XML 93 R11.htm IDEA: XBRL DOCUMENT v3.2.0.727
Discontinued Operations
 12 Months Ended
May. 31, 2015
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations
DISCONTINUED OPERATIONS
 
The Company continuously evaluates its portfolio of businesses for both impairment and economic viability, as well as for possible strategic dispositions. The Company monitors the expected cash proceeds to be realized from the disposition of discontinued operations’ assets, and adjusts asset values accordingly. As a result, the Company closed or sold several operations during fiscal 2015 and 2013. All of these businesses are classified as discontinued operations in the Company’s Consolidated Financial Statements.

Educational Technology and Services Business

On May 29, 2015, the Company completed the sale of substantially all of the assets comprising the educational technology and services (“Ed Tech”) business for $575.0. The consideration received was $577.7, of which $34.5 was deposited in escrow for 18 months as security for potential indemnification and other obligations and $2.7 was received in estimated working capital adjustments. In connection with the sale of the Ed Tech business to the purchaser, the Company entered into a transition services agreement whereby the Company will provide administrative, distribution and other services to the purchaser for a minimum of 6 months and up to a maximum of 24 months. The majority of the escrow is subject to release periodically over the next 14 months upon fulfillment of certain service levels under a transition services agreement between the purchaser and the Company and is presented as Restricted cash held in escrow on the Consolidated Balance Sheets. The purchase price is subject to a further working capital adjustment based upon a final closing statement. The sale included substantially all of the assets of the Ed Tech segment including, but not limited to, current assets, accounts receivable, tangible personal property, certain leases, inventory, business products (including related intellectual property), rights under transferred contracts, rights of action and all associated goodwill and other intangible assets associated with the transferred assets. The carrying value of the net assets sold was $123.7.

The transition services agreement provides for certain finance, accounting, information technology, supply chain, and other general services to facilitate the orderly transfer of the business operations to the purchaser. Fees and expenses related to the transition services agreement are not considered significant to the disposal transaction. As such, the operating results of the Ed Tech business, which were previously reported as the former Educational Technology and Services segment, have been reported as a component of discontinued operations in the Consolidated Statements of Operations for the periods presented. In addition, the assets and liabilities of the Ed Tech business are classified as discontinued operations in the Consolidated Balance Sheets for the periods presented.

All Other Discontinued Operations

During fiscal 2015, the Company completed a restructuring of the businesses comprising its former Media, Licensing and Advertising segment and discontinued a subscription-based print magazine business, the animation and audio production business, and the game console digital content business, all of which were previously reported in such segment. During fiscal 2014, the Company did not discontinue any operations. During fiscal 2013, the Company discontinued a computer club business which was included in the Children's Book Publishing and Distribution segment and a subscription-based business which was previously reported in the former Media, Licensing and Advertising segment. During fiscal 2013, the Company sold a facility that was previously classified as held for sale for approximately $5.0, and recognized a loss on the sale in the amount of $1.1.

The following table summarizes the operating results of the discontinued operations for the fiscal year ended May 31, 2015: 
 
Ed Tech
 
All Other
 
Total
Revenues
$
217.4

 
$
11.7

 
$
229.1

Operating costs and expenses (1)
208.8

 
14.5

 
223.3

Interest income (expense)
—

 
0.1

 
0.1

Gain (loss) on sale
454.0

 
—

 
454.0

Earnings (loss) before income taxes
$
462.6

 
$
(2.7
)
 
$
459.9

Provision (benefit) for income taxes
181.8

 
(1.0
)
 
180.8

Earnings (loss) from discontinued operations, net of tax
$
280.8

 
$
(1.7
)
 
$
279.1


(1) Operating costs and expenses included costs related to unabsorbed overhead burden associated with the former educational technology and services business of $15.8.
The following table summarizes the operating results of the discontinued operations for the fiscal year ended May 31, 2014: 
 
Ed Tech
 
All Other
 
Total
Revenues
$
246.4

 
$
14.4

 
$
260.8

Operating costs and expenses (1)
193.0

 
15.0

 
208.0

Interest income (expense)
—

 
0.1

 
0.1

Earnings (loss) before income taxes
$
53.4

 
$
(0.5
)
 
$
52.9

Provision (benefit) for income taxes
22.0

 
(0.2
)
 
21.8

Earnings (loss) from discontinued operations, net of tax
$
31.4

 
$
(0.3
)
 
$
31.1


(1) Operating costs and expenses included costs related to unabsorbed overhead burden associated with the former educational technology and services business of $16.2.

The following table summarizes the operating results of the discontinued operations for the fiscal year ended May 31, 2013: 
 
Ed Tech
 
All Other
 
Total
Revenues
$
226.1

 
$
22.8

 
$
248.9

Operating costs and expenses (1)
180.6

 
28.7

 
209.3

Interest income (expense)
—

 
0.1

 
0.1

Earnings (loss) before income taxes
$
45.5

 
$
(5.8
)
 
$
39.7

Provision (benefit) for income taxes
15.5

 
(2.0
)
 
13.5

Earnings (loss) from discontinued operations, net of tax
$
30.0

 
$
(3.8
)
 
$
26.2


(1) Operating costs and expenses included costs related to unabsorbed overhead burden associated with the former educational technology and services business of $17.4.

The following table sets forth the assets and liabilities of the discontinued operations included in the Consolidated Balance Sheets of the Company as of May 31:
 
2015
 
2014
Accounts receivable, net
$
2.5

 
$
41.2

Inventories, net
0.1

 
16.3

Prepaid expenses and other current assets
0.5

 
1.2

Current assets of discontinued operations
$
3.1

 
$
58.7

 
 
 
 
Property, plant and equipment, net
—

 
1.6

Prepublication costs, net
—

 
89.8

Royalty advances, net
—

 
1.1

Goodwill
—

 
22.7

Other intangibles, net
—

 
4.3

Other assets and deferred charges
—

 
0.4

Noncurrent assets of discontinued operations
$
—

 
$
119.9

 
 
 
 
Accounts payable
0.1

 
7.8

Accrued royalties
0.7

 
3.4

Deferred revenue
0.1

 
28.8

Other accrued expenses
13.2

 
9.5

Current liabilities of discontinued operations
$
14.1

 
$
49.5



Fiscal 2015 assets and liabilities of discontinued operations primarily relate to insignificant continuing cash flows from passive activities. Other accrued expenses within the current liabilities of discontinued operations includes payables for costs related to the sale of the Ed Tech business that had not been paid as of May 31, 2015. The total accrued costs related to the sale were $12.2. These costs directly relate to the discontinued operations of the Ed Tech business and are expected to be paid in the short term. Fiscal 2014 assets and liabilities of discontinued operations relate directly to the reclassification of prior year balances.