Debt

3 Months Ended

Aug. 31, 2011

Debt Disclosure [Text Block]

4. Debt

The following table summarizes debt as of the dates indicated:

	Carrying Value			Fair Value			Carrying Value			Fair Value			Carrying Value			Fair Value
	August 31, 2011						May 31, 2011						August 31, 2010
Lines of Credit (weighted average interest rates of 4.0%, 6.7% and 3.9%, respectively)	$	7.9		$	7.9		$	0.7		$	0.7		$	7.7		$	7.7
Loan Agreement:
Revolving Loan		—			—			—			—			—			—
Term Loan (interest rates of 1.0%, 1.0% and 1.1%, respectively)		39.5			39.5			50.2			50.2			82.3			82.3
5% Notes due 2013, net of discount		152.6			153.0			152.5			156.6			152.3			149.2
Total debt	$	200.0		$	200.4		$	203.4		$	207.5		$	242.3		$	239.2
Less lines of credit, short-term debt and current portion of long-term debt		(47.4	)		(47.4	)		(43.5	)		(43.5	)		(50.5	)		(50.5	)
Total long-term debt	$	152.6		$	153.0		$	159.9		$	164.0		$	191.8		$	188.7

Short-term debt’s carrying value approximates fair value. Fair value of the Loan Agreement approximates its carrying value due to its variable interest rate and stable credit rating. Fair values of the Notes were estimated based on market quotes, where available, or dealer quotes.

The following table sets forth the maturities of the carrying values of Company’s debt obligations as of August 31, 2011, for the twelve-month periods ended August 31:

2012	$	47.4
2013		152.6
Total debt	$	200.0

Lines of Credit

As of August 31, 2011, the Company’s domestic credit lines available under unsecured money market bid rate credit lines totaled $20.0. There were no outstanding borrowings under these credit lines at August 31, 2011, May 31, 2011 and August 31, 2010. 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 August 31, 2011, the Company had various local currency credit lines, with maximum available borrowings in amounts equivalent to $30.1, underwritten by banks primarily in the United States, Canada and the United Kingdom. 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. There were borrowings outstanding under these international facilities equivalent to $7.9 at August 31, 2011, at a weighted average interest rate of 4.0%; $0.7 at May 31, 2011, at a weighted average interest rate of 6.7%; and $7.7 at August 31, 2010, at a weighted average interest rate of 3.9%.

Loan Agreement

On June 1, 2007, Scholastic Corporation and Scholastic Inc. (each, a “Borrower” and together, the “Borrowers”) entered into a $525.0 credit facility with certain banks (the “Loan Agreement”), consisting of a $325.0 revolving credit component (the “Revolving Loan”) and a $200.0 amortizing term loan component (the “Term Loan”). The Loan Agreement is a contractually committed unsecured credit facility that is scheduled to expire on June 1, 2012. The $325.0 Revolving Loan component allows the Company to borrow, repay or prepay and reborrow at any time prior to the stated maturity date, and the proceeds may be used for general corporate purposes, including financing for acquisitions and share repurchases. The Loan Agreement also provides for an increase in the aggregate Revolving Loan commitments of the lenders of up to an additional $150.0. The Term Loan, which may be prepaid at any time without penalty, requires quarterly principal payments of $10.7, with the first payment on December 31, 2007, and a final payment of $7.4 due on June 1, 2012.

On August 16, 2010, the Borrowers entered into an amendment to the Loan Agreement, which added certain provisions related to covenants and interest. Interest on both the Term Loan and Revolving Loan 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 Borrower at the time each advance is made). At the election of the Borrower, the interest rate charged for each loan made under the Loan Agreement, as amended, is based on (1) a rate equal to the higher of (i) the prime rate, (ii) the prevailing Federal Funds rate plus 0.500% or (iii) the Eurodollar Rate for a one month interest period plus 1%; or (2) an adjusted LIBOR rate plus an applicable margin, ranging from 0.500% to 1.250% based upon the Company’s prevailing consolidated debt to total capital ratio. As of August 31, 2011, there were no borrowings outstanding under the Revolving Loan.

As of August 31, 2011, the applicable margin on the Term Loan was 0.750% and the applicable margin on the Revolving Loan was 0.600%. The Loan Agreement also provides for the payment of a facility fee ranging from 0.125% to 0.250% per annum on the Revolving Loan only, which at August 31, 2011, was 0.150%. As of August 31, 2011, $39.5 was outstanding under the Term Loan at an interest rate of 1.0%.

As of August 31, 2011, standby letters of credit outstanding under the Loan Agreement totaled $1.4. The Loan Agreement contains certain covenants, including interest coverage and leverage ratio tests and certain limitations on the amount of dividends and other distributions, and at August 31, 2011, the Company was in compliance with these covenants.

5% Notes due 2013

In April 2003, Scholastic Corporation issued $175.0 of 5% Notes (the “5% Notes”). The 5% Notes are senior unsecured obligations that mature on April 15, 2013. Interest on the 5% Notes is payable semi-annually on April 15 and October 15 of each year through maturity. The Company may at any time redeem all or a portion of the 5% Notes at a redemption price (plus accrued interest to the date of the redemption) equal to the greater of (i) 100% of the principal amount, or (ii) the sum of the present values of the remaining scheduled payments of principal and interest discounted to the date of redemption.