Scholastic announced that its Board of Directors has authorized an additional $50M for repurchases of its common stock under the company's stock repurchase program. Under this program, which will continue to be funded with available cash, the company may purchase shares, from time to time as conditions allow, on the open market or in negotiated private transactions.
In connection with the company's previously announced termination of its domestic defined benefit pension plan, $36.5M in trust assets were distributed to eligible participants in November 2017. This distribution of plan assets gave rise to a pre-tax settlement charge of $15.4M, which has been reported as a one-time non-cash charge in the company's quarterly results. The company expects to purchase an annuity contract from a third-party insurance company for all remaining pension liabilities in the early part of the new calendar year. It is expected that this final settlement of these pension liabilities will trigger the recognition of an additional non-cash pension settlement charge in the third fiscal quarter. As of the most recent measurement date, the assets of the plan were approximately 105% of the plan's stated liabilities.
"The second quarter's solid results, with operating profit close to last year's level, confirm that we are on track to achieve our fiscal year 2018 goals when revenues and profits were expected to be lower after last year's best-selling new Harry Potter releases. Based on these results, we are affirming guidance for the year." said Richard Robinson, Chairman, President and CEO. "Our strategic technology transformation, a core component of our Scholastic 2020 plan, is beginning to deliver increasing value to our business units. Scholastic 2020 is a three-year program to increase operating profitability by 2020 through improved marketing efficiency and simplified business processes leading to lower operating costs.Enhanced digital marketing capabilities in clubs and our fairs segmentation strategy both helped to increase profitability in the school-based channels during the quarter. We are expanding our CRM investments with the goal of providing sales teams in the field with substantially improved customer information, ultimately contributing to higher revenue per fair in our book fairs business, as well as better pipeline information and increased market share in the education business. These new systems should lead to a significant increase in sales and profitability in fiscal year 2019 and beyond. A major ERP upgrade in finance will also take effect next spring."
Scholastic announced that Kenneth J. Cleary, Scholastic's Senior Vice President, Chief Accounting Officer, has been named CFO effective, following termination of Maureen O'Connell's employment as CFO and Chief Administrative Officer. With Cleary's promotion to CFO, Paul Hukkanen, Vice President, External Reporting and Compliance becomes Vice President, Chief Accounting Officer and Vincent Lucinese becomes Vice President, Controller and Shared Services Support. Kenneth Cleary has been Senior Vice President, Chief Accounting Officer since September 2014. Prior to that, he was Vice President, External Reporting and Compliance since joining Scholastic in May 2008.