Debt

3 Months Ended

Feb. 28, 2013

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
	February 28, 2013						May 31, 2012						February 29, 2012
Lines of Credit	$	1.8		$	1.8		$	6.5		$	6.5		$	12.6		$	12.6
Loan Agreement:
Revolving Loan		—			—			—			—			—			—
Term Loan		—			—			—			—			—			—
5% Notes due 2013, net of discount		153.0			153.0			152.8			155.4			152.7			158.5
Total debt	$	154.8		$	154.8		$	159.3		$	161.9		$	165.3		$	171.1
Less lines of credit, short-term debt and current portion of long-term debt		(1.8	)		(1.8	)		(6.5	)		(6.5	)		(12.6	)		(12.6	)
Total long-term debt	$	153.0		$	153.0		$	152.8		$	155.4		$	152.7		$	158.5
Lines of Credit weighted average interest rate		8.9	%					5.3	%					4.7	%

The carrying value of the Company’s short-term debt approximates its fair value. 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 Company’s debt obligations as of February 28, 2013, for the twelve-month period ending February 28,

2014	$	1.8
2015	$	—
2016	$	—
2017	$	—
2018	$	153.0
Total debt	$	154.8

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”), with the ability to increase the aggregate Revolving Loan commitments of the lenders by up to an additional $150.0. The Loan Agreement was amended on August 16, 2010, on October 25, 2011 and most recently on December 5, 2012. The amendment on December 5, 2012 served to, among other things, (i) increase the Revolving Loan from $325.0 to $425.0 (with the continued ability to increase the aggregate Revolving Loan commitments of the lenders by up to an additional $150.0), (ii) extend the maturity of the $425.0 Revolving Loan to December 5, 2017 from June 1, 2014, (iii) amend a covenant in the Loan Agreement to permit certain sales, transfers and dispositions of assets by either Borrower or any subsidiary to any other Borrower or subsidiary and (iv) amend a covenant in the Loan Agreement to permit transactions between or among the Company and its wholly-owned subsidiaries not involving any other affiliates. Additionally, this amendment added certain lenders to the Loan Agreement and other lenders exited the Loan Agreement with no further obligation. The Loan Agreement also provides for the payment of a facility fee as described below.

The Revolving Loan 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.

Interest on the 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). The interest pricing under the Revolving Loan is dependent upon the Borrower’s election of a rate that is either:

•	A Base 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% plus an applicable spread ranging from 0.18% to 0.60%, as determined by the Company’s prevailing consolidated debt to total capital ratio.
	- Or -
•	A Eurodollar Rate equal to the London interbank offered rate (LIBOR) plus an applicable spread ranging from 1.18% to 1.60%, as determined by the Company’s prevailing consolidated debt to total capital ratio.

At February 28, 2013, the indicated spread on Base Rate Advances was 0.18% and the indicated spread on Eurodollar Rate Advances was 1.18%, both based on the Company’s prevailing consolidated debt to total capital ratio. The Loan Agreement also provides for the payment of a facility fee ranging from 0.20% to 0.40% per annum based upon the Company’s prevailing consolidated debt to total capital ratio. At February 28, 2013, the facility fee rate was 0.20%. There were no outstanding borrowings under the Revolving Loan as of February 28, 2013.

As of February 28, 2013, the Company had open standby letters of credit totaling $6.6, including $1.4 under the Loan Agreement.

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 February 28, 2013, the Company was in compliance with these covenants.

Lines of Credit

As of February 28, 2013, 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 February 28, 2013, May 31, 2012 and February 29, 2012. 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 364 days. These credit lines may be renewed, if requested by the Company, at the option of the lender.

As of February 28, 2013, the Company had various local currency credit lines, with maximum available borrowings in amounts equivalent to $27.1, 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. Borrowings and weighted average interest rates for these lines of credit are presented in the table above. The increased weighted average interest rate of 8.9% as of February 28, 2013 was higher due to local borrowing interest rates in Asia.

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.

As noted above under “Loan Agreement,” the Company amended the terms of the Revolving Loan to extend the maturity date to December 5, 2017. The Company has the ability to use a portion of this credit facility to fully redeem the 5% Notes due April 15, 2013 and intends to draw on this credit facility for this purpose. Accordingly, the balance of the 5% Notes is excluded from current liabilities and classified as long-term debt on the Company’s condensed consolidated balance sheets at February 28, 2013 and May 31, 2012.