EMPLOYEE BENEFIT PLANS

The following table sets forth components of the net periodic (benefit) cost for the periods indicated under the Company’s cash balance retirement plan for its United States employees meeting certain eligibility requirements (the “U.S. Pension Plan”) and the defined benefit pension plan of Scholastic Ltd., an indirect subsidiary of Scholastic Corporation located in the United Kingdom (the “UK Pension Plan” and, together with the U.S. Pension Plan, the “Pension Plans”). Also included are the post-retirement benefits, consisting of certain healthcare and life insurance benefits provided by the Company to its eligible retired United States-based employees (the “Post-Retirement Benefits”). The Pension Plans and Post-Retirement Benefits include participants associated with both continuing operations and discontinued operations.



	U.S. Pension Plan						UK Pension Plan						Post-Retirement Benefits
	Three months ended November 30,						Three months ended November 30,						Three months ended November 30,
	2017			2016			2017			2016			2017		2016
Components of net periodic (benefit) cost:
Service cost	$	—		$	—		$	—		$	—		$	0.0	$	0.0
Interest cost	0.8			0.8			0.2			0.3			0.2		0.3
Expected return on assets	(1.5		)	(1.6		)	(0.2		)	(0.2		)	—		—
Benefit cost of settlement event	15.4			—			—			—			—		—
Amortization of (gain) loss	0.3			0.3			0.3			0.2			0.0		0.6
Net periodic (benefit) cost	$	15.0		$	(0.5	)	$	0.3		$	0.3		$	0.2	$	0.9



	Pension Plans						UK Pension Plan						Post-Retirement Benefits
	Six months ended November 30,						Six months ended November 30,						Six months ended November 30,
	2017			2016			2017			2016			2017		2016
Components of net periodic (benefit) cost:
Service cost	$	—		$	—		—			—			$	0.0	$	0.0
Interest cost	1.5			1.6			0.5			0.6			0.5		0.6
Expected return on assets	(3.0		)	(3.1		)	(0.5		)	(0.5		)	—		—
Benefit cost of settlement event	15.4			—			—			—			—		—
Amortization of (gain) loss	0.6			0.5			0.6			0.4			0.0		1.2
Net periodic cost (credit)	$	14.5		$	(1.0	)	$	0.6		$	0.5		$	0.5	$	1.8

The Company’s funding practice with respect to the Pension Plans is to contribute on an annual basis at least the minimum amounts required by applicable laws. For the six months ended November 30, 2017, the Company made no contribution to the U.S. Pension Plan and contributed $0.6 to the UK Pension Plan. The Company expects, based on actuarial calculations, to contribute cash of approximately $1.1 to the UK Pension Plan for the fiscal year ending May 31, 2018.

On July 20, 2016, the Board approved the termination of the U.S. Pension Plan (the "Expected Termination"), in which all benefit accruals were previously frozen as of June 1, 2009. Based on the U.S. Pension Plan’s current funded status and the frozen benefit, it was determined that the on-going costs of maintaining the U.S. Pension Plan were growing at a greater rate than the benefit delivered to the Company’s employees and former employees. An application was approved by the IRS for an advance determination that the U.S. Pension Plan met the qualification requirements of Internal Revenue Code section 401(a). The assets of the U.S. Pension Plan will be distributed either via a lump sum payment to each eligible active and deferred vested participant or to another qualified retirement plan designated by the participant, or via an annuity contract underwritten by a highly rated insurance company. All participants currently receiving a periodic benefit will continue to receive their benefit payments without disruption.

In fiscal 2018 the U.S. Pension Plan's funding status has been sufficient to allow participants to receive "lump sum" payments at the participant's request and under certain circumstances. In addition, during the fiscal quarter ended November 30, 2017, the Company made a lump sum offer to certain participants in anticipation of the Expected Termination. If lump sum payments exceed interest costs for the fiscal year period, a settlement charge of accumulated net actuarial losses is recognized based on the proportion of the projected benefit obligation settled. For the six months ended November 30, 2017, the U.S. Pension Plan made $37.4 of lump sum benefit payments to vested plan participants which was in excess of interest costs. As a result, a remeasurement was completed on the settlement date and a pretax settlement charge of $15.4 was recognized in the Company's Condensed Consolidated Statement of Operations in Other components of net periodic benefit (costs) as part of Earnings (loss) from continuing operations before income taxes.

The actuarial assumptions were updated based on the short-term nature of the U.S. Pension Plan. A short-term annual expected rate of return on plan assets of 4.75% was used for the remainder of the current fiscal period rather than a long-term return for the plan, as the assets are expected to be distributed within the next twelve months.

As of November 30, 2017, a discount rate of 2.2% was used to determine the pension benefit obligation on a plan termination basis. The rate was developed such that the present value of the U.S. Pension Plan cash flows is equal to the projected benefit obligation and the expected fair value of annuity contracts on the portion of the obligation not distributed through lump sum payments.

The Company believes the Expected Termination will be completed by May 31, 2018.