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Employee Benefit Plans | 12 Months Ended
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May. 31, 2015
Compensation and Retirement Disclosure [Abstract] |
Employee Benefit Plans | 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. The Pension Plan is a defined benefit plan. 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. 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. The Company’s pension plans have a measurement date of May 31. Post-Retirement Benefits The Company provides post-retirement benefits to eligible 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. Effective June 1, 2009, the Company modified the terms of the Post-Retirement Benefits, effectively excluding a large percentage of employees from the plan. At May 31, 2015, the unrecognized prior service credit remaining was less than $0.1. 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 its retiree population are in aggregate the actuarial equivalent of the benefits under Medicare Part D. As a result, in fiscal 2015, 2014 and 2013, the Company recognized a cumulative reduction of its accumulated post-retirement benefit obligation of $3.0, $3.1 and $3.1, 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 and the UK Pension Plan (collectively the “Pension Plans”), including the Post-Retirement Benefits, at May 31:
| Pension Plans |  | Post-Retirement Benefits
| 2015 |  | 2014 |  | 2013 |  | 2015 |  | 2014 |  | 2013
Weighted average assumptions used to determine benefit obligations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Discount rate | 3.7 | % |  | 4.1 | % |  | 4.0 | % |  | 3.8 | % |  | 4.0 | % |  | 3.9 | %
Rate of compensation increase | 4.1 | % |  | 4.2 | % |  | 4.4 | % |  | — |  |  | — |  |  | — |
Weighted average assumptions used to determine net periodic benefit cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Discount rate | 4.1 | % |  | 4.0 | % |  | 4.0 | % |  | 4.0 | % |  | 3.9 | % |  | 3.9 | %
Expected long-term return on plan assets | 5.4 | % |  | 7.5 | % |  | 7.3 | % |  | — |  |  | — |  |  | — |
Rate of compensation increase | 4.2 | % |  | 4.4 | % |  | 3.3 | % |  | — |  |  | — |  |  | — |
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 5.4%. 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
| 2015 |  | 2014 |  | 2015 |  | 2014
Change in benefit obligation: |  |  |  |  |  |  |  |  |  |  |
Benefit obligation at beginning of year | $ | 180.5 |  |  | $ | 185.6 |  |  | $ | 33.4 |  |  | $ | 36.2 |
Service cost | — |  |  | — |  |  | 0.0 |  |  | 0.0 |
Interest cost | 6.7 |  |  | 7.2 |  |  | 1.3 |  |  | 1.3 |
Plan participants’ contributions | — |  |  | — |  |  | 0.3 |  |  | 0.4 |
Actuarial losses (gains) | 11.4 |  |  | (2.5 | ) |  | 3.8 |  |  | (1.9 | )
Foreign currency translation | (3.6 | ) |  | 3.7 |  |  | — |  |  | — |
Settlement | (14.4 | ) |  | (6.4 | ) |  | — |  |  | — |
Curtailment due to sale of segment | 0.1 |  |  | — |  |  | — |  |  | — |
Benefits paid, including expenses | (7.6 | ) |  | (7.1 | ) |  | (2.5 | ) |  | (2.6 | )
Benefit obligation at end of year | $ | 173.1 |  |  | $ | 180.5 |  |  | $ | 36.3 |  |  | $ | 33.4 |
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
| 2015 |  | 2014 |  | 2015 |  | 2014
Change in plan assets: |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year | $ | 188.6 |  |  | $ | 173.8 |  |  | $ | — |  |  | $ | — |
Actual return on plan assets | 8.5 |  |  | 21.1 |  |  | — |  |  | — |
Employer contributions | 1.3 |  |  | 4.6 |  |  | 2.2 |  |  | 2.2 |
Settlement | (14.4 | ) |  | (6.4 | ) |  | — |  |  | — |
Benefits paid, including expenses | (7.6 | ) |  | (7.1 | ) |  | (2.5 | ) |  | (2.6 | )
Plan participants’ contributions | — |  |  | — |  |  | 0.3 |  |  | 0.4 |
Foreign currency translation | (2.7 | ) |  | 2.6 |  |  | — |  |  | — |
Fair value of plan assets at end of year | $ | 173.7 |  |  | $ | 188.6 |  |  | $ | — |  |  | $ | — |
In fiscal 2015 and 2014, the Company recognized a pretax charge of $4.3 and $1.7, respectively, related to the lump sum settlements of certain U.S. pension obligations. 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:
| Pension Plans |  | Post-Retirement Benefits
| 2015 |  | 2014 |  | 2015 |  | 2014
Non-current assets | $ | 13.3 |  |  | $ | 19.4 |  |  | $ | — |  |  | $ | — |
Current liabilities | — |  |  | — |  |  | (2.6 | ) |  | (2.6 | )
Non-current liabilities | (12.6 | ) |  | (11.4 | ) |  | (33.7 | ) |  | (30.8 | )
Net funded balance | $ | 0.7 |  |  | $ | 8.0 |  |  | $ | (36.3 | ) |  | $ | (33.4 | )
The following amounts were recognized in Accumulated other comprehensive income (loss) for the Pension Plans and Post-Retirement Benefits in the Company’s Consolidated Balance Sheets at May 31:
| 2015 |  | 2014
| Pension Plans |  | Post - Retirement Benefits |  | Total |  | Pension Plans |  | Post - Retirement Benefits |  | Total
Net actuarial gain (loss) | $ | (54.0 | ) |  | $ | (11.7 | ) |  | $ | (65.7 | ) |  | $ | (47.6 | ) |  | $ | (9.3 | ) |  | $ | (56.9 | )
Net prior service credit | — |  |  | (0.0 | ) |  | — |  |  | — |  |  | 0.3 |  |  | 0.3 |
Net amount recognized in Accumulated other comprehensive income (loss) | $ | (54.0 | ) |  | $ | (11.7 | ) |  | $ | (65.7 | ) |  | $ | (47.6 | ) |  | $ | (9.0 | ) |  | $ | (56.6 | )
The following table presents the impact on earnings of reclassifications out of Accumulated other comprehensive income (loss) for the periods indicated:
| 2015 | 2014 |  | 2013
| Pension Plans |  | Post - Retirement Benefits |  | Pension Plans |  | Post - Retirement Benefits |  | Pension Plans |  | Post - Retirement Benefits
Service cost | $ | — |  |  | $ | 0.0 |  |  | $ | — |  |  | $ | 0.0 |  |  | $ | — |  |  | $ | 0.0 |
Net amortization and deferrals | — |  |  | (0.2 | ) |  | — |  |  | (0.2 | ) |  | — |  |  | (0.4 | )
Lump sum settlement charge | 4.3 |  |  | — |  |  | 1.7 |  |  | — |  |  | — |  |  | — |
Recognized net actuarial loss | 1.4 |  |  | 1.3 |  |  | 1.8 |  |  | 2.2 |  |  | 2.2 |  |  | 3.0 |
Amounts reclassified from Accumulated other comprehensive income (loss) | $ | 5.7 |  |  | $ | 1.1 |  |  | $ | 3.5 |  |  | $ | 2.0 |  |  | $ | 2.2 |  |  | $ | 2.6 |
The amounts reclassified out of Accumulated other comprehensive income (loss) were recognized in Selling, general and administrative expense. The estimated net loss 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, 2016 is $1.7. 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, 2016 are $2.2 and less than $0.1, respectively. Income tax benefit of $2.5, income tax expense of $5.0 and income tax benefit of $8.4 were recognized in Accumulated other comprehensive loss at May 31, 2015, 2014 and 2013, respectively. The following table sets forth information with respect to the Pension Plans with plan assets in excess of accumulated benefit obligations for the fiscal years ended May 31:
| 2015 |  | 2014
Projected benefit obligations | $ | 173.1 |  |  | $ | 180.5 |
Accumulated benefit obligations | 172.2 |  |  | 179.5 |
Fair value of plan assets | 173.7 |  |  | 188.6 |
The following table sets forth the net periodic (benefit) cost for the Pension Plans and Post-Retirement Benefits for the fiscal years ended May 31:
| Pension Plans |  | Post - Retirement Benefits
| 2015 |  | 2014 |  | 2013 |  | 2015 |  | 2014 |  | 2013
Components of net periodic (benefit) cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Service cost | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 0.0 |  |  | $ | 0.0 |  |  | $ | 0.0 |
Interest cost | 6.7 |  |  | 7.2 |  |  | 6.9 |  |  | 1.3 |  |  | 1.3 |  |  | 1.4 |
Expected return on assets | (9.3 | ) |  | (12.7 | ) |  | (10.5 | ) |  | — |  |  | — |  |  | — |
Net amortization and deferrals | — |  |  | — |  |  | — |  |  | (0.2 | ) |  | (0.2 | ) |  | (0.4 | )
Lump sum settlement charge | 4.3 |  |  | 1.7 |  |  | — |  |  | — |  |  | — |  |  | — |
Recognized net actuarial loss | 1.4 |  |  | 1.8 |  |  | 2.2 |  |  | 1.3 |  |  | 2.2 |  |  | 3.0 |
Net periodic (benefit) cost | $ | 3.1 |  |  | $ | (2.0 | ) |  | $ | (1.4 | ) |  | $ | 2.4 |  |  | $ | 3.3 |  |  | $ | 4.0 |
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:
| 2015 |  | 2014
Equity securities | 29.2 | % |  | 33.0 | %
Debt securities | 64.6 | % |  | 58.8 | %
Real estate | 1.3 | % |  | 1.1 | %
Other | 4.9 | % |  | 7.1 | %
| 100.0 | % |  | 100.0 | %
The following table sets forth the targeted weighted average asset allocations for the Pension Plans included in the Company’s investment policy:
| U.S. Pension Plan |  | UK Pension Plan
Equity | 30 | % |  | 40 | %
Debt and cash equivalents | 70 | % |  | 30 | %
Real estate and other | 0 | % |  | 30 | %
| 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. For a more complete description of fair value measurements see Note 18, “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, 2015
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash and cash equivalents | $ | 2.4 |  |  | $ | — |  |  | $ | — |  |  | $ | 2.4 |
Equity securities: |  |  |  |  |  |  |  |  |  |  |
U.S. (1) | 34.4 |  |  | — |  |  | — |  |  | 34.4 |
International (2) | 4.7 |  |  | 11.7 |  |  | — |  |  | 16.4 |
Pooled, Common and Collective Funds (3) | — |  |  | 101.8 |  |  | — |  |  | 101.8 |
Fixed Income (4) | — |  |  | 10.4 |  |  | — |  |  | 10.4 |
Annuities | — |  |  | — |  |  | 6.1 |  |  | 6.1 |
Real estate (5) | — |  |  | 2.2 |  |  | — |  |  | 2.2 |
Total | $ | 41.5 |  |  | $ | 126.1 |  |  | $ | 6.1 |  |  | $ | 173.7 |
| Assets at Fair Value as of May 31, 2014
| Level 1 |  | Level 2 |  | Level 3 |  | Total
Cash and cash equivalents | $ | 7.1 |  |  | $ | — |  |  | $ | — |  |  | $ | 7.1 |
Equity securities: |  |  |  |  |  |  |  |  |  |  |
U.S. (1) | 39.8 |  |  | — |  |  | — |  |  | 39.8 |
International (2) | 10.3 |  |  | 12.1 |  |  | — |  |  | 22.4 |
Pooled, Common and Collective Funds (3) | — |  |  | 101.3 |  |  | — |  |  | 101.3 |
Fixed Income (4) | — |  |  | 9.7 |  |  | — |  |  | 9.7 |
Annuities | — |  |  | — |  |  | 6.2 |  |  | 6.2 |
Real estate (5) | — |  |  | 2.1 |  |  | — |  |  | 2.1 |
Total | $ | 57.2 |  |  | $ | 125.2 |  |  | $ | 6.2 |  |  | $ | 188.6 |
(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 bond index funds available to certain qualified retirement plans but not traded openly in any public exchanges.
(4) | 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.
(5) | 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 has purchased 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 $6.1 and $6.2 at May 31, 2015 and May 31, 2014, respectively. The following table summarizes the changes in fair value of these Level 3 assets for the fiscal years ended May 31, 2015 and 2014:
Balance at May 31, 2013 | $ | 6.1 |
Actual Return on Plan Assets: |  |
Relating to assets still held at May 31, 2014 | (0.1 | )
Relating to assets sold during the year | — |
Purchases, sales and settlements, net | (0.3 | )
Transfers in and/or out of Level 3 | — |
Foreign currency translation | 0.5 |
Balance at May 31, 2014 | $ | 6.2 |
Actual Return on Plan Assets: |  |
Relating to assets still held at May 31, 2015 | 0.7 |
Relating to assets sold during the year | — |
Purchases, sales and settlements, net | (0.3 | )
Transfers in and/or out of Level 3 | — |
Foreign currency translation | (0.5 | )
Balance at May 31, 2015 | $ | 6.1 |
Contributions In fiscal 2016, the Company expects to contribute $1.3 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
2016 | $ | 16.8 |  |  | $ | 2.9 |  |  | $ | 0.3 |
2017 | 10.9 |  |  | 2.8 |  |  | 0.3 |
2018 | 10.6 |  |  | 2.8 |  |  | 0.3 |
2019 | 10.5 |  |  | 2.7 |  |  | 0.3 |
2020 | 10.2 |  |  | 2.6 |  |  | 0.3 |
2020-2024 | 47.3 |  |  | 12.9 |  |  | 1.5 |
Assumed health care cost trend rates at May 31:
| 2015 |  | 2014
Health care cost trend rate assumed for the next fiscal year | 7.0 | % |  | 7.0 | %
Rate to which the cost trend is assumed to decline (the ultimate trend rate) | 5.0 | % |  | 5.0 | %
Year that the rate reaches the ultimate trend rate | 2022 |  |  | 2021 |
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:
| 2015 |  | 2014
Total service and interest cost - 1% increase | $ | 0.1 |  |  | $ | 0.1 |
Total service and interest cost - 1% decrease | (0.1 | ) |  | (0.1 | )
Post-retirement benefit obligation - 1% increase | 4.2 |  |  | 3.6 |
Post-retirement benefit obligation - 1% decrease | (3.6 | ) |  | (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 $7.9, $7.5 and $8.0 for fiscal 2015, 2014 and 2013, respectively.

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