Revenues (Tables)

6 Months Ended

Nov. 30, 2018

Revenue from Contract with Customer [Abstract]

Schedule of Impact of Adoption of New Accounting Standards

The following table illustrates the amounts by which each summarized income statement line item was affected by the adoption of Topic 606:



	As reported			Adjustments				Without adoption of Topic 606
Three months ended November 30, 2018
Revenues	$	604.7		$	10.8		⁽¹⁾	$	615.5
Cost of goods sold	262.4			2.6			⁽¹⁾	265.0
Selling, general and administrative expenses	229.7			2.6			⁽³⁾	232.3
Depreciation and amortization	14.4			—				14.4
Operating income (loss)	98.2			5.6				103.8
Interest income (expense), net	0.5			—				0.5
Other components of net periodic benefit (cost)	(0.3		)	—				(0.3		)
Provision (benefit) for income taxes	26.8			1.5			⁽⁴⁾	28.3
Net income (loss)	$	71.6		$	4.1			$	75.7
Basic earnings (loss) per share:	$	2.03		$	0.12			$	2.15
Diluted earnings (loss) per share:	$	1.99		$	0.11			$	2.10

Six months ended November 30, 2018
Revenues	$	823.1		$	(1.7	)	⁽²⁾	$	821.4
Cost of goods sold	387.7			(1.5		)	⁽²⁾	386.2
Selling, general and administrative expenses	393.4			(0.6		)	⁽³⁾	392.8
Depreciation and amortization	27.6			—				27.6
Operating income (loss)	14.4			0.4				14.8
Interest income (expense), net	1.3			—				1.3
Other components of net periodic benefit (cost)	(0.7		)	—				(0.7		)
Provision (benefit) for income taxes	4.7			0.1			⁽⁴⁾	4.8
Net income (loss)	$	10.3		$	0.3			$	10.6
Basic earnings (loss) per share:	$	0.29		$	0.01			$	0.30
Diluted earnings (loss) per share:	$	0.29		$	0.01			$	0.30

(1) - Represents additional deferred revenue and cost of goods sold on incentive credits awarded during the period, partially offset by incremental revenue and cost of goods sold related to the redemption of book fairs incentive credits.

(2) - Represents incremental revenue and cost of goods sold related to the redemption of book fairs incentive program credits, partially offset by additional deferred revenue on incentive credits awarded during the period.

(3) - Represents direct response advertising costs being expensed as incurred.

(4) - Represents the income tax impact of Topic 606 adjustments.

The cumulative effect of the changes made to the Company’s condensed consolidated balance sheet at June 1, 2018 are as follows:



	As reported - May 31, 2018		Adjustments due to adoption				June 1, 2018
Accounts receivable, net	$	204.9	$	31.1		⁽¹⁾	$	236.0
Inventories, net	294.9		(1.9		)	⁽²⁾	293.0
Prepaid expenses and other current assets	66.6		(4.3		)	⁽²⁾⁽³⁾	62.3
Noncurrent deferred income taxes	25.2		16.0			⁽⁴⁾	41.2
Deferred revenue	24.7		86.3			⁽⁵⁾	111.0
Other accrued expenses	177.9		1.1			⁽⁶⁾	179.0
Retained earnings	1,065.2		(46.5		)		1,018.7

(1) - Primarily represents the reclassification of the Company’s accounting for estimated returns from a reduction to Accounts receivable, net, to a current liability within Other accrued expenses.

(2) - Represents the reclassification of a return asset from Inventory to Prepaid expenses and other current assets.

(3) - Primarily represents the adjustment for previously capitalized direct response advertising costs.

(4) - Represents the income tax impact of Topic 606 adjustments.

(5) - Represents the deferred revenue related to outstanding book fairs incentive credits as of June 1, 2018.

(6) - Represents a reduction to Other accrued expenses of $27.2 for outstanding book fair incentive credits as of June 1, 2018. This decrease was offset by a $28.3 increase for estimated returns recorded to Other accrued expenses.

Schedule of Disaggregation of Revenue

The following table presents the Company’s revenues disaggregated by region and channel:



Three months ended November 30,	2018		2017
Book Clubs	$	101.3	$	99.9
Book Fairs	220.7		231.0
Trade	95.9		82.8
Total Children's Book Publishing & Distribution	417.9		413.7

Education	71.5		69.0

Major Markets⁽¹⁾	87.9		88.6
Other Markets⁽²⁾	27.4		27.0
Total International	115.3		115.6
Total Revenues	$	604.7	$	598.3

Six months ended November 30,	2018		2017
Book Clubs	$	110.4	$	107.9
Book Fairs	245.9		243.1
Trade	157.3		131.6
Total Children's Book Publishing & Distribution	513.6		482.6

Education	119.4		111.9

Major Markets⁽¹⁾	138.2		140.3
Other Markets⁽²⁾	51.9		52.7
Total International	190.1		193.0
Total Revenues	$	823.1	$	787.5

(1) - Includes Canada, UK, Australia and New Zealand.

(2) - Primarily includes markets in Asia.