EMPLOYEE BENEFIT PLANS

12 Months Ended

May 31, 2011

Pension and Other Postretirement Benefits Disclosure [Text Block]

12. EMPLOYEE BENEFIT PLANS

Pension Plans

The Company has a cash balance retirement plan (the “Pension Plan”), which covers the majority of United States employees who meet certain eligibility requirements. The Company funds all of the contributions for the Pension Plan. Benefits generally are based on the Company’s contributions and interest credits allocated to participants’ accounts based on years of benefit service and annual pensionable earnings. It is the Company’s policy to fund the minimum amount required by the Employee Retirement Income Security Act of 1974, as amended. Effective June 1, 2009, no further benefits will accrue to employees under the Pension Plan. Accordingly, the Company recognized a curtailment loss of $0.5 associated with this action in fiscal 2009.

Scholastic Ltd., an indirect subsidiary of Scholastic Corporation located in the United Kingdom, has a defined benefit pension plan (the “UK Pension Plan”) that covers its employees who meet various eligibility requirements. Benefits are based on years of service and on a percentage of compensation near retirement. The UK Pension Plan is funded by contributions from Scholastic Ltd. and its employees.

Grolier Ltd., an indirect subsidiary of Scholastic Corporation located in Canada, provided a defined benefit pension plan (the “Grolier Canada Pension Plan”) that covered its employees who met certain eligibility requirements. All full-time employees were eligible to participate in the plan after two years of employment. Employees were not required to contribute to the fund. In fiscal 2011, the Company completed the settlement of its outstanding liabilities under the Grolier Canada Pension Plan by purchasing non-participating annuities to service these liabilities prospectively. Accordingly, net liabilities of $1.3 were settled with $1.2 of contributions above plan assets and the Company recognized $4.2 of expense in fiscal 2011 related to the settlement of this pension plan.

The Company’s pension plans have a measurement date of May 31, 2011.

Post-Retirement Benefits

The Company provides post-retirement benefits to retired United States-based employees (the “Post-Retirement Benefits”) consisting of certain healthcare and life insurance benefits. Employees may become eligible for these benefits after completing certain minimum age and service requirements. At May 31, 2011, the unrecognized prior service credit remaining was $1.5.

Effective June 1, 2009, the Company modified the terms of the Post Retirement Benefits, effectively excluding a large percentage of employees from the plan. Accordingly, the Company recognized a $3.0 curtailment gain associated with this action in fiscal 2009.

The Medicare Prescription Drug, Improvement and Modernization Act (the “Medicare Act”) introduced a prescription drug benefit under Medicare (“Medicare Part D”) as well as a Federal subsidy of 28% to sponsors of retiree health care benefit plans providing a benefit that is at least actuarially equivalent to Medicare Part D. The Company has determined that the Post-Retirement Benefits provided to the retiree population are in aggregate the actuarial equivalent of the benefits under Medicare. As a result, in fiscal 2011, 2010 and 2009, the Company recognized a cumulative reduction of its accumulated post-retirement benefit obligation of $3.0, $2.8 and $9.4, respectively, due to the federal subsidy under the Medicare Act.

The following table sets forth the weighted average actuarial assumptions utilized to determine the benefit obligations for the Pension Plan, the UK Pension Plan and the Grolier Canada Pension Plan (collectively the “Pension Plans”), including the Post-Retirement Benefits, at May 31:

	Pension Plans									Post-Retirement Benefits
	2011			2010			2009			2011			2010			2009
Weighted average assumptions used to determine benefit obligations:
Discount rate		5.1	%		5.4	%		6.5	%		5.0	%		5.4	%		6.7	%
Rate of compensation increase		4.3	%		4.3	%		3.6	%		—			—			—
Weighted average assumptions used to determine net periodic benefit cost:
Discount rate		5.3	%		6.7	%		6.5	%		5.4	%		6.7	%		6.6	%
Expected long-term return on plan assets		7.5	%		7.7	%		8.5	%		—			—			—
Rate of compensation increase		4.3	%		3.6	%		3.6	%		—			—			—

Beginning in fiscal 2011, the Company selected a discount rate which more closely matches the future obligations and projected cash flows of the Pension Plans.

To develop the expected long-term rate of return on assets assumption for the Pension Plans, the Company considers historical returns and future expectations. Considering this information and the potential for lower future returns due to a generally lower interest rate environment, the Company selected an assumed weighted average long-term rate of return of 7.5% for all of the Pension Plans. The following table sets forth the change in benefit obligation for the Pension Plans and Post-Retirement Benefits at May 31:

	Pension Plans						Post-Retirement Benefits
	2011			2010			2011			2010
Change in benefit obligation:
Benefit obligation at beginning of year	$	171.1		$	153.9		$	34.4		$	23.3
Service cost		0.3			0.1			—			—
Interest cost		8.9			9.7			1.9			1.6
Plan participants’ contributions		—			—			0.5			0.4
Settlements		(7.5	)		(1.3	)		—			—
Curtailment gain		—			(0.3	)		—			—
Actuarial losses		6.0			21.4			4.7			12.0
Foreign currency translation		3.7			(2.6	)		—			—
Benefits paid, including expenses		(8.6	)		(9.8	)		(3.2	)		(2.9	)
Benefit obligation at end of year	$	173.9		$	171.1		$	38.3		$	34.4

The following table sets forth the change in plan assets for the Pension Plans and Post-Retirement Benefits at May 31:

	Pension Plans						Post-Retirement Benefits
	2011			2010			2011			2010
Change in plan assets:
Fair value of plan assets at beginning of year	$	126.5		$	105.3		$	—		$	—
Actual return on plan assets		24.6			18.1			—			—
Employer contributions		9.2			15.9			2.7			2.5
Benefits paid, including expenses		(8.6	)		(9.7	)		(3.2	)		(2.9	)
Settlements		(7.5	)		(1.3	)		—			—
Measurement change and other adjustments		—			(0.2	)		—			—
Plan participants’ contributions		—			—			0.5			0.4
Foreign currency translation		2.5			(1.6	)		—			—
Fair value of plan assets at end of year	$	146.7		$	126.5		$	—		$	—

The following table sets forth the net funded status of the Pension Plans and Post-Retirement Benefits and the related amounts recognized on the Company’s Consolidated Balance Sheets at May 31:

Amounts recognized in the Consolidated Balance Sheets	Pension Plans						Post-Retirement Benefits
	2011			2010			2011			2010
Current liabilities	$	—		$	—		$	(2.8	)	$	(2.5	)
Non-current liabilities		(27.2	)		(44.6	)		(35.5	)		(31.9	)
Net funded balance	$	(27.2	)	$	(44.6	)	$	(38.3	)	$	(34.4	)

The following pretax amounts were recognized in Accumulated other comprehensive loss for the Pension Plans and Post- Retirement Benefits in the Company’s Consolidated Balance Sheets at May 31:

	Pension Plans			2011 Post - Retirement Benefits			Total			Pension Plans			2010 Post - Retirement Benefits			Total
Net actuarial loss	$	(56.4	)	$	(21.3	)	$	(77.7	)	$	(69.5	)	$	(19.2	)	$	(88.7	)
Net prior service credit		—			1.5			1.5			—			2.2			2.2
Net amount recognized in accumulated other comprehensive loss	$	(56.4	)	$	(19.8	)	$	(76.2	)	$	(69.5	)	$	(17.0	)	$	(86.5	)

The estimated net loss and prior service cost for the Pension Plans that will be amortized from Accumulated other comprehensive loss into net periodic benefit cost over the Company’s fiscal year ending May 31, 2012 are $1.4 and less than $0.1, respectively. The estimated net loss and prior service credit for the Post-Retirement Benefits that will be amortized from Accumulated other comprehensive loss into net periodic benefit cost over the fiscal year ending May 31, 2012 are $4.1 and $0.6, respectively. Income tax expense of $4.0 and income tax benefit of $9.1 were recognized in accumulated other comprehensive income at May 31, 2011 and 2010, respectively.

The accumulated benefit obligation for the Pension Plans was $172.8 and $170.3 at May 31, 2011 and 2010, respectively. The following table sets forth information with respect to the Pension Plans with accumulated benefit obligations in excess of plan assets for the fiscal years ended May 31:

	2011		2010
Projected benefit obligations	$	173.9	$	171.1
Accumulated benefit obligations		172.8		170.3
Fair value of plan assets		146.7		126.5

The following table sets forth the net periodic cost for the Pension Plans and Post-Retirement Benefits for the fiscal years ended May 31:

	Pension Plans									Post - Retirement Benefits
	2011			2010			2009			2011			2010			2009
Components of net periodic benefit cost:
Service cost	$	0.3		$	0.1		$	7.8		$	—		$	—		$	0.1
Interest cost		8.9			9.7			10.5			1.9			1.6			1.5
Expected return on assets		(9.4	)		(8.1	)		(11.5	)		—			—			—
Net amortization and deferrals		—			(0.1	)		(0.1	)		(0.7	)		(0.7	)		(0.8	)
Curtailment loss (gain)		—			—			0.5			—			—			(3.0	)
Settlement		4.2			0.8			—			—			—			—
Special termination benefits		—			—			0.7			—			—			—
Recognized net actuarial loss		1.8			1.6			1.9			2.6			1.2			0.6
Net periodic cost (benefit)	$	5.8		$	4.0		$	9.8		$	3.8		$	2.1		$	(1.6	)

Plan Assets

The Company’s investment policy with regard to the assets in the Pension Plans is to actively manage, within acceptable risk parameters, certain asset classes where the potential exists to outperform the broader market.

The following table sets forth the total weighted average asset allocations for the Pension Plans by asset category at May 31:

	2011			2010
Equity securities		68.7	%		60.9	%
Debt securities		23.4	%		32.4	%
Real estate		1.1	%		0.7	%
Other		6.8	%		6.0	%
		100.0	%		100.0	%

The following table sets forth the weighted average target asset allocations for the Pension Plans included in the Company’s investment policy:

	US Pension Plan			UK Pension Plan
Equity		70	%		52	%
Debt and cash equivalents		30	%		14	%
Real estate and other		0	%		34	%
		100	%		100	%

The fair values of the Company’s Pension Plans’ assets are measured using Level 1, Level 2 and Level 3 fair value measurements. The fair values of the Level 1 Pension Plans’ assets are determined based on quoted market prices in active markets for identical assets. The fair values of the Level 2 and Level 3 Pension Plans’ assets are based on the net asset values of the funds, which are based on quoted market prices of the underlying investments. For a more complete description of fair value measurements see Note 19, “Fair Value Measurements.”

The following table sets forth the measurement of the Company’s Pension Plans’ assets at fair value by asset category at the respective dates:

	Assets at Fair Value as of May 31, 2011
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	4.4	$	—	$	—	$	4.4
Equity securities:
U.S. (1)		89.2		—		—		89.2
International (2)		—		11.5		—		11.5
Fixed Income (3)		31.1		3.1		—		34.2
Annuities		—		—		5.7		5.7
Real estate (4)		—		1.7		—		1.7
Total	$	124.7	$	16.3	$	5.7	$	146.7

	Assets at Fair Value as of May 31, 2010
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	2.5	$	—	$	—	$	2.5
Equity securities:
U.S. (1)		54.0		—		—		54.0
International (2)		13.7		9.4		—		23.1
Fixed Income (3)		34.7		6.3		—		41.0
Annuities		—		—		4.9		4.9
Real estate (4)		—		1.0		—		1.0
Total	$	104.9	$	16.7	$	4.9	$	126.5

(1)	Funds which invest in a diversified portfolio of publicly traded U.S. common stocks of large-cap, medium-cap and small-cap companies. There are no restrictions on these investments.
(2)	Funds which invest in a diversified portfolio of publicly traded common stock of non-U.S. companies, primarily in Europe and Asia. There are no restrictions on these investments.
(3)	Funds which invest in a diversified portfolio of publicly traded government bonds, corporate bonds and mortgage-backed securities. There are no restrictions on these investments.
(4)	Represents assets of a non-U.S. entity plan invested in a fund whose underlying investments are comprised of properties. The fund has publicly available quoted market prices and there are no restrictions on these investments.

The Company purchases annuities to service fixed payments to certain retired plan participants in the UK. These annuities are purchased from investment grade counterparties. These annuities are not traded on open markets, and are therefore valued based upon the actuarial determined valuation, and related assumptions, of the underlying projected benefit obligation, a Level 3 valuation technique. The fair value of these assets was $5.7 and $4.9 at May 31, 2011 and May 31, 2010, respectively.

Contributions

In fiscal 2012, the Company expects to contribute $3.9 to the Pension Plans.

Estimated future benefit payments

The following table sets forth the expected future benefit payments under the Pension Plans and the Post-Retirement Benefits by fiscal year:

			Post - Retirement
	Pension Benefits		Benefit Payments		Medicare Subsidy Receipts
2012	$	14.6	$	3.0	$	0.2
2013		12.0		3.1		0.3
2014		14.7		3.2		0.3
2015		11.2		3.2		0.3
2016		11.4		3.2		0.3
2017-2021		52.5		15.3		1.6

Assumed health care cost trend rates at May 31:

Assumed health care cost trend rates could have a significant effect on the amounts reported for the post-retirement health care plan. A one percentage point change in assumed health care cost trend rates would have the following effects:

	2011			2010
Total service and interest cost - 1% increase	$	0.2		$	0.1
Total service and interest cost - 1% decrease		(0.2	)		(0.1	)
Post-retirement benefit obligation - 1% increase		4.1			3.6
Post-retirement benefit obligation - 1% decrease		(3.5	)		(3.1	)

Defined contribution plans

The Company also provides defined contribution plans for certain eligible employees. In the United States, the Company sponsors a 401(k) retirement plan and has contributed $6.9, $5.0 and $7.1 for fiscal 2011, 2010 and 2009, respectively.