Discontinued Operations

3 Months Ended

Aug. 31, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONS

The Company continuously evaluates its portfolio of businesses for both impairment and economic viability, as well as for possible strategic dispositions. The Company monitors the expected cash proceeds to be realized from the disposition of discontinued operations’ assets, and adjusts asset values accordingly.

During the first quarter of fiscal 2016, there were no new transactions that were classified as discontinued operations.

During fiscal 2015, the Company closed or sold several operations. All of these businesses are classified as discontinued operations in the Company’s condensed consolidated financial statements.

Educational Technology and Services Business

On May 29, 2015, the Company completed the sale of substantially all of the assets comprising its former educational technology and services (“Ed Tech”) business and accordingly has categorized this business as a discontinued operation. The consideration received was $577.7, of which $34.5 was deposited in escrow as security for potential indemnification and other obligations and $2.7 was received in estimated working capital adjustments. In connection with the sale of the Ed Tech business to the purchaser, the Company entered into a transition services agreement whereby the Company will provide administrative, distribution and other services to the purchaser for a minimum of 6 months and up to a maximum of 24 months. Transition service fees under this agreement are recorded as a reduction to Selling, general and administrative expenses.

As of August 31, 2015, a majority of the escrow is subject to release periodically over the next 11 months upon fulfillment of certain service levels under the transition services agreement between the purchaser and the Company and is presented as Restricted cash held in escrow on the condensed consolidated balance sheets. As of August 31, 2015, $2.5 was released from Restricted cash held in escrow in accordance with the transition services agreement.

All Other Discontinued Operations

During fiscal 2015, the Company completed a restructuring of the businesses comprising its former Media, Licensing and Advertising segment and discontinued a subscription-based print magazine business, the animation and audio production business, and the game console digital content business, all of which were previously reported in such segment.

The following table summarizes the operating results of the discontinued operations for the fiscal quarter ended August 31, 2015: 

	Ed Tech			All Other			Total
Revenues	$	—		$	0.1		$	0.1
Operating costs and expenses	0.6			0.4			1.0
Earnings (loss) before income taxes	$	(0.6	)	$	(0.3	)	$	(0.9	)
Provision (benefit) for income taxes	(0.3		)	(0.1		)	(0.4		)
Earnings (loss) from discontinued operations, net of tax	$	(0.3	)	$	(0.2	)	$	(0.5	)

The following table summarizes the operating results of the discontinued operations for the fiscal quarter ended August 31, 2014: 

	Ed Tech		All Other			Total
Revenues	$	90.2	$	3.1		$	93.3
Operating costs and expenses (1)	55.9		4.0			59.9
Earnings (loss) before income taxes	$	34.3	$	(0.9	)	$	33.4
Provision (benefit) for income taxes	13.9		(0.3		)	13.6
Earnings (loss) from discontinued operations, net of tax	$	20.4	$	(0.6	)	$	19.8

(1) Operating costs and expenses included costs related to unabsorbed overhead burden associated with the Ed Tech business of $3.9.

The following table sets forth the assets and liabilities of the discontinued operations included in the condensed consolidated balance sheets of the Company:

	August 31, 2015		May 31, 2015		August 31, 2014
Accounts receivable, net	$	0.4	$	2.5	$	82.8
Inventories, net	0.1		0.1		14.2
Prepaid expenses and other current assets	0.4		0.5		1.5
Current assets of discontinued operations	$	0.9	$	3.1	$	98.5
Property, plant and equipment, net	—		—		1.3
Prepublication costs, net	—		—		88.5
Royalty advances, net	—		—		1.1
Goodwill	—		—		22.7
Other intangibles, net	—		—		4.2
Other assets and deferred charges	—		—		0.4
Noncurrent assets of discontinued operations	$	—	$	—	$	118.2
Accounts payable	0.1		0.1		13.1
Accrued royalties	0.7		0.7		4.6
Deferred revenue	0.1		0.1		51.0
Other accrued expenses	2.1		13.2		12.5
Current liabilities of discontinued operations	$	3.0	$	14.1	$	81.2

As of August 31 and May 31, 2015, assets and liabilities of discontinued operations primarily related to insignificant continuing cash flows from passive activities. As of May 31, 2015, other accrued expenses within the current liabilities of discontinued operations included payables for accrued costs of $12.2 related to the sale of the Ed Tech business that had not been paid as of May 31, 2015. These costs directly relate to the discontinued operations of the Ed Tech business and a majority were paid in the first quarter of fiscal 2016.