid expenses | (0.2 | ) | (0.4 | ) | |||
Depreciation and amortization | (60.3 | ) | (41.4 | ) | |||
Total deferred tax liability | $ | (60.5 | ) | $ | (41.8 | ) | |
Total net deferred tax assets | $ | 37.0 | $ | 25.2 |
Gross unrecognized benefits at May 31, 2016 | $ | 17.9 | |
Decreases related to prior year tax positions | (6.3 | ) | |
Increase related to prior year tax positions | 0.1 | ||
Increases related to current year tax positions | 3.0 | ||
Settlements during the period | (0.6 | ) | |
Lapse of statute of limitation | — | ||
Gross unrecognized benefits at May 31, 2017 | $ | 14.1 | |
Decreases related to prior year tax positions | (2.6 | ) | |
Increase related to prior year tax positions | 0.4 | ||
Increases related to current year tax positions | 0.5 | ||
Settlements during the period | (1.9 | ) | |
Lapse of statute of limitation | (0.4 | ) | |
Gross unrecognized benefits at May 31, 2018 | $ | 10.1 | |
Decreases related to prior year tax positions | (1.1 | ) | |
Increase related to prior year tax positions | 0.2 | ||
Increases related to current year tax positions | 0.7 | ||
Settlements during the period | (0.2 | ) | |
Lapse of statute of limitation | (0.7 | ) | |
Gross unrecognized benefits at May 31, 2019 | $ | 9.0 |
Royalty Advances | Minimum Print Quantities | ||||||
2020 | $ | 6.7 | $ | 49.2 | |||
2021 | 2.6 | 1.7 | |||||
2022 | 2.1 | 1.4 | |||||
2023 | 0.2 | 1.4 | |||||
2024 and thereafter | — | — | |||||
Total commitments | $ | 11.6 | $ | 53.7 |
Authorizations | Amount | |||
July 2015 | $ | 50.0 | ||
March 2018 | 50.0 | |||
Total current Board authorizations | $ | 100.0 | ||
Less repurchases made under the authorizations as of May 31, 2019 | $ | (47.2 | ) | |
Remaining Board authorization at May 31, 2019 | $ | 52.8 |
(Amounts in millions) | |||||||||||||||||||
Years ended May 31, | |||||||||||||||||||
Balance at Beginning of Year | Expensed | Write-Offs and Other | Balance at End of Year | ||||||||||||||||
2019 | |||||||||||||||||||
Allowance for doubtful accounts | $ | 12.4 | $ | 7.0 | $ | 7.8 | $ | 11.6 | |||||||||||
Returns liability, after adoption of Topic 606 (1) | 30.0 | 67.2 | 62.7 | (1) | 34.5 | ||||||||||||||
Reserves for obsolescence | 67.5 | 20.8 | 15.4 | 72.9 | |||||||||||||||
Reserve for royalty advances | 97.0 | 6.8 | 0.9 | 102.9 | |||||||||||||||
2018 | |||||||||||||||||||
Allowance for doubtful accounts | $ | 13.7 | $ | 9.5 | $ | 10.8 | $ | 12.4 | |||||||||||
Reserve for returns | 36.3 | 54.5 | 60.8 | (2) | 30.0 | ||||||||||||||
Reserves for obsolescence | 71.9 | 18.4 | 22.8 | 67.5 | |||||||||||||||
Reserve for royalty advances | 93.8 | 4.1 | 0.9 | 97.0 | |||||||||||||||
2017 | |||||||||||||||||||
Allowance for doubtful accounts | $ | 16.1 | $ | 11.0 | $ | 13.4 | $ | 13.7 | |||||||||||
Reserve for returns | 32.1 | 80.4 | 76.2 | (2) | 36.3 | ||||||||||||||
Reserves for obsolescence | 73.9 | 16.0 | 18.0 | 71.9 | |||||||||||||||
Reserve for royalty advances | 90.1 | 4.3 | 0.6 | 93.8 |
(1) | In fiscal year 2019, this balance was reclassified from a reduction to Accounts receivable, net, to a current liability within Other accrued expenses in accordance with Topic 606. |
(2) | Represents actual returns charged to the reserve. |
2019 | 2018 | ||||||
Accrued payroll, payroll taxes and benefits | $ | 41.2 | $ | 47.1 | |||
Accrued bonus and commissions | 13.7 | 22.4 | |||||
Accrued other taxes | 29.3 | 25.7 | |||||
Returns liability (1) | 34.5 | — | |||||
Accrued advertising and promotions(1) | 9.6 | 35.8 | |||||
Other accrued expenses | 36.5 | 46.9 | |||||
Total accrued expenses | $ | 164.8 | $ | 177.9 |
2019 | 2018 | ||||||
Beginning balance | $ | 4.2 | $ | 6.6 | |||
Accruals | 10.6 | 9.9 | |||||
Payments | (9.3 | ) | (12.3 | ) | |||
Ending balance | $ | 5.5 | $ | 4.2 |
Operating Leases | Capital Leases | |||||
2020 | $ | 27.8 | $ | 2.0 | ||
2021 | 22.3 | 2.0 | ||||
2022 | 17.7 | 1.9 | ||||
2023 | 12.3 | 1.7 | ||||
2024 | 7.1 | 1.6 | ||||
Thereafter | 11.7 | 2.1 | ||||
Total minimum lease payments | $ | 98.9 | $ | 11.3 | ||
Less: amount representing interest | (1.2 | ) | ||||
Present value of net minimum capital lease payments | $ | 10.1 | ||||
Less: current maturities of capital lease obligations | (1.7 | ) | ||||
Long-term capital lease obligations | $ | 8.4 |
Royalty Advances | Minimum Print Quantities | ||||||
2020 | $ | 6.7 | $ | 49.2 | |||
2021 | 2.6 | 1.7 | |||||
2022 | 2.1 | 1.4 | |||||
2023 | 0.2 | 1.4 | |||||
2024 and thereafter | — | — | |||||
Total commitments | $ | 11.6 | $ | 53.7 |
Operating Leases | Capital Leases | |||||
2020 | $ | 27.8 | $ | 2.0 | ||
2021 | 22.3 | 2.0 | ||||
2022 | 17.7 | 1.9 | ||||
2023 | 12.3 | 1.7 | ||||
2024 | 7.1 | 1.6 | ||||
Thereafter | 11.7 | 2.1 | ||||
Total minimum lease payments | $ | 98.9 | $ | 11.3 | ||
Less: amount representing interest | (1.2 | ) | ||||
Present value of net minimum capital lease payments | $ | 10.1 | ||||
Less: current maturities of capital lease obligations | (1.7 | ) | ||||
Long-term capital lease obligations | $ | 8.4 |
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
2019 | 2018 | ||||||||||||||
Loan Agreement: | |||||||||||||||
Revolving Loan | $ | — | $ | — | $ | — | $ | — | |||||||
Unsecured Lines of Credit (weighted average interest rates of 4.1% and 2.9%, respectively) | 7.3 | 7.3 | 7.9 | 7.9 | |||||||||||
Total debt | $ | 7.3 | $ | 7.3 | $ | 7.9 | $ | 7.9 | |||||||
Less: lines of credit and current portion of long-term debt | (7.3 | ) | (7.3 | ) | (7.9 | ) | (7.9 | ) | |||||||
Total long-term debt | $ | — | $ | — | $ | — | $ | — |
• | the borrowing limit was reduced to $375.0 from $425.0; |
• | 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%, as well as, in each case, an applicable spread ranging from 0.175% to 0.60%, as determined by the Company’s prevailing consolidated debt to total capital ratio. |
• | A Eurodollar Rate equal to the London interbank offered rate (LIBOR) plus an applicable spread ranging from 1.175% to 1.60%, as determined by the Company’s prevailing consolidated debt to total capital ratio. |
Class A Stock | Common Stock | Preferred Stock | ||||||
Authorized | 4,000,000 | 70,000,000 | 2,000,000 | |||||
Reserved for Issuance | — | 8,501,147 | — | |||||
Outstanding | 1,656,200 | 33,410,323 | — |
• | Scholastic Corporation 2001 Stock Incentive Plan (the “2001 Plan”), under which no further awards can be made; |
• | Scholastic Corporation 2011 Stock Incentive Plan (the “2011 Plan”); |
• | Scholastic Corporation 2007 Outside Directors Stock Incentive Plan (the “2007 Directors Plan”), under which no further grants can be made; and |
• | Scholastic Corporation 2017 Outside Directors Stock Incentive Plan (the “2017 Directors Plan”) |
2019 | 2018 | 2017 | ||||||||||||
Total intrinsic value of stock options exercised | $ | 2.1 | $ | 5.0 | $ | 11.0 | ||||||||
Total stock-based compensation cost (pretax) | 8.3 | 10.7 | 10.1 | |||||||||||
Tax benefits (shortfalls) related to stock-based compensation cost | 0.5 | (0.2 | ) | 0.8 | ||||||||||
Weighted average grant date fair value per option | $ | 11.97 | $ | 10.45 | $ | 12.70 |
Options | Weighted Average Exercise Price | Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in millions) | |||||||||||
Outstanding at May 31, 2018 | 2,822,126 | $ | 35.52 | |||||||||||
Granted | 358,369 | 42.77 | ||||||||||||
Exercised | (214,273 | ) | 31.87 | |||||||||||
Expired, canceled and forfeited | (24,093 | ) | 42.02 | |||||||||||
Outstanding at May 31, 2019 | 2,942,129 | $ | 36.62 | 6.3 | $ | 3.6 | ||||||||
Exercisable at May 31, 2019 | 1,799,534 | $ | 34.14 | 5.0 | $ | 3.6 |
2019 | 2018 | 2017 | ||||||||||||
Granted | 82,044 | 68,089 | 52,331 | |||||||||||
Weighted average grant date price per unit | $ | 42.86 | $ | 38.97 | $ | 39.22 |
2019 | 2018 | 2017 | ||||||||||||
MSPP Stock Units allocated | 17,239 | 73,965 | 42,565 | |||||||||||
Purchase price per unit | $ | 30.48 | $ | 28.76 | $ | 28.49 |
Restricted stock units and MSPP stock units | Weighted Average grant date fair value | ||||||
Nonvested as of May 31, 2018 | 298,094 | $ | 21.78 | ||||
Granted | 99,283 | 37.07 | |||||
Vested | (107,315 | ) | 25.19 | ||||
Forfeited | (2,498 | ) | 42.02 | ||||
Nonvested as of May 31, 2019 | 287,564 | $ | 25.61 |
2019 | 2018 | 2017 | |||||||||
Shares issued | 48,000 | 50,516 | 42,799 | ||||||||
Weighted average purchase price per share | $ | 36.25 | $ | 33.74 | $ | 35.58 |
2019 | 2018 | 2017 | |||||||||
Earnings (loss) from continuing operations attributable to Class A and Common Shares | $ | 15.5 | $ | (5.0 | ) | $ | 52.4 | ||||
Earnings (loss) from discontinued operations attributable to Class A and Common Shares, net of tax | $ | — | $ | — | $ | (0.2 | ) | ||||
Net income (loss) attributable to Class A and Common Shares | $ | 15.5 | $ | (5.0 | ) | $ | 52.2 | ||||
Weighted average Shares of Class A Stock and Common Stock outstanding for basic earnings (loss) per share (in millions) | 35.2 | 35.0 | 34.7 | ||||||||
Dilutive effect of Class A Stock and Common Stock potentially issuable pursuant to stock-based compensation plans (in millions) | 0.6 | — | 0.7 | ||||||||
Adjusted weighted average Shares of Class A Stock and Common Stock outstanding for diluted earnings (loss) per share (in millions) | 35.8 | 35.0 | 35.4 | ||||||||
Earnings (loss) per share of Class A Stock and Common Stock | |||||||||||
Basic earnings (loss) per share: | |||||||||||
Earnings (loss) from continuing operations | $ | 0.44 | $ | (0.14 | ) | $ | 1.51 | ||||
Earnings (loss) from discontinued operations, net of tax | $ | — | $ | — | $ | (0.00 | ) | ||||
Net income (loss) | $ | 0.44 | $ | (0.14 | ) | $ | 1.51 | ||||
Diluted earnings (loss) per share: | |||||||||||
Earnings (loss) from continuing operations | $ | 0.43 | $ | (0.14 | ) | $ | 1.48 | ||||
Earnings (loss) from discontinued operations, net of tax | $ | — | $ | — | $ | (0.01 | ) | ||||
Net income (loss) | $ | 0.43 | $ | (0.14 | ) | $ | 1.47 |
2019 | 2018 | ||
Options outstanding pursuant to stock-based compensation plans (in millions) | 2.9 | 2.8 |
Net carrying value as of | Fair value measured and recognized using | Impairment losses for fiscal year ended | Additions due to acquisitions | ||||||||||||||||||||
May 31, 2019 | Level 1 | Level 2 | Level 3 | May 31, 2019 | |||||||||||||||||||
Property, plant and equipment, net | $ | — | $ | — | $ | — | $ | — | $ | 0.9 | $ | — | |||||||||||
Investment acquired | 6.0 | — | — | 6.0 | — | 6.0 | |||||||||||||||||
Intangible assets | 4.9 | — | — | 5.1 | — | 5.1 |
Net carrying value as of | Fair value measured and recognized using | Impairment losses for fiscal year ended | Additions due to other investments and acquisitions | ||||||||||||||||||||
May 31, 2018 | Level 1 | Level 2 | Level 3 | May 31, 2018 | |||||||||||||||||||
Property, plant and equipment, net | $ | — | $ | — | $ | — | $ | — | $ | 11.2 | $ | — | |||||||||||
Intangible assets | 3.1 | — | — | 3.3 | — | 3.3 |
Net carrying value as of | Fair value measured and recognized using | Impairment losses for fiscal year ended | Additions due to other investments and acquisitions | ||||||||||||||||||||
May 31, 2017 | Level 1 | Level 2 | Level 3 | May 31, 2017 | |||||||||||||||||||
Property, plant and equipment, net | $ | — | $ | — | $ | — | $ | — | $ | 5.7 | $ | — | |||||||||||
Goodwill | 2.8 | — | — | 2.8 | — | 2.8 | |||||||||||||||||
Prepublication assets | — | — | — | — | 1.1 | — | |||||||||||||||||
Intangible assets | 6.8 | — | — | 7.0 | — | 7.0 |
• | Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. |
• | Level 2 Observable inputs other than unadjusted quoted prices in active markets for identical assets or liabilities such as: |
◦ | Quoted prices for similar assets or liabilities in active markets |
◦ | Quoted prices for identical or similar assets or liabilities in inactive markets |
◦ | Inputs other than quoted prices that are observable for the asset or liability |
◦ | Inputs that are derived principally from or corroborated by observable market data by correlation or other means |
• | Level 3 Unobservable inputs in which there is little or no market data available, which are significant to the fair value measurement and require the Company to develop its own assumptions. |
• | Long-lived assets |
• | Investments |
• | Assets acquired in a business combination |
• | Impairment assessment of goodwill and intangible assets |
• | Long-lived assets held for sale |
Net carrying value as of | Fair value measured and recognized using | Impairment losses for fiscal year ended | Additions due to acquisitions | ||||||||||||||||||||
May 31, 2019 | Level 1 | Level 2 | Level 3 | May 31, 2019 | |||||||||||||||||||
Property, plant and equipment, net | $ | — | $ | — | $ | — | $ | — | $ | 0.9 | $ | — | |||||||||||
Investment acquired | 6.0 | — | — | 6.0 | — | 6.0 | |||||||||||||||||
Intangible assets | 4.9 | — | — | 5.1 | — | 5.1 |
Net carrying value as of | Fair value measured and recognized using | Impairment losses for fiscal year ended | Additions due to other investments and acquisitions | ||||||||||||||||||||
May 31, 2018 | Level 1 | Level 2 | Level 3 | May 31, 2018 | |||||||||||||||||||
Property, plant and equipment, net | $ | — | $ | — | $ | — | $ | — | $ | 11.2 | $ | — | |||||||||||
Intangible assets | 3.1 | — | — | 3.3 | — | 3.3 |
Net carrying value as of | Fair value measured and recognized using | Impairment losses for fiscal year ended | Additions due to other investments and acquisitions | ||||||||||||||||||||
May 31, 2017 | Level 1 | Level 2 | Level 3 | May 31, 2017 | |||||||||||||||||||
Property, plant and equipment, net | $ | — | $ | — | $ | — | $ | — | $ | 5.7 | $ | — | |||||||||||
Goodwill | 2.8 | — | — | 2.8 | — | 2.8 | |||||||||||||||||
Prepublication assets | — | — | — | — | 1.1 | — | |||||||||||||||||
Intangible assets | 6.8 | — | — | 7.0 | — | 7.0 |
2019 | 2018 | ||||||
Gross beginning balance | $ | 158.8 | $ | 158.5 | |||
Accumulated impairment | (39.6 | ) | (39.6 | ) | |||
Beginning balance | $ | 119.2 | $ | 118.9 | |||
Additions | 6.3 | — | |||||
Foreign currency translation | (0.3 | ) | 0.2 | ||||
Other | — | 0.1 | |||||
Ending balance | $ | 125.2 | $ | 119.2 |
2019 | 2018 | ||||||
Other intangibles subject to amortization - beginning balance | $ | 10.1 | $ | 9.0 | |||
Additions | 4.5 | 3.3 | |||||
Other | 0.6 | — | |||||
Amortization expense | (2.8 | ) | (2.1 | ) | |||
Foreign currency translation | (0.2 | ) | (0.1 | ) | |||
Total other intangibles subject to amortization, net of accumulated amortization of $26.9 and $24.1, respectively | $ | 12.2 | $ | 10.1 | |||
Total other intangibles not subject to amortization | 2.1 | 2.1 | |||||
Total other intangibles | $ | 14.3 | $ | 12.2 |
2020 | $ | 3.1 | |
2021 | 2.7 | ||
2022 | 2.4 | ||
2023 | 1.1 | ||
2024 | 0.8 | ||
Thereafter | 2.1 |
Restricted stock units and MSPP stock units | Weighted Average grant date fair value | ||||||
Nonvested as of May 31, 2018 | 298,094 | $ | 21.78 | ||||
Granted | 99,283 | 37.07 | |||||
Vested | (107,315 | ) | 25.19 | ||||
Forfeited | (2,498 | ) | 42.02 | ||||
Nonvested as of May 31, 2019 | 287,564 | $ | 25.61 |
• | Accounts receivable allowance for doubtful accounts |
• | Pension and other postretirement obligations |
• | 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, intangibles 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 |
2019 | 2018 | 2017 | |||||||||
Estimated fair value of stock options granted | $ | 11.97 | $ | 10.45 | $ | 12.70 | |||||
Assumptions: | |||||||||||
Expected dividend yield | 1.4 | % | 1.5 | % | 1.5 | % | |||||
Expected stock price volatility | 28.4 | % | 29.8 | % | 36.6 | % | |||||
Risk-free interest rate | 3.0 | % | 2.1 | % | 1.5 | % | |||||
Average expected life of options | 6 years | 6 years | 6 years |
2019 | 2018 | ||||||
Accrued payroll, payroll taxes and benefits | $ | 41.2 | $ | 47.1 | |||
Accrued bonus and commissions | 13.7 | 22.4 | |||||
Accrued other taxes | 29.3 | 25.7 | |||||
Returns liability (1) | 34.5 | — | |||||
Accrued advertising and promotions(1) | 9.6 | 35.8 | |||||
Other accrued expenses | 36.5 | 46.9 | |||||
Total accrued expenses | $ | 164.8 | $ | 177.9 |
2019 | 2018 | ||||||
Beginning balance | $ | 4.2 | $ | 6.6 | |||
Accruals | 10.6 | 9.9 | |||||
Payments | (9.3 | ) | (12.3 | ) | |||
Ending balance | $ | 5.5 | $ | 4.2 |
U.S. Pension Plan | UK Pension Plan | Postretirement Benefits | |||||||||||||||||||||||||
2019 * | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||
Weighted average assumptions used to determine benefit obligations: | |||||||||||||||||||||||||||
Discount rate | * | — | % | 2.4 | % | 2.3 | % | 2.6 | % | 2.5 | % | 3.6 | % | 4.0 | % | 3.7 | % | ||||||||||
Rate of compensation increase | * | — | — | 4.1 | % | 3.9 | % | 4.1 | % | — | — | — | |||||||||||||||
Weighted average assumptions used to determine net periodic benefit cost: | |||||||||||||||||||||||||||
Discount rate (1) | * | 2.3 | % | 3.5 | % | 2.4 | % | 2.5 | % | 3.5 | % | 3.7 | % | 3.7 | % | 3.7 | % | ||||||||||
Expected short-term return on plan assets (2) | * | 4.8 | % | 4.8 | — | — | — | — | — | — | — | — | |||||||||||||||
Expected long-term return on plan assets | * | — | — | 3.4 | % | 3.4 | % | 3.9 | % | — | — | — | |||||||||||||||
Rate of compensation increase | * | — | — | 3.9 | % | 4.1 | % | 3.8 | % | — | — | — |
U.S. Pension Plan | UK Pension Plan | Postretirement Benefits | |||||||||||||||||||||
2019 * | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Change in benefit obligation: | |||||||||||||||||||||||
Benefit obligation at beginning of year | * | $ | 127.8 | $ | 40.0 | $ | 41.7 | $ | 26.8 | $ | 28.8 | ||||||||||||
Service cost | * | — | — | — | 0.0 | 0.0 | |||||||||||||||||
Interest cost | * | 1.9 | 0.9 | 1.1 | 0.8 | 0.8 | |||||||||||||||||
Plan participants’ contributions | * | — | — | — | 0.4 | 0.4 | |||||||||||||||||
Actuarial losses (gains) | * | 1.7 | 3.1 | (2.0 | ) | 0.1 | (2.4 | ) | |||||||||||||||
Foreign currency translation | * | — | (2.0 | ) | 1.3 | — | — | ||||||||||||||||
Settlement | * | (125.2 | ) | — | — | — | — | ||||||||||||||||
Plan amendments | * | — | 0.1 | — | (2.7 | ) | — | ||||||||||||||||
Benefits paid, including expenses | * | (6.2 | ) | (1.2 | ) | (2.1 | ) | (2.0 | ) | (0.8 | ) | ||||||||||||
Benefit obligation at end of year | $ | — | $ | — | $ | 40.9 | $ | 40.0 | $ | 23.4 | $ | 26.8 |
U.S. Pension Plan | UK Pension Plan | Postretirement Benefits | |||||||||||||||||||||
2019 * | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Change in plan assets: | |||||||||||||||||||||||
Fair value of plan assets at beginning of year | * | $ | 132.5 | $ | 30.8 | $ | 29.2 | $ | — | $ | — | ||||||||||||
Actual return on plan assets | * | 0.5 | 2.8 | 1.7 | — | — | |||||||||||||||||
Employer contributions | * | — | 1.0 | 1.1 | — | 2.0 | |||||||||||||||||
Settlement | * | (125.2 | ) | — | — | — | — | ||||||||||||||||
Benefits paid, including expenses | * | (6.2 | ) | (1.2 | ) | (2.1 | ) | — | (2.4 | ) | |||||||||||||
Plan participants’ contributions | * | — | — | — | — | 0.4 | |||||||||||||||||
Foreign currency translation | * | — | (1.6 | ) | 0.9 | — | — | ||||||||||||||||
Fair value of plan assets at end of year | $ | — | $ | 1.6 | $ | 31.8 | $ | 30.8 | $ | — | $ | — |
U.S. Pension Plan | UK Pension Plan | Postretirement Benefits | |||||||||||||||||||||
2019 * | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Current assets | * | $ | 1.6 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Current liabilities | * | — | — | — | (1.8 | ) | (2.2 | ) | |||||||||||||||
Non-current liabilities | * | — | (9.1 | ) | (9.2 | ) | (21.6 | ) | (24.6 | ) | |||||||||||||
Net funded balance | $ | — | $ | 1.6 | $ | (9.1 | ) | $ | (9.2 | ) | $ | (23.4 | ) | $ | (26.8 | ) |
2019 | 2018 | ||||||||||||||||||||||||||||
U.S. Pension Plan * | UK Pension Plan | Post - Retirement Benefits | Total | U.S. Pension Plan | UK Pension Plan | Post - Retirement Benefits | Total | ||||||||||||||||||||||
Net actuarial gain (loss) | * | $ | (13.0 | ) | $ | 0.5 | $ | (12.5 | ) | $ | — | $ | (12.5 | ) | $ | (1.3 | ) | $ | (13.8 | ) | |||||||||
Amount recognized in Accumulated comprehensive income (loss) before tax | * | (13.0 | ) | 0.0 | (13.0 | ) | — | (12.5 | ) | (2.4 | ) | (14.9 | ) |
U.S. Pension Plan | UK Pension Plan | ||||||||||||
2019 * | 2018 | 2019 | 2018 | ||||||||||
Projected benefit obligations | * | $ | — | $ | 40.9 | $ | 40.0 | ||||||
Accumulated benefit obligations | * | — | 40.2 | 39.4 | |||||||||
Fair value of plan assets | * | 1.6 | 31.8 | 30.8 |
U.S. Pension Plan | UK Pension Plan | Postretirement Benefits | |||||||||||||||||||||||||||||||||
2019 * | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Components of net (benefit) cost: | |||||||||||||||||||||||||||||||||||
Service cost | * | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 0.0 | $ | 0.0 | $ | 0.0 | ||||||||||||||||||
Interest cost | * | 1.9 | 3.2 | 0.9 | 1.1 | 1.2 | 0.8 | 0.8 | 0.9 | ||||||||||||||||||||||||||
Expected return on assets | * | (4.1 | ) | (6.1 | ) | (1.0 | ) | (1.0 | ) | (1.0 | ) | — | — | — | |||||||||||||||||||||
Settlement charge | * | 57.3 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Amortization of net actuarial (gain) loss | * | 0.9 | 0.9 | 0.8 | 1.2 | 0.8 | (0.1 | ) | 0.1 | 0.4 | |||||||||||||||||||||||||
Net periodic (benefit) cost | $ | — | $ | 56.0 | $ | (2.0 | ) | $ | 0.7 | $ | 1.3 | $ | 1.0 | $ | 0.7 | $ | 0.9 | $ | 1.3 |
U.S. Pension Plan | UK Pension Plan | ||||||||||
2019 * | 2018 | 2019 | 2018 | ||||||||
Equity securities | * | — | % | 35.0 | % | 38.6 | % | ||||
Cash and cash equivalents | * | 100.0 | % | 3.0 | % | 2.6 | % | ||||
Liability-driven instruments | * | — | % | 38.0 | % | 32.8 | % | ||||
Real estate | * | — | % | 7.0 | % | 7.5 | % | ||||
Other | * | — | % | 17.0 | % | 18.5 | % | ||||
— | % | 100.0 | % | 100.0 | % | 100.0 | % |
UK Pension Plan | |||
Equity securities | 35 | % | |
Cash and cash equivalents | 3 | % | |
Liability-driven instruments and other | 55 | % | |
Real estate | 7 | % | |
Total | 100 | % |
Assets at Fair Value as of May 31, 2019 | |||||||||||||||||||||||||||
U.S. Pension Plan * | UK Pension Plan | U.S. Pension Plan (1) | UK Pension Plan | U.S. Pension Plan (1) | UK Pension Plan | Total | |||||||||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
Cash and cash equivalents | * | $ | 0.9 | * | $ | — | * | $ | — | $ | 0.9 | ||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||
U.S. (2) | * | 1.1 | * | — | * | — | 1.1 | ||||||||||||||||||||
International (3) | * | 10.0 | * | — | * | — | 10.0 | ||||||||||||||||||||
Pooled, Common and Collective Funds (4) (5) | * | — | * | 12.0 | * | — | 12.0 | ||||||||||||||||||||
Annuities | * | — | * | — | * | 5.5 | 5.5 | ||||||||||||||||||||
Real estate (6) | * | 2.3 | * | — | * | — | 2.3 | ||||||||||||||||||||
Total | $ | — | $ | 14.3 | $ | — | $ | 12.0 | $ | — | $ | 5.5 | $ | 31.8 |
Assets at Fair Value as of May 31, 2018 | |||||||||||||||||||||||||||
U.S. Pension Plan | UK Pension Plan | U.S. Pension Plan | UK Pension Plan | U.S. Pension Plan | UK Pension Plan | Total | |||||||||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
Cash and cash equivalents | $ | 1.6 | $ | 0.8 | $ | — | $ | — | $ | — | $ | — | $ | 2.4 | |||||||||||||
Equity securities: | |||||||||||||||||||||||||||
U.S. (1) | — | 1.5 | — | — | — | — | 1.5 | ||||||||||||||||||||
International (2) | — | 10.4 | — | — | — | — | 10.4 | ||||||||||||||||||||
Pooled, Common and Collective Funds (3) (4) | — | — | — | 10.1 | — | — | 10.1 | ||||||||||||||||||||
Annuities | — | — | — | — | — | 5.7 | 5.7 | ||||||||||||||||||||
Real estate (5) | — | 2.3 | — | — | — | — | 2.3 | ||||||||||||||||||||
Total | $ | 1.6 | $ | 15.0 | $ | — | $ | 10.1 | $ | — | $ | 5.7 | $ | 32.4 |
Balance at May 31, 2017 | $ | 5.8 | |
Actual Return on Plan Assets: | |||
Relating to assets still held at May 31, 2017 | (0.3 | ) | |
Relating to assets sold during the year | — | ||
Purchases, sales and settlements, net | — | ||
Transfers in and/or out of Level 3 | — | ||
Foreign currency translation | 0.2 | ||
Balance at May 31, 2018 | $ | 5.7 | |
Actual Return on Plan Assets: | |||
Relating to assets still held at May 31, 2018 | 0.1 | ||
Relating to assets sold during the year | — | ||
Purchases, sales and settlements, net | — | ||
Transfers in and/or out of Level 3 | — | ||
Foreign currency translation | (0.3 | ) | |
Balance at May 31, 2019 | $ | 5.5 |
UK Pension Plan | Postretirement | ||||||||||
Pension benefits | Benefit payments | Medicare subsidy receipts | |||||||||
2020 | $ | 1.0 | $ | 1.9 | $ | 0.1 | |||||
2021 | 0.9 | 1.9 | 0.1 | ||||||||
2022 | 0.9 | 1.9 | 0.1 | ||||||||
2023 | 1.3 | 1.9 | 0.2 | ||||||||
2024 | 1.2 | 1.9 | 0.2 | ||||||||
2025 and thereafter | 10.2 | 8.5 | 0.8 |
2019 | 2018 | ||||
Health care cost trend rate assumed for the next fiscal year | 6.5 | % | 6.8 | % | |
Rate to which the cost trend is assumed to decline (the ultimate trend rate) | 5.0 | % | 5.0 | % | |
Year that the rate reaches the ultimate trend rate | 2026 | 2026 |
2019 | 2018 | ||||||
Total service and interest cost - 1% increase | $ | 0.1 | $ | 0.1 | |||
Total service and interest cost - 1% decrease | (0.1 | ) | (0.1 | ) | |||
Postretirement benefit obligation - 1% increase | 2.1 | 2.8 | |||||
Postretirement benefit obligation - 1% decrease | (1.9 | ) | (2.4 | ) |
2019 | 2018 | ||||||
Land | $ | 79.1 | $ | 78.9 | |||
Buildings | 239.1 | 240.0 | |||||
Capitalized software | 204.0 | 158.7 | |||||
Furniture, fixtures and equipment | 213.9 | 215.5 | |||||
Building and leasehold improvements | 212.2 | 202.7 | |||||
Total at cost | $ | 948.3 | $ | 895.8 | |||
Less Accumulated depreciation and amortization | (370.6 | ) | (340.2 | ) | |||
Property, plant and equipment, net | $ | 577.7 | $ | 555.6 |
2019 | 2018 | ||||||
Land | $ | 79.1 | $ | 78.9 | |||
Buildings | 239.1 | 240.0 | |||||
Capitalized software | 204.0 | 158.7 | |||||
Furniture, fixtures and equipment | 213.9 | 215.5 | |||||
Building and leasehold improvements | 212.2 | 202.7 | |||||
Total at cost | $ | 948.3 | $ | 895.8 | |||
Less Accumulated depreciation and amortization | (370.6 | ) | (340.2 | ) | |||
Property, plant and equipment, net | $ | 577.7 | $ | 555.6 |
2019 | 2018 | 2017 | |||||||||||||||||||||
Pension Plans | Post - Retirement Benefits | Pension Plans | Post - Retirement Benefits | Pension Plans | Post - Retirement Benefits | ||||||||||||||||||
Service cost | $ | — | $ | — | $ | — | $ | 0.0 | $ | — | $ | 0.0 | |||||||||||
Net amortization and deferrals | (0.1 | ) | — | — | — | — | |||||||||||||||||
Lump sum settlement charge | — | — | 55.0 | — | — | — | |||||||||||||||||
Amortization of net actuarial (gain) loss | 0.8 | — | 2.1 | 0.1 | 1.7 | 0.4 | |||||||||||||||||
Tax benefit | — | 0.0 | (22.3 | ) | 0.0 | (0.4 | ) | (0.1 | ) | ||||||||||||||
Amounts reclassified from Accumulated other comprehensive income (loss) | $ | 0.8 | $ | (0.1 | ) | $ | 34.8 | $ | 0.1 | $ | 1.3 | $ | 0.3 |
As reported - May 31, 2018 | Adjustments due to adoption | June 1, 2018 | ||||||||
Accounts receivable, net | $ | 204.9 | $ | 31.1 | (1) | $ | 236.0 | |||
Inventories, net | 294.9 | (1.9 | ) | (2) | 293.0 | |||||
Prepaid expenses and other current assets | 66.6 | (4.3 | ) | (2)(3) | 62.3 | |||||
Noncurrent deferred income taxes | 25.2 | 16.0 | (4) | 41.2 | ||||||
Deferred revenue | 24.7 | 86.8 | (5) | 111.5 | ||||||
Other accrued expenses | 177.9 | 1.1 | (6) | 179.0 | ||||||
Retained earnings | 1,065.2 | (47.0 | ) | 1,018.2 |
May 31, 2019 | |||||||||||
As reported | Adjustments | Without adoption of Topic 606 | |||||||||
Revenues | $ | 1,653.9 | $ | 12.8 | (1) | $ | 1,666.7 | ||||
Cost of goods sold | 779.9 | 4.0 | (1) | 783.9 | |||||||
Selling, general and administrative expenses | 781.4 | 1.1 | (2) | 782.5 | |||||||
Depreciation and amortization | 56.1 | — | 56.1 | ||||||||
Severance | 10.6 | — | 10.6 | ||||||||
Asset Impairments | 0.9 | — | 0.9 | ||||||||
Operating income (loss) | 25.0 | 7.7 | 32.7 | ||||||||
Interest (income) expense, net | (3.4 | ) | — | (3.4 | ) | ||||||
Other components of net periodic benefit (cost) | (1.4 | ) | — | (1.4 | ) | ||||||
Gain (Loss) on investments and other | (1.0 | ) | — | (1.0 | ) | ||||||
Provision (benefit) for income taxes | 10.4 | 2.1 | (3) | 12.5 | |||||||
Net income (loss) | 15.6 | 5.6 | 21.2 | ||||||||
Basic earnings (loss) per share: | $ | 0.44 | $ | 0.16 | $ | 0.60 | |||||
Diluted earnings (loss) per share: | $ | 0.43 | $ | 0.16 | $ | 0.59 |
2019 | 2018 | |||||
Book Clubs | $ | 212.4 | $ | 224.3 | ||
Book Fairs | 499.6 | 513.6 | ||||
Trade | 278.3 | 232.3 | ||||
Total Children's Book Publishing & Distribution | 990.3 | 970.2 | ||||
Education | 297.4 | 288.6 | ||||
Major Markets(1) | 254.9 | 258.3 | ||||
Other Markets(2) | 111.3 | 111.3 | ||||
Total International | 366.2 | 369.6 | ||||
Total Revenues | $ | 1,653.9 | $ | 1,628.4 |
2019 | 2018 | |||||
Book Clubs | $ | 212.4 | $ | 224.3 | ||
Book Fairs | 499.6 | 513.6 | ||||
Trade | 278.3 | 232.3 | ||||
Total Children's Book Publishing & Distribution | 990.3 | 970.2 | ||||
Education | 297.4 | 288.6 | ||||
Major Markets(1) | 254.9 | 258.3 | ||||
Other Markets(2) | 111.3 | 111.3 | ||||
Total International | 366.2 | 369.6 | ||||
Total Revenues | $ | 1,653.9 | $ | 1,628.4 |
U.S. Pension Plan | UK Pension Plan | ||||||||||||
2019 * | 2018 | 2019 | 2018 | ||||||||||
Projected benefit obligations | * | $ | — | $ | 40.9 | $ | 40.0 | ||||||
Accumulated benefit obligations | * | — | 40.2 | 39.4 | |||||||||
Fair value of plan assets | * | 1.6 | 31.8 | 30.8 |
Foreign currency translation adjustments | Pension Plans | Post - Retirement Benefits | Total | ||||||||||||
Balance at May 31, 2017 (1) | $ | (45.3 | ) | $ | (46.9 | ) | $ | (2.0 | ) | $ | (94.2 | ) | |||
Other comprehensive income (loss) before reclassifications | 3.4 | (0.4 | ) | 0.6 | 3.6 | ||||||||||
Less: amount reclassified from Accumulated other comprehensive income (loss) (net of taxes) | |||||||||||||||
Settlement charge | — | 33.0 | — | 33.0 | |||||||||||
Amortization of net actuarial loss | — | 1.8 | 0.1 | 1.9 | |||||||||||
Net prior service credit | — | — | — | — | |||||||||||
Other comprehensive income (loss) | 3.4 | 34.4 | 0.7 | 38.5 | |||||||||||
Balance at May 31, 2018 (1) | $ | (41.9 | ) | $ | (12.5 | ) | $ | (1.3 | ) | $ | (55.7 | ) | |||
Other comprehensive income (loss) before reclassifications | $ | (5.2 | ) | $ | (1.4 | ) | $ | 1.9 | $ | (4.7 | ) | ||||
Less: amount reclassified from Accumulated other comprehensive income (loss) (net of taxes) | |||||||||||||||
Amortization of net actuarial loss | $ | — | $ | 0.8 | $ | (0.1 | ) | $ | 0.7 | ||||||
Other comprehensive income (loss) | (5.2 | ) | (0.6 | ) | 1.8 | (4.0 | ) | ||||||||
Balance at May 31, 2019 (1) | $ | (47.1 | ) | $ | (13.1 | ) | $ | 0.5 | $ | (59.7 | ) |
U.S. Pension Plan | UK Pension Plan | ||||||||||
2019 * | 2018 | 2019 | 2018 | ||||||||
Equity securities | * | — | % | 35.0 | % | 38.6 | % | ||||
Cash and cash equivalents | * | 100.0 | % | 3.0 | % | 2.6 | % | ||||
Liability-driven instruments | * | — | % | 38.0 | % | 32.8 | % | ||||
Real estate | * | — | % | 7.0 | % | 7.5 | % | ||||
Other | * | — | % | 17.0 | % | 18.5 | % | ||||
— | % | 100.0 | % | 100.0 | % | 100.0 | % |
UK Pension Plan | |||
Equity securities | 35 | % | |
Cash and cash equivalents | 3 | % | |
Liability-driven instruments and other | 55 | % | |
Real estate | 7 | % | |
Total | 100 | % |
Assets at Fair Value as of May 31, 2019 | |||||||||||||||||||||||||||
U.S. Pension Plan * | UK Pension Plan | U.S. Pension Plan (1) | UK Pension Plan | U.S. Pension Plan (1) | UK Pension Plan | Total | |||||||||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
Cash and cash equivalents | * | $ | 0.9 | * | $ | — | * | $ | — | $ | 0.9 | ||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||
U.S. (2) | * | 1.1 | * | — | * | — | 1.1 | ||||||||||||||||||||
International (3) | * | 10.0 | * | — | * | — | 10.0 | ||||||||||||||||||||
Pooled, Common and Collective Funds (4) (5) | * | — | * | 12.0 | * | — | 12.0 | ||||||||||||||||||||
Annuities | * | — | * | — | * | 5.5 | 5.5 | ||||||||||||||||||||
Real estate (6) | * | 2.3 | * | — | * | — | 2.3 | ||||||||||||||||||||
Total | $ | — | $ | 14.3 | $ | — | $ | 12.0 | $ | — | $ | 5.5 | $ | 31.8 |
Assets at Fair Value as of May 31, 2018 | |||||||||||||||||||||||||||
U.S. Pension Plan | UK Pension Plan | U.S. Pension Plan | UK Pension Plan | U.S. Pension Plan | UK Pension Plan | Total | |||||||||||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
Cash and cash equivalents | $ | 1.6 | $ | 0.8 | $ | — | $ | — | $ | — | $ | — | $ | 2.4 | |||||||||||||
Equity securities: | |||||||||||||||||||||||||||
U.S. (1) | — | 1.5 | — | — | — | — | 1.5 | ||||||||||||||||||||
International (2) | — | 10.4 | — | — | — | — | 10.4 | ||||||||||||||||||||
Pooled, Common and Collective Funds (3) (4) | — | — | — | 10.1 | — | — | 10.1 | ||||||||||||||||||||
Annuities | — | — | — | — | — | 5.7 | 5.7 | ||||||||||||||||||||
Real estate (5) | — | 2.3 | — | — | — | — | 2.3 | ||||||||||||||||||||
Total | $ | 1.6 | $ | 15.0 | $ | — | $ | 10.1 | $ | — | $ | 5.7 | $ | 32.4 |
U.S. Pension Plan | UK Pension Plan | Postretirement Benefits | |||||||||||||||||||||
2019 * | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Current assets | * | $ | 1.6 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Current liabilities | * | — | — | — | (1.8 | ) | (2.2 | ) | |||||||||||||||
Non-current liabilities | * | — | (9.1 | ) | (9.2 | ) | (21.6 | ) | (24.6 | ) | |||||||||||||
Net funded balance | $ | — | $ | 1.6 | $ | (9.1 | ) | $ | (9.2 | ) | $ | (23.4 | ) | $ | (26.8 | ) |
2019 | 2018 | ||||||||||||||||||||||||||||
U.S. Pension Plan * | UK Pension Plan | Post - Retirement Benefits | Total | U.S. Pension Plan | UK Pension Plan | Post - Retirement Benefits | Total | ||||||||||||||||||||||
Net actuarial gain (loss) | * | $ | (13.0 | ) | $ | 0.5 | $ | (12.5 | ) | $ | — | $ | (12.5 | ) | $ | (1.3 | ) | $ | (13.8 | ) | |||||||||
Amount recognized in Accumulated comprehensive income (loss) before tax | * | (13.0 | ) | 0.0 | (13.0 | ) | — | (12.5 | ) | (2.4 | ) | (14.9 | ) |
U.S. Pension Plan | UK Pension Plan | Postretirement Benefits | |||||||||||||||||||||||||
2019 * | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||
Weighted average assumptions used to determine benefit obligations: | |||||||||||||||||||||||||||
Discount rate | * | — | % | 2.4 | % | 2.3 | % | 2.6 | % | 2.5 | % | 3.6 | % | 4.0 | % | 3.7 | % | ||||||||||
Rate of compensation increase | * | — | — | 4.1 | % | 3.9 | % | 4.1 | % | — | — | — | |||||||||||||||
Weighted average assumptions used to determine net periodic benefit cost: | |||||||||||||||||||||||||||
Discount rate (1) | * | 2.3 | % | 3.5 | % | 2.4 | % | 2.5 | % | 3.5 | % | 3.7 | % | 3.7 | % | 3.7 | % | ||||||||||
Expected short-term return on plan assets (2) | * | 4.8 | % | 4.8 | — | — | — | — | — | — | — | — | |||||||||||||||
Expected long-term return on plan assets | * | — | — | 3.4 | % | 3.4 | % | 3.9 | % | — | — | — | |||||||||||||||
Rate of compensation increase | * | — | — | 3.9 | % | 4.1 | % | 3.8 | % | — | — | — |
U.S. Pension Plan | UK Pension Plan | Postretirement Benefits | |||||||||||||||||||||
2019 * | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Change in plan assets: | |||||||||||||||||||||||
Fair value of plan assets at beginning of year | * | $ | 132.5 | $ | 30.8 | $ | 29.2 | $ | — | $ | — | ||||||||||||
Actual return on plan assets | * | 0.5 | 2.8 | 1.7 | — | — | |||||||||||||||||
Employer contributions | * | — | 1.0 | 1.1 | — | 2.0 | |||||||||||||||||
Settlement | * | (125.2 | ) | — | — | — | — | ||||||||||||||||
Benefits paid, including expenses | * | (6.2 | ) | (1.2 | ) | (2.1 | ) | — | (2.4 | ) | |||||||||||||
Plan participants’ contributions | * | — | — | — | — | 0.4 | |||||||||||||||||
Foreign currency translation | * | — | (1.6 | ) | 0.9 | — | — | ||||||||||||||||
Fair value of plan assets at end of year | $ | — | $ | 1.6 | $ | 31.8 | $ | 30.8 | $ | — | $ | — |
U.S. Pension Plan | UK Pension Plan | Postretirement Benefits | |||||||||||||||||||||
2019 * | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||
Change in benefit obligation: | |||||||||||||||||||||||
Benefit obligation at beginning of year | * | $ | 127.8 | $ | 40.0 | $ | 41.7 | $ | 26.8 | $ | 28.8 | ||||||||||||
Service cost | * | — | — | — | 0.0 | 0.0 | |||||||||||||||||
Interest cost | * | 1.9 | 0.9 | 1.1 | 0.8 | 0.8 | |||||||||||||||||
Plan participants’ contributions | * | — | — | — | 0.4 | 0.4 | |||||||||||||||||
Actuarial losses (gains) | * | 1.7 | 3.1 | (2.0 | ) | 0.1 | (2.4 | ) | |||||||||||||||
Foreign currency translation | * | — | (2.0 | ) | 1.3 | — | — | ||||||||||||||||
Settlement | * | (125.2 | ) | — | — | — | — | ||||||||||||||||
Plan amendments | * | — | 0.1 | — | (2.7 | ) | — | ||||||||||||||||
Benefits paid, including expenses | * | (6.2 | ) | (1.2 | ) | (2.1 | ) | (2.0 | ) | (0.8 | ) | ||||||||||||
Benefit obligation at end of year | $ | — | $ | — | $ | 40.9 | $ | 40.0 | $ | 23.4 | $ | 26.8 |
2019 | 2018 | 2017 | |||||||||
Current | |||||||||||
Federal | $ | (0.2 | ) | $ | (3.6 | ) | $ | 8.3 | |||
State and local | 4.8 | 0.7 | 1.8 | ||||||||
Non-United States | 2.8 | 4.9 | 5.4 | ||||||||
Total Current | $ | 7.4 | $ | 2.0 | $ | 15.5 | |||||
Deferred | |||||||||||
Federal | $ | 1.1 | $ | 5.0 | $ | 17.7 | |||||
State and local | 3.1 | (3.5 | ) | 2.2 | |||||||
Non-United States | (1.2 | ) | — | — | |||||||
Total Deferred | $ | 3.0 | $ | 1.5 | $ | 19.9 | |||||
Total Current and Deferred | $ | 10.4 | $ | 3.5 | $ | 35.4 |
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
2019 | 2018 | ||||||||||||||
Loan Agreement: | |||||||||||||||
Revolving Loan | $ | — | $ | — | $ | — | $ | — | |||||||
Unsecured Lines of Credit (weighted average interest rates of 4.1% and 2.9%, respectively) | 7.3 | 7.3 | 7.9 | 7.9 | |||||||||||
Total debt | $ | 7.3 | $ | 7.3 | $ | 7.9 | $ | 7.9 | |||||||
Less: lines of credit and current portion of long-term debt | (7.3 | ) | (7.3 | ) | (7.9 | ) | (7.9 | ) | |||||||
Total long-term debt | $ | — | $ | — | $ | — | $ | — |
2019 | 2018 | ||||||
Deferred tax assets: | |||||||
Tax uniform capitalization | $ | 12.8 | $ | 9.6 | |||
Prepublication expenses | 1.2 | 0.7 | |||||
Inventory reserves | 15.1 | 15.0 | |||||
Allowance for doubtful accounts | 1.9 | 2.2 | |||||
Deferred revenue | 23.5 | — | |||||
Other reserves | 17.2 | 16.9 | |||||
Postretirement, post employment and pension obligations | 6.0 | 7.1 | |||||
Tax carryforwards | 31.8 | 26.9 | |||||
Other - net | 13.7 | 13.7 | |||||
Gross deferred tax assets | $ | 123.2 | $ | 92.1 | |||
Valuation allowance | (25.7 | ) | (25.1 | ) | |||
Total deferred tax assets | $ | 97.5 | $ | 67.0 | |||
Deferred tax liabilities: | |||||||
Prepaid expenses | (0.2 | ) | (0.4 | ) | |||
Depreciation and amortization | (60.3 | ) | (41.4 | ) | |||
Total deferred tax liability | $ | (60.5 | ) | $ | (41.8 | ) | |
Total net deferred tax assets | $ | 37.0 | $ | 25.2 |
2019 | 2018 | 2017 | |||||||||
Earnings (loss) from continuing operations attributable to Class A and Common Shares | $ | 15.5 | $ | (5.0 | ) | $ | 52.4 | ||||
Earnings (loss) from discontinued operations attributable to Class A and Common Shares, net of tax | $ | — | $ | — | $ | (0.2 | ) | ||||
Net income (loss) attributable to Class A and Common Shares | $ | 15.5 | $ | (5.0 | ) | $ | 52.2 | ||||
Weighted average Shares of Class A Stock and Common Stock outstanding for basic earnings (loss) per share (in millions) | 35.2 | 35.0 | 34.7 | ||||||||
Dilutive effect of Class A Stock and Common Stock potentially issuable pursuant to stock-based compensation plans (in millions) | 0.6 | — | 0.7 | ||||||||
Adjusted weighted average Shares of Class A Stock and Common Stock outstanding for diluted earnings (loss) per share (in millions) | 35.8 | 35.0 | 35.4 | ||||||||
Earnings (loss) per share of Class A Stock and Common Stock | |||||||||||
Basic earnings (loss) per share: | |||||||||||
Earnings (loss) from continuing operations | $ | 0.44 | $ | (0.14 | ) | $ | 1.51 | ||||
Earnings (loss) from discontinued operations, net of tax | $ | — | $ | — | $ | (0.00 | ) | ||||
Net income (loss) | $ | 0.44 | $ | (0.14 | ) | $ | 1.51 | ||||
Diluted earnings (loss) per share: | |||||||||||
Earnings (loss) from continuing operations | $ | 0.43 | $ | (0.14 | ) | $ | 1.48 | ||||
Earnings (loss) from discontinued operations, net of tax | $ | — | $ | — | $ | (0.01 | ) | ||||
Net income (loss) | $ | 0.43 | $ | (0.14 | ) | $ | 1.47 |
2019 | 2018 | ||||||
Total service and interest cost - 1% increase | $ | 0.1 | $ | 0.1 | |||
Total service and interest cost - 1% decrease | (0.1 | ) | (0.1 | ) | |||
Postretirement benefit obligation - 1% increase | 2.1 | 2.8 | |||||
Postretirement benefit obligation - 1% decrease | (1.9 | ) | (2.4 | ) |
Balance at May 31, 2017 | $ | 5.8 | |
Actual Return on Plan Assets: | |||
Relating to assets still held at May 31, 2017 | (0.3 | ) | |
Relating to assets sold during the year | — | ||
Purchases, sales and settlements, net | — | ||
Transfers in and/or out of Level 3 | — | ||
Foreign currency translation | 0.2 | ||
Balance at May 31, 2018 | $ | 5.7 | |
Actual Return on Plan Assets: | |||
Relating to assets still held at May 31, 2018 | 0.1 | ||
Relating to assets sold during the year | — | ||
Purchases, sales and settlements, net | — | ||
Transfers in and/or out of Level 3 | — | ||
Foreign currency translation | (0.3 | ) | |
Balance at May 31, 2019 | $ | 5.5 |
2019 | 2018 | 2017 | |||||||||
Computed federal statutory provision | 21.0 | % | 29.2 | % | 35.0 | % | |||||
State income tax provision, net of federal income tax benefit | 25.7 | 37.1 | 3.3 | ||||||||
Difference in effective tax rates on earnings of foreign subsidiaries | 2.3 | (1.3 | ) | — | |||||||
GILTI inclusion | 3.4 | — | — | ||||||||
Charitable contributions | (0.6 | ) | 28.6 | (0.3 | ) | ||||||
Tax credits | (3.1 | ) | 42.8 | (0.5 | ) | ||||||
Valuation allowances | 2.3 | 68.1 | 0.1 | ||||||||
Uncertain positions | (6.3 | ) | 110.3 | 2.9 | |||||||
Remeasurement of deferred tax balances | — | (371.3 | ) | — | |||||||
Permanent differences | 0.1 | (177.6 | ) | (0.3 | ) | ||||||
Other - net | (4.8 | ) | 0.8 | 0.1 | |||||||
Effective tax rates | 40.0 | % | (233.3 | )% | 40.3 | % | |||||
Total provision for income taxes | $ | 10.4 | $ | 3.5 | $ | 35.4 |
2019 | 2018 | |||||
Book Clubs | $ | 212.4 | $ | 224.3 | ||
Book Fairs | 499.6 | 513.6 | ||||
Trade | 278.3 | 232.3 | ||||
Total Children's Book Publishing & Distribution | 990.3 | 970.2 | ||||
Education | 297.4 | 288.6 | ||||
Major Markets(1) | 254.9 | 258.3 | ||||
Other Markets(2) | 111.3 | 111.3 | ||||
Total International | 366.2 | 369.6 | ||||
Total Revenues | $ | 1,653.9 | $ | 1,628.4 |
UK Pension Plan | Postretirement | ||||||||||
Pension benefits | Benefit payments | Medicare subsidy receipts | |||||||||
2020 | $ | 1.0 | $ | 1.9 | $ | 0.1 | |||||
2021 | 0.9 | 1.9 | 0.1 | ||||||||
2022 | 0.9 | 1.9 | 0.1 | ||||||||
2023 | 1.3 | 1.9 | 0.2 | ||||||||
2024 | 1.2 | 1.9 | 0.2 | ||||||||
2025 and thereafter | 10.2 | 8.5 | 0.8 |
2019 | 2018 | ||||||
Other intangibles subject to amortization - beginning balance | $ | 10.1 | $ | 9.0 | |||
Additions | 4.5 | 3.3 | |||||
Other | 0.6 | — | |||||
Amortization expense | (2.8 | ) | (2.1 | ) | |||
Foreign currency translation | (0.2 | ) | (0.1 | ) | |||
Total other intangibles subject to amortization, net of accumulated amortization of $26.9 and $24.1, respectively | $ | 12.2 | $ | 10.1 | |||
Total other intangibles not subject to amortization | 2.1 | 2.1 | |||||
Total other intangibles | $ | 14.3 | $ | 12.2 |
2019 | 2018 | ||||||
Gross beginning balance | $ | 158.8 | $ | 158.5 | |||
Accumulated impairment | (39.6 | ) | (39.6 | ) | |||
Beginning balance | $ | 119.2 | $ | 118.9 | |||
Additions | 6.3 | — | |||||
Foreign currency translation | (0.3 | ) | 0.2 | ||||
Other | — | 0.1 | |||||
Ending balance | $ | 125.2 | $ | 119.2 |
2019 | 2018 | ||||
Health care cost trend rate assumed for the next fiscal year | 6.5 | % | 6.8 | % | |
Rate to which the cost trend is assumed to decline (the ultimate trend rate) | 5.0 | % | 5.0 | % | |
Year that the rate reaches the ultimate trend rate | 2026 | 2026 |
2019 | 2018 | 2017 | |||||||||
United States | $ | 8.7 | $ | (18.4 | ) | $ | 78.7 | ||||
Non-United States | 17.3 | 16.9 | 9.2 | ||||||||
Total | $ | 26.0 | $ | (1.5 | ) | $ | 87.9 |
U.S. Pension Plan | UK Pension Plan | Postretirement Benefits | |||||||||||||||||||||||||||||||||
2019 * | 2018 | 2017 | 2019 | 2018 | 2017 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Components of net (benefit) cost: | |||||||||||||||||||||||||||||||||||
Service cost | * | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 0.0 | $ | 0.0 | $ | 0.0 | ||||||||||||||||||
Interest cost | * | 1.9 | 3.2 | 0.9 | 1.1 | 1.2 | 0.8 | 0.8 | 0.9 | ||||||||||||||||||||||||||
Expected return on assets | * | (4.1 | ) | (6.1 | ) | (1.0 | ) | (1.0 | ) | (1.0 | ) | — | — | — | |||||||||||||||||||||
Settlement charge | * | 57.3 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||
Amortization of net actuarial (gain) loss | * | 0.9 | 0.9 | 0.8 | 1.2 | 0.8 | (0.1 | ) | 0.1 | 0.4 | |||||||||||||||||||||||||
Net periodic (benefit) cost | $ | — | $ | 56.0 | $ | (2.0 | ) | $ | 0.7 | $ | 1.3 | $ | 1.0 | $ | 0.7 | $ | 0.9 | $ | 1.3 |
May 31, 2019 | |||||||||||
As reported | Adjustments | Without adoption of Topic 606 | |||||||||
Revenues | $ | 1,653.9 | $ | 12.8 | (1) | $ | 1,666.7 | ||||
Cost of goods sold | 779.9 | 4.0 | (1) | 783.9 | |||||||
Selling, general and administrative expenses | 781.4 | 1.1 | (2) | 782.5 | |||||||
Depreciation and amortization | 56.1 | — | 56.1 | ||||||||
Severance | 10.6 | — | 10.6 | ||||||||
Asset Impairments | 0.9 | — | 0.9 | ||||||||
Operating income (loss) | 25.0 | 7.7 | 32.7 | ||||||||
Interest (income) expense, net | (3.4 | ) | — | (3.4 | ) | ||||||
Other components of net periodic benefit (cost) | (1.4 | ) | — | (1.4 | ) | ||||||
Gain (Loss) on investments and other | (1.0 | ) | — | (1.0 | ) | ||||||
Provision (benefit) for income taxes | 10.4 | 2.1 | (3) | 12.5 | |||||||
Net income (loss) | 15.6 | 5.6 | 21.2 | ||||||||
Basic earnings (loss) per share: | $ | 0.44 | $ | 0.16 | $ | 0.60 | |||||
Diluted earnings (loss) per share: | $ | 0.43 | $ | 0.16 | $ | 0.59 |
As reported - May 31, 2018 | Adjustments due to adoption | June 1, 2018 | ||||||||
Accounts receivable, net | $ | 204.9 | $ | 31.1 | (1) | $ | 236.0 | |||
Inventories, net | 294.9 | (1.9 | ) | (2) | 293.0 | |||||
Prepaid expenses and other current assets | 66.6 | (4.3 | ) | (2)(3) | 62.3 | |||||
Noncurrent deferred income taxes | 25.2 | 16.0 | (4) | 41.2 | ||||||
Deferred revenue | 24.7 | 86.8 | (5) | 111.5 | ||||||
Other accrued expenses | 177.9 | 1.1 | (6) | 179.0 | ||||||
Retained earnings | 1,065.2 | (47.0 | ) | 1,018.2 |
Children's Book Publishing & Distribution | Education | Overhead (1) | Total Domestic | International | Total | ||||||||||||||||||
2019 | |||||||||||||||||||||||
Revenues | $ | 990.3 | $ | 297.4 | $ | — | $ | 1,287.7 | $ | 366.2 | $ | 1,653.9 | |||||||||||
Bad debts | 3.8 | 1.4 | — | 5.2 | 1.8 | 7.0 | |||||||||||||||||
Depreciation and amortization(2) | 23.7 | 9.5 | 41.7 | 74.9 | 6.8 | 81.7 | |||||||||||||||||
Asset impairments | — | — | 0.9 | 0.9 | — | 0.9 | |||||||||||||||||
Segment operating income (loss) | 82.9 | 30.6 | (102.3 | ) | 11.2 | 13.8 | 25.0 | ||||||||||||||||
Segment assets at May 31, 2019 | 523.4 | 214.7 | 887.6 | 1,625.7 | 252.8 | 1,878.5 | |||||||||||||||||
Goodwill at May 31, 2019 | 47.0 | 68.2 | — | 115.2 | 10.0 | 125.2 | |||||||||||||||||
Expenditures for other non-current assets(3) | 75.2 | 22.6 | 77.6 | 175.4 | 13.5 | 188.9 | |||||||||||||||||
Other non-current assets at May 31, 2019(3) | 175.0 | 116.3 | 507.7 | 799.0 | 65.3 | 864.3 | |||||||||||||||||
2018 | |||||||||||||||||||||||
Revenues | $ | 970.2 | $ | 288.6 | $ | — | $ | 1,258.8 | $ | 369.6 | $ | 1,628.4 | |||||||||||
Bad debts | 4.4 | 1.4 | — | 5.8 | 3.7 | 9.5 | |||||||||||||||||
Depreciation and amortization(2) | 23.3 | 7.4 | 29.1 | 59.8 | 6.2 | 66.0 | |||||||||||||||||
Asset impairments | 0.2 | — | 11.0 | 11.2 | — | 11.2 | |||||||||||||||||
Segment operating income (loss) | 105.8 | 33.9 | (101.8 | ) | 37.9 | 17.7 | 55.6 | ||||||||||||||||
Segment assets at May 31, 2018 | 434.8 | 202.4 | 927.9 | 1,565.1 | 260.3 | 1,825.4 | |||||||||||||||||
Goodwill at May 31, 2018 | 40.9 | 68.3 | — | 109.2 | 10.0 | 119.2 | |||||||||||||||||
Expenditures for other non-current assets(3) | 58.6 | 19.2 | 104.5 | 182.3 | 15.3 | 197.6 | |||||||||||||||||
Other non-current assets at May 31, 2018(3) | 151.2 | 101.8 | 492.7 | 745.7 | 74.3 | 820.0 | |||||||||||||||||
2017 | |||||||||||||||||||||||
Revenues | $ | 1,061.2 | $ | 303.6 | $ | — | $ | 1,364.8 | $ | 376.8 | $ | 1,741.6 | |||||||||||
Bad debts | 4.2 | 1.1 | — | 5.3 | 5.7 | 11.0 | |||||||||||||||||
Depreciation and amortization(2) | 24.1 | 6.9 | 24.0 | 55.0 | 7.4 | 62.4 | |||||||||||||||||
Asset impairments | — | 1.1 | 5.7 | 6.8 | — | 6.8 | |||||||||||||||||
Segment operating income (loss) | 143.5 | 50.3 | (124.3 | ) | 69.5 | 19.7 | 89.2 | ||||||||||||||||
Segment assets at May 31, 2017 | 404.5 | 191.8 | 922.2 | 1,518.5 | 241.5 | 1,760.0 | |||||||||||||||||
Goodwill at May 31, 2017 | 40.9 | 68.0 | — | 108.9 | 10.0 | 118.9 | |||||||||||||||||
Expenditures for other non-current assets(3) | 65.3 | 20.1 | 54.5 | 139.9 | 11.5 | 151.4 | |||||||||||||||||
Other non-current assets at May 31, 2017(3) | 143.6 | 90.5 | 418.2 | 652.3 | 67.1 | 719.4 |
(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 its facility located in Connecticut. |
(2) | Includes depreciation of property, plant and equipment and amortization of intangible assets and prepublication and production costs. |
2019 | 2018 | 2017 | ||||||||||||
Total intrinsic value of stock options exercised | $ | 2.1 | $ | 5.0 | $ | 11.0 | ||||||||
Total stock-based compensation cost (pretax) | 8.3 | 10.7 | 10.1 | |||||||||||
Tax benefits (shortfalls) related to stock-based compensation cost | 0.5 | (0.2 | ) | 0.8 | ||||||||||
Weighted average grant date fair value per option | $ | 11.97 | $ | 10.45 | $ | 12.70 |
2019 | 2018 | ||
Options outstanding pursuant to stock-based compensation plans (in millions) | 2.9 | 2.8 |
2019 | 2018 | 2017 | |||||||||
Shares issued | 48,000 | 50,516 | 42,799 | ||||||||
Weighted average purchase price per share | $ | 36.25 | $ | 33.74 | $ | 35.58 |
2019 | 2018 | 2017 | ||||||||||||
MSPP Stock Units allocated | 17,239 | 73,965 | 42,565 | |||||||||||
Purchase price per unit | $ | 30.48 | $ | 28.76 | $ | 28.49 |
2019 | 2018 | 2017 | ||||||||||||
Granted | 82,044 | 68,089 | 52,331 | |||||||||||
Weighted average grant date price per unit | $ | 42.86 | $ | 38.97 | $ | 39.22 |
Options | Weighted Average Exercise Price | Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in millions) | |||||||||||
Outstanding at May 31, 2018 | 2,822,126 | $ | 35.52 | |||||||||||
Granted | 358,369 | 42.77 | ||||||||||||
Exercised | (214,273 | ) | 31.87 | |||||||||||
Expired, canceled and forfeited | (24,093 | ) | 42.02 | |||||||||||
Outstanding at May 31, 2019 | 2,942,129 | $ | 36.62 | 6.3 | $ | 3.6 | ||||||||
Exercisable at May 31, 2019 | 1,799,534 | $ | 34.14 | 5.0 | $ | 3.6 |
2019 | 2018 | 2017 | |||||||||
Estimated fair value of stock options granted | $ | 11.97 | $ | 10.45 | $ | 12.70 | |||||
Assumptions: | |||||||||||
Expected dividend yield | 1.4 | % | 1.5 | % | 1.5 | % | |||||
Expected stock price volatility | 28.4 | % | 29.8 | % | 36.6 | % | |||||
Risk-free interest rate | 3.0 | % | 2.1 | % | 1.5 | % | |||||
Average expected life of options | 6 years | 6 years | 6 years |
Class A Stock | Common Stock | Preferred Stock | ||||||
Authorized | 4,000,000 | 70,000,000 | 2,000,000 | |||||
Reserved for Issuance | — | 8,501,147 | — | |||||
Outstanding | 1,656,200 | 33,410,323 | — |
Gross unrecognized benefits at May 31, 2016 | $ | 17.9 | |
Decreases related to prior year tax positions | (6.3 | ) | |
Increase related to prior year tax positions | 0.1 | ||
Increases related to current year tax positions | 3.0 | ||
Settlements during the period | (0.6 | ) | |
Lapse of statute of limitation | — | ||
Gross unrecognized benefits at May 31, 2017 | $ | 14.1 | |
Decreases related to prior year tax positions | (2.6 | ) | |
Increase related to prior year tax positions | 0.4 | ||
Increases related to current year tax positions | 0.5 | ||
Settlements during the period | (1.9 | ) | |
Lapse of statute of limitation | (0.4 | ) | |
Gross unrecognized benefits at May 31, 2018 | $ | 10.1 | |
Decreases related to prior year tax positions | (1.1 | ) | |
Increase related to prior year tax positions | 0.2 | ||
Increases related to current year tax positions | 0.7 | ||
Settlements during the period | (0.2 | ) | |
Lapse of statute of limitation | (0.7 | ) | |
Gross unrecognized benefits at May 31, 2019 | $ | 9.0 |
2020 | $ | 3.1 | |
2021 | 2.7 | ||
2022 | 2.4 | ||
2023 | 1.1 | ||
2024 | 0.8 | ||
Thereafter | 2.1 |
• | Children’s Book Publishing and Distribution operates as an integrated business which includes the publication and distribution of children’s books, ebooks, media and interactive products in the United States through its book clubs and book fairs in its school channels and through the trade channel. This segment is comprised of three operating segments. |
• | Education includes the publication and distribution to schools and libraries of children’s books, classroom magazines, supplemental and core classroom materials and programs 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. |
Children's Book Publishing & Distribution | Education | Overhead (1) | Total Domestic | International | Total | ||||||||||||||||||
2019 | |||||||||||||||||||||||
Revenues | $ | 990.3 | $ | 297.4 | $ | — | $ | 1,287.7 | $ | 366.2 | $ | 1,653.9 | |||||||||||
Bad debts | 3.8 | 1.4 | — | 5.2 | 1.8 | 7.0 | |||||||||||||||||
Depreciation and amortization(2) | 23.7 | 9.5 | 41.7 | 74.9 | 6.8 | 81.7 | |||||||||||||||||
Asset impairments | — | — | 0.9 | 0.9 | — | 0.9 | |||||||||||||||||
Segment operating income (loss) | 82.9 | 30.6 | (102.3 | ) | 11.2 | 13.8 | 25.0 | ||||||||||||||||
Segment assets at May 31, 2019 | 523.4 | 214.7 | 887.6 | 1,625.7 | 252.8 | 1,878.5 | |||||||||||||||||
Goodwill at May 31, 2019 | 47.0 | 68.2 | — | 115.2 | 10.0 | 125.2 | |||||||||||||||||
Expenditures for other non-current assets(3) | 75.2 | 22.6 | 77.6 | 175.4 | 13.5 | 188.9 | |||||||||||||||||
Other non-current assets at May 31, 2019(3) | 175.0 | 116.3 | 507.7 | 799.0 | 65.3 | 864.3 | |||||||||||||||||
2018 | |||||||||||||||||||||||
Revenues | $ | 970.2 | $ | 288.6 | $ | — | $ | 1,258.8 | $ | 369.6 | $ | 1,628.4 | |||||||||||
Bad debts | 4.4 | 1.4 | — | 5.8 | 3.7 | 9.5 | |||||||||||||||||
Depreciation and amortization(2) | 23.3 | 7.4 | 29.1 | 59.8 | 6.2 | 66.0 | |||||||||||||||||
Asset impairments | 0.2 | — | 11.0 | 11.2 | — | 11.2 | |||||||||||||||||
Segment operating income (loss) | 105.8 | 33.9 | (101.8 | ) | 37.9 | 17.7 | 55.6 | ||||||||||||||||
Segment assets at May 31, 2018 | 434.8 | 202.4 | 927.9 | 1,565.1 | 260.3 | 1,825.4 | |||||||||||||||||
Goodwill at May 31, 2018 | 40.9 | 68.3 | — | 109.2 | 10.0 | 119.2 | |||||||||||||||||
Expenditures for other non-current assets(3) | 58.6 | 19.2 | 104.5 | 182.3 | 15.3 | 197.6 | |||||||||||||||||
Other non-current assets at May 31, 2018(3) | 151.2 | 101.8 | 492.7 | 745.7 | 74.3 | 820.0 | |||||||||||||||||
2017 | |||||||||||||||||||||||
Revenues | $ | 1,061.2 | $ | 303.6 | $ | — | $ | 1,364.8 | $ | 376.8 | $ | 1,741.6 | |||||||||||
Bad debts | 4.2 | 1.1 | — | 5.3 | 5.7 | 11.0 | |||||||||||||||||
Depreciation and amortization(2) | 24.1 | 6.9 | 24.0 | 55.0 | 7.4 | 62.4 | |||||||||||||||||
Asset impairments | — | 1.1 | 5.7 | 6.8 | — | 6.8 | |||||||||||||||||
Segment operating income (loss) | 143.5 | 50.3 | (124.3 | ) | 69.5 | 19.7 | 89.2 | ||||||||||||||||
Segment assets at May 31, 2017 | 404.5 | 191.8 | 922.2 | 1,518.5 | 241.5 | 1,760.0 | |||||||||||||||||
Goodwill at May 31, 2017 | 40.9 | 68.0 | — | 108.9 | 10.0 | 118.9 | |||||||||||||||||
Expenditures for other non-current assets(3) | 65.3 | 20.1 | 54.5 | 139.9 | 11.5 | 151.4 | |||||||||||||||||
Other non-current assets at May 31, 2017(3) | 143.6 | 90.5 | 418.2 | 652.3 | 67.1 | 719.4 |
(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 its facility located in Connecticut. |
(2) | Includes depreciation of property, plant and equipment and amortization of intangible assets and prepublication and production costs. |
(3) | Other non-current assets include property, plant and equipment, prepublication assets, production assets, royalty advances, goodwill, intangible assets and investments. Expenditures for other non-current assets for the International reportable segment include expenditures for long-lived assets of $8.2, $10.0 and $6.7 for the fiscal years ended May 31, 2019, 2018 and 2017, respectively. Other non-current assets for the International reportable segment include long-lived assets of $35.9, $36.8 and $33.4 at May 31, 2019, 2018 and 2017, respectively. |
2019 | 2018 | 2017 | |||||||||
Estimated fair value of stock options granted | $ | 11.97 | $ | 10.45 | $ | 12.70 | |||||
Assumptions: | |||||||||||
Expected dividend yield | 1.4 | % | 1.5 | % | 1.5 | % | |||||
Expected stock price volatility | 28.4 | % | 29.8 | % | 36.6 | % | |||||
Risk-free interest rate | 3.0 | % | 2.1 | % | 1.5 | % | |||||
Average expected life of options | 6 years | 6 years | 6 years |
2019 | 2018 | 2017 | |||||||||||||||||||||
Pension Plans | Post - Retirement Benefits | Pension Plans | Post - Retirement Benefits | Pension Plans | Post - Retirement Benefits | ||||||||||||||||||
Service cost | $ | — | $ | — | $ | — | $ | 0.0 | $ | — | $ | 0.0 | |||||||||||
Net amortization and deferrals | (0.1 | ) | — | — | — | — | |||||||||||||||||
Lump sum settlement charge | — | — | 55.0 | — | — | — | |||||||||||||||||
Amortization of net actuarial (gain) loss | 0.8 | — | 2.1 | 0.1 | 1.7 | 0.4 | |||||||||||||||||
Tax benefit | — | 0.0 | (22.3 | ) | 0.0 | (0.4 | ) | (0.1 | ) | ||||||||||||||
Amounts reclassified from Accumulated other comprehensive income (loss) | $ | 0.8 | $ | (0.1 | ) | $ | 34.8 | $ | 0.1 | $ | 1.3 | $ | 0.3 |
Foreign currency translation adjustments | Pension Plans | Post - Retirement Benefits | Total | ||||||||||||
Balance at May 31, 2017 (1) | $ | (45.3 | ) | $ | (46.9 | ) | $ | (2.0 | ) | $ | (94.2 | ) | |||
Other comprehensive income (loss) before reclassifications | 3.4 | (0.4 | ) | 0.6 | 3.6 | ||||||||||
Less: amount reclassified from Accumulated other comprehensive income (loss) (net of taxes) | |||||||||||||||
Settlement charge | — | 33.0 | — | 33.0 | |||||||||||
Amortization of net actuarial loss | — | 1.8 | 0.1 | 1.9 | |||||||||||
Net prior service credit | — | — | — | — | |||||||||||
Other comprehensive income (loss) | 3.4 | 34.4 | 0.7 | 38.5 | |||||||||||
Balance at May 31, 2018 (1) | $ | (41.9 | ) | $ | (12.5 | ) | $ | (1.3 | ) | $ | (55.7 | ) | |||
Other comprehensive income (loss) before reclassifications | $ | (5.2 | ) | $ | (1.4 | ) | $ | 1.9 | $ | (4.7 | ) | ||||
Less: amount reclassified from Accumulated other comprehensive income (loss) (net of taxes) | |||||||||||||||
Amortization of net actuarial loss | $ | — | $ | 0.8 | $ | (0.1 | ) | $ | 0.7 | ||||||
Other comprehensive income (loss) | (5.2 | ) | (0.6 | ) | 1.8 | (4.0 | ) | ||||||||
Balance at May 31, 2019 (1) | $ | (47.1 | ) | $ | (13.1 | ) | $ | 0.5 | $ | (59.7 | ) |
Authorizations | Amount | |||
July 2015 | $ | 50.0 | ||
March 2018 | 50.0 | |||
Total current Board authorizations | $ | 100.0 | ||
Less repurchases made under the authorizations as of May 31, 2019 | $ | (47.2 | ) | |
Remaining Board authorization at May 31, 2019 | $ | 52.8 |
• | Accounts receivable allowance for doubtful accounts |
• | Pension and other postretirement obligations |
• | 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, intangibles 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 |