SCHOLASTIC CORP

Scholastic Corporation is the world's largest publisher and distributor of children's books, a leading provider of print and digital instructional materials for grades pre-kindergarten to grade 12, and a producer of entertaining literary and educational children's media. The company operates in the United States and throughout the world including Canada, the United Kingdom, Ireland, Australia, New Zealand and Asia and, through its export business, sells products in approximately 145 international locations. The industry is highly competitive, with competition based on the quality and range of materials made available, price, promotion and customer service, as well as the nature of the distribution channels. Competitors include numerous other book, ebook, library, reference material and educational publishers, including of core and supplemental educational materials in both print and digital formats, distributors and other resellers of children's books and educational materials, national publishers of classroom and professional magazines, distributors of products and services on the internet and producers of film and television content.

Scholastic is the leading operator of school-based book club and book fair proprietary channels in the United States. In the school-based book fairs channel, the company is the leading distributor, serving schools in all 50 states, with one other competitor operating on a national level. The company believes its position as both a publisher and distributor is unique to certain of the markets in which it competes, principally in the context of its children's book business. The company's trade publishing staff, combined with its reputation and proprietary school distribution channels, provides a significant competitive advantage, evidenced by numerous bestsellers over the past two decades. The company's top five U.S. trade customers make up approximately 74% of the company's U.S. trade business and 15% of the company's total revenues.

The company generates revenue through the publication and distribution of children's print, digital and audio books, media and interactive products, as well as print and digital instructional materials, classroom magazines, and entertainment content. The company distributes its products and services through school-based book clubs and book fairs, retail stores, the internet, and directly to schools and libraries. The company's business is highly seasonal, with revenues in the first and third quarters of the fiscal year generally lower than revenues in the other two fiscal quarters, as school-based channels and magazine revenues are minimal in the first quarter when schools are not in session. Education channel revenues are generally higher in the fourth quarter.

The Children's Book Publishing and Distribution segment represented 61.0% of fiscal 2026 revenues and includes the publication and distribution of children's print, digital and audio books, media and interactive products in the United States through its School Reading Events business and through the trade channel. This segment comprises the Children's Book Group, which includes the Book Fairs, Book Clubs, and Trade Publishing divisions. The company is the world's largest publisher and distributor of children's books and is the leading operator of school-based book clubs and school-based book fairs in the United States. The company is also a leading publisher of children's print books, ebooks and audiobooks distributed through the trade channel. Scholastic publishes a broad range of children's books, many of which have received awards including the Caldecott and Newbery Medals. Original publications include Harry Potter, The Hunger Games, The Baby-Sitters Club, The Magic School Bus, Captain Underpants, Dog Man, Wings of Fire, Cat Kid Comic Club, I Survived, Goosebumps and Clifford The Big Red Dog, and licensed properties such as Peppa Pig and Pokemon. Klutz and Make Believe Ideas publish "books plus" and novelty products. Top selling new release titles in the trade division during fiscal 2026 included Dog Man #14: Big Jim Begins, the interactive edition of Harry Potter and the Goblet of Fire, Wings of Fire Graphix Novel #9: Talons of Power and Legends: Darkstalker, The Baby-Sitter's Club #19: Dawn on the Coast, and Heartstopper #6.

The Education segment represented 16.9% of fiscal 2026 revenues and includes the publication and distribution of children's books, classroom magazines, and print and digital instructional materials to schools and libraries in the United States. The segment's offerings are organized into three primary components: Teacher, School and District, and Family and Community. Scholastic is the leading publisher of classroom magazines through its Scholastic Magazines+ platform, with a portfolio of 31 classroom magazines including Scholastic News, Let's Find Out, Scholastic Scope, Storyworks, and Junior Scholastic. In fiscal 2026, classroom magazine circulation in the United States was approximately 10.2 million ¹, with approximately 81% ² of circulation serving grades pre-K through 6. The company is a leading provider of classroom libraries and take-home book solutions. The portfolio includes research-based literacy solutions such as the Ready4Reading phonics curriculum and the comprehensive early childhood program, PreK On My Way. The Entertainment segment represented 4.2% of fiscal 2026 revenues and includes the operations of 9 Story Media Group Inc. as acquired on June 20, 2024, including its studios in Canada, Ireland and Indonesia, and Scholastic Entertainment Inc. This segment includes the development, production, distribution and licensing of kids and family film and television content. The company has an in-house animation studio, Brown Bag Films, recognized for producing programs such as "Doc McStuffins," "Daniel Tiger's Neighborhood," "Octonauts," "Wild Kratts," "Blue's Clue's & You!," and "The Magic School Bus Rides Again." In June 2026, the segment launched Bad Pencil Animation, a new label focused on the production of animated projects for teen and adult audiences. The International segment represented 17.5% of fiscal 2026 revenues and includes the publication and distribution of products and services outside the United States. Scholastic has operations in Major Markets including Canada, the United Kingdom, Ireland, Australia, and New Zealand, as well as in India, Singapore and other parts of Asia including Malaysia, the Philippines, China, Taiwan and Korea. The company has branches in the United Arab Emirates and Colombia and sells products in approximately 145 international locations through its export business. Scholastic Canada is the largest operator of school-based marketing channels in Canada. Scholastic UK is the largest operator of school-based marketing channels in the United Kingdom. Scholastic Australia is the largest operator of school-based marketing channels in Australia, reaching approximately 90% ³ of the country's primary schools. Scholastic New Zealand is the largest children's book publisher and the leading book distributor to schools in New Zealand, reaching approximately 90% ⁴ of the country's primary schools through its school-based book clubs and book fairs channels.

On June 20, 2024, the company acquired 9 Story Media Group Inc., including its studios in Canada, Ireland and Indonesia. During the third quarter of fiscal 2026, the company completed sale and leaseback transactions for its SoHo headquarters and Jefferson City distribution facility. The company has been engaged in a significant cost management exercise, which has included a reduction in its employee base. The company repurchased shares under board-authorized share repurchase programs. As of May 31, 2026, the company had approximately 6,905 ⁵ employees, of which 4,710 ⁶ were located in the United States and 2,195 ⁷ outside the United States. Globally, approximately 74% ⁸ of its employees are employed on a full-time basis, 22% ⁹ part-time, and 4% ¹⁰ seasonal.

Total revenues for fiscal 2026 were $1,581.9 million ¹¹, compared to $1,625.5 million ¹² in fiscal 2025 and $1,589.7 million ¹³ in fiscal 2024. The Children's Book Publishing and Distribution segment generated revenues of $964.2 million ¹⁴ in fiscal 2026, compared to $963.9 million ¹⁵ in fiscal 2025 and $953.3 million ¹⁶ in fiscal 2024. The Education segment generated revenues of $267.6 million ¹⁷ in fiscal 2026, compared to $309.8 million ¹⁸ in fiscal 2025 and $351.2 million ¹⁹ in fiscal 2024. The Entertainment segment generated revenues of $65.7 million ²⁰ in fiscal 2026, compared to $61.0 million ²¹ in fiscal 2025 and $1.9 million ²² in fiscal 2024. The International segment generated revenues of $277.2 million ²³ in fiscal 2026, compared to $279.6 million ²⁴ in fiscal 2025 and $273.6 million ²⁵ in fiscal 2024. Overhead was $7.2 million ²⁶ in fiscal 2026, compared to $11.2 million ²⁷ in fiscal 2025 and $9.7 million ²⁸ in fiscal 2024.

The company continues to implement a strategic information technology transformation process, including the implementation of enterprise-wide customer and content management systems and the migration to SaaS and cloud-based technology solutions, in initiatives to integrate its separate legacy platforms into a cohesive enterprise-wide system. The company is also focused on key digital opportunities, including a digital and print literacy solution that requires a multi-year investment through internal development, third party providers and/or acquisitions. The company's Entertainment segment, following the acquisition of 9 Story, is focused on realizing synergies and developing new programming utilizing Scholastic's current and future intellectual property. The company has recently taken a new holistic approach to serving its customers through the reorganization of the company's Trade, Book Fairs and Clubs businesses into a combined Children's Book Group, with the expectation of obtaining operational improvements.

The company continues to explore opportunities to enhance the efficiency of its cost and organizational structure, which includes actions to restructure its cost base. The company has been engaged in a significant cost management exercise, which has included a reduction in its employee base. The company's ability to achieve certain anticipated cost savings could be dependent on the use of artificial intelligence and other technologies. The company is subject to inflationary pressures on printing, paper, transportation and labor costs and has taken steps to manage and budget for certain expected operating cost increases.

The company outsources certain business processes to reduce complexity and increase efficiency for activities such as distribution, manufacturing, product development, transactional processing, information technologies and various administrative functions. Increasingly, the company is engaging third parties to provide software as a service, which can reduce internal execution risk but increases dependency upon third parties. The company's primary warehouse and distribution facility is in Jefferson City, Missouri. In connection with the sale and leaseback transactions completed during the third quarter of fiscal 2026, the company no longer owns the underlying leasable space at its headquarters. The company's book fairs are fulfilled through a network of warehouses across the country, as well as from the Jefferson City facility. As of May 31, 2026, the company had approximately 6,905 ²⁹ employees.

The filing does not disclose specific R&D spending levels, capital expenditure plans, share repurchase authorization amounts, or dividend policy with exact figures for the upcoming period.

The company faces structural headwinds including potential reductions in federal education funding, as the Education segment is materially dependent on the availability of federal, state, and local education funding to school districts. Since 2025, the federal government has undertaken significant restructuring of the U.S. Department of Education, including material reductions in staffing levels and proposals to reorganize, curtail, or eliminate certain federal education programs and agencies. Any substantial reduction, reorganization, or elimination of federal education funding programs could materially reduce the budgets available to school districts. The company also faces risks from changes in trade policies and tariff regulations, which have changed significantly since 2025 and continue to evolve, with the United States imposing, modifying, and in certain cases replacing tariffs on imported goods under various statutory authorities. The company's entertainment business faces risks from the rapidly evolving media and content industry, including the entrance of new major streaming platforms and consolidation of traditional platforms, as well as changing viewing habits of children and youth. The company also faces risks from the rapid development and proliferation of generative artificial intelligence technologies, which could enable competitive displacement of traditional publishing, increase competition from AI-enabled educational technologies, and create copyright and training data liability uncertainties.

The Education segment is materially dependent on federal, state, and local education funding, and since 2025 the federal government has undertaken significant restructuring of the U.S. Department of Education, including material reductions in staffing levels and proposals to reorganize, curtail, or eliminate certain federal education programs, which could materially reduce school district budgets. The company faces significant risks from generative artificial intelligence, which could enable competitive displacement of traditional publishing, increase competition from AI-enabled educational technologies, and create copyright and training data liability uncertainties with unsettled legal standards. The company's top five U.S. trade customers make up approximately 74% ³⁰ of the company's U.S. trade business and 15% ³¹ of total revenues, creating concentration risk. At May 31, 2026, there was $199.4 million ³² of goodwill and $77.9 million ³³ of intangible assets, with $75.8 million ³⁴ of definite-lived intangibles subject to impairment testing, and failure to achieve business objectives could result in noncash impairment charges. The company's entertainment business depends on Canadian government tax credits at both the federal and provincial level, and the company could lose these credits if 9 Story ceases to be controlled by Canadian nationals, as the company's voting equity ownership of 9 Story is limited to 25% ³⁵ of total voting equity shares outstanding.

Management's message emphasizes the company's position as the world's largest publisher and distributor of children's books and its dedication to reading, learning and literacy since its founding in 1920. The strategic priorities emphasized include the reorganization of the company's Trade, Book Fairs and Clubs businesses into a combined Children's Book Group to execute new customer-centric strategies and obtain operational improvements, the continued integration of the 9 Story acquisition to realize synergies and develop new programming utilizing Scholastic's intellectual property, and the ongoing strategic information technology transformation process including migration to SaaS and cloud-based technology solutions. The company also continues to explore opportunities to enhance the efficiency of its cost and organizational structure through cost management exercises, including a reduction in its employee base.