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Item 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

The Company categorizes its businesses into four reportable segments: Children’s Book Publishing and Distribution; Education Solutions; Entertainment; and International.

The following discussion and analysis of the Company’s financial position and results of operations should be read in conjunction with the Company’s Consolidated Financial Statements and the related Notes included in Item 8, “Consolidated Financial Statements and Supplementary Data.”

Overview and Outlook

Overview

Revenues from operations for the fiscal year ended May 31, 2025 increased by $35.8 million, or 2.3%, to $1,625.5 million, compared to $1,589.7 million in the prior fiscal year. The Company reported net loss per basic and diluted share of Class A and Common Stock of $0.07 for the fiscal year ended May 31, 2025, compared to net income per basic and diluted share of Class A and Common Stock of $0.41 and $0.40, respectively, in the prior fiscal year.

During fiscal 2025, the Company successfully integrated 9 Story into its Entertainment segment, which significantly contributed to the Company's revenue growth year over year. Fiscal 2025 results also reflected new releases in the Company's bestselling series, including Sunrise on the Reaping, the latest installment in Suzanne Collins’ Hunger Games series and Dav Pilkey's Dog Man #13: Big Jim Begins, which benefited the Company's trade channels globally and helped to offset softness in the overall retail market. Education Solutions continued to be negatively impacted by the continuing headwinds in the supplemental curriculum market and the Company is repositioning the business focused on long-term growth and improved profitability under its new leadership. Operating income in fiscal 2025 was $15.8 million compared to $14.5 million in the prior fiscal year, representing an increase of $1.3 million, as the Company successfully executed on a cost management strategy.

Outlook

During fiscal 2026, the Company expects to continue to expand the reach and monetization of Scholastic’s intellectual property, which includes the release of the next title in the best-selling Dog Man series and a growing slate of content development and production commitments. While there continues to be significant near-term uncertainty about school funding, the Company is focusing its product development and go-to-market strategies in EducationSolutions to better align with the evolving needs of educators, schools, and families. The Company has also made progress on its strategic and operational initiatives, which include streamlining the Company's organizational structure, strengthening leadership, reducing costs and evaluating options to optimize its real estate assets, all of which are intended to enhance the Company's ability to drive long-term growth and deliver greater value to shareholders.

Critical Accounting Policies and Estimates

General:

The Company’s discussion and analysis of its financial condition and results of operations is based upon its Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements involves the use of estimates and assumptions by management, which affects the amounts reported in the Consolidated Financial Statements and accompanying notes. The Company bases its estimates on historical experience, current business factors, future expectations 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 assets and liabilities. Actual results may differ from those estimates and assumptions. On an ongoing basis, the Company evaluates the adequacy of its reserves and the estimates used in calculations, including, but not limited to: collectability of accounts receivable; variable consideration related to anticipated returns; allocation of transaction price to contractual performance obligations; amortization periods; stock-based compensation expense; pension and other postretirement obligations; tax rates; recoverability of inventories; deferred income taxes and tax reserves; the timing and amount of future income taxes and related deductions; recoverability of prepublication costs; recoverability of investment in film and television programs; royalty advance reserves; customer reward programs; and the impairment assessment of long-lived assets, goodwill and other intangibles. For a complete description of the Company’s significant accounting policies, see Note 1, "Description of Business, Basis of Presentation and Summary of Significant Accounting Policies," of Notes to Consolidated Financial Statements in Item 8, “Consolidated Financial Statements and Supplementary Data.” The following policies and account descriptions include all those identified by the Company as critical to its business operations and the understanding of its results of operations:

Revenue recognition:

The Company has identified the allocation of the transaction price to contractual performance obligations related to revenues within the school-based book fairs channel, as described below, as a critical accounting estimate.

Revenues associated with school-based book fairs relate to the sale of children's books and other products to book fair sponsors. In addition, the Company employs an incentive program to encourage the sponsorship of book fairs and increase the number of fairs held each school year. The Company identifies two potential performance obligations within its school-based book fair contracts, which include the fulfillment of book fairs product and the fulfillment of product upon the redemption of incentive program credits by customers. The Company allocates the transaction price to each performance obligation and recognizes revenue at a point in time. The Company utilizes certain estimates based on historical experience, redemption patterns and future expectations related to the participation in the incentive program to determine the relative fair value of each performance obligation when allocating the transaction price. Changes in these estimates could impact the timing of the recognition of revenue. Revenue allocated to the book fairs product is recognized at the point at which product is delivered to the customer and control is transferred. The revenue allocated to the incentive program credits is recognized upon redemption of incentive credits and the transfer of control of the redeemed product. Incentive credits are generally redeemed within 12 months of issuance. Payment for school-based book fairs product is due at the completion of a customer's fair. Revenues associated with virtual fairs are recognized upon shipment of the products and related incentive program credits are expensed upon issuance.

Estimated returns:

For sales that include a right of return, the Company estimates the transaction price and records revenues as variable consideration based on the amounts the Company expects to ultimately be entitled. In order to determine estimated returns, the Company utilizes historical return rates, sales patterns, types of products and expectations and recognizes a corresponding reduction to Revenues and Cost of goods sold. Management also considers patterns of sales and returns in the months preceding the fiscal year, as well as actual returns received subsequent to the fiscal year, available customer and market specific data and other return rate information that management believes is relevant. In addition, a refund liability is recorded within Other accrued expenses for the consideration to which the Company believes it will not ultimately be entitled and a return asset is recorded within Prepaid expenses and other current assets for the expected inventory to be returned. Actual returns could differ from the Company's estimate. A one percentage point change in the estimated reserve for returns rate would have resulted in an increase or decrease in operating income for the year ended May 31, 2025 of approximately $5.0 million.

Inventories:

Inventories, consisting principally of books, are stated at the lower of cost, using the first-in, first-out method, or net realizable value. The Company records a reserve for excess and obsolete inventory based upon a calculation using the expected future sales of existing inventory driven by estimates around forecasted purchases, inventory consumption costs, and the sell-through rate of current fiscal year purchases. In accordance with the Company's inventory retention policy, expected future sales of existing inventory are compared against historical usage by channel for reasonableness and any specifically identified excess or obsolete inventory, due to an anticipated lack of demand, will also be reserved. The impact of a one percentage point change in the obsolescence reserve rate would have resulted in an increase or decrease in operating income for the year ended May 31, 2025 of approximately $3.5 million.

Royalty advances:

Royalty advances are initially capitalized and subsequently expensed as related revenues are earned or when the Company determines future recovery through earndowns is not probable. The Company has a long history of providing authors, illustrators, licensors and other publishers with royalty advances, and it tracks each advance earned with respect to the sale of the related publication. Historically, the longer the unearned portion of the advance remains outstanding, the less likely it is that the Company will recover the advance through the sale of the publication, as the related royalties earned are applied first against the remaining unearned portion of the advance. The Company applies this historical experience to its existing outstanding royalty advances to estimate the likelihood of recovery. Additionally, the Company’s editorial staff regularly reviews its portfolio of royalty advances to determine if individual royalty advances are not recoverable through earndowns for discrete reasons, such as the death of an author prior to completion of a title or titles, a Company decision to not publish a title, poor market demand or other relevant factors that could impact recoverability.

Business combinations:

The Company allocates the purchase price in a business combination to the underlying tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values, with any excess recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates, estimated useful lives and market multiples, among other items.

With respect to the 9 Story acquisition, the Company was required to make significant judgments and estimates, particularly in the identification and valuation of identifiable intangible assets. The Company utilized a third-party valuation specialist in determining the fair values. The assets acquired primarily include intellectual property ("IP") related to 9 Story's existing and recognized program titles, customer contracts/relationships related to licensing, distribution and service arrangements, and the trade names associated with 9 Story and Brown Bag Films, its animation studio. The intellectual property and customer contracts/relationships were valued using the multi-period excess earnings valuation method and the tradename was valued using the relief-from-royalty valuation method. The significant underlying assumptions used in these methods included the projected revenue and revenue attributable to the individual intangible assets, as well as the discount and royalty rate. These assumptions are inherently subjective and sensitive to changes in market conditions and the future performance of the acquired business. Refer to Note 11, "Acquisitions," of Notes to Consolidated Financial Statements in Item 8, “Consolidated Financial Statements and Supplementary Data” for further details regarding this acquisition.

Evaluation of Goodwill impairment:

Goodwill is not amortized and is reviewed for impairment annually or more frequently if impairment indicators arise.

The Company compares the estimated fair values of its identified reporting units to the carrying values of their net assets. The Company first performs a qualitative assessment to determine whether it is more likely than not that the fair values of its identified reporting units are less than their carrying values. If it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs the quantitative goodwill impairment test. The Company measures goodwill impairment by the amount the carrying value exceeds the fair value of a reporting unit. For each of the reporting units, the estimated fair value is determined utilizing the expected present value of the projected future cash flows of the reporting unit, in addition to comparisons to similar companies. The Company reviews its definition of reporting units annually or more frequently if conditions indicate that the reporting units may change. The Company evaluates its operating segments to determine if there are components one level below the operating segment level. A component is present if discrete financial information is available and segment management regularly reviews the operating results of the business. If an operating segment only contains a single

component, that component is determined to be a reporting unit for goodwill impairment testing purposes. If an operating segment contains multiple components, the Company evaluates the economic characteristics of these components. Any components within an operating segment that share similar economic characteristics are aggregated and deemed to be a reporting unit for goodwill impairment testing purposes. Components within the same operating segment that do not share similar economic characteristics are deemed to be individual reporting units for goodwill impairment testing purposes.

The Company has seven reporting units with goodwill subject to impairment testing. The determination of the fair value of the Company’s reporting units involves a number of assumptions, including the estimates of future cash flows, discount rates and market-based multiples, among others, each of which is subject to change. Accordingly, it is possible that changes in assumptions and the performance of certain reporting units could lead to impairments in future periods, which may be material.

Income taxes:

The Company uses the asset and liability method of accounting for income taxes. Under this method, for purposes of determining taxable income, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of such assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to be realized.

The Company believes that its taxable earnings, during the periods when the temporary differences giving rise to deferred tax assets become deductible or when tax benefit carryforwards may be utilized, should be sufficient to realize the related future income tax benefits. For those jurisdictions where the expiration date of the tax benefit carryforwards or the projected taxable earnings indicate that realization is not likely, the Company establishes a valuation allowance.

In assessing the need for a valuation allowance, the Company estimates future taxable earnings, with consideration for the feasibility of ongoing tax planning strategies and the realizability of tax benefit carryforwards, to determine which deferred tax assets are more likely than not to be realized in the future. Valuation allowances related to deferred tax assets can be impacted by changes to tax laws, changes to statutory tax rates and future taxable earnings. In the event that actual results differ from these estimates in future periods, the Company may need to adjust the valuation allowance.

Results of Operations - Consolidated

(Amounts in millions, except per share data)For fiscal years ended May 31,

$ % (1) $ % (1)

Revenues:

Asset impairments and write downs 2.9 0.2 10.0 0.6

Other components of net periodic benefit (cost) (1.1) (0.1) (1.0) (0.1)

Earnings (loss) before income taxes (1.3) (0.1) 16.2 1.0

Provision (benefit) for income taxes 0.6 0.0 4.1 0.2

Basic and diluted earnings (loss) per share of Class A and Common Stock

(1) Represents percentage of total revenues.

(2) The Entertainment segment includes the operations of Scholastic Entertainment Inc. ("SEI"), which were included in the Children’s Book Publishing and Distribution segment in prior periods, and 9 Story, as acquired on June 20, 2024. The financial results for SEI for the prior fiscal year presented have been reclassified to Entertainment to reflect this change.

(3) Represents rental income related to leased space in the Company's headquarters which was not allocated to a segment.

Results of Operations – Consolidated

The section below is a discussion of the Company's fiscal year 2025 results compared to fiscal year 2024. A discussion of the Company's fiscal year 2024 results compared to fiscal year 2023 is not included in this Form 10-K and can be found in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" for the year ended May 31, 2024, filed as part of the Company's Form 10-K dated July 19, 2024.

Fiscal 2025 compared to fiscal 2024

Revenues from operations for the fiscal year ended May 31, 2025 increased by $35.8 million, or 2.3%, to $1,625.5 million, compared to $1,589.7 million in the prior fiscal year. Children’s Book Publishing and Distribution, Entertainment and International segment revenues increased $10.6 million, $59.1 million and $6.0 million, respectively, partially offset by lower revenues from the Education Solutions segment of $41.4 million.

Children’s Book Publishing and Distribution segment revenues increased $10.6 million, primarily driven by the school reading events business on higher fair count in the book fairs channel and higher revenue per sponsor in the book clubs channel. Trade channel revenues were relatively consistent with the prior year as increased sales from the Hunger Games and Dog Man series, driven by the latest releases, Sunrise on the Reaping and Dog Man #13: Big Jim Begins, respectively, were largely offset by lower sales of backlist titles reflecting continued softness in the retail book market.

Education Solutions segment revenues decreased $41.4 million, primarily driven by the continued impact of market conditions as school districts focus on adopting and implementing new evidence-based core programs and decrease spending on supplemental materials.

Entertainment segment revenues increased $59.1 million, reflecting the addition of 9 Story.

International segment revenues increased $6.0 million, primarily driven by increased revenues from the Company's Major Markets, which benefited from the new releases in the Hunger Games and Dog Man series. International segment revenues were also impacted by unfavorable foreign currency exchange of $1.6 million.

Components of Cost of goods sold for fiscal years 2025 and 2024 are as follows:

($ amounts in millions)

Postage, freight, shipping, fulfillment and all other costs 138.4 8.4 141.7 8.9

Cost of goods sold as a percentage of revenue for the fiscal year ended May 31, 2025 was 44.2%, compared to 44.4% in the prior fiscal year. Cost of goods sold benefited from favorable product mix in the trade channels, driven in particular by the higher priced hardcover sales of Sunrise on the Reaping. This was largely offset by higher royalty costs as a result of an increase in the mix of higher-royalty bearing titles sold in the fiscal year ended May 31, 2025 and the addition of production costs as a result of the 9 Story acquisition. The Company expects cost of good sold to increase in fiscal 2026 due to the newly imposed tariffs.

Selling, general and administrative expenses for the fiscal year ended May 31, 2025 were $822.3 million, compared to $803.0 million in the prior fiscal year. The $19.3 million increase was primarily attributable to the addition of 9 Story, which resulted in higher operating expenses in the period ended May 31, 2025, partially offset by lower commission expense and external labor costs within Education Solutions. In addition, amortization expense related to cloud computing arrangements for the fiscal year ended May 31, 2025 increased by $2.5 million compared to the prior fiscal year as a result of new assets placed into service.

Depreciation and amortization expenses for the fiscal year ended May 31, 2025 were $65.7 million, compared to $57.1 million in the prior fiscal year. The $8.6 million increase in Depreciation and amortization was primarily driven by the intangible assets acquired as a result of the 9 Story acquisition. The Company also continues to shift spending to cloud

computing arrangements in which the amortization expense is included in Selling, general and administrative expenses rather than Depreciation and amortization.

Asset impairments and write downs for the fiscal year ended May 31, 2025 were $2.9 million, compared to $10.0 million in the prior year. In fiscal 2025, the Company recognized asset impairments of $1.2 million related to certain digital products in Children's Book Publishing and Distribution and Education Solutions, $1.1 million related to certain inventory and other assets in Asia, and $0.6 million related to the early exit of leased office space in the U.S., Canada and Ireland. In fiscal 2024, the Company recognized asset impairments of $6.1 million related to certain education products as a result of the shift to evidence-based approaches to literacy instruction in the education market and $3.9 million related to the early exit of leased office space in the U.S. and Canada.

Interest income for the fiscal year ended May 31, 2025 was $2.2 million, compared to $4.6 million in the prior fiscal year. The decrease in interest income was attributable to lower average short term investment balances as compared to the prior fiscal year. The Company invests excess cash in short term investments which earn competitive interest rates that change directionally in relation to the Federal Funds rate.

Interest expense for the fiscal year ended May 31, 2025 was $18.2 million, compared to $1.9 million in the prior fiscal year. The increase in interest expense was due to borrowings under the U.S. Credit Agreement incurred during the first quarter of fiscal 2025 to fund the 9 Story acquisition. The Company expects to maintain these borrowings into the next fiscal year resulting in comparable to slightly higher interest expense in fiscal 2026. Any potential asset monetization strategies executed by the Company could result in repayments of the outstanding borrowings and reduce interest expense.

The Company’s effective tax rate for the fiscal year ended May 31, 2025 was (46.2)%, compared to 25.3% in the prior fiscal year. The effective tax rate varies from the statutory rate primarily due to expected state and local income taxes and non-deductible compensation for covered executive employees. The tax provision on the global consolidated loss before income taxes was due to the Company's domestic taxable income generating tax expense.

Net loss for fiscal 2025 was $1.9 million compared to net income of $12.1 million in fiscal 2024, a decrease of $14.0 million. The basic and diluted loss per share of Class A Stock and Common Stock was $0.07 in fiscal 2025, compared to basic and diluted income per share of Class A Stock and Common Stock of $0.41 and $0.40, respectively, in fiscal 2024. Outstanding shares decreased 11% from 28.2 million to 25.0 million as of May 31, 2025 which is expected to benefit earnings per share calculations in fiscal 2026.

Results of Operations – Segments

CHILDREN’S BOOK PUBLISHING AND DISTRIBUTION

($ amounts in millions) 2025 compared to 2024

Asset impairments and write downs 0.6 0.5 0.1 20.0

* Other operating expenses include selling, general and administrative expenses and depreciation and amortization.

Fiscal 2025 compared to fiscal 2024

Revenues for the fiscal year ended May 31, 2025 increased by $10.6 million to $963.9 million, compared to $953.3 million in the prior fiscal year. The increase in segment revenues was primarily driven by increased revenues from School Reading Events of $8.2 million. Book fairs channel revenues increased $6.7 million, driven by higher fair count, partially offset by slightly lower revenue per fair as compared to the prior year. Book clubs channel revenues increased $1.5 million as a result of higher revenue per sponsor and an increase in events. Trade channel revenues were relatively consistent with the prior year, increasing $2.4 million, or 1%, as increased sales from the Hunger Games and Dog Man series, driven by the latest releases, Sunrise on the Reaping and Dog Man #13: Big Jim Begins, respectively, were largely offset by lower sales of backlist titles reflecting continued softness in the retail book market. The retail book

market is expected to remain soft in fiscal 2026 and, similar to fiscal 2025, the Company is anticipating its proprietary school market channels to outpace this softness.

Cost of goods sold for the fiscal year ended May 31, 2025 was $410.2 million, or 42.6% of revenues, compared to $412.0 million, or 43.2% of revenues, in the prior fiscal year. The improvement in Cost of goods sold as a percentage of revenues was primarily attributable to the mix of product sold in the trade channel in fiscal 2025, driven in particular by the higher priced hardcover sales of Sunrise on the Reaping, partially offset by higher royalty costs as a result of an increase in the mix of higher-royalty bearing titles sold in the fiscal year ended May 31, 2025. In addition, the book fairs channel had lower excess inventory reserves as a result of better inventory utilization. The Company expects an increase in cost of product as a result of increased tariffs, especially in the book fairs channel beginning in the peak selling season in the upcoming second fiscal quarter.

Other operating expenses were $422.4 million for the fiscal year ended May 31, 2025, compared to $417.5 million in the prior fiscal year. The $4.9 million increase in Other operating expenses was primarily attributable to the book fairs channel to support the increased fair count, in addition to inflationary pressures.

Asset impairments were $0.6 million for the fiscal year ended May 31, 2025, compared to $0.5 million in the prior fiscal year. In fiscal 2025, the Company recognized an asset impairment of $0.6 million related to certain digital products. In fiscal 2024, the Company early exited leased office space, as a result of which the Company recognized an impairment expense of $0.5 million, primarily related to the right-of-use asset associated with the operating lease.

Segment operating income for the fiscal year ended May 31, 2025 was $130.7 million, compared to $123.3 million in the prior fiscal year. The $7.4 million increase in operating income was attributable to higher revenues, primarily from School Reading Events, driven by higher fair count in the book fairs channel, coupled with favorable cost of product in the trade channel driven by higher margins on Sunrise on the Reaping. This was partially offset by increased operating costs in the book fairs channel to support the increased fair count.

EDUCATION SOLUTIONS

($ amounts in millions) 2025 compared to 2024

Operating income (loss) $ 6.3 $ 15.8 $ (9.5) (60.1) %

Operating margin 2.0 % 4.5 %

* Other operating expenses include selling, general and administrative expenses and depreciation and amortization.

Fiscal 2025 compared to fiscal 2024

Revenues for the fiscal year ended May 31, 2025 decreased by $41.4 million to $309.8 million, compared to $351.2 million in the prior fiscal year. The decrease in segment revenues was primarily driven by the continued impact of market conditions as school districts focus on adopting and implementing new evidence-based core programs and decrease spending on supplemental materials. In addition, subscription revenues from Magazines+ and revenues from community literacy programs decreased from the prior fiscal year. Partially offsetting the decline, the segment benefited from increased revenues from sponsored programs as a result of an increase in participants and increased sales of the Company's Ready4ReadingTM phonics curriculum. The Company expects the revenues to remain consistent in fiscal 2026 due to the on-going headwinds in the education market.

Cost of goods sold for the fiscal year ended May 31, 2025 was $122.8 million, or 39.6% of revenue, compared to $137.6 million, or 39.2% of revenue, in the prior fiscal year. Cost of goods sold as a percentage of revenues was impacted by higher outbound freight costs related to sponsored programs, which was largely offset by lower prepublication amortization as a result of the impairment of certain education products in fiscal 2024.

Other operating expenses were $180.1 million for the fiscal year ended May 31, 2025, compared to $191.7 million in the prior fiscal year. The $11.6 million decrease in Other operating expenses was primarily attributable to lower commission expense driven by the lower revenues, in addition to lower external labor and marketing costs.

Asset impairments were $0.6 million for the fiscal year ended May 31, 2025, compared to $6.1 million in the prior fiscal year. In fiscal 2025, the Company recognized an asset impairment of $0.6 million related to certain digital products. In fiscal 2024, the Company recognized an asset impairment of $6.1 million related to certain education products that were not aligned with evidence-based approaches to literacy instruction.

Segment operating income for the fiscal year ended May 31, 2025 was $6.3 million, compared to $15.8 million in the prior fiscal year. The $9.5 million decrease in operating income was attributable to lower revenues, primarily due to continued market conditions which resulted in decreased spending on supplemental materials. This was partially offset by lower external labor and marketing costs and lower impairment expense in the fiscal year ended May 31, 2025.

ENTERTAINMENT

($ amounts in millions) 2025 compared to 2024

Asset impairments and write downs 0.5 — 0.5 NM

Operating income (loss) $ (12.1) $ (11.2) $ (0.9) (8.0)%

Operating margin NM NM

* Other operating expenses include selling, general and administrative expenses and depreciation and amortization.

NM Not meaningful

The Entertainment segment includes the operations of 9 Story, as acquired on June 20, 2024, and Scholastic Entertainment Inc. ("SEI"). SEI was reported in the Children's Book Publishing and Distribution segment in prior periods. The financial results for SEI for fiscal 2024 have been reclassified to Entertainment to reflect this change. Refer to Note 11, "Acquisitions," of Notes to the Consolidated Financial Statements in Item 8, "Consolidated Financial Statements and Supplementary Data" for further details regarding the acquisition of 9 Story.

Revenues for the fiscal year ended May 31, 2025 were $61.0 million compared to $1.9 million in the prior fiscal year period. The increase reflected the addition of 9 Story from the date of acquisition on June 20, 2024 through May 31, 2025 in which a majority of the revenues were driven by production revenue related to episodic deliveries, production services provided to third parties and, to a lesser extent, revenues from royalties and distribution. Entertainment revenues have been negatively impacted by delays in production greenlights from major platforms which are expected to improve in fiscal 2026.

Cost of goods sold for the fiscal year ended May 31, 2025 was $33.4 million, or 54.8% of revenues. Cost of goods sold primarily consists of production costs and amortization, participation expenses and interest on film related obligations.

Other operating expenses for the fiscal year ended May 31, 2025 were $39.2 million, which included costs of $3.0 million related to the 9 Story acquisition and severance expense of $1.4 million related to cost-saving initiatives. Other operating expenses for the fiscal year ended May 31, 2024 were $13.0 million, which included transaction costs of $9.3 million related to the 9 Story acquisition.

Asset impairments for the fiscal year ended May 31, 2025 were $0.5 million. The Company early exited certain leased office space as a result of which the Company recognized an impairment expense of $0.5 million in fiscal 2025, primarily related to the right-of-use asset associated with the operating leases.

Segment operating loss for the fiscal year ended May 31, 2025 was $12.1 million compared to $11.2 million in the prior fiscal year.

INTERNATIONAL

($ amounts in millions) 2025 compared to 2024

Asset impairments and write downs 1.1 1.1 — —

Operating income (loss) $ (1.0) $ (6.9) $ 5.9 85.5%

Operating margin NM NM

* Other operating expenses include selling, general and administrative expenses and depreciation and amortization.

NM Not meaningful

Fiscal 2025 compared to fiscal 2024

Revenues for the fiscal year ended May 31, 2025 increased by $6.0 million to $279.6 million compared to $273.6 million in the prior fiscal year. Local currency revenues in the Company's ongoing foreign operations increased $7.6 million when compared to the prior fiscal year, excluding unfavorable foreign exchange impact of $1.6 million. In the UK, local currency revenues increased $8.4 million, driven by higher trade channel sales which benefited from several current year releases including the latest Hunger Games title, Sunrise of the Reaping, Jonty Gentoo: The Adventures of a Penguin by Julia Donaldson and Axel Scheffler and Dog Man #13: Big Jim Begins by Dav Pilkey, in addition to higher book fairs channel sales driven by higher fair count. In Canada, local currency revenues increased $4.2 million, primarily driven by higher sales from the trade channel, which benefited from the new releases in the Hunger Games and Dog Man series and lower sales returns from its major customers, coupled with higher sales from the book clubs channel. In Australia and New Zealand, local currency revenues increased $1.9 million, driven by increased sales of education products in New Zealand and higher trade channel sales in both markets, partially offset by lower school channel revenues in Australia. The increase in revenues from the Major Markets was partly offset by lower local currency revenues in Asia of $5.5 million. This was primarily attributable to lower sales within the trade and education channels, partially offset by growth in India. Export channel sales also decreased $1.4 million as compared to the prior fiscal year.

Cost of goods sold for the fiscal year ended May 31, 2025 was $159.3 million, or 57.0% of revenues, compared to $162.2 million, or 59.3% of revenues, in the prior fiscal year. Cost of goods sold as a percentage of revenues decreased as a result of the mix of product sold in Canada and the U.K. in fiscal 2025, driven in particular by the higher priced hardcover sales of Sunrise on the Reaping. This was partially offset by increased fulfillment costs in Australia on lower revenues.

Other operating expenses were $120.2 million for the fiscal year ended May 31, 2025, compared to $117.2 million in the prior fiscal year. Other operating expenses increased $3.0 million primarily due to higher general overhead costs in the Major Markets, partially offset by lower costs in Asia driven by operational efficiencies as a result of the Company's reorganization efforts. In the fiscal year ended May 31, 2025, the Company incurred severance expense from its cost-saving initiatives and reorganization efforts in Asia, Canada and Australia of $2.8 million, compared to $2.7 million in the prior fiscal year related to reorganization efforts in Canada and its exit from the franchise business in China.

Asset impairments and write downs were $1.1 million for the fiscal years ended May 31, 2025 and 2024. In fiscal 2025, the Company recognized an asset impairment of $1.1 million related to certain inventory and other assets that were not recoverable as a result of the reorganization in China. In fiscal 2024, the Company early exited certain leased office space in Canada as part of the Company's efforts to rightsize its real estate footprint to reduce occupancy costs, resulting in an impairment expense of $1.1 million related to the right-of-use assets associated with the operating leases.

Segment operating loss for the fiscal year ended May 31, 2025 was $1.0 million, compared to $6.9 million in the prior fiscal year. The $5.9 million improvement was primarily attributable to higher revenues in the Major Markets, coupled with favorable cost of product in the trade channels driven by higher margins on Sunrise on the Reaping. In addition, operating efficiencies in Canada and Asia drove improved profitability, coupled with lower trade sales returns in Canada. This improvement was partially offset by increased general overhead costs in the Major Markets in the fiscal year ended May 31, 2025.

Overhead

Fiscal 2025 compared to fiscal 2024

Unallocated overhead expense for the fiscal year ended May 31, 2025 increased by $1.6 million to $108.1 million, compared to $106.5 million in the prior fiscal year. The increase was primarily attributable to higher employee-related expenses driven by higher medical costs. This was partly offset by lower severance expense of $0.6 million related to the Company's cost-savings initiatives and lower impairment expense of $2.2 million. The Company early exited certain leased office space as part of the Company's efforts to rightsize office space in fiscal years 2025 and 2024, resulting in an impairment expense of $0.1 million and $2.3 million, respectively, related to the right-of-use assets associated with the operating leases. In addition, the Company recognized higher rental income of $1.5 million as a result of a new tenant leasing space in the Company's headquarters.

Liquidity and Capital Resources

Fiscal 2025 compared to fiscal 2024

Cash provided by operating activities was $124.2 million for the fiscal year ended May 31, 2025, compared to cash provided by operating activities of $154.6 million for the prior fiscal year, representing a decrease in cash provided by operating activities of $30.4 million. The decrease in cash provided was primarily driven by lower customer remittances, increased inventory purchases and royalty advance payments, as well as increased medical claim payments, interest payments related to the Company's borrowings and higher spending in Entertainment due to the acquisition of 9 Story in fiscal 2025. This was partially offset by lower tax payments and lower discretionary spending in the fiscal year ended May 31, 2025.

Cash used in investing activities was $252.9 million for the fiscal year ended May 31, 2025, compared to cash used in investing activities of $89.7 million for the prior fiscal year, representing an increase in cash used in investing activities of $163.2 million. The increase in cash used was driven by the cash paid for the 9 Story acquisition of $176.2 million, net of cash acquired, during the fiscal year ended May 31, 2025, as compared to the prior fiscal year in which the Company acquired certain amortizable intangible assets related to educational programs and a U.S.-based children's book publishing business for $6.0 million and purchased the remaining noncontrolling interest related to Make Believe Ideas Limited for $2.1 million. This was partially offset by lower capital expenditures of $6.2 million.

Cash provided by financing activities was $137.3 million for the fiscal year ended May 31, 2025, compared to cash used in financing activities of $176.1 million for the prior fiscal year, representing an increase in cash provided by financing activities of $313.4 million. The increase in cash provided was primarily attributable to net borrowings of $250 million under the U.S. Credit Agreement incurred during fiscal 2025 to fund the 9 Story acquisition. In addition, the Company repurchased common stock of $70.0 million, compared to repurchases of $158.2 million in the prior fiscal year, which also resulted in lower dividends of $2.1 million. This was partially offset by $18.3 million of net repayments of film related obligations in the fiscal year ended May 31, 2025.

Cash Position

The Company’s cash and cash equivalents totaled $124.0 million at May 31, 2025 and $113.7 million at May 31, 2024. Cash and cash equivalents held by the Company’s U.S. operations totaled $48.7 million at May 31, 2025 and $54.9 million at May 31, 2024.

The Company’s operating philosophy is to use cash provided by operating activities to create value by paying down debt, reinvesting in existing businesses and, from time to time, making acquisitions that will complement its portfolio of businesses or acquiring other strategic assets, as well as engaging in shareholder enhancement initiatives, such as share repurchases or dividend declarations. During fiscal 2025, the Company repurchased $70.0 million of its common stock on the open market. See Note 15, "Treasury Stock," of Notes to the Consolidated Financial Statements in Item 8, "Consolidated Financial Statements and Supplementary Data" for further details. Under the Company's open-market buy-back program, $70.0 million remained available for future purchases of common shares as of May 31, 2025.

The Company has maintained, and expects to maintain for the foreseeable future, sufficient liquidity to fund ongoing operations, including working capital requirements, pension contributions, postretirement benefits, debt service, planned capital expenditures and other investments, as well as dividends and share repurchases. As of May 31, 2025, the Company’s primary sources of liquidity consisted of cash and cash equivalents of $124.0 million, cash from

operations and the Company's U.S. Credit Agreement. The Company expects the U.S. Credit Agreement to provide it with an appropriate level of flexibility to strategically manage its business operations. The U.S. Credit Agreement has a borrowing limit of $400 million and a maturity date of November 26, 2029. See Note 5, "Debt," of Notes to the Consolidated Financial Statements in Item 8, "Consolidated Financial Statements and Supplementary Data" for more information regarding the U.S. Credit Agreement. As of May 31, 2025, the Company's U.S. Credit Agreement, less borrowings of $250.0 million and commitments of $0.4 million, had $149.6 million of availability. Additionally, the Company has short-term credit facilities of $32.0 million, less current borrowings of $6.2 million and commitments of $3.6 million, resulting in $22.2 million of current availability under these facilities at May 31, 2025. Accordingly, the Company believes these sources of liquidity are sufficient to finance its currently anticipated ongoing operating needs, as well as its financing and investing activities.

The following table summarizes, as of May 31, 2025, the Company’s contractual cash obligations by future period (see Notes 5, 6, 10 and 16 of Notes to Consolidated Financial Statements in Item 8, “Consolidated Financial Statements and Supplementary Data”):

$ amounts in millions

Payments Due By Period

Contractual Obligations 1 Year or Less Years 2-3 Years 4-5 After Year 5 Total

Minimum print quantities $ 0.4 $ 0.6 $ 0.3 $ — $ 1.3

Lines of credit and short-term debt 6.2 — — — 6.2

(1) Film related obligations are due on demand. Outstanding borrowings are presented by fiscal year maturity based on expected repayment dates per loan agreements.

(2) Includes principal and interest.

(3) Excludes expected Medicare Part D subsidy receipts.

Financing

Loan Agreement

The Company is party to the U.S. Credit Agreement and certain credit lines with various banks, including those related to film related obligations. For a more complete description of the U.S. Credit Agreement, as well as the Company's other debt obligations, reference is made to Note 5, "Debt," of Notes to Consolidated Financial Statements in Item 8, “Consolidated Financial Statements and Supplementary Data.”

Acquisitions

In the ordinary course of business, the Company explores domestic and international expansion opportunities, including potential niche and strategic acquisitions. As part of this process, the Company engages with interested parties in discussions concerning possible transactions. The Company will continue to evaluate such expansion opportunities and prospects. See Note 11, "Acquisitions," of Notes to Consolidated Financial Statements in Item 8, “Consolidated Financial Statements and Supplementary Data.”

Item 7A | Quantitative and Qualitative Disclosures about Market Risk

The Company conducts its business in various foreign countries, and as such, its cash flows and earnings are subject to fluctuations from changes in foreign currency exchange rates. The Company sells products from its domestic operations to its foreign subsidiaries, creating additional currency risk. The Company manages its exposures to this market risk through internally established procedures and, when deemed appropriate, through the use of short-term forward exchange contracts which were not significant as of May 31, 2025. The Company does not enter into derivative transactions or use other financial instruments for trading or speculative purposes.

The Company is subject to the risk that market interest rates and its cost of borrowing will increase and thereby increase the interest charged under its variable-rate debt.

Additional information relating to the Company’s derivative transactions and outstanding financial instruments is included in Note 20, "Derivatives and Hedging," and Note 5, "Debt," respectively, of Notes to Consolidated Financial Statements in Item 8, “Consolidated Financial Statements and Supplementary Data,” which is included herein.

The following table sets forth information about the Company’s debt instruments as of May 31, 2025:

$ amounts in millions

Fiscal Year Maturity Fair Value

Debt Obligations

Average interest rate 4.5 % — — — — —

Average interest rate — — — — 6.1 % —

Average interest rate 5.7 % 6.6 % 5.7 % 5.5 % — —

(1) Film related obligations are due on demand. Outstanding borrowings are presented by fiscal year maturity based on expected repayment dates per loan agreements.

Item 8 | Consolidated Financial Statements and Supplementary Data

Page

Notes to Consolidated Financial Statements 42

Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42) 85

Schedule II — Valuation and Qualifying Accounts and Reserves S-1

All other schedules have been omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the Consolidated Financial Statements or the Notes thereto.

Consolidated Statements of Operations

(Amounts in millions, except per share data)For fiscal years ended May 31,

Operating costs and expenses

Selling, general and administrative expenses 822.3 803.0 756.6

Asset impairments and write downs 2.9 10.0 —

Other components of net periodic benefit (cost) (1.1) (1.0) 0.3

Earnings (loss) before income taxes (1.3) 16.2 112.4

Provision (benefit) for income taxes 0.6 4.1 25.9

Less: Net income (loss) attributable to noncontrolling interest — — 0.2

Net income (loss) attributable to Scholastic Corporation $ (1.9) $ 12.1 $ 86.3

Basic and diluted earnings (loss) per share of Class A and Common Stock

Basic:

Net Income (loss) attributable to Scholastic Corporation $ (0.07) $ 0.41 $ 2.56

Diluted:

Net Income (loss) attributable to Scholastic Corporation $ (0.07) $ 0.40 $ 2.49

Dividends declared per share of Class A and Common Stock $ 0.80 $ 0.80 $ 0.80

See accompanying notes

Consolidated Statements of Comprehensive Income (Loss)

(Amounts in millions)For fiscal years ended May 31,

Other comprehensive income (loss), net:

Foreign currency translation adjustments 10.9 3.1 (5.4)

Pension and postretirement adjustments, net of tax 0.1 0.2 (5.0)

Total other comprehensive income (loss) $ 11.0 $ 3.3 $ (10.4)

Comprehensive income (loss) 9.1 15.4 76.1

Less: Net income (loss) attributable to noncontrolling interest — — 0.2

See accompanying notes

Consolidated Balance Sheets

(Amounts in millions)Balances at May 31,

Current Assets:

Cash and cash equivalents $ 124.0 $ 113.7

Income tax receivable 8.8 15.2

Tax credit receivable 21.0 —

Prepaid expenses and other current assets 47.9 48.8

Noncurrent Assets:

Property, plant and equipment, net 516.3 511.9

Prepublication costs, net 49.7 49.5

Investment in film and television programs, net 42.1 —

Operating lease right-of-use assets, net 103.9 99.1

Royalty advances, net 78.1 57.8

Other intangible assets, net 87.9 10.3

Noncurrent deferred income taxes 34.7 23.1

Other assets and deferred charges 113.2 109.8

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Lines of credit and current portion of long-term debt $ 6.2 $ 6.0

Film related obligations 18.3 —

Accrued income taxes 3.7 1.9

Operating lease liabilities 26.8 22.4

Noncurrent Liabilities:

Long-term debt 250.0 —

Operating lease liabilities 91.5 89.2

Other noncurrent liabilities 35.7 29.2

Commitments and Contingencies: — —

Stockholders’ Equity:

Accumulated other comprehensive income (loss) (41.5) (52.5)

Treasury stock at cost: 18.7 and 15.5 shares, respectively (619.2) (558.1)

Total liabilities and stockholders’ equity $ 1,950.1 $ 1,671.2

See accompanying notes

Consolidated Statement of Changes in Stockholders’ Equity

(Amounts in millions)

Shares Amount Shares Amount

Foreign currency translation adjustment — — — — — (5.4) — — (5.4) — (5.4)

Stock-based compensation — — — — 10.5 — — — 10.5 — 10.5

Purchases of treasury stock at cost — — (3.3) — — — — (135.1) (135.1) — (135.1)

Dividends — — — — — — (27.2) — (27.2) — (27.2)

Net Income (loss) — — — — — — 12.1 — 12.1 — 12.1

Foreign currency translation adjustment — — — — — 3.1 — — 3.1 — 3.1

Stock-based compensation — — — — 11.0 — — — 11.0 — 11.0

Proceeds pursuant to stock-based compensation plans — — — — 6.5 — — — 6.5 — 6.5

Purchases of treasury stock at cost — — (4.0) — — — — (156.8) (156.8) — (156.8)

Dividends — — — — — — (24.0) — (24.0) — (24.0)

Other (share conversion) (0.9) — 0.9 — (28.6) — — 28.6 — — —

Other (noncontrolling interest) — — — — (0.5) — — — (0.5) (1.6) (2.1)

Net Income (loss) — — — — — — (1.9) — (1.9) — (1.9)

Foreign currency translation adjustment — — — — — 10.9 — — 10.9 — 10.9

Stock-based compensation — — — — 9.3 — — — 9.3 — 9.3

Purchases of treasury stock at cost — — (3.5) — — — — (70.9) (70.9) — (70.9)

Dividends — — — — — — (22.1) — (22.1) — (22.1)

See accompanying notes

Consolidated Statements of Cash Flows

(Amounts in millions)Years ended May 31,

Cash flows - operating activities:

Net income (loss) attributable to Scholastic Corporation $ (1.9) $ 12.1 $ 86.3

Provision for losses on accounts receivable 5.0 5.2 3.3

Provision for losses on inventory 16.1 20.4 26.5

Provision for losses on royalty advances 5.7 2.7 4.2

Amortization of prepublication costs 21.9 26.2 25.1

Amortization of film and television programs 9.9 — —

Amortization of pension and postretirement plans 0.5 0.4 (0.4)

Deferred income taxes (19.7) (1.9) (0.7)

Income from equity method investments (0.5) (0.5) (0.9)

Non cash write off related to asset impairments and write downs 2.9 10.0 —

Changes in assets and liabilities, net of amounts acquired:

Income tax receivable 6.8 (6.3) 17.7

Tax credit receivable 10.6 — —

Prepaid expenses and other current assets 4.1 (1.7) 21.5

Investment in film and television programs (12.5) — —

Deferred revenue 7.5 (8.1) (2.9)

Other accrued expenses (1.5) (10.3) (15.3)

Net cash provided by (used in) operating activities 124.2 154.6 148.9

Cash flows - investing activities:

Prepublication expenditures (24.5) (22.8) (26.9)

Additions to property, plant and equipment (52.2) (58.4) (62.0)

Acquisition-related payments (176.2) (6.4) (10.7)

Purchase of noncontrolling interests — (2.1) —

Net cash provided by (used in) investing activities (252.9) (89.7) (99.6)

See accompanying notes

Consolidated Statements of Cash Flows

(Amounts in millions)Years ended May 31,

Cash flows - financing activities:

Borrowings under film related obligations 16.5 — —

Repayments of film related obligations (including interests) (34.8) — —

Repayment of capital lease obligations (1.7) (2.3) (2.3)

Proceeds pursuant to stock-based compensation plans 1.2 9.1 20.7

Other, net 0.2 — —

Net cash provided by (used in) financing activities 137.3 (176.1) (139.5)

Effect of exchange rate changes on cash and cash equivalents 1.7 0.4 (1.9)

Net increase (decrease) in cash and cash equivalents 10.3 (110.8) (92.1)

Cash and cash equivalents at beginning of period 113.7 224.5 316.6

Cash and cash equivalents at end of period $ 124.0 $ 113.7 $ 224.5

Supplemental Information:

Income tax payments (refunds) $ 2.0 $ 23.7 $ 2.5

See accompanying notes

Notes to Consolidated Financial Statements

(Amounts in millions, except share and per share data)

1. DESCRIPTION OF THE BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of the business

Scholastic Corporation (the “Corporation” and together with its subsidiaries, “Scholastic” or the “Company”) is the world’s largest publisher and distributor of children’s books, a leading provider of print and digital instructional materials for grades pre-kindergarten ("pre-K") to grade 12 and a producer of entertaining literary and educational children’s media. The Company creates quality books and ebooks, print and technology-based learning materials and programs, classroom magazines and other products that, in combination, offer schools, as well as parents and children, customized and comprehensive solutions to support children’s learning and reading both at school and at home. Since its founding in 1920, Scholastic has emphasized quality products and a dedication to reading, learning and literacy. The Company is the leading operator of school-based book club and book fair proprietary channels. It distributes its products and services through these channels, as well as directly to schools and libraries, through retail stores and through the internet. The Company’s website, scholastic.com, is a leading site for teachers, classrooms and parents and an award-winning destination for children. Scholastic has operations in the United States and throughout the world including Canada, the United Kingdom, Ireland, Australia, New Zealand and Asia and, through its export business, sells products in approximately 130 international locations.

Basis of presentation

Principles of consolidation

The Consolidated Financial Statements include the accounts of Scholastic Corporation (the “Corporation”) and all wholly-owned and majority-owned subsidiaries (collectively, “Scholastic” or the “Company”). The Company reviews its relationships with other entities to identify whether it is the primary beneficiary of a variable interest entity (“VIE”). If the determination is made that the Company is the primary beneficiary, then the entity is consolidated. Intercompany transactions are eliminated in consolidation.

The Company’s fiscal year is not a calendar year. Accordingly, references in this document to fiscal 2025 relate to the twelve-month period ending May 31, 2025. Certain prior period amounts have been reclassified to conform with the current year presentation.

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.

Use of estimates

The Company’s Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The preparation of these financial statements involves the use of estimates and assumptions by management, which affects the amounts reported in the Consolidated 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 assets and liabilities. Actual results may differ from those estimates and assumptions. On an ongoing basis, the Company evaluates the adequacy of its reserves and the estimates used in calculations, including, but not limited to:

•Accounts receivable allowance for credit losses

•Pension and postretirement benefit plans

•Uncertain tax positions

•The timing and amount of future income taxes and related deductions

•Inventory reserves

•Cost of goods sold from book fair operations during interim periods based on estimated gross profit rates

•Sales tax contingencies

•Royalty advance reserves and royalty expense accruals

•Expected economic useful life and recoverability of film and television program assets

•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

Summary of Significant Accounting Policies

Revenue recognition

The Company’s revenue recognition policies for its principal businesses are as follows:

School-Based Book Clubs– Revenue from school-based book clubs is recognized upon shipment of the products.

School-Based Book Fairs – Revenues associated with school-based book fairs relate to the sale of children's books and other products to book fair sponsors. In addition, the Company employs an incentive program to encourage the sponsorship of book fairs and increase the number of fairs held each school year. The Company identifies two potential performance obligations within its school-based book fair contracts, which include the fulfillment of book fairs product and the fulfillment of product upon the redemption of incentive program credits by customers. The Company allocates the transaction price to each performance obligation and recognizes revenue at a point in time. The Company utilizes certain estimates based on historical experience, redemption patterns and future expectations related to the participation in the incentive program to determine the relative fair value of each performance obligation when allocating the transaction price. Changes in these estimates could impact the timing of the recognition of revenue. Revenue allocated to the book fairs product is recognized at the point at which product is delivered to the customer and control is transferred. The revenue allocated to the incentive program credits is recognized upon redemption of incentive credits and the transfer of control of the redeemed product. Incentive credits are generally redeemed within 12 months of issuance. Payment for school-based book fairs product is due at the completion of a customer's fair. Revenues associated with virtual fairs are recognized upon shipment of the products and related incentive program credits are expensed upon issuance.

Trade – Revenue from the sale of children’s books for distribution in the retail channel is primarily recognized when performance obligations are satisfied and control is transferred to the customer, or when the product is on sale and available to the public. For newly published titles, the Company, on occasion, contractually agrees with its customers when the publication may be first offered for sale to the public, or an agreed upon “Strict Laydown Date." For such titles, the control of the product is not deemed to be transferred to the customer until such time that the publication can contractually be sold to the public, and the Company defers revenue on sales of such titles until such time as the customer is permitted to sell the product to the public. Revenue for ebooks, which is generally the net amount received from the retailer, is recognized upon electronic delivery to the customer by the retailer. The sale of trade product generally includes a right of return.

Education – Revenue from the sale of educational materials is recognized upon shipment of the products, or upon acceptance of product by the customer, depending on individual contractual terms. Revenue from digital products is deferred and recognized ratably over the subscription period. Revenue from professional development services is recognized when the services have been provided to the customer. Revenue from contracts with multiple deliverables are recognized as each performance obligation is satisfied in which the transaction price is allocated on a relative standalone selling price basis.

Magazines – Revenue is deferred and recognized ratably over the subscription period, as the magazines are delivered.

Film and TV production – Revenue is deferred during production and recognized at a point in time when the film or episodes have been delivered and are available for showing or exploitation.

Production services – Revenue is recognized over time using the percentage-of-completion method based on the proportion of costs incurred in the current period to total expected costs as this depicts the transfer of control of the promised services or goods to the customer.

Licensing and royalty income – Revenue from the sale or granting of broadcast license rights to third parties is recognized when the licensed content is available to the customer and the customer has the contractual right to broadcast or stream the content. Revenue from sales and usage-based royalties related to licenses is generally recognized when the subsequent sale or usage occurs.

Export – Revenue from the export channel is recognized upon acceptance of the physical product by the customer.

The Company has elected to present sales and other related taxes on a net basis, excluded from revenues, and as such, these are included within Other accrued expenses until remitted to taxing authorities.

Cash equivalents

Cash equivalents consist of short-term investments with original maturities of three months or less.

Accounts receivable

Accounts receivable are recognized net of an allowance for credit losses. In the normal course of business, the Company extends credit to customers that satisfy predefined credit criteria. The Company recognizes an allowance for credit losses on trade receivables that are expected to be incurred over the lifetime of the receivable. Reserves for estimated credit losses are established at the time of sale and are based on relevant information about past events, current conditions, and supportable forecasts impacting its ultimate collectability, including specific reserves on a customer-by-customer basis, creditworthiness of the Company’s customers and prior collection experience. At the time the Company determines that a receivable balance, or any portion thereof, is deemed to be permanently uncollectible, the balance is then written off. Accounts receivable allowance for credit losses was $11.0 and $14.9 as of May 31, 2025 and 2024, respectively.

Estimated returns

Inventories

Property, plant and equipment

Property, plant and equipment are stated at cost. Depreciation and amortization are recognized on a straight-line basis over the estimated useful lives of the assets. Buildings have an estimated useful life, for purposes of depreciation, of forty years. Building improvements are depreciated over the life of the improvement which typically does not exceed twenty-five years. Capitalized software, net of accumulated amortization, was $51.8 and $54.6 at May 31, 2025 and 2024, respectively. Capitalized software is amortized over a period of three to ten years. Amortization expense for capitalized software was $23.0, $25.1 and $25.3 for the fiscal years ended May 31, 2025, 2024 and 2023, respectively. Furniture, fixtures and equipment are depreciated over periods not exceeding ten years. Leasehold improvements are amortized over the life of the lease or the life of the assets, whichever is shorter. The Company evaluates the depreciation periods of property, plant and equipment to determine whether events or circumstances indicate that the asset’s carrying value is not recoverable or warrant revised estimates of useful lives.

Cloud Computing Arrangements

The Company incurs costs to implement cloud computing arrangements that are hosted by a third party vendor. Implementation costs incurred during the application development stage are capitalized and amortized over the term of the hosting arrangement on a straight-line basis. The Company capitalized $9.8 and $14.4 of costs incurred in fiscal 2025 and 2024, respectively, to implement cloud computing arrangements, primarily related to digital and consumer data platforms. These amounts are included within Other assets and deferred charges on the Company's Consolidated Balance Sheets.

Leases

The Company's lease arrangements primarily relate to corporate offices and warehouse facilities, and to a lesser

extent, certain equipment and other assets. The Company's leases generally have initial terms ranging from 3 to 10 years and certain leases include renewal or early-termination options, rent escalation clauses, and/or lease incentives. Lease renewal rent payment terms generally reflect adjustments for market rates prevailing at the time of renewal. The Company's leases require fixed minimum rent payments and also often require the payment of certain other costs that do not relate specifically to its right to use an underlying leased asset, but are associated with the asset, such as real estate taxes, insurance, common area maintenance fees and/or certain other costs (referred to collectively herein as "non-lease components"), which may be fixed or variable in amount depending on the terms of the respective lease agreement. The Company's leases do not contain significant residual value guarantees or restrictive covenants.

The Company determines whether an arrangement contains a lease at the inception of the arrangement. If a lease is determined to exist, the term of such lease is assessed based on the date on which the underlying asset is made available for the Company's use by the lessor. The Company's assessment of the lease term reflects the non-cancelable term of the lease, inclusive of any rent-free periods and/or periods covered by early-termination options which the Company is reasonably certain of not exercising, as well as periods covered by renewal options which the Company is reasonably certain of exercising. The Company also determines lease classification as either operating or finance at lease commencement, which governs the pattern of expense recognition and the presentation reflected in the Consolidated Statements of Operations over the lease term.

For leases with a term exceeding 12 months, a lease liability is recorded on the Company's Consolidated Balance Sheet at lease commencement reflecting the present value of its fixed minimum payment obligations over the lease term. A corresponding right-of-use ("ROU") asset equal to the initial lease liability is also recorded, adjusted for any prepaid rent and/or initial direct costs incurred in connection with execution of the lease and reduced by any lease incentives received. The Company includes fixed payment obligations related to non-lease components in the measurement of ROU assets and lease liabilities, as it elects to account for lease and non-lease components together as a single lease component. ROU assets associated with finance leases are presented separate from ROU assets associated with operating leases and are included within Property, plant and equipment, net on the Company's Consolidated Balance Sheet. For purposes of measuring the present value of its fixed payment obligations for a given lease, the Company uses its incremental borrowing rate, determined based on information available at lease commencement, as rates implicit in its leasing arrangements are typically not readily determinable. The Company's incremental borrowing rate reflects the rate it would pay to borrow on a secured basis, and incorporates the term and economic environment of the associated lease.

For operating leases, fixed lease payments are recognized as lease expense on a straight-line basis over the lease term. For finance leases, the initial ROU asset is depreciated on a straight-line basis over the lease term, along with recognition of interest expense associated with accretion of the lease liability, which is ultimately reduced by the related fixed payments. For leases with a term of 12 months or less, any fixed lease payments are recognized on a straight-line basis over the lease term, and are not recognized on the Company's Consolidated Balance Sheet. Variable lease costs for both operating and finance leases, if any, are recognized as incurred.

Sublease rental income is recognized on a straight-line basis over the duration of each lease term. To the extent expected sublease income is less than expected rental payments, the Company recognizes a loss on the difference based on the present value of the minimum lease payments under each lease.

Lease payments received are presented as Revenues for fiscal 2025 and 2024 and as a reduction to rent expense in Selling, general and administrative expenses in fiscal year 2023 in the Consolidated Statements of Operations.

Prepublication costs

Prepublication costs are incurred in all of the Company’s reportable segments. Prepublication costs include costs incurred to create the art, prepress, editorial, digital conversion and other content required for the creation of the master copy of a book or other media. Prepublication costs are amortized on a straight-line basis over a two-to-five-

year period based on expected future revenues. The Company regularly reviews the recoverability of these capitalized costs based on expected future cash flows.

Investment in film and television programs

Investments in film and television programs are stated at the lower of cost or net realizable value. Investment in film and television programs includes all direct production and financing costs incurred during production and minimum guarantee payments made to acquire distribution rights. Interest costs are capitalized to the cost of the film or television program until substantially all of the activities required for delivery are complete. Investments in film and television programs are amortized using the declining-balance method with rates ranging from 50% to 90% at the time of initial episodic delivery and at rates ranging from 10% to 25% annually thereafter. The determination of the rates is based on the expected economic useful life of the film or television program and includes factors such as rights retained by the Company, the availability of rights to renew licenses for episodic television programs in various territories, and the availability of secondary market revenue. The Company regularly reviews the recoverability of these capitalized costs based on expected future cash flows for an individual film or television program.

Government financing and assistance

The Company has access to government programs and tax credits that are designed to assist film, television and digital media production and distribution. Amounts received and amounts receivable which relate to the Company's film and television program assets are recorded as a reduction in the production costs of the related asset.

Long-lived assets

Long-lived assets, including operating lease right-of-use assets, property, plant, and equipment, prepublication costs and definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of any such asset may not be recoverable. For the purposes of impairment testing, long-lived assets are grouped at the lowest level of identifiable cash flows. If impairment indicators are present, the Company performs a recoverability test by comparing the sum of the estimated undiscounted future cash flows attributable to the asset to its carrying amount. If it is determined that a long-lived asset is not recoverable, an impairment loss is recognized based on the excess of the carrying amount over the fair value of the asset. The fair values determined by the Company require significant judgment and include certain assumptions regarding future sales and expenses, discount rates and real estate market conditions.

Royalty advances

Royalty advances are incurred in all of the Company’s reportable segments except the Entertainment segment, but are most prevalent in the Children’s Book Publishing and Distribution segment and enable the Company to obtain contractual commitments from authors, illustrators, licensors and other publishers to produce content. The Company regularly provides these content providers advances against expected future royalty payments, often before the books are written. Upon publication and sale of the books or other media, the content providers will not receive further royalty payments until the contractual royalties earned from sales of such books or other media exceed such advances.

Royalty advances are initially capitalized and subsequently expensed as related revenues are earned or when the Company determines future recovery through earndowns is not probable. The Company has a long history of providing authors, illustrators, licensors and other publishers with royalty advances and it tracks each advance earned with respect to the sale of the related publication. The royalties earned are applied first against the remaining unearned portion of the advance. Historically, the longer the unearned portion of the advance remains outstanding, the less likely it is that the Company will recover the advance through the sale of the publication. The Company applies this historical experience to its existing outstanding royalty advances to estimate the likelihood of recoveries through earndowns. Additionally, the Company’s editorial staff regularly reviews its portfolio of royalty advances to determine if individual royalty advances are not recoverable through earndowns for discrete reasons, such as the death of an author prior to completion of a title or titles, a Company decision to not publish a title, poor market demand or other relevant factors that could impact recoverability. The reserve for royalty advances was $86.9 and $83.2 as of May 31, 2025 and 2024, respectively.

Business combinations

Goodwill and intangible assets

The Company records intangible assets based on their fair value on the date of acquisition. Goodwill is recorded as the difference between the fair value of the purchase consideration and the fair value of the net identifiable tangible and intangible assets acquired.

Goodwill and other intangible assets with indefinite lives are not amortized and are reviewed for impairment annually as of May 31 or more frequently if impairment indicators arise.

With regard to goodwill, the Company compares the estimated fair values of its identified reporting units to the carrying values of their net assets. The Company first performs a qualitative assessment to determine whether it is more likely than not that the fair values of its identified reporting units are less than their carrying values. If it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company performs the quantitative goodwill impairment test. The Company measures goodwill impairment by the amount the carrying value exceeds the fair value of a reporting unit. For each of the reporting units, the estimated fair value is determined utilizing the expected present value of the projected future cash flows of the reporting unit, in addition to comparisons to similar companies. The Company reviews its definition of reporting units annually or more frequently if conditions indicate that the reporting units may change. The Company evaluates its operating segments to determine if there are components one level below the operating segment level. A component is present if discrete financial information is available and segment management regularly reviews the operating results of the business. If an operating segment only contains a single component, that component is determined to be a reporting unit for goodwill impairment testing purposes. If an operating segment contains multiple components, the Company evaluates the economic characteristics of these components. Any components within an operating segment that share similar economic characteristics are aggregated and deemed to be a reporting unit for goodwill impairment testing purposes. Components within the same operating segment that do not share similar economic characteristics are deemed to be individual reporting units for goodwill impairment testing purposes. The Company has seven reporting units with goodwill subject to impairment testing.

With regard to other intangibles with indefinite lives, the Company first performs a qualitative assessment to determine whether it is more likely than not that the fair value of the identified asset is less than its carrying value. If it is more likely than not that the fair value of the asset is less than its carrying amount, the Company performs a quantitative test. The estimated fair value is determined utilizing the expected present value of the projected future cash flows of the asset.

Intangible assets with definite lives consist principally of customer lists, customer contracts/relationships, intellectual property, and trade names and are amortized over their expected useful lives. Customer lists, customer contracts/relationships, intellectual property and trade names are typically amortized on a straight-line basis over five to ten years.

Income taxes

The Company uses the asset and liability method of accounting for income taxes. Under this method, for purposes of determining taxable income, deferred tax assets and liabilities are determined based on differences between the financial reporting and the tax basis of such assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to be realized.

The Company believes that its taxable earnings, during the periods when the temporary differences giving rise to deferred tax assets become deductible or when tax benefit carryforwards may be utilized, should be sufficient to realize the related future income tax benefits. For those jurisdictions where the expiration date of the tax benefit carryforwards or the projected taxable earnings indicates that realization is not likely, the Company establishes a valuation allowance.

The Company accounts for uncertain tax positions using a two-step method. Recognition occurs when an entity concludes that a tax position, based solely on technical merits, is more likely than not to be sustained upon examination. If a tax position is more likely than not to be sustained upon examination, the amount recognized is the largest amount of benefit, determined on a cumulative probability basis, which is more likely than not to be realized upon settlement. The Company assesses all income tax positions and adjusts its reserves against these positions periodically based upon these criteria. The Company also assesses potential penalties and interest associated with these tax positions, and includes these amounts as a component of income tax expense.

The Company assesses foreign investment levels periodically to determine if all or a portion of the Company’s investments in foreign subsidiaries are indefinitely invested. Any required adjustment to the income tax provision would be reflected in the period that the Company changes this assessment. The Company elects to recognize the tax on Global Intangible Low-Taxed Income (GILTI) earned by foreign subsidiaries as a period expense in the period the tax is incurred.

Non-income Taxes

The Company is subject to tax examinations for sales-based taxes. A number of these examinations are ongoing and, in certain cases, have resulted in assessments from taxing authorities. Where a sales tax liability with respect to a jurisdiction is probable and can be reliably estimated, the Company has made accruals for these matters which are reflected in the Company’s Consolidated Financial Statements. These amounts are included in the Consolidated Financial Statements in Selling, general and administrative expenses. Future developments relating to the foregoing could result in adjustments being made to these accruals.

Employee Benefit Plan Obligations

The rate assumptions discussed below impact the Company’s calculations of its UK pension and U.S. postretirement obligations. The rates applied by the Company are based on the UK pension plan asset portfolio's past average rates of return, discount rates and actuarial information. Any change in market performance, interest rate performance, assumed health care cost trend rate and compensation rates could result in significant changes in the Company’s UK pension plan and U.S. postretirement obligations.

Pension obligations – Scholastic Corporation's UK subsidiary has a defined benefit pension plan covering the majority of its employees who meet certain eligibility requirements. The Company’s pension plan and other postretirement benefits are accounted for using actuarial valuations.

The Company’s UK Pension Plan calculations are based on three primary actuarial assumptions: the discount rate, the long-term expected rate of return on plan assets and the anticipated rate of compensation increases. The discount rate is used in the measurement of the projected, accumulated and vested benefit obligations and interest cost component of net periodic pension costs. The long-term expected return on plan assets is used to calculate the expected earnings from the investment or reinvestment of plan assets. The anticipated rate of compensation increase is used to estimate the increase in compensation for participants of the plan from their current age to their assumed retirement age. The estimated compensation amounts are used to determine the benefit obligations.

Other postretirement benefits – The Company provides postretirement benefits, consisting of healthcare and life insurance benefits, to eligible retired United State-based employees. The postretirement medical plan benefits are funded on a pay-as-you-go basis, with the employee paying a portion of the premium and the Company paying the remainder. The existing benefit obligation is based on the discount rate and the assumed health care cost trend rate. The discount rate is used in the measurement of the projected and accumulated benefit obligations and the interest cost component of net periodic postretirement benefit cost. The assumed health care cost trend rate is used in the measurement of the long-term expected increase in medical claims.

Foreign currency translation

The Company’s non-United States dollar-denominated assets and liabilities are translated into United States dollars at prevailing rates at the balance sheet date and the revenues, costs and expenses are translated at the weighted average

rates prevailing during each reporting period. Net gains or losses resulting from the translation of the foreign financial statements and the effect of exchange rate changes on long-term intercompany balances are accumulated and charged directly to the foreign currency translation adjustment component of stockholders’ equity until such time as the operations are substantially liquidated or sold. The Company assesses foreign investment levels periodically to determine if all or a portion of the Company’s investments in foreign subsidiaries are indefinitely invested.

Shipping and handling costs

Amounts billed to customers for shipping and handling are classified as revenue. Costs incurred in shipping and handling are recognized in Cost of goods sold.

Advertising costs

Advertising costs are expensed by the Company as incurred. Total advertising expense was $61.4, $61.7 and $76.9 for the twelve months ended May 31, 2025, 2024 and 2023, respectively.

Stock-based compensation

The Company recognizes the cost of services received in exchange for any stock-based awards. The Company recognizes the cost on a straight-line basis over an award’s requisite service period, which is generally the vesting period, except for the grants to retirement-eligible employees, based on the award’s fair value at the date of grant.

The fair values of stock options granted by the Company are estimated at the date of grant using the Black-Scholes option-pricing model. The Company’s determination of the fair value of stock-based payment awards using this option-pricing model is affected by the price of the Common Stock as well as by assumptions regarding highly complex and subjective variables, including, but not limited to, the expected price volatility of the Common Stock over the terms of the awards, the risk-free interest rate, and actual and projected employee stock option exercise behaviors. Estimates of fair value are not intended to predict actual future events or the value that may ultimately be realized by those who receive these awards.

Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates, in order to derive the Company’s best estimate of awards ultimately expected to vest. In determining the estimated forfeiture rates for stock-based awards, the Company annually conducts an assessment of the actual number of equity awards that have been forfeited previously. When estimating expected forfeitures, the Company considers factors such as the type of award, the employee class and historical experience. The estimate of stock-based awards that will ultimately be forfeited requires significant judgment and, to the extent that actual results or updated estimates differ from current estimates, such amounts will be recognized as a cumulative adjustment in the period such estimates are revised.

The table set forth below provides the estimated fair value of options granted by the Company during fiscal years 2025, 2024 and 2023 and the significant weighted average assumptions used in determining such fair value under the Black-Scholes option-pricing model. The average expected life represents an estimate of the period of time stock options are expected to remain outstanding based on the historical exercise behavior of the option grantees. The risk-free interest rate was based on the U.S. Treasury yield curve corresponding to the expected life in effect at the time of the grant. The volatility was estimated based on historical volatility corresponding to the expected life.

Estimated fair value of stock options granted $ 11.92 $ 11.53 $ 11.62

Assumptions:

Expected dividend yield 2.2 % 2.2 % 1.9 %

Expected stock price volatility 38.8 % 37.4 % 32.8 %

Risk-free interest rate 4.3 % 4.7 % 3.8 %

Average expected life of options 5 years 4 years 5 years

Recently Adopted 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 that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss. The amendments in this ASU have been applied retrospectively to all prior periods presented

in the financial statements. Refer to Note 3, "Segment Information," for the Company's disclosures related to this update.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 annual disclosures for fiscal year 2026. 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.

In November 2024, the FASB issued ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) - Disaggregation of Income Statement Expenses." This ASU improves financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. In January 2025, the FASB issued ASU 2025-01,""Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) - Clarifying the Effective Date" to clarify the effective date of ASU 2024-03 for non-calendar year-end entities. ASU 2024-03 is effective for the Company's fiscal year 2028, and interim periods starting in fiscal year 2029. 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.

2. REVENUES

Disaggregated Revenue Data

The following table presents the Company’s segment revenues disaggregated by region and domestic channel during the year ended May 31:

Total Children's Book Publishing and Distribution 963.9 953.3 1,019.0

Entertainment - International 55.8 — —

(1) The Entertainment segment includes the operations of SEI, which were included in the Children’s Book Publishing and Distribution segment in prior periods, and 9 Story. The financial results for SEI for the fiscal years presented have been reclassified to Entertainment to reflect this change.

(2) Primarily includes foreign rights and certain product sales in the UK.

(3) Includes Canada, UK, Australia and New Zealand.

(4) Primarily includes markets in Asia.

(5) Overhead includes rental income related to leased space in the Company's headquarters. Rental income of $7.1was recognized as a reduction to Selling, general and administrative expenses for the fiscal year ended May 31, 2023.

Estimated Returns

A liability for expected returns of $34.4 and $33.1 was recorded within Other accrued expenses on the Company's Consolidated Balance Sheets as of May 31, 2025 and 2024, respectively. In addition, a return asset of $3.7 and $4.2 was recorded within Prepaid expenses and other current assets as of May 31, 2025 and 2024, 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 balance for the years ended May 31:

Book fairs incentive credits $ 122.1 $ 114.2

Magazines+ subscriptions 3.9 4.6

U.S. digital subscriptions 11.1 15.6

U.S. education-related (1) 7.5 10.1

Entertainment-related (2) 8.2 0.1

Stored value programs 22.4 16.7

Total contract liabilities $ 183.0 $ 167.6

(1) Primarily relates to contracts with school districts and professional services.

(2) Primarily relates to contracts for film and TV productions and production services.

(3) Primarily relates to contracts for 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. Contract liabilities of $178.8 and $161.1 as of May 31, 2025 and 2024, respectively, are recorded within Deferred revenue on the Company's Consolidated Balance Sheets and are classified as short term, as substantially all of the associated performance obligations are expected to be satisfied, and related revenue recognized, within one year. The remaining $4.2 and $6.5 of contract liabilities as of May 31, 2025 and 2024, respectively, are recorded within Other noncurrent liabilities on the Company's Consolidated Balance Sheets as the associated performance obligations are expected to be satisfied, and related revenue recognized, in excess of one year. The amount of revenue recognized during the years ended May 31, 2025 and 2024 included within the opening Deferred revenue balance was $136.8 and $138.0, respectively.

Allowance for Credit Losses

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

Allowance for Credit Losses

Current period provision 5.0

Write-offs and other (8.9)

3. SEGMENT INFORMATION

The Company categorizes its businesses into four reportable segments: Children’s Book Publishing and Distribution,Education Solutions, Entertainment and International.

•Children’s Book Publishing and Distribution operates as an integrated business which includes the publication and distribution of children’s books, ebooks, media and interactive products in the United States through its 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 programs 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.

•Entertainment includes the development, production, distribution and licensing of children and family film and television content. 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 and foreign rights businesses. This segment is comprised of four operating segments.

The Company's chief operating decision maker ("CODM") is the President and Chief Executive Officer. The CODM uses operating income (loss) as the profit measure to evaluate segment performance and allocate resources to the segments. The CODM considers variances of actual performance to forecasts and prior year when making decisions.

The following tables present the Company’s revenue, significant expenses, and operating income (loss) by segment for the three fiscal years ended May 31:

Interest income (expense), net (16.0)

Other components of net periodic benefit (cost) (1.1)

Earnings (loss) before income taxes $ (1.3)

Other segment disclosures:

Interest income (expense), net 2.7

Other components of net periodic benefit (cost) (1.0)

Earnings (loss) before income taxes $ 16.2

Other segment disclosures:

Interest income (expense), net 5.8

Other components of net periodic benefit (cost) 0.3

Earnings (loss) before income taxes $ 112.4

Other segment disclosures:

The following table presents geographic information for revenues for the three fiscal years ended May 31. Revenues are attributed to locations based on the origin of sale.

The following table presents geographic information for long-lived assets for the three fiscal years ended May 31. Long-lived assets consist of property, plant and equipment, net, excluding capitalized software.

4. ASSET WRITE DOWN

During fiscal 2025, the Company identified certain digital products that were not recoverable. The estimated future cash flows related to these assets were impacted by the Company's decision to no longer sell the related products. The assets consisted of prepublication costs of which $0.6 were included within the Children's Book Publishing and Distribution segment and $0.6 were included within the Education Solutions segment. The Company also identified assets of $1.1 that were not recoverable as a result of the reorganization in China. These assets consisted primarily of inventory and were included within the International segment. In addition, the Company ceased use of certain leased office space in the U.S., Canada and Ireland as part of the Company's efforts to rightsize its real estate footprint to reduce occupancy costs. The Company recognized an impairment expense related to the right-of-use (ROU) assets associated with the operating leases of which $0.5 was included within the Entertainment segment and $0.1 was included in Overhead. Accordingly, the Company recognized a total impairment charge of $2.9 which was included in Asset impairments and write downs within the Company's Consolidated Statement of Operations for the fiscal year ended May 31, 2025. The related impact of the impairments was a loss per basic and diluted share of Class A and Common Stock of $0.08 in the twelve months ended May 31, 2025.

During fiscal 2024, the Company identified certain education products that were not recoverable. The estimated future cash flows related to these assets were impacted by the shift to evidence-based approaches to literacy instruction within the education market. The assets consisted primarily of prepublication costs and amortizable intangible assets and were included within the Education Solutions segment. Accordingly, the Company recognized an impairment charge of $6.1 which was included in Asset impairments and write downs within the Company's Consolidated Statement of Operations for the fiscal year ended May 31, 2024. In addition, during fiscal 2024, the Company ceased use of certain leased office space in the U.S. and Canada as part of the Company's efforts to rightsize its real estate footprint to reduce occupancy costs. A total impairment expense of $3.9 was recognized during fiscal 2024 which was included in Asset impairments and write downs within the Company's Consolidated Statement of Operations for the fiscal year ended May 31, 2024. A right-of-use (ROU) asset of $2.3 was related to leased office space in New York City and included in Overhead, $1.1 was related to leased office space in Canada and included in the International segment, and $0.5 was related to leased office space used by the U.S. book fairs business and included in the Children's Book Publishing and Distribution segment. The related impact of the impairments was a loss per basic and diluted share of Class A and Common Stock of $0.25 in the twelve months ended May 31, 2024.

5. DEBT

The following table summarizes the Company's debt, excluding film related obligations, as of May 31:

CarryingValue FairValue CarryingValue FairValue

Loan Agreement:

Total long-term debt $ 250.0 $ 250.0 $ — $ —

The following table sets forth the maturities of the carrying values of the Company's debt obligations, excluding film related obligations, as of May 31, 2025 for the twelve month periods ended May 31:

Thereafter —

U.S. Credit Agreement

On November 26, 2024, Scholastic Corporation and its principal operating subsidiary, Scholastic Inc., entered

into a Third Amendment to Amended and Restated Credit Agreement (the “Amendment”) with a syndicate of

banks and Bank of America, N.A., as administrative agent, and Truist Bank and Wells Fargo Bank, National

Association, as co-syndication agents (as amended by the Third Amendment, the “Credit Agreement”). The

arrangement was accounted for as a debt modification. The revised terms of the amended Credit Agreement

include the following:

•an increase in borrowing limits to $400.0 from $300.0, as amended on October 27, 2021;

•an increase in the interest pricing margins for SOFR loans to a range of 1.625% to 1.875% from a range of 1.35% to 1.75% and for Base Rate loans to a range of 0.625% to 0.875% from a range of 0.35% to 0.75%;

•the elimination of the credit spread adjustment of 0.10% applicable to Term SOFR loans; and

•the extension of the maturity date to November 26, 2029.

The Company incurred debt issuance costs of $1.6 in connection with the Amendment which are amortized over the term of the Credit Agreement. The current portion of these costs is recorded within Prepaid expenses and other current assets and the noncurrent portion is recorded within Other assets and deferred charges on the Company's Consolidated Balance Sheets.

The Credit Agreement provides for a $400.0 unsecured revolving credit facility and allows the Company to borrow, repay or prepay and reborrow at any time prior to the November 26, 2029 maturity date. The Credit Agreement also provides an unlimited basket for permitted payments of dividends and other distributions in respect of capital stock so long as the Corporation’s pro forma Consolidated Net Leverage Ratio, as defined in the Credit Agreement, is not in excess of 2.75:1.

Under the Credit Agreement, interest on (i) Base Rate Advances (as defined in the Credit Agreement) is due and payable in arrears quarterly on the last day of each February, May, August and November, and (ii) Term SOFR Advances (as defined in the Credit Agreement) is due and payable in arrears on the last day of the interest period (defined as the period commencing on the date of the advance and ending on the last day of the period selected by the Borrowers at

the time each advance is made). The interest pricing under the Credit Agreement is dependent upon the Company’s election of a rate that is either:

•a Base Rate Advance equal to the higher of (i) the prime rate, (ii) the prevailing Federal Funds rate plus 0.50% or (iii) the Term SOFR Rate plus 1.00% plus, in each case, an applicable margin ranging from 0.625% to 0.875%, as determined by the Company’s prevailing Consolidated Net Leverage Ratio (as defined in the Credit Agreement);

-or-

•a Term SOFR Advance equal to the Term SOFR rate plus an applicable margin ranging from 1.625% to 1.875%, as determined by the Company’s prevailing Consolidated Net Leverage Ratio (as defined in the Credit Agreement).

As of May 31, 2025, the applicable margin on Base Rate Advances was 0.75% and the applicable margin on SOFR Advances was 1.75%.

The Credit Agreement provides for payment of a commitment fee in respect of the aggregate unused amount of revolving credit commitments ranging from 0.20% to 0.30% per annum based upon the Corporation’s then prevailing Consolidated Net Leverage Ratio. As of May 31, 2025, the commitment fee rate was 0.25%.

A portion of the revolving credit facility, up to a maximum of $50.0, is available for the issuance of letters of credit. In addition, a portion of the revolving credit facility, up to a maximum of $15.0, is available for swingline loans. The Credit Agreement has an accordion feature which permits the Company, provided certain conditions are satisfied, to increase the facility by up to an additional $150.0.

As of May 31, 2025, the Company had outstanding borrowings of $250.0 under the Credit Agreement at a weighted average interest rate of 6.1%. While this obligation is not due until the November 26, 2029 maturity date, the Company may, from time to time, make payments to reduce this obligation when cash from operations becomes available for this purpose. As of May 31, 2024, the Company had no outstanding borrowings under the Credit Agreement.

The Credit Agreement contains certain financial covenants related to leverage and interest coverage ratios (as defined in the Credit Agreement), limitations on the amount of dividends and other distributions, and other limitations on fundamental changes to the Company or its business. The Company was in compliance with required covenants for all periods presented.

At May 31, 2025, the Company had open standby letters of credit totaling $4.0 issued under certain credit lines, including $0.4 under the Credit Agreement and $3.6 under the domestic credit lines discussed below.

Unsecured Lines of Credit

As of May 31, 2025, the Company’s domestic credit lines available under unsecured money market bid rate credit lines totaled $10.0. There were no outstanding borrowings under these credit lines as of May 31, 2025 and May 31, 2024. As of May 31, 2025, availability under these unsecured money market bid rate credit lines totaled $6.4, excluding commitments of $3.6.All loans made under these credit lines are at the sole discretion of the lender and at an interest rate and term agreed to at the time each loan is made, but not to exceed 365 days. These credit lines may be renewed, if requested by the Company, at the option of the lender.

As of May 31, 2025, the Company had various local currency international credit lines totaling $22.0, underwritten by banks primarily in the United States and the United Kingdom. Outstanding borrowings under these facilities were $6.2 at May 31, 2025 at a weighted average interest rate of 4.5%, compared to outstanding borrowings of $6.0 at May 31, 2024 at a weighted average interest rate of 4.5%. As of May 31, 2025, the amounts available under these facilities totaled $15.8. These credit lines are typically available for overdraft borrowings or loans up to 364 days and may be renewed, if requested by the Company, at the sole option of the lender.

Film Related Obligations

The Company's entertainment business enters into credit facilities with third-party banks to obtain interim financing for certain productions. The interim production credit facilities are secured by an assignment and direction of specific production financing including tax credits and license contract receivables and are due on demand. As of May 31, 2025, interest is charged at the following rates:

•the bank prime rate plus a margin ranging from 0.50% to 0.75% for Canadian dollar loans; and

•SOFR plus a margin ranging from 2.25% to 3.00% for U.S. dollar loans.

As of May 31, 2025, outstanding borrowings under these facilities were $18.3at a weighted average interest rate of 6.2%.

6. COMMITMENTS AND CONTINGENCIES

Contractual Commitments

The following table sets forth the aggregate minimum future contractual commitments at May 31, 2025 relating to royalty advances and minimum print quantities for the fiscal years ending May 31:

Royalty Advances Minimum Print Quantities

Thereafter 0.2 —

Total commitments $ 25.9 $ 1.3

The Company had open standby letters of credit of $4.0 issued under certain credit lines as of May 31, 2025 and 2024, respectively, in support of its insurance programs. These letters of credit are scheduled to expire within one year; however, the Company expects that substantially all of these letters of credit will be renewed, at similar terms, prior to their expiration.

Contingencies

Legal Matters

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

The Company expects to receive additional recoveries from its insurance programs related to an intellectual property legal settlement accrued during fiscal 2021, however, it is premature to determine with any level of probability or accuracy the amount of those recoveries at this time.

During fiscal 2023, the Company received $5.0 in recoveries from its insurance programs related to photo litigation settlements accrued and paid in prior periods. The recoveries were recognized as an offset to the legal settlements and reflected in Selling, general and administrative expenses in the Company's Consolidated Statement of Operations for the year ended May 31, 2023.

7. INVESTMENT IN FILM AND TELEVISION PROGRAMS

The Company predominantly monetizes film and television programs on an individual film basis. The following table summarizes investment in film and television programs at May 31:

Released, net of accumulated amortization $ 26.2

Completed and not released —

In production 6.8

In development 5.2

Acquired library content (1) 3.6

Investment in Film and Television Programs, net (3) $ 42.1

(1) Acquired library content is monetized individually and amortized on a straight-line basis. At May 31, 2025, the weighted-average remaining amortization period was approximately 7 years.

(2) Other primarily consists of third party distribution rights.

(3) Production tax credits reduced total investment in films and television programs by $5.8 as of May 31, 2025 and resulted in a reduction of Cost of goods sold related to the amortization of investment in films and television programs of approximately $9.5 for the fiscal year ended May 31, 2025.

Amortization of film and television programs was $9.9 for the fiscal year ended May 31, 2025 which was included in Cost of goods sold in the Consolidated Statement of Operations.

The following table summarizes estimated future amortization expense for the Company’s investment in film and television programs as of May 31, 2025:

Fiscal year ending May 31,

Estimated future amortization expense:

Released, net of accumulated amortization $ 4.1 $ 3.3 $ 2.7

Acquired library content 0.7 0.5 0.5

Investment in film and television programs, net includes write-downs to fair value which are included in Cost of goods sold in the Consolidated Statement of Operations. During the fiscal year ended May 31, 2025, the Company recognized write-downs of $0.2 related to programs in development.

Participation costs represent amounts payable to parties associated with the film or television program and are based on the performance of the film or television program. The Company estimates participation costs based on the contractual participation percentage on the revenue recognized to date, less participation payments made to date. As of May 31, 2025, accrued participation costs were $7.0 and were included in Accrued royalties on the Company’s Consolidated Balance Sheet.

8. INVESTMENTS

Investments are included in Other assets and deferred charges on the Consolidated Balance Sheets. The following table summarizes the Company’s investments for the fiscal years ended May 31, 2025:

Equity method investments $ 33.6 $ 31.5 International

Equity method and other investments 6.4 6.0 Entertainment

Total investments $ 40.0 $ 37.5

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

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

The Company acquired investments of $0.9 as part of the 9 Story acquisition which are included in the Entertainment segment. These acquired investments include a 50% ownership interest in certain animated television production companies. These joint venture investments are accounted for using the equity method of accounting. The acquired investments also include a 12% ownership interest in a children's book publishing business located in the UK. This investment is accounted for at cost, less impairment on the Company's Consolidated Balance Sheet. There have been no impairments or adjustments to the carrying value of the investment.

Income from equity investments reported in Selling, general and administrative expenses in the Consolidated Statements of Operations totaled $0.5 for the year ended May 31, 2025, $0.5 for the year ended May 31, 2024 and $0.9 for the year ended May 31, 2023. No dividends were received in the fiscal years ended May 31, 2025 and May 31, 2023. The Company received dividends of $1.3 for the year ended May 31, 2024.

9. PROPERTY, PLANT AND EQUIPMENT

The following table summarizes the major classes of assets at cost and accumulated depreciation for the fiscal years ended May 31:

Furniture, fixtures and equipment 244.5 220.7

Building and leasehold improvements 239.6 223.2

Construction in progress 30.8 28.5

Less: Accumulated depreciation and amortization (587.1) (523.7)

Property, plant and equipment, net $ 516.3 $ 511.9

Included in Other assets and deferred charges 2025 2024

Capitalized Cloud Computing Arrangements $ 51.4 $ 51.6

Depreciation and amortization expense related to property, plant, and equipment was $54.5, $54.5 and $52.5 for the fiscal years ended May 31, 2025, 2024 and 2023, respectively. Amortization expense related to cloud computing arrangements was $9.9, $7.4 and $6.3 for the fiscal years ended May 31, 2025, 2024 and 2023, respectively.

10. LEASES

The following table summarizes right-of-use assets and lease liabilities recorded on the Company's Consolidated Balance Sheet for the fiscal years ended May 31, 2025 and May 31, 2024:

May 31, 2025 May 31, 2024 Location within Consolidated Balance Sheet

Operating leases $ 103.9 $ 99.1 Operating lease right-of-use assets, net

Finance leases 6.0 5.6 Property, plant and equipment, net

Operating leases:

Current portion $ 26.8 $ 22.4 Operating lease liabilities, current

Noncurrent portion 91.5 89.2 Operating lease liabilities, noncurrent

Total operating lease liabilities $ 118.3 $ 111.6

Finance leases:

Current portion $ 1.7 $ 1.7 Other accrued expenses

Noncurrent portion 4.9 4.5 Other noncurrent liabilities

Total finance lease liabilities $ 6.6 $ 6.2

As part of the Company's efforts to rightsize its real estate footprint to reduce occupancy costs, the Company recognized a pretax impairment charge of $0.6 and $3.9 for the fiscal years ended May 31, 2025 and 2024, respectively, related to operating lease right-of-use assets in connection with the early exit of certain leased office space. Refer to Note 4, "Asset Write Down", for further discussion regarding the impairment.

The following table summarizes the lease expense activity for the fiscal years ended May 31:

Location within Consolidated Statements of Operations

SCHL US Equity

SCHL · 10-K · period ended 2025-05-31

Item 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A | Quantitative and Qualitative Disclosures about Market Risk

Item 8 | Consolidated Financial Statements and Supplementary Data

SCHL US Equity☆

SCHL · 10-K · period ended 2025-05-31

Item 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A | Quantitative and Qualitative Disclosures about Market Risk

Item 8 | Consolidated Financial Statements and Supplementary Data

SCHL US Equity