Debt

12 Months Ended

May 31, 2013

Debt Disclosure [Text Block]

Debt Disclosure [Text Block]

5. DEBT

The following table summarizes debt as of May 31:

	Carrying Value			Fair Value			Carrying Value			Fair Value
	2013						2012
Lines of Credit (weighted average interest rates of 9.0% and 5.3%, respectively)	$	2.0		$	2.0		$	6.5		$	6.5
Loan Agreement:
Revolving Loan		—			—			—			—
Term Loan		—			—			—			—
5% Notes due 2013, net of discount		—			—			152.8			155.4
Total debt	$	2.0		$	2.0		$	159.3		$	161.9
Less lines of credit and current portion of long-term debt		(2.0	)		(2.0	)		(6.5	)		(6.5	)
Total long-term debt	$	—		$	—		$	152.8		$	155.4

The short-term debt’s carrying value approximates its fair value. The 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 the Company’s debt obligations as of May 31, 2013 for the fiscal years ending May 31:

2014	$	2.0
2015		—
2016		—
2017		—
2018		—
Thereafter		—
Total debt	$	2.0

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 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 Revolving Loan allows the Company to borrow, repay or prepay and reborrow at any time prior to the maturity date, and the proceeds may be used for general corporate purposes, including financing for acquisitions and share repurchases. On April 15, 2013, the Company drew on this Revolving Loan to fully repay the 5% Notes due April 2013. As of May 31, 2013, the Company had fully paid down the Revolving Loan.

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, in each case, 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.

As of May 31, 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 May 31, 2013, the facility fee rate was 0.20%.

There were no outstanding borrowings under the Revolving Loan as of May 31, 2012 and May 31, 2013.

At May 31, 2013, the Company had open standby letters of credit totaling $6.6 issued under certain credit lines, including $1.4 under the Loan agreement discussed above. These letters of credit are scheduled to expire within one year; however, the Company expects that substantially all of these letters of credit will be renewed, at similar terms, prior to expiration.

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 May 31, 2013, the Company was in compliance with these covenants.

Lines of Credit

As of May 31, 2013, the Company’s domestic credit lines available under unsecured money market bid rate credit lines totaled $14.8. There were no outstanding borrowings under these credit lines at May 31, 2013 and 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 365 days. These credit lines may be renewed, if requested by the Company, at the option of the lender.

As of May 31, 2013, the Company had various local currency credit lines, with maximum available borrowings in amounts equivalent to $27.0, 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 facilities equivalent to $2.0 at May 31, 2013 at a weighted average interest rate of 9.0%, compared to borrowings outstanding equivalent to $6.5 at May 31, 2012 at a weighted average interest rate of 5.3%.

5% Notes due 2013

In April 2003, Scholastic Corporation issued $175.0 of 5% Notes (the “5% Notes”). The 5% Notes were senior unsecured obligations that matured on April 15, 2013. Interest on the 5% Notes was payable semi-annually on April 15 and October 15 of each year through maturity.

As discussed above, the Company amended its existing revolving credit facility, which was scheduled to mature on June 1, 2014, to extend the maturity date of the Revolving Loan to December 5, 2017. On April 15, 2013, the Company drew on the Revolving Loan to satisfy its obligations to fully repay the 5% Notes due April 2013. As of May 31, 2013, the Company had fully paid down the Revolving Loan.