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ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 444.28 Td (Net \(loss\) income) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 340.00 444.28 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 396.80 444.33 Td (\(139,716) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 432.65 444.28 Td (\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 443.00 444.28 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 499.80 444.33 Td (\(162,337) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 535.65 444.28 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 429.27 Td (Net \(loss\) earnings per share from continuing operations, basic) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 419.27 Td (and diluted) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 340.00 419.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 406.80 419.32 Td (\(13.14) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 419.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.00 419.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.80 419.32 Td (\(14.76) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 419.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 404.27 Td (Net \(loss\) earnings per share) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 340.00 404.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 406.80 404.32 Td (\(13.22) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 404.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.00 404.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.80 404.32 Td (\(15.48) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 404.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 389.27 Td (Weighted average shares outstanding, basic and diluted) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 405.15 389.27 Td (10,569) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 389.27 Td (10,486) Tj ET Q BT /F1 10.00 Tf ET BT /F3 10.00 Tf ET q 0 0 0 rg BT 153.65 361.10 Td (See accompanying notes to the unaudited consolidated financial statements.) 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RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 377.5 367.5 m 456.5 367.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 460.5 367.5 m 539.5 367.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 377.5 297.5 m 456.5 297.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 460.5 297.5 m 539.5 297.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 377.5 117.5 m 456.5 117.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 460.5 117.5 m 539.5 117.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 377.5 117.5 m 456.5 117.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 377.5 103.5 m 456.5 103.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 460.5 117.5 m 539.5 117.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 460.5 103.5 m 539.5 103.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 377.5 103.5 m 456.5 103.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 377.5 90.5 m 456.5 90.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 377.5 88.5 m 456.5 88.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 460.5 103.5 m 539.5 103.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 460.5 90.5 m 539.5 90.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 460.5 88.5 m 539.5 88.5 l s BT /F2 9.00 Tf ET q 0 0 0 rg BT 386.70 708.95 Td (March 31, 2016) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 393.20 699.95 Td (\(Unaudited\)) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 463.20 704.45 Td (December 31, 2015) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 74.00 683.95 Td (Current assets) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 669.96 Td (Cash and cash equivalents) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 380.00 669.96 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 423.75 669.96 Td (346,888) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 463.00 669.96 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 506.75 669.96 Td (553,194) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 655.96 Td (Accounts receivable, net of allowance for doubtful accounts of $18,202 and) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 646.96 Td ($18,212 and sales returns of $88,707 and $150,511 as of March 31, 2016 and) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 637.96 Td (December 31, 2015, respectively) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 423.75 637.96 Td (134,411) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 506.75 637.96 Td (269,595) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 623.96 Td (Inventories, net) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 423.75 623.96 Td (193,395) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 506.75 623.96 Td (169,425) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 609.96 Td (Prepaid and other current assets) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 428.25 609.96 Td (71,914) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 511.25 609.96 Td (56,657) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 98.00 595.96 Td (Total current assets) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 423.75 595.96 Td (746,608) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 500.00 595.96 Td (1,048,871) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 581.96 Td (Pre-publication costs, net) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 423.75 581.96 Td (147,919) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 506.75 581.96 Td (147,436) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 567.96 Td (Property, plant and equipment, net) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 428.25 567.96 Td (95,016) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 511.25 567.96 Td (95,866) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 553.96 Td (Goodwill) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 423.75 553.96 Td (491,232) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 506.75 553.96 Td (488,956) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 539.96 Td (Other intangible assets, net) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 423.75 539.96 Td (796,409) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 506.75 539.96 Td (817,928) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 525.96 Td (Investments) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 432.75 525.96 Td (6,194) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 515.75 525.96 Td (6,368) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 511.96 Td (Deferred income taxes) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 428.25 511.96 Td (10,380) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 511.25 511.96 Td (10,531) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 497.96 Td (Other non-current assets) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 428.25 497.96 Td (72,366) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 511.25 497.96 Td (70,133) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 74.00 483.95 Td (Total assets) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 380.00 483.95 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 417.00 483.95 Td (2,366,124) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 463.00 483.95 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 500.00 483.95 Td (2,686,089) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 74.00 469.95 Td (Liabilities and equity \(deficit\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 74.00 455.96 Td (Current liabilities) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 441.96 Td (Accounts payable) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 380.00 441.96 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 423.75 441.96 Td (139,938) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 463.00 441.96 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 506.75 441.96 Td (181,305) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 427.96 Td (Accrued royalties) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 428.25 427.96 Td (19,141) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 511.25 427.96 Td (98,970) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 413.96 Td (Accrued compensation) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 428.25 413.96 Td (25,596) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 511.25 413.96 Td (75,299) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 399.96 Td (Deferred revenue) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 423.75 399.96 Td (289,301) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 506.75 399.96 Td (296,453) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 385.96 Td (Current portion of long-term debt) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 428.25 385.96 Td (81,620) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 511.25 385.96 Td (81,620) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 371.96 Td (Other current liabilities) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 423.75 371.96 Td (147,178) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 506.75 371.96 Td (143,511) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 98.00 357.96 Td (Total current liabilities) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 423.75 357.96 Td (702,774) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 506.75 357.96 Td (877,158) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 74.00 343.96 Td (Long-term debt) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 417.00 343.96 Td (2,055,638) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 500.00 343.96 Td (2,053,175) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 74.00 329.96 Td (Deferred income taxes) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 428.25 329.96 Td (15,177) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 511.25 329.96 Td (15,327) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 74.00 315.96 Td (Long-term deferred revenue) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 423.75 315.96 Td (366,837) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 506.75 315.96 Td (390,243) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 74.00 301.96 Td (Other non-current liabilities) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 428.25 301.96 Td (24,121) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 511.25 301.96 Td (14,594) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 98.00 287.96 Td (Total liabilities) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 417.00 287.96 Td (3,164,547) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 500.00 287.96 Td (3,350,497) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 74.00 273.96 Td (Commitments and contingencies \(Note 14\)) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 74.00 260.90 Td (Stockholders' equity \(deficit\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 245.96 Td (Preferred stock, par value $0.01 per share; 1,000,000 shares authorized,) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 236.96 Td (100,000 issued and 50,000 and 62,500 outstanding as of March 31, 2016 and) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 227.96 Td (December 31, 2015, respectively) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 444.00 227.96 Td () Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 527.00 227.96 Td () Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 213.96 Td (Common stock, par value $0.01 per share; 100,000,000 shares authorized,) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 204.96 Td (10,454,246 and 10,441,746 shares issued as of March 31, 2016 and December) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 195.96 Td (31, 2015, respectively; and 10,450,158 and 10,437,658 shares outstanding as of) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 186.96 Td (March 31, 2016 and December 31, 2015, respectively) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 439.50 186.96 Td (104) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 522.50 186.96 Td (104) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 172.96 Td (Additional paid in capital) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 428.25 172.96 Td (64,493) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 511.25 172.96 Td (63,430) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 158.96 Td (Treasury stock, 4,088 shares as of March 31, 2016 and December 31, 2015,) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 149.96 Td (respectively) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 436.50 149.96 Td (\(597) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 453.00 149.96 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 519.50 149.96 Td (\(597) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 536.00 149.96 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 135.96 Td (Accumulated deficit) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 420.75 135.96 Td (\(815,339) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 453.00 135.96 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 503.75 135.96 Td (\(675,623) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 536.00 135.96 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 121.96 Td (Accumulated other comprehensive loss) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 425.25 121.96 Td (\(47,084) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 453.00 121.96 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 508.25 121.96 Td (\(51,722) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 536.00 121.96 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 98.00 107.96 Td (Total stockholders' equity \(deficit\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 420.75 107.96 Td (\(798,423) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 453.00 107.96 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 503.75 107.96 Td (\(664,408) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 536.00 107.96 Td (\)) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 74.00 93.95 Td (Total liabilities and equity \(deficit\)) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 380.00 93.95 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 417.00 93.95 Td (2,366,124) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 463.00 93.95 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 500.00 93.95 Td (2,686,089) Tj ET Q BT /F1 10.00 Tf ET BT /F3 10.00 Tf ET q 0 0 0 rg BT 153.65 78.00 Td (See accompanying notes to the unaudited consolidated financial statements.) Tj ET Q endstream endobj 15 0 obj <> endobj 16 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 221.80 760.75 Td (Consolidated Statements of Cash Flows) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 234.15 748.75 Td (\(Unaudited; dollars in thousands\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 557.00 60.60 Td (4) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 690.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 690.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 690.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 690.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 664.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 664.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 664.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 664.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 629.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 629.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 629.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 629.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 603.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 603.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 603.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 603.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 577.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 577.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 577.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 577.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 551.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 551.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 551.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 551.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 525.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 525.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 525.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 525.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 499.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 499.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 499.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 499.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 473.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 473.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 473.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 473.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 447.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 447.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 447.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 447.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 421.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 421.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 421.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 421.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 395.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 395.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 395.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 395.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 369.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 369.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 369.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 369.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 343.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 343.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 343.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 343.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 317.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 317.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 317.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 317.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 291.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 291.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 291.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 291.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 265.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 265.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 265.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 265.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 239.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 239.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 239.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 239.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 213.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 213.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 213.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 213.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 187.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 187.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 187.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 187.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 161.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 161.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 161.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 161.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 135.50 266.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 135.50 99.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 135.50 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 135.50 99.00 -13.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 690.5 m 436.5 690.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 690.5 m 539.5 690.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 369.5 m 436.5 369.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 369.5 m 539.5 369.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 369.5 m 436.5 369.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 356.5 m 436.5 356.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 369.5 m 539.5 369.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 356.5 m 539.5 356.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 304.5 m 436.5 304.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 291.5 m 436.5 291.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 304.5 m 539.5 304.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 291.5 m 539.5 291.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 226.5 m 436.5 226.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 213.5 m 436.5 213.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 226.5 m 539.5 226.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 213.5 m 539.5 213.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 213.5 m 436.5 213.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 200.5 m 436.5 200.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 213.5 m 539.5 213.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 200.5 m 539.5 200.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 200.5 m 436.5 200.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 200.5 m 539.5 200.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 174.5 m 436.5 174.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 174.5 m 436.5 174.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 162.5 m 436.5 162.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 160.5 m 436.5 160.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 174.5 m 539.5 174.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 162.5 m 539.5 162.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 160.5 m 539.5 160.5 l s BT /F2 8.50 Tf ET q 0 0 0 rg BT 347.80 703.34 Td (Three Months Ended) Tj ET Q BT /F2 8.50 Tf ET q 0 0 0 rg BT 357.30 694.84 Td (March 31, 2016) Tj ET Q BT /F2 8.50 Tf ET q 0 0 0 rg BT 450.80 703.34 Td (Three Months Ended) Tj ET Q BT /F2 8.50 Tf ET q 0 0 0 rg BT 460.30 694.84 Td (March 31, 2015) Tj ET Q BT /F2 8.50 Tf ET q 0 0 0 rg BT 74.00 681.84 Td (Operating activities) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 74.00 668.86 Td (Net \(loss\) income from continuing operations) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 340.00 668.86 Td ($) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 402.65 668.86 Td (\(138,880) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 433.15 668.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 443.00 668.86 Td ($) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 505.65 668.86 Td (\(154,767) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 668.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 74.00 655.86 Td (Net \(loss\) income from discontinued operations, net of taxes) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 417.55 655.91 Td (\(836) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 433.15 655.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 514.15 655.86 Td (\(7,570) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 655.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 74.00 642.36 Td (Adjustments to reconcile net loss including noncontrolling interests to net) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 74.00 633.86 Td (cash provided by operating activities) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 620.86 Td (Depreciation \(including amortization of technology projects\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 409.75 620.86 Td (12,796) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 517.00 620.86 Td (7,905) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 607.86 Td (Amortization of intangibles) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 409.75 607.86 Td (22,815) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 512.75 607.86 Td (23,617) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 594.86 Td (Amortization of pre-publication costs) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 409.75 594.86 Td (12,805) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 512.75 594.86 Td (12,054) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 581.86 Td (Provision for losses on accounts receivable) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 420.40 581.86 Td (441) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 527.65 581.86 Td (94) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 568.86 Td (Inventory obsolescence) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 414.00 568.86 Td (3,805) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 517.00 568.86 Td (3,368) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 555.86 Td (Deferred income taxes) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 424.65 555.86 Td () Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 514.15 555.86 Td (\(2,843) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 555.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 542.86 Td (Stock-based compensation) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 414.00 542.86 Td (3,787) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 517.00 542.86 Td (4,237) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 529.86 Td (Amortization of debt discount) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 414.00 529.86 Td (1,593) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 517.00 529.86 Td (1,476) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 516.86 Td (Amortization of deferred financing costs) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 414.00 516.86 Td (4,183) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 517.00 516.86 Td (4,066) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 503.86 Td (Restructuring charges) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 420.40 503.86 Td (885) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 517.00 503.86 Td (1,584) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 490.86 Td (Other) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 420.40 490.86 Td (267) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 517.00 490.86 Td (1,096) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 74.00 477.86 Td (Changes in operating assets and liabilities, net of the effect of acquisitions) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 464.86 Td (Accounts receivable) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 405.50 464.86 Td (134,267) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 508.50 464.86 Td (158,390) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 451.86 Td (Inventories) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 406.90 451.86 Td (\(27,436) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 433.15 451.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 509.90 451.86 Td (\(20,998) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 451.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 438.86 Td (Prepaid and other current assets) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 406.90 438.86 Td (\(13,792) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 433.15 438.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 509.90 438.86 Td (\(10,009) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 438.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 425.86 Td (Accounts payable and accrued expenses) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 402.65 425.86 Td (\(170,233) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 433.15 425.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 505.65 425.86 Td (\(181,078) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 425.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 412.86 Td (Deferred revenue) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 406.90 412.86 Td (\(30,758) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 433.15 412.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 509.90 412.86 Td (\(17,029) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 412.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 399.86 Td (Other current liabilities) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 414.00 399.86 Td (5,085) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 512.75 399.86 Td (16,737) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 386.86 Td (Net change in prepaid and accrued income taxes) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 417.55 386.91 Td (\(701) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 433.15 386.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 514.15 386.86 Td (\(2,504) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 386.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 373.86 Td (Net change in operating assets and liabilities) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 414.00 373.86 Td (2,632) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 514.15 373.86 Td (\(3,648) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 373.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 98.00 360.86 Td (Cash provided by \(used for\) operating activities) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 402.65 360.86 Td (\(177,275) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 433.15 360.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 505.65 360.86 Td (\(165,822) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 360.86 Td (\)) Tj ET Q BT /F2 8.50 Tf ET q 0 0 0 rg BT 74.00 347.84 Td (Investing activities) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 74.00 334.86 Td (Investment in pre-publication costs) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 406.90 334.86 Td (\(12,959) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 433.15 334.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 509.90 334.86 Td (\(20,072) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 334.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 74.00 321.86 Td (Capital expenditures) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 411.15 321.86 Td (\(6,528) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 433.15 321.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 514.15 321.86 Td (\(9,300) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 321.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 74.00 308.86 Td (Proceeds from dispositions) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 424.65 308.86 Td () Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 527.65 308.86 Td (89) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 98.00 295.86 Td (Cash provided by \(used for\) investing activities) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 406.90 295.86 Td (\(19,487) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 433.15 295.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 509.90 295.86 Td (\(29,283) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 295.86 Td (\)) Tj ET Q BT /F2 8.50 Tf ET q 0 0 0 rg BT 74.00 282.84 Td (Financing activities) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 74.00 269.86 Td (Payment of term loan) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 411.15 269.86 Td (\(2,322) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 433.15 269.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 514.15 269.86 Td (\(2,345) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 269.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 74.00 256.86 Td (Repurchase of vested stock options and restricted stock units) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 411.15 256.86 Td (\(2,533) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 433.15 256.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 527.65 256.86 Td () Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 74.00 243.86 Td (Dividends to common stockholders) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 417.55 243.91 Td (\(629) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 433.15 243.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 514.15 243.86 Td (\(1,268) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 243.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 74.00 230.86 Td (Dividends on restricted stock units) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 411.15 230.86 Td (\(4,698) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 433.15 230.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 527.65 230.86 Td () Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 98.00 217.86 Td (Cash provided by \(used for\) financing activities) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 406.90 217.86 Td (\(10,182) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 433.15 217.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 514.15 217.86 Td (\(3,613) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 217.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 74.00 204.86 Td (Effect of exchange rate changes on cash) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 420.40 204.86 Td (638) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 514.15 204.86 Td (\(1,994) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 204.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 98.00 191.86 Td (Net change in cash and cash equivalents) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 402.65 191.86 Td (\(206,306) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 433.15 191.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 505.65 191.86 Td (\(200,712) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 536.15 191.86 Td (\)) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 74.00 178.86 Td (Cash and cash equivalents at the beginning of the period) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 405.50 178.86 Td (553,194) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 508.50 178.86 Td (413,963) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 74.00 165.86 Td (Cash and cash equivalents, ending balance) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 340.00 165.86 Td ($) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 405.50 165.86 Td (346,888) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 443.00 165.86 Td ($) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 508.50 165.86 Td (213,251) Tj ET Q BT /F2 8.50 Tf ET q 0 0 0 rg BT 74.00 152.84 Td (Supplemental disclosures) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 139.86 Td (Cash paid for interest expense) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 340.00 139.86 Td ($) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 409.75 139.86 Td (33,705) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 443.00 139.86 Td ($) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 512.75 139.86 Td (32,468) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 86.00 126.86 Td (Cash paid for income taxes) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 414.00 126.86 Td (1,030) Tj ET Q BT /F1 8.50 Tf ET q 0 0 0 rg BT 523.40 126.86 Td (755) Tj ET Q BT /F1 10.00 Tf ET BT /F3 10.00 Tf ET q 0 0 0 rg BT 153.65 99.00 Td (See accompanying notes to the unaudited consolidated financial statements.) Tj ET Q endstream endobj 17 0 obj <> endobj 18 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 557.00 60.60 Td (5) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 695.70 Td (1. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 90.00 695.70 Td (Basis of Pr) Tj ET Q q 0 0 0 rg BT 135.93 695.70 Td (esentation and ) Tj ET Q q 0 0 0 rg BT 199.83 695.70 Td (Accounting Policies) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 671.70 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 671.70 Td (On March22, 2013, MHE ) Tj ET Q q 0 0 0 rg BT 215.49 671.70 Td (Acquisition, LLC \(AcquisitionCo\), a wholly-owned subsidiary of McGraw-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 659.70 Td (Hill Education, Inc., \(formerly known as Geor) Tj ET Q q 0 0 0 rg BT 257.04 659.70 Td (gia Holdings, Inc.\) \(the Company, the Successor or the "Parent"\), ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 647.70 Td (acquired all of the outstanding equity interests of certain subsidiaries of ) Tj ET Q q 0 0 0 rg BT 360.35 647.70 Td (The McGraw-Hill Companies, Inc. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 635.70 Td (\(MHC\) pursuant to a Purchase and Sale ) Tj ET Q q 0 0 0 rg BT 241.68 635.70 Td (Agreement, dated November 26, 2012 and as amended March 4, 2013, for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 623.70 Td ($2,184,071) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 117.00 623.70 Td ( in cash \(the Acquired Business\). ) Tj ET Q q 0 0 0 rg BT 260.39 623.70 Td (The ) Tj ET Q q 0 0 0 rg BT 277.88 623.70 Td (Acquired Business included all of MHC) Tj ET Q q 0 0 0 rg BT 441.47 623.70 Td (s educational materials ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 611.70 Td (and learning solutions business, which is comprised of \(i\)the Higher Education, Professional, and International ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 599.70 Td (Group \(the HPI business\), which includes post-secondary education and professional products both in the United ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 587.70 Td (States and internationally and \(ii\)the School Education Group business \(the SEG business\), which includes school ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 575.70 Td (and assessment products tar) Tj ET Q q 0 0 0 rg BT 183.18 575.70 Td (geting students in the pre-kinder) Tj ET Q q 0 0 0 rg BT 312.42 575.70 Td (garten through secondary school market. ) Tj ET Q q 0 0 0 rg BT 477.74 575.70 Td (W) Tj ET Q q 0 0 0 rg BT 486.38 575.70 Td (e refer to the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 563.70 Td (purchase of the ) Tj ET Q q 0 0 0 rg BT 135.03 563.70 Td (Acquired Business and the related financing transactions as the Founding ) Tj ET Q q 0 0 0 rg BT 434.96 563.70 Td (Acquisition.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 541.70 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 541.70 Td (As of completion of the Founding ) Tj ET Q q 0 0 0 rg BT 245.77 541.70 Td (Acquisition, ) Tj ET Q q 0 0 0 rg BT 296.88 541.70 Td (Apollo Global Management LLC \(the Sponsors\), certain ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 529.70 Td (co-investors and certain members of management directly or indirectly owned all of the equity interests of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 517.70 Td (AcquisitionCo. In connection with the Founding ) Tj ET Q q 0 0 0 rg BT 267.82 517.70 Td (Acquisition, a restructuring was completed, the result of which was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 505.70 Td (that the HPI business and the SEG business became held by separate wholly owned subsidiaries of MHE US ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 493.70 Td (Holdings LLC. ) Tj ET Q q 0 0 0 rg BT 134.88 493.70 Td (The HPI business became held by McGraw-Hill Global Education Intermediate Holdings, LLC ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 481.70 Td (\( MHGE Holdings\) and its wholly owned subsidiary McGraw-Hill Global Education Holdings, LLC \(MHGE\), ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 469.70 Td (while the SEG business became held by McGraw-Hill School Education Intermediate Holdings, LLC \(MHSE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 457.70 Td (Holdings\) and its wholly owned subsidiary McGraw-Hill School Education Holdings, LLC \(MHSE\). In addition, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 445.70 Td (concurrently with the closing of the Founding ) Tj ET Q q 0 0 0 rg BT 257.25 445.70 Td (Acquisition, MHGE and MHSE entered into certain credit facilities ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 433.70 Td (which are described in Note 2 - ) Tj ET Q q 0 0 0 rg BT 199.83 433.70 Td (The Founding ) Tj ET Q q 0 0 0 rg BT 258.16 433.70 Td (Acquisition. MHGE nor its parent companies guarantee or provide ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 421.70 Td (collateral to the financing of MHSE, and MHSE does not guarantee or provide collateral to the financing of MHGE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 409.70 Td (or its parent companies. ) Tj ET Q q 0 0 0 rg BT 169.85 409.70 Td (The terms we, our) Tj ET Q q 0 0 0 rg BT 255.52 409.70 Td (, and us used herein refer to the Company) Tj ET Q q 0 0 0 rg BT 435.08 409.70 Td (.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 387.70 Td (Principles of Consolidation) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 365.70 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 365.70 Td (The accompanying unaudited consolidated financial statements have been prepared in accordance with ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 353.70 Td (U.S. GAAP) Tj ET Q q 0 0 0 rg BT 119.14 353.70 Td ( and all significant intercompany transactions and balances have been eliminated. In the opinion of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 341.70 Td (management, the accompanying unaudited consolidated financial statements include all adjustments \(consisting of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 329.70 Td (normal recurring accruals\) considered necessary for a fair presentation.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 307.70 Td (Seasonality and Comparability) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 285.70 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 285.70 Td (Our revenues, operating profit and operating cash flows are af) Tj ET Q q 0 0 0 rg BT 356.06 285.70 Td (fected by the inherent seasonality of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 273.70 Td (academic calendar) Tj ET Q q 0 0 0 rg BT 145.71 273.70 Td (, which varies by country) Tj ET Q q 0 0 0 rg BT 246.42 273.70 Td (. Changes in our customers) Tj ET Q q 0 0 0 rg BT 357.61 273.70 Td ( ordering patterns may impact the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 261.70 Td (comparison of our results in a quarter with the same quarter of the previous year) Tj ET Q q 0 0 0 rg BT 392.61 261.70 Td (, or in a fiscal year with the prior ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 249.70 Td (fiscal year) Tj ET Q q 0 0 0 rg BT 112.96 249.70 Td (, where our customers may shift the timing of material orders for any number of reasons, including, but ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 237.70 Td (not limited to, changes in academic semester start dates or changes to their inventory management practices.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 215.70 Td (Use of Estimates) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 193.70 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 193.70 Td (The preparation of financial statements in conformity with U.S. GAAP) Tj ET Q q 0 0 0 rg BT 391.73 193.70 Td ( requires management to make ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 181.70 Td (estimates and assumptions that af) Tj ET Q q 0 0 0 rg BT 205.68 181.70 Td (fect the amounts reported in the financial statements and accompanying notes. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 169.70 Td (Actual results could dif) Tj ET Q q 0 0 0 rg BT 165.41 169.70 Td (fer from those estimates.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 147.70 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 147.70 Td (On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 135.70 Td (recognition, allowance for doubtful accounts and sales returns, inventories, pre-publication costs, accounting for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 123.70 Td (impairment of long-lived assets \(including other intangible assets\), goodwill and indefinite-lived intangible assets, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 111.70 Td (restructuring, stock-based compensation, income taxes and contingencies. Management further considers the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 99.70 Td (accounting policy with regard to the purchase price allocation to assets and liabilities to be critical. ) Tj ET Q q 0 0 0 rg BT 469.19 99.70 Td (This accounting ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 87.70 Td (policy) Tj ET Q q 0 0 0 rg BT 96.35 87.70 Td (, as more fully described in Note 2 - ) Tj ET Q q 0 0 0 rg BT 242.79 87.70 Td (The Founding ) Tj ET Q q 0 0 0 rg BT 301.13 87.70 Td (Acquisition, encompasses significant judgments and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 75.70 Td (estimates used in the preparation of these financial statements.) Tj ET Q endstream endobj 19 0 obj <> endobj 20 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 557.00 60.60 Td (6) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 713.10 Td (Certain reclassifications have been made to prior period amounts in order to conform to current period ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (presentation.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 677.10 Td (Cash and Cash Equivalents) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 655.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 655.10 Td (Cash and cash equivalents include bank deposits and highly liquid investments with original maturities of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 643.10 Td (three months or less that consist primarily of interest bearing demand deposits with daily liquidity) Tj ET Q q 0 0 0 rg BT 462.95 643.10 Td (, money market ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 631.10 Td (and time deposits. ) Tj ET Q q 0 0 0 rg BT 146.81 631.10 Td (The balance also includes cash that is held by the Company outside the United States to fund ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 619.10 Td (international operations or to be reinvested outside of the United States. ) Tj ET Q q 0 0 0 rg BT 361.19 619.10 Td (The investments and bank deposits are ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 607.10 Td (stated at cost, which approximates market value and were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 305.25 607.10 Td ($346,888) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 342.75 607.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 362.19 607.10 Td ($553,194) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 399.69 607.10 Td ( as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 423.85 607.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 487.44 607.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 595.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 150.58 595.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 203.25 595.10 Td (. ) Tj ET Q q 0 0 0 rg BT 208.06 595.10 Td (These investments are not subject to significant market risk.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 571.10 Td (Accounts Receivable) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 549.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 549.10 Td (Credit is extended to customers based upon an evaluation of the customer) Tj ET Q q 0 0 0 rg BT 403.01 549.10 Td () Tj ET Q q 0 0 0 rg BT 405.79 549.10 Td (s financial condition. ) Tj ET Q q 0 0 0 rg BT 491.89 549.10 Td (Accounts ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 537.10 Td (receivable are recorded at net realizable value.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 515.10 Td (Allowance for Doubtful ) Tj ET Q q 0 0 0 rg BT 171.92 515.10 Td (Accounts and Sales Returns) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 493.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 493.10 Td (The allowance for doubtful accounts and sales returns reserves methodology is based on historical analysis, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 481.10 Td (a review of outstanding balances and current conditions. In determining these reserves, we consider) Tj ET Q q 0 0 0 rg BT 470.08 481.10 Td (, among other ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 469.10 Td (factors, the financial condition and risk profile of our customers, areas of specific or concentrated risk as well as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 457.10 Td (applicable industry trends or market indicators. ) Tj ET Q q 0 0 0 rg BT 263.15 457.10 Td (The allowance for sales returns is a significant estimate, which is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 445.10 Td (based on historical rates of return and current market conditions. ) Tj ET Q q 0 0 0 rg BT 332.57 445.10 Td (The provision for sales returns is reflected as a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 433.10 Td (reduction to Revenues in our combined consolidated statements of operations. Sales returns are char) Tj ET Q q 0 0 0 rg BT 481.69 433.10 Td (ged against ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 421.10 Td (the reserve as products are returned to inventory) Tj ET Q q 0 0 0 rg BT 264.33 421.10 Td (. ) Tj ET Q q 0 0 0 rg BT 268.78 421.10 Td (Accounts receivable losses for bad debt are char) Tj ET Q q 0 0 0 rg BT 461.57 421.10 Td (ged against the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 409.10 Td (allowance for doubtful accounts when the receivable is determined to be uncollectible. ) Tj ET Q q 0 0 0 rg BT 420.85 409.10 Td (The change in the allowance ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 397.10 Td (for doubtful accounts is reflected as part of operating and administrative expenses in our combined consolidated ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 385.10 Td (statement of operations.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 361.10 Td (Concentration of Credit Risk) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 339.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 339.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 132.44 339.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 196.04 339.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 201.04 339.10 Td (one) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 215.48 339.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 217.73 339.10 Td (customer comprised approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 361.30 339.10 Td (12%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 379.63 339.10 Td ( and as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 420.73 339.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 499.31 339.10 Td (, two ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 327.10 Td (customers comprised approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 219.46 327.10 Td (29%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 237.79 327.10 Td ( of the gross accounts receivable balance, which is reflective of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 315.10 Td (concentration and seasonality in our industry) Tj ET Q q 0 0 0 rg BT 251.03 315.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 293.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 293.10 Td (The Company had ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 184.37 293.10 Td (no) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 194.37 293.10 Td ( single customer that accounted for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 337.10 293.10 Td (10%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 355.43 293.10 Td ( of our gross revenue for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 471.23 293.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 491.21 293.10 Td ( months ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 281.10 Td (ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 98.38 281.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 161.98 281.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 181.41 281.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 201.41 281.10 Td (. ) Tj ET Q q 0 0 0 rg BT 206.23 281.10 Td (The loss of, or any reduction in sales from, a significant customer or deterioration ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 269.10 Td (in their ability to pay could harm our business and financial results.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 247.10 Td (Inventories) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 225.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 225.10 Td (Inventories, consisting principally of books, are stated at the lower of cost \(first-in, first-out\) or market ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 213.10 Td (value. ) Tj ET Q q 0 0 0 rg BT 98.47 213.10 Td (The majority of our inventories relate to finished goods. ) Tj ET Q q 0 0 0 rg BT 324.53 213.10 Td (A) Tj ET Q q 0 0 0 rg BT 331.20 213.10 Td ( significant estimate, the reserve for inventory ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 201.10 Td (obsolescence, is reflected in operating and administration expenses. In determining this reserve, we consider ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 189.10 Td (management) Tj ET Q q 0 0 0 rg BT 125.87 189.10 Td (s current assessment of the marketplace, industry trends and projected product demand as compared to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 177.10 Td (the number of units currently on hand. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 153.10 Td (Pre-publication Costs) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 131.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 131.10 Td (Pre-publication costs include both the cost of developing educational content and the development of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 119.10 Td (assessment solution products. Costs incurred prior to the publication date of a title or release date of a product ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 107.10 Td (represent activities associated with product development. ) Tj ET Q q 0 0 0 rg BT 303.13 107.10 Td (These may be performed internally or outsourced to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 95.10 Td (subject matter specialists and include, but are not limited to, editorial review and fact verification, graphic art design ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 83.10 Td (and layout and the process of conversion from print to digital media or within various formats of digital media. ) Tj ET Q endstream endobj 21 0 obj <> endobj 22 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 557.00 60.60 Td (7) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (These costs are capitalized when the costs can be directly attributable to a project or title and the title is expected to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (generate probable future economic benefits. Capitalized costs are amortized upon publication of the title over its ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td (estimated useful life of up to six years, with a higher proportion of the amortization typically taken in the earlier ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 677.10 Td (years. ) Tj ET Q q 0 0 0 rg BT 97.55 677.10 Td (Amortization expenses for prepublication costs are char) Tj ET Q q 0 0 0 rg BT 320.62 677.10 Td (ged as a component of operatingand administration ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 665.10 Td (expenses. In evaluating recoverability) Tj ET Q q 0 0 0 rg BT 222.96 665.10 Td (, we consider management) Tj ET Q q 0 0 0 rg BT 332.36 665.10 Td (s current assessment of the marketplace, industry ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 653.10 Td (trends and the projected success of programs. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 629.10 Td (Property) Tj ET Q q 0 0 0 rg BT 107.18 629.10 Td (, Plant and Equipment) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 607.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 607.10 Td (Property) Tj ET Q q 0 0 0 rg BT 141.79 607.10 Td (, plant and equipment are stated at cost less accumulated depreciation as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.90 607.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 507.50 607.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 595.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 150.58 595.10 Td (. Depreciation and amortization are recorded on a straight-line basis, over the assets) Tj ET Q q 0 0 0 rg BT 488.04 595.10 Td ( estimated ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 583.10 Td (useful lives. Buildings have an estimated useful life, for purposes of depreciation, from ten to forty years. Furniture, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 571.10 Td (fixtures and equipment are depreciated over periods not exceeding twelve years. Leasehold improvements are ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 559.10 Td (amortized over the life of the lease or the life of the assets, whichever is shorter) Tj ET Q q 0 0 0 rg BT 389.10 559.10 Td (. ) Tj ET Q q 0 0 0 rg BT 393.92 559.10 Td (The Company evaluates the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 547.10 Td (depreciation periods of property) Tj ET Q q 0 0 0 rg BT 199.92 547.10 Td (, plant and equipment to determine whether events or circumstances warrant revised ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 535.10 Td (estimates of useful lives.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 513.10 Td (Royalty ) Tj ET Q q 0 0 0 rg BT 105.23 513.10 Td (Advances) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 489.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 489.10 Td (Royalty advances are initially capitalized and subsequently expensed as related revenues are earned or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 477.10 Td (when the Company determines future recovery is not probable. ) Tj ET Q q 0 0 0 rg BT 326.74 477.10 Td (The Company has a long history of providing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 465.10 Td (authors with royalty advances, and it tracks each advance earned with respect to the sale of the related publication. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 453.10 Td (Historically) Tj ET Q q 0 0 0 rg BT 118.56 453.10 Td (, the longer the unearned portion of the advance remains outstanding, the less likely it is that the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 441.10 Td (Company will recover the advance through the sale of the publication, as the related royalties earned are applied first ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 429.10 Td (against the remaining unearned portion of the advance. ) Tj ET Q q 0 0 0 rg BT 294.24 429.10 Td (The Company applies this historical experience to its ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 417.10 Td (existing outstanding royalty advances to estimate the likelihood of recovery) Tj ET Q q 0 0 0 rg BT 374.32 417.10 Td (. ) Tj ET Q q 0 0 0 rg BT 378.77 417.10 Td (Additionally) Tj ET Q q 0 0 0 rg BT 428.67 417.10 Td (, the Company) Tj ET Q q 0 0 0 rg BT 490.06 417.10 Td (s editorial ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 405.10 Td (staf) Tj ET Q q 0 0 0 rg BT 86.26 405.10 Td (f reviews its portfolio of royalty advances at a minimum quarterly to determine if individual royalty advances are ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 393.10 Td (not recoverable for discrete reasons, such as the death of an author prior to completion of a title or titles, a Company ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 381.10 Td (decision to not publish a title, poor market demand or other relevant factors that could impact recoverability) Tj ET Q q 0 0 0 rg BT 503.16 381.10 Td (. Based ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 369.10 Td (on this information, the portion of any advance that we believe is not recoverable is expensed.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 345.10 Td (Deferred T) Tj ET Q q 0 0 0 rg BT 116.34 345.10 Td (echnology Costs) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 321.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 321.10 Td (W) Tj ET Q q 0 0 0 rg BT 116.64 321.10 Td (e capitalize certain software development and website implementation costs. Capitalized costs only ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 309.10 Td (include incremental, direct costs of materials and services incurred to develop the software after the preliminary ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 297.10 Td (project stage is completed, funding has been committed and it is probable that the project will be completed and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 285.10 Td (used to perform the function intended. Incremental costs are expenditures that are out-of-pocket to us and are not ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 273.10 Td (part of an allocation or existing expense base. Software development and website implementation costs are expensed ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 261.10 Td (as incurred during the preliminary project stage. Capitalized costs are amortized from the period the software is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 249.10 Td (ready for its intended use over its estimated useful life, three to seven years, using the straight-line method and are ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 237.10 Td (included within depreciation in the combined consolidated statements of operations. Periodically) Tj ET Q q 0 0 0 rg BT 458.75 237.10 Td (, we evaluate the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 225.10 Td (amortization methods, remaining lives and recoverability of such costs. Capitalized software development and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 213.10 Td (website implementation costs are included in other non-current assets in the combined consolidated balance sheets ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 201.10 Td (and are presented net of accumulated amortization. Gross deferred technology costs were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 431.58 201.10 Td ($74,744) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 464.08 201.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 483.51 201.10 Td ($69,152) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 516.01 201.10 Td ( as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 189.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 135.60 189.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 155.04 189.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 233.62 189.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 286.28 189.10 Td (. ) Tj ET Q q 0 0 0 rg BT 290.73 189.10 Td (Accumulated amortization of deferred technology costs were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 177.10 Td ($30,649) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 104.50 177.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 123.94 177.10 Td ($26,917) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 156.44 177.10 Td ( as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 180.60 177.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 244.20 177.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 263.64 177.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 342.22 177.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 394.88 177.10 Td (. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 153.10 Td (Accounting for the Impairment of Long-Lived ) Tj ET Q q 0 0 0 rg BT 264.41 153.10 Td (Assets \(Including Other Intangible ) Tj ET Q q 0 0 0 rg BT 410.18 153.10 Td (Assets\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 129.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 129.10 Td (W) Tj ET Q q 0 0 0 rg BT 116.64 129.10 Td (e evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 117.10 Td (carrying amount of an asset may not be recoverable. Upon such an occurrence, recoverability of assets to be held ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 105.10 Td (and used is measured by comparing the carrying amount of an asset to current forecasts of undiscounted future net ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 93.10 Td (cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 81.10 Td (cash flows, an impairment char) Tj ET Q q 0 0 0 rg BT 197.05 81.10 Td (ge is recognized equal to the amount by which the carrying amount of the asset ) Tj ET Q endstream endobj 23 0 obj <> endobj 24 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 557.00 60.60 Td (8) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (exceeds the fair value of the asset. Long-lived assets held for sale are written down to fair value, less cost to sell. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (Fair value is determined based on market evidence, discounted cash flows, appraised values or management) Tj ET Q q 0 0 0 rg BT 506.85 701.10 Td (s ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td (estimates, depending upon the nature of the assets.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 665.10 Td (Goodwill and Indefinite-Lived Intangible ) Tj ET Q q 0 0 0 rg BT 243.86 665.10 Td (Assets) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 643.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 643.10 Td (Goodwill represents the excess of purchase price and related costs over the fair value of identifiable assets ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 631.10 Td (acquired and liabilities assumed in a business combination. Indefinite-lived intangible assets consist of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 619.10 Td (Company's acquired brands. Goodwill and indefinite-lived intangible assets are not amortized, but instead are tested ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 607.10 Td (for impairment annually during the fourth quarter each year) Tj ET Q q 0 0 0 rg BT 310.39 607.10 Td (, or more frequently if events or changes in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 595.10 Td (circumstances indicate that the asset might be impaired. ) Tj ET Q q 0 0 0 rg BT 297.58 595.10 Td (W) Tj ET Q q 0 0 0 rg BT 306.21 595.10 Td (e have four reporting units, Higher Education, K-12, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 583.10 Td (International, and Professional with goodwill and indefinite-lived intangible assets that are evaluated for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 571.10 Td (impairment.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 549.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 549.10 Td (W) Tj ET Q q 0 0 0 rg BT 116.64 549.10 Td (e initially perform a qualitative analysis evaluating whether there are events or circumstances that ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 537.10 Td (provide evidence that it is more likely than not that the fair value of any of our reporting units or indefinite-lived ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 525.10 Td (intangible assets are less than their carrying amount. If, based on our evaluation we do not believe that it is more ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 513.10 Td (likely than not that the fair value of any of our reporting units or indefinite-lived intangible assets are less than their ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 501.10 Td (carrying amount, no quantitative impairment test is performed. Conversely) Tj ET Q q 0 0 0 rg BT 370.72 501.10 Td (, if the results of our qualitative ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 489.10 Td (assessment determine that it is more likely than not that the fair value of any of our reporting units or indefinite-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 477.10 Td (lived intangible assets are less than their respective carrying amounts we perform a two-step quantitative impairment ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 465.10 Td (test.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 443.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 443.10 Td (During the first step, the estimated fair value of the reporting units are compared to their carrying value ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 431.10 Td (including goodwill and the estimated fair value of the intangible assets is compared to their carrying value. Fair ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 419.10 Td (values of the reporting units are estimated using the income approach, which incorporates the use of a discounted ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 407.10 Td (free cash flow analysis, and are corroborated using the market approach, which incorporates the use of revenue and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 395.10 Td (earnings multiples based on market data. ) Tj ET Q q 0 0 0 rg BT 237.61 395.10 Td (The discounted free cash flow analyses are based on the current operating ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 383.10 Td (budgets and estimated long-term growth projections for each reporting unit. Future cash flows are discounted based ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 371.10 Td (on a market comparable weighted average cost of capital rate for each reporting unit, adjusted for market and other ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 359.10 Td (risks where appropriate. Fair values of indefinite-lived intangible assets are estimated using avoided royalty ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 347.10 Td (discounted free cash flow analyses. Significant judgments inherent in these analyses include the selection of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 335.10 Td (appropriate royalty and discount rates and estimating the amount and timing of expected future cash flows. ) Tj ET Q q 0 0 0 rg BT 501.97 335.10 Td (The ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 323.10 Td (discount rates used in the discounted free cash flow analyses reflect the risks inherent in the expected future cash ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 311.10 Td (flows generated by the respective intangible assets. ) Tj ET Q q 0 0 0 rg BT 278.97 311.10 Td (The royalty rates used in the discounted free cash flow analyses ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 299.10 Td (are based upon an estimate of the royalty rates that a market participant would pay to license the Company's trade ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 287.10 Td (names and trademarks.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 265.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 265.10 Td (If the fair value of the reporting units or indefinite-lived intangible assets are less than their carrying value, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 253.10 Td (a second step is performed which compares the implied fair value of the reporting unit) Tj ET Q q 0 0 0 rg BT 420.22 253.10 Td (s goodwill or indefinite-lived ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 241.10 Td (intangible assets to the carrying value. ) Tj ET Q q 0 0 0 rg BT 227.61 241.10 Td (The fair value of the goodwill or indefinite-lived intangible assets is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 229.10 Td (determined based on the dif) Tj ET Q q 0 0 0 rg BT 182.89 229.10 Td (ference between the fair value of the reporting unit and the net fair value of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 217.10 Td (identifiable assets and liabilities of the reporting unit or carrying value of the indefinite-lived intangible asset. If the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 205.10 Td (implied fair value of the goodwill or indefinite-lived intangible assets is less than the carrying value, the dif) Tj ET Q q 0 0 0 rg BT 501.70 205.10 Td (ference ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 193.10 Td (is recognized as an impairment char) Tj ET Q q 0 0 0 rg BT 215.93 193.10 Td (ge. Significant judgments inherent in this analysis include estimating the amount ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 181.10 Td (and timing of future cash flows and the selection of appropriate discount rates, royalty rate and long-term growth ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 169.10 Td (rate assumptions. Changes in these estimates and assumptions could materially af) Tj ET Q q 0 0 0 rg BT 398.14 169.10 Td (fect the determination of fair value ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 157.10 Td (for each reporting unit and indefinite-lived intangible asset and for some of the reporting units and indefinite-lived ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 145.10 Td (intangible assets could result in an impairment char) Tj ET Q q 0 0 0 rg BT 277.60 145.10 Td (ge, which could be material to our financial position and results ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 133.10 Td (of operations.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 111.10 Td (Fair V) Tj ET Q q 0 0 0 rg BT 98.40 111.10 Td (alue Measurements) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 89.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 89.10 Td (In accordance with authoritative guidance for fair value measurements, certain assets and liabilities are ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 77.10 Td (required to be recorded at fair value on a recurring basis. Fair value is defined as the amount that would be received ) Tj ET Q endstream endobj 25 0 obj <> endobj 26 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 557.00 60.60 Td (9) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (to sell an asset or transfer a liability in an orderly transaction between market participants. ) Tj ET Q q 0 0 0 rg BT 434.10 713.10 Td (A) Tj ET Q q 0 0 0 rg BT 440.77 713.10 Td ( fair value hierarchy has ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (been established which requires us to maximize the use of observable inputs and minimize the use of unobservable ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td (inputs when measuring fair value. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 667.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 667.10 Td (The three levels of inputs used to measure fair value are as follows:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 645.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 645.10 Td (Level1 - Unadjusted quoted prices in active markets for identical assets or liabilities.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 621.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 621.10 Td (Level2 - Observable inputs other than Level1 prices, such as quoted prices for similar assets or liabilities; ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 609.10 Td (quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 597.10 Td (observable market data for substantially the full term of the asset or liabilities.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 573.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 573.10 Td (Level3 - Unobservable inputs that are supported by little or no market activity and that are significant to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 561.10 Td (the fair value of the assets or liabilities.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 537.10 Td (Foreign Currency T) Tj ET Q q 0 0 0 rg BT 154.97 537.10 Td (ranslation) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 515.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 515.10 Td (W) Tj ET Q q 0 0 0 rg BT 116.64 515.10 Td (e have operations in many foreign countries. For most international operations, the local currency is the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 503.10 Td (functional currency) Tj ET Q q 0 0 0 rg BT 149.37 503.10 Td (. For international operations that are determined to be extensions of the U.S. operations or where ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 491.10 Td (a majority of revenue and/or expenses is USD denominated, the United States dollar is the functional currency) Tj ET Q q 0 0 0 rg BT 513.17 491.10 Td (. For ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 479.10 Td (local currency operations, assets and liabilities are translated into United States dollars using end-of-period exchange ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 467.10 Td (rates, and revenue and expenses are translated into United States dollars using weighted-average exchange rates. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 455.10 Td (Foreign currency translation adjustments are accumulated in a separate component of equity) Tj ET Q q 0 0 0 rg BT 440.38 455.10 Td (.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 433.10 Td (Stock-Based Compensation) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 411.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 411.10 Td (The Company issues stock options and other stock-based compensation to eligible employees, directors and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 399.10 Td (consultants and accounts for these transactions under the provisions of ) Tj ET Q q 0 0 0 rg BT 355.82 399.10 Td (Accounting Standards Codification \(ASC\) ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 387.10 Td (718, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 92.00 387.10 Td (Compensation - Stock Compensation) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 240.04 387.10 Td (. For equity awards, total compensation cost is based on the grant date fair ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 375.10 Td (value. For liability awards, total compensation cost is based on the fair value of the award on the date the award is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 363.10 Td (granted and is remeasured at each reporting date until settlement. For performance-based options issued, the value of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 351.10 Td (the instrument is measured at the grant date as the fair value of the common stock and expensed over the vesting ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 339.10 Td (term when the performance tar) Tj ET Q q 0 0 0 rg BT 195.09 339.10 Td (gets are considered probable of being achieved. ) Tj ET Q q 0 0 0 rg BT 387.61 339.10 Td (The Company recognizes stock-based ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 327.10 Td (compensation expense for all awards, on a straight-line basis, over the service period required to earn the award, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 315.10 Td (which is typically the vesting period.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 293.10 Td (Revenue Recognition) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 271.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 271.10 Td (Revenue is recognized as it is earned when goods are shipped to customers or services are rendered. ) Tj ET Q q 0 0 0 rg BT 510.45 271.10 Td (W) Tj ET Q q 0 0 0 rg BT 519.09 271.10 Td (e ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 259.10 Td (consider amounts to be earned once evidence of an arrangement has been obtained, services are performed, fees are ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 247.10 Td (fixed or determinable and collectability is reasonably assured.) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 108.00 225.10 Td (Arrangements with multiple deliverables) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 201.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 201.10 Td (Revenue relating to products that provide for more than one deliverable is recognized based upon the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 189.10 Td (relative fair value to the customer of each deliverable as each deliverable is provided. Revenue relating to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 177.10 Td (agreements that provide for more than one service is recognized based upon the relative fair value to the customer of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 165.10 Td (each service component as each component is earned. If the fair value to the customer for each service is not ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 153.10 Td (determinable based on stand-alone selling price, we make our best estimate of the services) Tj ET Q q 0 0 0 rg BT 436.13 153.10 Td ( stand-alone selling price ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 141.10 Td (and recognize revenue as earned as the services are delivered. Because we determine the basis for allocating ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 129.10 Td (consideration to each deliverable primarily on prices experienced from completed sales, the portion of consideration ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 117.10 Td (allocated to each deliverable in a multiple deliverable arrangement may increase or decrease depending on the most ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 105.10 Td (recent selling price of a comparable product or service sold on a stand-alone basis. For example, as the demand for) Tj ET Q q 0 0 0 rg BT 533.10 105.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 93.10 Td (and prevalence of, digital products increases, as new sales occur we may be required to increase the amount of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 81.10 Td (consideration allocable to digital products included in multiple deliverable arrangements because the fair value of ) Tj ET Q endstream endobj 27 0 obj <> endobj 28 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (10) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (such products or services may increase relative to other products or services bundled in the arrangement. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (Conversely) Tj ET Q q 0 0 0 rg BT 116.90 701.10 Td (, in the event that demand for our print products decreases, thereby causing us to experience reduced ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td (prices on our print products, we may be required to allocate less consideration to our print products in our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 677.10 Td (arrangements that include multiple deliverables.) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 108.00 655.10 Td (Subscription-based pr) Tj ET Q q 0 0 0 rg BT 196.24 655.10 Td (oducts) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 631.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 631.10 Td (Subscription income is recognized over the related subscription period that the subscription is available and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 619.10 Td (is used by the customer) Tj ET Q q 0 0 0 rg BT 165.32 619.10 Td (. Subscription revenue received or receivable in advance of the delivery of services or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 607.10 Td (publications is included in deferred revenue. Incremental costs that are directly related to the subscription revenue ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 595.10 Td (are deferred and amortized over the subscription period. Included among the underlying assumptions related to our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 583.10 Td (estimates that impact the recognition of subscription income is the extent of our responsibility to provide access to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 571.10 Td (our subscription-based products, and the extent of complementary support services customers demand to access our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 559.10 Td (products.) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 108.00 535.10 Td (Service arrangements) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 511.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 511.10 Td (Revenue relating to arrangements that provide for more than one service is recognized based upon the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 499.10 Td (relative fair value to the customer of each service component as each component is earned. Such arrangements may ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 487.10 Td (include digital products bundled with traditional print products, obligations to provide products and services in the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 475.10 Td (future at no additional cost, and periodic training pertinent to products and services previously provided. If the fair ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 463.10 Td (value to the customer for each service is not objectively determinable, we make our best estimate of the services) Tj ET Q q 0 0 0 rg BT 523.59 463.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 451.10 Td (stand-alone selling price and recognize revenue as earned as the services are delivered. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 427.10 Td (Shipping and Handling Costs) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 405.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 405.10 Td (All amounts billed to customers in a sales transaction for shipping and handling are classified as revenue. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 393.10 Td (Shipping and handling costs are also a component of cost of sales.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 371.10 Td (Income T) Tj ET Q q 0 0 0 rg BT 110.80 371.10 Td (axes) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 349.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 349.10 Td (The Company) Tj ET Q q 0 0 0 rg BT 167.71 349.10 Td (s operations are subject to United States federal, state and local income taxes, and foreign ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 337.10 Td (income taxes.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 315.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 315.10 Td (W) Tj ET Q q 0 0 0 rg BT 116.64 315.10 Td (e determine the provision for income taxes using the asset and liability approach. Under this approach, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 303.10 Td (deferred income taxes represent the expected future tax consequences of temporary dif) Tj ET Q q 0 0 0 rg BT 418.60 303.10 Td (ferences between the carrying ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 291.10 Td (amounts and tax bases of assets and liabilities.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 269.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 269.10 Td (V) Tj ET Q q 0 0 0 rg BT 114.11 269.10 Td (aluation allowances are established when management determines that it is more-likely-than not that some ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 257.10 Td (portion or all of the deferred tax asset will not be realized. Management evaluates the weight of both positive and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 245.10 Td (negative evidence in determining whether a deferred tax asset will be realized. Management will look to a history of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 233.10 Td (losses, future reversal of existing taxable temporary dif) Tj ET Q q 0 0 0 rg BT 292.30 233.10 Td (ferences, taxable income in carryback years, feasibility of tax ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 221.10 Td (planning strategies, and estimated future taxable income. ) Tj ET Q q 0 0 0 rg BT 302.02 221.10 Td (The valuation allowance can also be af) Tj ET Q q 0 0 0 rg BT 457.32 221.10 Td (fected by changes in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 209.10 Td (tax laws and changes to statutory tax rates.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 187.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 187.10 Td (W) Tj ET Q q 0 0 0 rg BT 116.64 187.10 Td (e prepare and file tax returns based on management) Tj ET Q q 0 0 0 rg BT 325.44 187.10 Td (s interpretation of tax laws and regulations. ) Tj ET Q q 0 0 0 rg BT 500.39 187.10 Td (As with ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 175.10 Td (all businesses, our tax returns are subject to examination by various taxing authorities. Such examinations may result ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 163.10 Td (in future tax assessments based on dif) Tj ET Q q 0 0 0 rg BT 222.90 163.10 Td (ferences in interpretation of the tax law and regulations. ) Tj ET Q q 0 0 0 rg BT 448.74 163.10 Td (W) Tj ET Q q 0 0 0 rg BT 457.38 163.10 Td (e adjust our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 151.10 Td (estimated uncertain tax positions reserves based on audits by and settlements with various taxing authorities as well ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 139.10 Td (as changes in tax laws, regulations, and interpretations. ) Tj ET Q q 0 0 0 rg BT 294.81 139.10 Td (W) Tj ET Q q 0 0 0 rg BT 303.45 139.10 Td (e recognize interest and penalties on uncertain tax ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 127.10 Td (positions as part of interest expense and operating expenses, respectively) Tj ET Q q 0 0 0 rg BT 362.93 127.10 Td (.) Tj ET Q endstream endobj 29 0 obj <> endobj 30 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.35 60.60 Td (1) Tj ET Q q 0 0 0 rg BT 556.98 60.60 Td (1) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 713.25 Td (Contingencies) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 691.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 691.25 Td (W) Tj ET Q q 0 0 0 rg BT 116.64 691.25 Td (e accrue for loss contingencies when both \(a\) information available prior to issuance of the financial ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 679.25 Td (statements indicates that it is probable that a liability had been incurred at the date of the financial statements and \(b\) ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 667.25 Td (the amount of loss can reasonably be estimated. ) Tj ET Q q 0 0 0 rg BT 265.37 667.25 Td (When we accrue for loss contingencies and the reasonable estimate ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 655.25 Td (of the loss is within a range, we record its best estimate within the range. ) Tj ET Q q 0 0 0 rg BT 365.35 655.25 Td (W) Tj ET Q q 0 0 0 rg BT 373.99 655.25 Td (e disclose an estimated possible loss or a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 643.25 Td (range of loss when it is at least reasonably possible that a loss may have been incurred. Neither an accrual nor ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 631.25 Td (disclosure is required for losses that are deemed remote.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 609.25 Td (Earnings \(Loss\) per Share) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 585.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 585.25 Td (The Company computes net income \(loss\) per share in accordance with ) Tj ET Q q 0 0 0 rg BT 395.96 585.25 Td (ASC 260 which requires ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 573.25 Td (presentation of both basic and diluted earnings per share \(EPS\) on the face of the income statement. Basic EPS is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 561.25 Td (computed by dividing net income \(loss\) available to common shareholders \(numerator\) by the weighted average ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 549.25 Td (number of shares outstanding \(denominator\) during the period. Diluted EPS gives ef) Tj ET Q q 0 0 0 rg BT 409.53 549.25 Td (fect to all dilutive potential ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 537.25 Td (common shares outstanding during the period using the treasury stock method and convertible preferred stock using ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 525.25 Td (the if-converted method. Diluted EPS excludes all dilutive potential shares if their ef) Tj ET Q q 0 0 0 rg BT 410.33 525.25 Td (fect is anti-dilutive.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 503.25 Td (Recent ) Tj ET Q q 0 0 0 rg BT 102.45 503.25 Td (Accounting Standards) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 479.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 479.25 Td (In March 2016, the the Financial ) Tj ET Q q 0 0 0 rg BT 241.02 479.25 Td (Accounting Standards Board \(F) Tj ET Q q 0 0 0 rg BT 371.64 479.25 Td (ASB\) issued ) Tj ET Q q 0 0 0 rg BT 428.31 479.25 Td (Accounting Standards ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 467.25 Td (Update \(ASU\) No. 2016-09, ") Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 201.05 467.25 Td (CompensationStock Compensation \(T) Tj ET Q q 0 0 0 rg BT 360.13 467.25 Td (opic 718\).) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 400.68 467.25 Td (" ) Tj ET Q q 0 0 0 rg BT 407.08 467.25 Td (This standard makes several ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 455.25 Td (modifications to ) Tj ET Q q 0 0 0 rg BT 139.59 455.25 Td (T) Tj ET Q q 0 0 0 rg BT 145.00 455.25 Td (opic 718 related to the accounting for forfeitures, employer tax withholding on share-based ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 443.25 Td (compensation and the financial statement presentation of excess tax benefits or deficiencies. ) Tj ET Q q 0 0 0 rg BT 443.07 443.25 Td (This standard also ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 431.25 Td (clarifies the statement of cash flows presentation for certain components of share-based awards. ) Tj ET Q q 0 0 0 rg BT 457.79 431.25 Td (The standard is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 419.25 Td (ef) Tj ET Q q 0 0 0 rg BT 79.59 419.25 Td (fective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 407.25 Td (The Company is currently evaluating the impact of this guidance on its consolidated financial statements.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 383.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 383.25 Td (In February 2016, the F) Tj ET Q q 0 0 0 rg BT 201.96 383.25 Td (ASB issued ) Tj ET Q q 0 0 0 rg BT 250.87 383.25 Td (ASU No. 2016-02, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 333.36 383.25 Td (Leases) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 360.58 383.25 Td (. ) Tj ET Q q 0 0 0 rg BT 369.84 383.25 Td (This ) Tj ET Q q 0 0 0 rg BT 389.57 383.25 Td (ASU requires that a lessee record an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 371.25 Td (operating lease in the balance sheet with a liability to make lease payments and a right-of-use asset representing its ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 359.25 Td (right to use the underlying asset for the lease term. ) Tj ET Q q 0 0 0 rg BT 276.48 359.25 Td (This standard is ef) Tj ET Q q 0 0 0 rg BT 349.90 359.25 Td (fective for annual and interim periods ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 347.25 Td (beginning after December 15, 2018, with early adoption permitted. ) Tj ET Q q 0 0 0 rg BT 341.92 347.25 Td (Adoption of this standard will be on a modified ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 335.25 Td (retrospective approach, which includes a number of optional practical expedients that the Company may elect to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 323.25 Td (apply) Tj ET Q q 0 0 0 rg BT 93.57 323.25 Td (. ) Tj ET Q q 0 0 0 rg BT 98.39 323.25 Td (The Company is currently evaluating the impact of this guidance on its consolidated financial statements.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 299.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 299.25 Td (In ) Tj ET Q q 0 0 0 rg BT 118.28 299.25 Td (April 2015, F) Tj ET Q q 0 0 0 rg BT 171.71 299.25 Td (ASB issued ) Tj ET Q q 0 0 0 rg BT 220.61 299.25 Td (ASU No.2015-03, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 298.66 299.25 Td (Simplifying the Pr) Tj ET Q q 0 0 0 rg BT 376.62 299.25 Td (esentation of Debt Issuance Costs) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 512.17 299.25 Td (.) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 514.67 299.25 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 520.23 299.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 287.25 Td (This ) Tj ET Q q 0 0 0 rg BT 91.73 287.25 Td (ASU changes the presentation of debt issuance costs by requiring an entity to present such costs as a direct ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 275.25 Td (deduction from the related debt liability rather than as an asset. ) Tj ET Q q 0 0 0 rg BT 325.80 275.25 Td (Amortization of the costs will continue to be ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 263.25 Td (reported as interest expense. ) Tj ET Q q 0 0 0 rg BT 187.61 263.25 Td (This guidance should be applied retrospectively and is ef) Tj ET Q q 0 0 0 rg BT 415.13 263.25 Td (fective for interim and annual ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 251.25 Td (reporting periods beginning after December15, 2015. ) Tj ET Q q 0 0 0 rg BT 289.81 251.25 Td (This guidance is reflected within these consolidated financial ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 239.25 Td (statements.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 215.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 215.25 Td (In July 2015, the F) Tj ET Q q 0 0 0 rg BT 182.54 215.25 Td (ASB issued ) Tj ET Q q 0 0 0 rg BT 231.44 215.25 Td (ASU No. 2015-1) Tj ET Q q 0 0 0 rg BT 299.12 215.25 Td (1, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 309.12 215.25 Td (Inventory \(T) Tj ET Q q 0 0 0 rg BT 363.47 215.25 Td (opic 330\) Related to Simplifying the ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 72.00 203.25 Td (Measur) Tj ET Q q 0 0 0 rg BT 102.18 203.25 Td (ement of Inventory) Tj ET Q q 0 0 0 rg BT 176.60 203.25 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 187.16 203.25 Td (that applies to all inventory except that which is measured using last-in, first-out \(LIFO\) ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 191.25 Td (or the retail inventory method. Inventory measured using first-in, first-out \(FIFO\) or average cost is within the scope ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 179.25 Td (of the new guidance and should be measured at the lower of cost and net realizable value. Net realizable value is the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 167.25 Td (estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 155.25 Td (and transportation. Subsequent measurement is unchanged for inventory measured using LIFO of the retail ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 143.25 Td (inventory method. ) Tj ET Q q 0 0 0 rg BT 147.64 143.25 Td (The amendments are ef) Tj ET Q q 0 0 0 rg BT 241.02 143.25 Td (fective for public business entities for fiscal years beginning after ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 131.25 Td (December 15, 2016, including interim periods within those fiscal years. ) Tj ET Q q 0 0 0 rg BT 360.92 131.25 Td (The new guidance should be applied ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 119.25 Td (prospectively) Tj ET Q q 0 0 0 rg BT 125.22 119.25 Td (, and earlier application is permitted as of the beginning of an interim or annual reporting period. ) Tj ET Q q 0 0 0 rg BT 514.64 119.25 Td (The ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 107.25 Td (Company is currently evaluating the impact of this guidance on its consolidated financial statements.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 83.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 83.25 Td (In ) Tj ET Q q 0 0 0 rg BT 118.28 83.25 Td (August 2014, the F) Tj ET Q q 0 0 0 rg BT 194.21 83.25 Td (ASB issued ) Tj ET Q q 0 0 0 rg BT 243.11 83.25 Td (ASU No.2014-15, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 321.16 83.25 Td (Disclosur) Tj ET Q q 0 0 0 rg BT 365.25 83.25 Td (e of Uncertainties about an Entity) Tj ET Q q 0 0 0 rg BT 503.10 83.25 Td (s ) Tj ET Q q 0 0 0 rg BT 509.31 83.25 Td (Ability ) Tj ET Q endstream endobj 31 0 obj <> endobj 32 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (12) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (to Continue as a Going Concern,) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 210.33 713.10 Td ( to provide guidance on management) Tj ET Q q 0 0 0 rg BT 361.12 713.10 Td (s responsibility in evaluating whether there ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (is substantial doubt about a company) Tj ET Q q 0 0 0 rg BT 222.81 701.10 Td (s ability to continue as a going concern and to provide related footnote ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td (disclosures. ) Tj ET Q q 0 0 0 rg BT 123.76 689.10 Td (This guidance is ef) Tj ET Q q 0 0 0 rg BT 199.39 689.10 Td (fective for the annual period ending after December15, 2016, and for annual periods ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 677.10 Td (and interim periods thereafter) Tj ET Q q 0 0 0 rg BT 190.01 677.10 Td (. Early application is permitted. ) Tj ET Q q 0 0 0 rg BT 318.40 677.10 Td (The adoption of this guidance will not have a material ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 665.10 Td (impact on the Company) Tj ET Q q 0 0 0 rg BT 170.59 665.10 Td (s consolidated financial statements.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 643.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 643.10 Td (In May 2014, the F) Tj ET Q q 0 0 0 rg BT 184.20 643.10 Td (ASB issued ) Tj ET Q q 0 0 0 rg BT 233.10 643.10 Td (ASU No. 2014-09, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 311.15 643.10 Td (Revenue fr) Tj ET Q q 0 0 0 rg BT 359.38 643.10 Td (om Contracts with Customers) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 478.56 643.10 Td (,) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 481.06 643.10 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 486.62 643.10 Td ( which ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 631.10 Td (supersedes most of the current revenue recognition requirements. ) Tj ET Q q 0 0 0 rg BT 337.84 631.10 Td (The core principle of the new guidance is that an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 619.10 Td (entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 607.10 Td (reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. New ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 595.10 Td (disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 583.10 Td (customers are also required. Entities must adopt the new guidance using one of two retrospective application ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 571.10 Td (methods. ) Tj ET Q q 0 0 0 rg BT 110.71 571.10 Td (This guidance is ef) Tj ET Q q 0 0 0 rg BT 186.34 571.10 Td (fective for annual periods beginning after December 15, 2017 and interim periods ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 559.10 Td (within annual periods beginning after December 15, 2018. Early adoption is permitted. ) Tj ET Q q 0 0 0 rg BT 422.00 559.10 Td (The Company is currently ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 547.10 Td (evaluating the impact of this guidance on its consolidated financial statements.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 523.10 Td (2. ) Tj ET Q q 0 0 0 rg BT 84.32 523.10 Td (The Founding ) Tj ET Q q 0 0 0 rg BT 146.57 523.10 Td (Acquisition) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 499.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 499.10 Td (The Founding ) Tj ET Q q 0 0 0 rg BT 166.33 499.10 Td (Acquisition was accounted for as a business combination in accordance with ) Tj ET Q q 0 0 0 rg BT 474.86 499.10 Td (ASC 805, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 72.00 487.10 Td (Business Combinations) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 165.62 487.10 Td (. ) Tj ET Q q 0 0 0 rg BT 170.44 487.10 Td (The Founding ) Tj ET Q q 0 0 0 rg BT 228.77 487.10 Td (Acquisition and determination of the fair value of the assets acquired and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 475.10 Td (liabilities assumed was recorded as of March23, 2013 based on the purchase price of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 415.78 475.10 Td ($2,184,071) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 460.78 475.10 Td (. ) Tj ET Q q 0 0 0 rg BT 465.23 475.10 Td (As a result of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 463.10 Td (Founding ) Tj ET Q q 0 0 0 rg BT 112.29 463.10 Td (Acquisition, goodwill of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 212.84 463.10 Td ($387,478) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 250.34 463.10 Td ( was recorded on the Successor's balance sheet. ) Tj ET Q q 0 0 0 rg BT 442.17 463.10 Td (The Company has ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 451.10 Td (finalized the allocation of goodwill to each of its reporting units. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 429.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 429.10 Td (As discussed in Note 1 - Basis of Presentation and ) Tj ET Q q 0 0 0 rg BT 311.31 429.10 Td (Accounting Policies, the Founding ) Tj ET Q q 0 0 0 rg BT 452.14 429.10 Td (Acquisition was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 417.10 Td (completed on March22, 2013 and financed by:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 395.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 395.10 Td (Borrowings under MHGE senior secured credit facilities \(the MHGE Facilities\), consisting of a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 383.10 Td ($810,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 145.50 383.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 150.50 383.10 Td (6) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 155.50 383.10 Td (-year senior secured term loan credit facility \(the MHGE ) Tj ET Q q 0 0 0 rg BT 389.39 383.10 Td (T) Tj ET Q q 0 0 0 rg BT 394.80 383.10 Td (erm Loan\), all of which was drawn ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 371.10 Td (at closing and a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 172.98 371.10 Td ($240,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 210.48 371.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 215.48 371.10 Td (5) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 220.48 371.10 Td (-year senior secured revolving credit facility \(the MHGE Revolving Facility\), ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 359.10 Td ($35,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 140.50 359.10 Td ( of which was drawn at closing;) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 335.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 335.10 Td (Issuance by MHGE and McGraw-Hill Global Education Finance, Inc., a wholly owned subsidiary of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 323.10 Td (MHGE, \(together with MHGE, the Issuers\) of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 303.79 323.10 Td ($800,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 341.29 323.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 346.29 323.10 Td (9.75%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 372.12 323.10 Td ( first-priority senior secured notes due ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 311.10 Td (2021 \(the MHGE Senior Secured Notes\); ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 287.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 287.10 Td (MHSE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 138.28 287.10 Td ($150,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 175.78 287.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 180.78 287.10 Td (5) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 185.78 287.10 Td ( year asset-based revolving credit facility \("MHSE Revolving Facility"\), which was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 275.10 Td (undrawn at closing; and) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 251.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 251.10 Td (Equity contribution of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 199.38 251.10 Td ($1,000,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 244.38 251.10 Td ( funded by the Sponsor and co-investors.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 227.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 227.10 Td (The Founding ) Tj ET Q q 0 0 0 rg BT 166.33 227.10 Td (Acquisition occurred simultaneously with the closing of the financing transactions and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 215.10 Td (equity investments described above.) Tj ET Q endstream endobj 33 0 obj <> endobj 34 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (13) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 713.10 Td (The sources and uses of funds in connection with the Founding ) Tj ET Q q 0 0 0 rg BT 362.68 713.10 Td (Acquisition are summarized below:) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 692.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 465.50 692.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 662.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 465.50 662.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 632.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 465.50 632.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 602.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 465.50 602.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 572.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 465.50 572.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 542.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 465.50 542.60 75.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 465.5 617.6 m 540.5 617.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 465.5 603.6 m 540.5 603.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 465.5 601.6 m 540.5 601.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 465.5 527.6 m 540.5 527.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 465.5 527.6 m 540.5 527.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 465.5 513.6 m 540.5 513.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 465.5 511.6 m 540.5 511.6 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 75.00 682.28 Td (Sources) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 667.27 Td (Proceeds from MHGE Term Loan) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 468.00 667.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.15 667.27 Td (785,700) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 652.27 Td (Proceeds from MHGE Revolving Facility) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.15 652.27 Td (35,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 637.27 Td (Proceeds from MHGE Senior Secured Notes) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.15 637.27 Td (789,096) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 622.27 Td (Proceeds from equity contributions) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 496.65 622.27 Td (1,000,000) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 75.00 607.28 Td (Total sources) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 468.00 607.28 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 496.65 607.28 Td (2,609,796) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 75.00 577.28 Td (Uses) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 562.27 Td (Equity purchase price) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 468.00 562.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 496.65 562.27 Td (2,184,071) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 547.27 Td (Transaction fees and expenses) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.15 547.27 Td (138,604) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 532.27 Td (Cash) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.15 532.27 Td (287,121) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 75.00 517.28 Td (Total uses) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 468.00 517.28 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 496.65 517.28 Td (2,609,796) Tj ET Q BT /F1 10.00 Tf ET BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 491.10 Td (Purchase Price) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 469.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 469.10 Td (The Founding ) Tj ET Q q 0 0 0 rg BT 166.33 469.10 Td (Acquisition has been accounted for using the acquisition method of accounting which ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 457.10 Td (requires assets acquired and liabilities assumed to be recognized at their fair values as of the acquisition date, with ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 445.10 Td (any excess of the purchase price attributed to goodwill. ) Tj ET Q q 0 0 0 rg BT 295.08 445.10 Td (The fair values have been determined based upon ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 433.10 Td (assumptions related to the future cash flows, discount rates and asset lives utilizing currently available information. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 421.10 Td (On October 16, 2013, the working capital adjustment was finalized and the Company's share of the proceeds of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 409.10 Td (working capital adjustment was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 201.41 409.10 Td ($31,276) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 233.91 409.10 Td (. ) Tj ET Q q 0 0 0 rg BT 238.73 409.10 Td (The Company has finalized the determination of the fair values of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 397.10 Td (assets acquired and liabilities assumed upon acquisition.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 375.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 375.10 Td (The table below summarizes the estimated fair values of the assets acquired and liabilities assumed at the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 363.10 Td (date of acquisition:) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 342.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 342.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 312.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 312.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 282.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 282.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 252.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 252.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 222.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 222.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 192.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 192.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 162.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 162.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 132.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 132.60 75.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 464.5 132.60000000000002 m 539.5 132.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 464.5 132.60000000000002 m 539.5 132.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 464.5 118.60000000000002 m 539.5 118.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 464.5 116.60000000000002 m 539.5 116.60000000000002 l s BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 332.27 Td (Cash and cash equivalents) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 467.00 332.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 332.27 Td (25,227) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 317.27 Td (Accounts receivable and other current assets) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 317.27 Td (237,585) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 302.27 Td (Inventory) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 302.27 Td (629,083) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 287.27 Td (Prepublication costs) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 287.27 Td (110,664) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 272.27 Td (Property, plant and equipment) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 272.27 Td (160,397) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 257.27 Td (Identifiable intangible assets) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 257.27 Td (998,007) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 242.27 Td (Other noncurrent assets) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 242.27 Td (63,076) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 227.27 Td (Accounts payable and accrued expenses) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 499.80 227.32 Td (\(221,031) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 227.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 212.27 Td (Deferred revenue) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.80 212.32 Td (\(67,799) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 212.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 197.27 Td (Other current liabilities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.80 197.32 Td (\(64,061) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 197.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 182.27 Td (Deferred income tax liability) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.80 182.32 Td (\(15,846) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 182.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 167.27 Td (Other long-term liabilities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.80 167.32 Td (\(36,484) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 167.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 152.27 Td (Noncontrolling interests) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.80 152.32 Td (\(22,225) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 152.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 137.27 Td (Goodwill) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 137.27 Td (387,478) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 122.28 Td (Purchase price) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 467.00 122.28 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 495.65 122.28 Td (2,184,071) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 93.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 93.10 Td (Residual goodwill consists primarily of an assembled workforce and other intangible assets that do not ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 81.10 Td (qualify for separate recognition.) Tj ET Q endstream endobj 35 0 obj <> endobj 36 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (14) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 713.10 Td (The fair values of the finite acquired intangible assets will be amortized over their useful lives, which is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (consistent with the estimated useful life considerations used in determining their fair values. Customer and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td (T) Tj ET Q q 0 0 0 rg BT 77.41 689.10 Td (echnology intangibles are amortized on a straight-line basis while Content intangibles are amortized using the sum ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 677.10 Td (of the years digits method.) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 641.60 314.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 385.50 641.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 460.50 641.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 641.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 611.60 314.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 385.50 611.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 460.50 611.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 611.60 75.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 385.5 641.6 m 460.5 641.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 464.5 641.6 m 539.5 641.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 385.5 641.6 m 460.5 641.6 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 400.20 646.28 Td (Fair Value) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 475.25 646.28 Td (Useful Lives) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 631.27 Td (Brands) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 388.00 631.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 424.15 631.27 Td (283,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 480.80 631.27 Td ( Indefinite) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 616.27 Td (Customers) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 424.15 616.27 Td (140,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 474.45 616.27 Td ( 11 - 14 years) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 601.27 Td (Content) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 424.15 601.27 Td (566,007) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 476.75 601.27 Td ( 8 - 14 years) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 586.27 Td (Technology) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 434.15 586.27 Td (9,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 487.20 586.27 Td (5 years) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 557.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 557.10 Td (Amortization expense of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 209.36 557.10 Td ($19,224) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 241.86 557.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 261.30 557.10 Td ($20,751) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 293.80 557.10 Td ( was recorded in the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 376.82 557.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 396.80 557.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 457.63 557.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 521.23 557.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 545.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 92.00 545.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 144.66 545.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 523.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 523.10 Td (The Founding ) Tj ET Q q 0 0 0 rg BT 166.33 523.10 Td (Acquisition was a taxable acquisition of the assets of domestic subsidiaries and a non-taxable ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 511.10 Td (acquisition of the stock of international subsidiaries for U.S. income tax purposes. ) Tj ET Q q 0 0 0 rg BT 402.59 511.10 Td (Therefore, a deferred income tax ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 499.10 Td (liability of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 116.44 499.10 Td ($15,846) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 148.94 499.10 Td ( has been provided for the dif) Tj ET Q q 0 0 0 rg BT 266.50 499.10 Td (ference in fair value of international assets and liabilities over the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 487.10 Td (carryover tax basis.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 463.10 Td (3. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 90.00 463.10 Td (Acquisitions) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 439.10 Td (ALEKS Corporation) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 415.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 415.10 Td (On ) Tj ET Q q 0 0 0 rg BT 122.17 415.10 Td (August 1, 2013, the Company acquired all of the outstanding shares of ) Tj ET Q q 0 0 0 rg BT 406.56 415.10 Td (ALEKS Corporation, a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 403.10 Td (developer of adaptive learning technology for the higher education and K-12 education markets. Prior to the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 391.10 Td (acquisition, the Company had a long-term royalty-based partnership with ) Tj ET Q q 0 0 0 rg BT 366.93 391.10 Td (ALEKS Corporation where ) Tj ET Q q 0 0 0 rg BT 478.86 391.10 Td (ALEKS ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 379.10 Td (Corporation technology solutions were incorporated into the Company) Tj ET Q q 0 0 0 rg BT 357.78 379.10 Td (s Higher Education) Tj ET Q q 0 0 0 rg BT 437.76 379.10 Td (s products.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 357.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 357.10 Td (ALEKS Corporation was acquired for a purchase price of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 340.97 357.10 Td ($103,500) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 378.47 357.10 Td (; of which ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 421.52 357.10 Td ($50,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 454.02 357.10 Td ( was paid in cash at ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 345.10 Td (closing. ) Tj ET Q q 0 0 0 rg BT 105.71 345.10 Td (The remaining ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 166.79 345.10 Td ($53,500) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 199.29 345.10 Td (was paid one year after closing on ) Tj ET Q q 0 0 0 rg BT 340.36 345.10 Td (August 1, 2014 of which ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 442.02 345.10 Td ($15,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 474.52 345.10 Td (was held in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 333.10 Td (escrow for six months. ) Tj ET Q q 0 0 0 rg BT 165.42 333.10 Td (The ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 183.46 333.10 Td ($50,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 215.96 333.10 Td ( paid at closing and subsequent payments were financed by a combination of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 321.10 Td (cash on hand and borrowing under the revolving credit facility) Tj ET Q q 0 0 0 rg BT 321.55 321.10 Td (. On October 31, 2013, the working capital adjustment ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 309.10 Td (was finalized and the Company) Tj ET Q q 0 0 0 rg BT 200.85 309.10 Td (s share of the proceeds of the working capital adjustment was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 449.39 309.10 Td ($1,422) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 476.89 309.10 Td (. ) Tj ET Q q 0 0 0 rg BT 481.71 309.10 Td (The Company ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 297.10 Td (has finalized the determination of the fair values of the assets acquired and liabilities assumed upon acquisition.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 275.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 275.10 Td (The table below summarizes the estimated fair values of the assets acquired and liabilities assumed at the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 263.10 Td (date of acquisition:) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 252.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 465.50 252.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 222.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 465.50 222.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 192.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 465.50 192.60 75.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 465.5 177.60000000000002 m 540.5 177.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 465.5 177.60000000000002 m 540.5 177.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 465.5 163.60000000000002 m 540.5 163.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 465.5 161.60000000000002 m 540.5 161.60000000000002 l s BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 242.27 Td (Tangible assets) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 468.00 242.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 514.15 242.27 Td (9,365) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 227.27 Td (Identifiable intangible assets) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.15 227.27 Td (40,700) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 212.27 Td (Deferred revenue) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 510.80 212.32 Td (\(2,754) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 536.65 212.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 197.27 Td (Other liabilities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 505.80 197.32 Td (\(23,083) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 536.65 197.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 182.27 Td (Goodwill) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.15 182.27 Td (79,272) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 75.00 167.28 Td (Purchase price) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 468.00 167.28 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 504.15 167.28 Td (103,500) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 138.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 138.10 Td (Residual goodwill consists primarily of an assembled workforce and other intangible assets that do not ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 126.10 Td (qualify for separate recognition as well as syner) Tj ET Q q 0 0 0 rg BT 263.14 126.10 Td (gies that are expected to arise as a result of the acquisition. Due to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 114.10 Td (the form of the acquisition, none of the purchase price was allocated to goodwill for tax purposes. ) Tj ET Q q 0 0 0 rg BT 465.32 114.10 Td (The goodwill of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 102.10 Td ($79,272) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 104.50 102.10 Td ( has been assigned to the Higher Education segment of the Company) Tj ET Q q 0 0 0 rg BT 379.06 102.10 Td (.) Tj ET Q endstream endobj 37 0 obj <> endobj 38 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (15) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 713.10 Td (The fair values of the acquired intangible assets will be amortized on a straight-line basis over their useful ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (lives which is consistent with the estimated useful life considerations used in determining their fair values.) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 675.60 314.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 386.50 675.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 461.50 675.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 465.50 675.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 645.60 314.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 386.50 645.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 461.50 645.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 465.50 645.60 75.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 386.5 675.6 m 461.5 675.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 465.5 675.6 m 540.5 675.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 386.5 675.6 m 461.5 675.6 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 401.20 680.28 Td (Fair Value) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 476.25 680.28 Td (Useful Lives) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 665.27 Td (Trade Name) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 389.00 665.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 435.15 665.27 Td (5,300) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 485.70 665.27 Td (10 years) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 650.27 Td (Customers) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 435.15 650.27 Td (7,100) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 488.20 650.27 Td (7 years) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 635.27 Td (Technology) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 430.15 635.27 Td (28,300) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 488.20 635.27 Td (7 years) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 606.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 606.10 Td (Amortization expense of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 209.36 606.10 Td ($1,397) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 236.86 606.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 256.30 606.10 Td ($1,397) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 283.80 606.10 Td ( was recorded in the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 366.82 606.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 386.80 606.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 447.63 606.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 511.23 606.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 594.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 92.00 594.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 144.66 594.10 Td (. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 572.10 Td (Engrade) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 548.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 548.10 Td (On February 5, 2014, the Company acquired all of the outstanding shares of Engrade, Inc., an educational ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 536.10 Td (technology company operating in the elementary and high school markets.Consideration for the acquisition was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 524.10 Td (121,103) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 104.50 524.10 Td ( shares of the Company's common stock and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 285.16 524.10 Td ($5,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 312.66 524.10 Td ( cash.) Tj ET Q q 0 0 0 rg BT 337.75 524.10 Td (The transaction was valued at ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 459.09 524.10 Td ($25,588) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 491.59 524.10 Td (. Of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 512.10 Td (121,103) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 104.50 512.10 Td ( common shares, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 174.49 512.10 Td (20,184) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 201.99 512.10 Td ( shares that were held in escrow were released on May 6, 2015 to the sellers ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.27 512.10 Td (15) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 518.27 512.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 500.10 Td (months after the closing date and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 206.96 500.10 Td (9,129) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 229.46 500.10 Td ( shares are reserved and are issuable upon a future liquidation event.) Tj ET Q q 0 0 0 rg BT 505.01 500.10 Td (The ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 488.10 Td (Company has finalized the determination of the fair values of the assets acquired and liabilities assumed upon ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 476.10 Td (acquisition. On June 5, 2014, the working capital adjustment was finalized and the Company's share of the proceeds ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 464.10 Td (of the working capital adjustment was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 226.96 464.10 Td ($142) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 246.96 464.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 440.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 440.10 Td (The table below summarizes the estimated fair values of the assets acquired and liabilities assumed at the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 428.10 Td (date of acquisition:) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 417.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 465.50 417.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 387.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 465.50 387.60 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 357.60 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 465.50 357.60 75.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 465.5 342.6 m 540.5 342.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 465.5 342.6 m 540.5 342.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 465.5 328.6 m 540.5 328.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 465.5 326.6 m 540.5 326.6 l s BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 407.27 Td (Tangible assets) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 468.00 407.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 514.15 407.27 Td (1,800) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 392.27 Td (Identifiable intangible assets) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 514.15 392.27 Td (5,800) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 377.27 Td (Deferred revenue) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 518.30 377.32 Td (\(300) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 536.65 377.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 362.27 Td (Other liabilities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 510.80 362.32 Td (\(1,319) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 536.65 362.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 347.27 Td (Goodwill) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.15 347.27 Td (19,465) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 75.00 332.28 Td (Purchase price) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 468.00 332.28 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 509.15 332.28 Td (25,446) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 304.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 304.10 Td (Residual goodwill consists primarily of an assembled workforce and other intangible assets that do not ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 292.10 Td (qualify for separate recognition as well as syner) Tj ET Q q 0 0 0 rg BT 263.14 292.10 Td (gies that are expected to arise as a result of the acquisition. Due to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 280.10 Td (the form of the acquisition, none of the purchase price was allocated to goodwill for tax purposes. ) Tj ET Q q 0 0 0 rg BT 465.32 280.10 Td (The goodwill of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 268.10 Td ($19,465) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 104.50 268.10 Td ( has been assigned to the K-12 segment of the Company) Tj ET Q q 0 0 0 rg BT 328.80 268.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 244.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 244.10 Td (The fair values of the acquired intangible assets will be amortized on a straight-line basis over their useful ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 232.10 Td (lives which is consistent with the estimated useful life considerations used in determining their fair values.) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 194.60 238.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 310.50 194.60 113.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 423.50 194.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 427.50 194.60 113.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 164.60 238.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 310.50 164.60 113.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 423.50 164.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 427.50 164.60 113.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 310.5 194.60000000000002 m 423.5 194.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 427.5 194.60000000000002 m 540.5 194.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 310.5 194.60000000000002 m 423.5 194.60000000000002 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 344.20 199.28 Td (Fair Value) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 457.25 199.28 Td (Useful Lives) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 184.27 Td (Trademarks) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 313.00 184.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 397.15 184.27 Td (1,150) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 469.20 184.27 Td (5 years) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 169.27 Td (Customers) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 404.65 169.27 Td (600) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 469.20 169.27 Td (8 years) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 154.27 Td (Technology) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 397.15 154.27 Td (4,050) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 469.20 154.27 Td (7 years) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 126.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 126.10 Td (Amortization expense of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 209.36 126.10 Td ($221) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 229.36 126.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 248.80 126.10 Td ($221) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 268.80 126.10 Td ( was recorded in the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 351.82 126.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 371.80 126.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.63 126.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 496.23 126.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 515.67 126.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.67 126.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 114.10 Td (respectively) Tj ET Q q 0 0 0 rg BT 119.66 114.10 Td (.) Tj ET Q endstream endobj 39 0 obj <> endobj 40 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (16) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 713.25 Td (LearnSmart) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 689.25 Td (On February6, 2014, the Company acquired the remaining ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 347.11 689.25 Td (80%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 365.44 689.25 Td ( that it did not already own of ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 486.52 689.25 Td (LearnSmart) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 534.30 689.25 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 677.25 Td (a Danish Company and developer of adaptive learning tools for the higher education market for total consideration ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 665.25 Td (of $78,049.Prior to the acquisition, the Company had a long-term royalty-based relationship with ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 465.54 665.25 Td (LearnSmart. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 518.32 665.25 Td (The ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 653.25 Td (Company had purchased the other ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 211.13 653.25 Td (20%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 229.46 653.25 Td ( stake in ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 265.28 653.25 Td (LearnSmart) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 313.06 653.25 Td ( in January 2013. Consideration for the acquisition of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 641.25 Td (the remaining ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 129.76 641.25 Td (80%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 148.09 641.25 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 168.64 641.25 Td ($29,003) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 201.14 641.25 Td ( in cash at closing, with the remainder in shares of the Company) Tj ET Q q 0 0 0 rg BT 460.80 641.25 Td (s common stock ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 629.25 Td (and preferred shares held in escrow) Tj ET Q q 0 0 0 rg BT 213.23 629.25 Td (, of which 50% are subject to conversion into the Company) Tj ET Q q 0 0 0 rg BT 453.46 629.25 Td (s common stock ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 617.25 Td (ratably upon each anniversary date beginning December 31, 2014 through December 29, 2017. ) Tj ET Q q 0 0 0 rg BT 454.47 617.25 Td (The remaining 50% ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 605.25 Td (are subject to an earn-out based on several financial measures which we expect to be met and therefore all earn out ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 593.25 Td (preferred shares have been valued in additional paid in capital. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 569.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 569.25 Td (Pursuant to the purchase agreement, consulting payments are due to the founders of ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 445.12 569.25 Td (LearnSmart) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 492.91 569.25 Td ( of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 506.24 569.25 Td ($9,800) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 533.74 569.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 557.25 Td (for a designated project and deliverable, of which ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 275.25 557.25 Td ($2,700) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 302.75 557.25 Td ( is contingent upon a successful completion of a project ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 545.25 Td (deliverable and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 135.86 545.25 Td ($5,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 163.36 545.25 Td ( expense reimbursement over a four year period. ) Tj ET Q q 0 0 0 rg BT 359.49 545.25 Td (These costs are expensed as incurred.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 521.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 521.25 Td (There was a gain of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 189.35 521.25 Td ($7,329) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 216.85 521.25 Td ( recorded in other income for the year ended December 31, 2014, reflecting a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 509.25 Td (fair value adjustment based on the purchase price of the additional ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 339.96 509.25 Td (80%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 358.29 509.25 Td ( interest on the original ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 453.54 509.25 Td (20%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 471.87 509.25 Td ( stake of which ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 497.25 Td (the fair value is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 136.42 497.25 Td ($15,866) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 168.92 497.25 Td (, making the total transaction value equal to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 346.37 497.25 Td ($93,915) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 378.87 497.25 Td (. ) Tj ET Q q 0 0 0 rg BT 383.68 497.25 Td (The Company determined the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 485.25 Td (acquisition date fair value of the previously held equity interest in ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 337.76 485.25 Td (LearnSmart) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 385.54 485.25 Td ( using the income approach, including ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 473.25 Td (consideration of a control premium, which requires the Company to make estimates and assumptions regarding ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 461.25 Td (future cash flows. On July 18, 2014, the working capital adjustment was finalized and the Company's payment for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 449.25 Td (the working capital adjustment was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 216.13 449.25 Td ($959) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 236.13 449.25 Td (. ) Tj ET Q q 0 0 0 rg BT 240.95 449.25 Td (The Company has finalized the determination of the fair values of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 437.25 Td (assets acquired and liabilities assumed upon acquisition.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 413.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 413.25 Td (The table below summarizes the estimated fair values of the assets acquired and liabilities assumed at the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 401.25 Td (date of acquisition:) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 390.75 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 390.75 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 360.75 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 360.75 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 330.75 393.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 330.75 75.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 464.5 330.75 m 539.5 330.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 464.5 330.75 m 539.5 330.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 464.5 316.75 m 539.5 316.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 464.5 314.75 m 539.5 314.75 l s BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 380.42 Td (Tangible assets) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 467.00 380.42 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 513.15 380.42 Td (1,969) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 365.42 Td (Identifiable intangible assets) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 365.42 Td (44,800) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 350.42 Td (Other liabilities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.80 350.47 Td (\(7,609) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 350.42 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 335.42 Td (Goodwill) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 335.42 Td (54,755) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 320.43 Td (Purchase price) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 467.00 320.43 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 508.15 320.43 Td (93,915) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 292.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 292.25 Td (Residual goodwill consists primarily of an assembled workforce and other intangible assets that do not ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 280.25 Td (qualify for separate recognition as well as syner) Tj ET Q q 0 0 0 rg BT 263.14 280.25 Td (gies that are expected to arise as a result of the acquisition. Due to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 268.25 Td (the form of the acquisition, none of the purchase price was allocated to goodwill for tax purposes. ) Tj ET Q q 0 0 0 rg BT 465.32 268.25 Td (The goodwill of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 256.25 Td ($54,755) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 104.50 256.25 Td ( has been assigned to the Higher Education segment of the Company) Tj ET Q q 0 0 0 rg BT 379.06 256.25 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 232.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 232.25 Td (The fair values of the acquired intangible assets will be amortized on a straight-line basis over their useful ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 220.25 Td (lives which is consistent with the estimated useful life considerations used in determining their fair values.) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 182.75 314.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 385.50 182.75 75.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 460.50 182.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 182.75 75.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 385.5 182.75 m 460.5 182.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 464.5 182.75 m 539.5 182.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 385.5 182.75 m 460.5 182.75 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 400.20 187.43 Td (Fair Value) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 475.25 187.43 Td (Useful Lives) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 172.42 Td (Technology) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 388.00 172.42 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 429.15 172.42 Td (42,200) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 487.20 172.42 Td (7 years) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 157.42 Td (Non-Compete) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 434.15 157.42 Td (2,600) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 487.20 157.42 Td (4 years) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 129.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 129.25 Td (Amortization expense of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 209.36 129.25 Td ($1,332) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 236.86 129.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 256.30 129.25 Td ($1,225) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 283.80 129.25 Td ( was recorded in the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 366.82 129.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 386.80 129.25 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 447.63 129.25 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 511.23 129.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 117.25 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 92.00 117.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 144.66 117.25 Td (.) Tj ET Q endstream endobj 41 0 obj <> endobj 42 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (17) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 713.25 Td (R) Tj ET Q q 0 0 0 rg BT 78.49 713.25 Td (yerson) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 689.25 Td (On June 17, 2014, the Company acquired the remaining ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 334.34 689.25 Td (30%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 352.67 689.25 Td ( interest in McGraw-Hill R) Tj ET Q q 0 0 0 rg BT 460.58 689.25 Td (yerson, its ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 677.25 Td (Canadian subsidiary) Tj ET Q q 0 0 0 rg BT 152.72 677.25 Td (, and now owns all of the outstanding shares of the operation. ) Tj ET Q q 0 0 0 rg BT 400.82 677.25 Td (The aggregate purchase price was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 665.25 Td (approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 132.26 665.25 Td ($27,450) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 164.76 665.25 Td (. ) Tj ET Q q 0 0 0 rg BT 169.58 665.25 Td (The excess of the purchase price over the value of the noncontrolling interest of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 491.13 665.25 Td ($4,815) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 518.63 665.25 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 653.25 Td (recognized as an adjustment to additional paid in capital. ) Tj ET Q q 0 0 0 rg BT 301.75 653.25 Td (The Company determined the fair value of the previously ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 641.25 Td (held equity interest in R) Tj ET Q q 0 0 0 rg BT 167.69 641.25 Td (yerson using an active market price on the date of acquisition. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 617.25 Td (4. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 90.00 617.25 Td (Discontinued Operations) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 593.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 593.25 Td (On June30, 2015, the Company entered into a definitive agreement and consummated the sale of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 581.25 Td (substantially all of the assets and certain liabilities of the Company) Tj ET Q q 0 0 0 rg BT 342.49 581.25 Td (s wholly-owned CTB business to Data ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 569.25 Td (Recognition Corporation \(DRC\). ) Tj ET Q q 0 0 0 rg BT 215.13 569.25 Td (The Company provided funding in lieu of delivering working capital to the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 557.25 Td (Seller of approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 168.91 557.25 Td ($6.6 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 217.81 557.25 Td ( at closing and a subsequent payment of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 379.99 557.25 Td ($10.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 433.88 557.25 Td ( in the fourth quarter of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 545.25 Td (2015.In addition, the Company is entitled to receive an earn-out in the event that the performance of the CTB ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 533.25 Td (business exceeds certain thresholds over a five year period as defined in the agreement. During the year ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 521.25 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 150.58 521.25 Td (, adjustments to amounts previously reported in discontinued operations were recognized. ) Tj ET Q q 0 0 0 rg BT 511.70 521.25 Td (These ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 509.25 Td (primarily included post-closing adjustments to the loss on sale, employee obligations directly related to the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 497.25 Td (divestiture and penalty contingencies that directly related to the operations of the CTB business prior to its ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 485.25 Td (divestiture. ) Tj ET Q q 0 0 0 rg BT 119.03 485.25 Td (W) Tj ET Q q 0 0 0 rg BT 127.67 485.25 Td (e have historically considered CTB a separate operating and reportable segment, consistent with the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 473.25 Td (manner in which the Chief Operating Decision Maker \(CODM\) views the business. ) Tj ET Q q 0 0 0 rg BT 417.20 473.25 Td (As the divestiture of the CTB ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 461.25 Td (business represents a strategic shift that will have a major ef) Tj ET Q q 0 0 0 rg BT 312.30 461.25 Td (fect on the Company) Tj ET Q q 0 0 0 rg BT 398.67 461.25 Td (s operations and financial results, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 449.25 Td (operating results, pre-publication investment and amortization, depreciation, and stock-based compensation for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 437.25 Td (CTB business are presented as discontinued operations separate from the Company) Tj ET Q q 0 0 0 rg BT 408.03 437.25 Td (s continuing operations for all ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 425.25 Td (periods presented.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 401.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 401.25 Td (The following table includes major line items constituting net \(loss\) income from discontinued operations, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 389.25 Td (net of taxes: ) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 342.75 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 342.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 342.75 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 342.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 342.75 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 312.75 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 312.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 312.75 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 312.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 312.75 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 282.75 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 282.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 282.75 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 282.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 282.75 99.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 342.75 m 436.5 342.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 342.75 m 539.5 342.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 342.75 m 436.5 342.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 342.75 m 539.5 342.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 297.75 m 436.5 297.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 297.75 m 539.5 297.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 267.75 m 436.5 267.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 253.75 m 436.5 253.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 251.75 m 436.5 251.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 267.75 m 539.5 267.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 253.75 m 539.5 253.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 251.75 m 539.5 251.75 l s BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 347.42 Td () Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 341.00 357.43 Td (Three Months Ended) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 352.15 347.43 Td (March 31, 2016) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 444.00 357.43 Td (Three Months Ended) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 455.15 347.43 Td (March 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 332.42 Td (Revenue) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 340.00 332.42 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.65 332.42 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.00 332.42 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 332.42 Td (24,339) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 317.42 Td (Cost of sales) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.65 317.42 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.80 317.47 Td (\(16,818) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 317.42 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 302.42 Td (Operating expenses) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 414.30 302.47 Td (\(836) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 302.42 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.80 302.47 Td (\(14,989) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 302.42 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 287.42 Td (\(Loss\) income from discontinued operations) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 414.30 287.47 Td (\(836) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 287.42 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.80 287.47 Td (\(7,468) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 287.42 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 272.42 Td (Income tax provision) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.65 272.42 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 520.65 272.42 Td (102) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 257.42 Td (Net \(loss\) income from discontinued operations, net of taxes) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 340.00 257.42 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 414.30 257.47 Td (\(836) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 257.42 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.00 257.42 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.80 257.47 Td (\(7,570) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 257.42 Td (\)) Tj ET Q BT /F1 10.00 Tf ET BT /F1 12.00 Tf ET q 0 0 0 rg BT 72.00 238.85 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 226.85 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 226.85 Td (The following table includes pre-publication investment costs and significant operating and investing non-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 214.85 Td (cash items included as part of discontinued operations: ) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 168.35 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 168.35 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 168.35 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 168.35 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 168.35 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 138.35 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 138.35 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 138.35 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 138.35 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 138.35 99.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 168.35000000000002 m 436.5 168.35000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 168.35000000000002 m 539.5 168.35000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 168.35000000000002 m 436.5 168.35000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 168.35000000000002 m 539.5 168.35000000000002 l s BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 173.02 Td () Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 341.00 183.03 Td (Three Months Ended) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 352.15 173.03 Td (March 31, 2016) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 444.00 183.03 Td (Three Months Ended) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 455.15 173.03 Td (March 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 158.02 Td (Pre-publication investment) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 340.00 158.02 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.65 158.02 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.00 158.02 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 520.65 158.02 Td (340) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 143.02 Td (Pre-publication amortization) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.65 143.02 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 520.65 143.02 Td (701) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 128.02 Td (Depreciation) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.65 128.02 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 520.65 128.02 Td (183) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 113.02 Td (Stock-based compensation) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.65 113.02 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 520.65 113.02 Td (213) Tj ET Q BT /F1 10.00 Tf ET endstream endobj 43 0 obj <> endobj 44 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (18) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 713.25 Td (5. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 90.00 713.25 Td (Inventories) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 689.25 Td (Inventories consist of the following:) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 638.75 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 638.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 638.75 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 638.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 638.75 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 608.75 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 608.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 608.75 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 608.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 608.75 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 578.75 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 578.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 578.75 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 578.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 578.75 99.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 652.75 m 436.5 652.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 436.5 652.75 m 440.5 652.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 652.75 m 539.5 652.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 652.75 m 436.5 652.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 638.75 m 436.5 638.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 652.75 m 539.5 652.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 638.75 m 539.5 638.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 593.75 m 436.5 593.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 593.75 m 539.5 593.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 563.75 m 436.5 563.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 563.75 m 539.5 563.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 550.75 m 436.5 550.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 548.75 m 436.5 548.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 550.75 m 539.5 550.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 548.75 m 539.5 548.75 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 427.00 657.48 Td (As of) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 353.40 643.43 Td (March 31, 2016) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 449.15 643.43 Td (December 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 628.42 Td (Raw materials) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 340.00 628.42 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 410.15 628.42 Td (7,428) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.00 628.42 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 513.15 628.42 Td (1,873) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 613.42 Td (Work-in-progress) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 410.15 613.42 Td (1,646) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 513.15 613.42 Td (1,898) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 598.42 Td (Finished goods) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 400.15 598.42 Td (257,379) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 598.42 Td (246,447) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 400.15 583.42 Td (266,453) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 583.42 Td (250,218) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 568.42 Td (Reserves) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 401.80 568.47 Td (\(73,058) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 568.42 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.80 568.47 Td (\(80,793) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 568.42 Td (\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 554.43 Td (Inventories, net) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 340.00 554.43 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 400.15 554.43 Td (193,395) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 443.00 554.43 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 503.15 554.43 Td (169,425) Tj ET Q BT /F1 10.00 Tf ET BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 526.25 Td (6. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 90.00 526.25 Td (Debt) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 502.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 502.25 Td (Long-term debt consisted of the following:) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 451.75 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 451.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 451.75 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 451.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 451.75 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 421.75 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 421.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 421.75 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 421.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 421.75 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 391.75 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 391.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 391.75 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 391.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 391.75 99.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 465.75 m 436.5 465.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 436.5 465.75 m 440.5 465.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 465.75 m 539.5 465.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 465.75 m 436.5 465.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 451.75 m 436.5 451.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 465.75 m 539.5 465.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 451.75 m 539.5 451.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 451.75 m 539.5 451.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 376.75 m 539.5 376.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 376.75 m 436.5 376.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 363.75 m 436.5 363.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 361.75 m 436.5 361.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 376.75 m 539.5 376.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 363.75 m 539.5 363.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 361.75 m 539.5 361.75 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 427.00 470.48 Td (As of) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 353.40 456.43 Td (March 31, 2016) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 449.15 456.43 Td (December 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 441.42 Td (MHGE Senior Secured Notes) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 340.00 441.42 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 400.15 441.42 Td (765,540) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.00 441.42 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 441.42 Td (764,267) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 426.42 Td (MHGE Term Loan) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 400.15 426.42 Td (642,440) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 426.42 Td (641,696) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 411.42 Td (MHGE PIK Toggle Notes) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 400.15 411.42 Td (489,605) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 411.42 Td (488,848) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 396.42 Td (MHSE Term Loan) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 400.15 396.42 Td (239,673) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 396.42 Td (239,984) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 381.42 Td (Less current portion of long term debt) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 401.80 381.47 Td (\(81,620) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 381.42 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.80 381.47 Td (\(81,620) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 381.42 Td (\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 367.43 Td (Long Term Debt \(1\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 340.00 367.43 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 392.65 367.43 Td (2,055,638) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 443.00 367.43 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 495.65 367.43 Td (2,053,175) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 351.25 Td (\(1\) Long term debt balances reflect face value of debt less the unamortized discount.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 327.25 Td (MHGE Senior Secured Notes) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 305.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 305.25 Td (In connection with the Founding ) Tj ET Q q 0 0 0 rg BT 240.49 305.25 Td (Acquisition, on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 304.65 305.25 Td (March22, 2013) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 368.25 305.25 Td (, the Issuers issued ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 445.74 305.25 Td ($800,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 483.24 305.25 Td ( in principal ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 293.25 Td (amount of the MHGE Senior Secured Notes in a private placement. ) Tj ET Q q 0 0 0 rg BT 344.52 293.25 Td (The MHGE Senior Secured Notes bear interest ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 281.25 Td (at a rate of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 116.97 281.25 Td (9.75%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 142.80 281.25 Td ( per annum, payable semi-annually in arrears on ) Tj ET Q q 0 0 0 rg BT 337.45 281.25 Td (April1 and October1 of each year) Tj ET Q q 0 0 0 rg BT 476.16 281.25 Td (, commencing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 269.25 Td (on October1, 2013. ) Tj ET Q q 0 0 0 rg BT 154.03 269.25 Td (The MHGE Senior Secured Notes were issued at a discount of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 406.46 269.25 Td (1.36%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.29 269.25 Td (. Debt issuance costs and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 257.25 Td (the discount are amortized to interest expense over the term of the MHGE Senior Secured Notes using the ef) Tj ET Q q 0 0 0 rg BT 506.13 257.25 Td (fective ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 245.25 Td (interest method. ) Tj ET Q q 0 0 0 rg BT 138.75 245.25 Td (The amount of amortization included in interest expense, net was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 402.28 245.25 Td ($1,274) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 429.78 245.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 449.22 245.25 Td ($1,145) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 476.72 245.25 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.09 245.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 528.08 245.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 233.25 Td (months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 130.33 233.25 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 193.92 233.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 213.36 233.25 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 233.36 233.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 286.02 233.25 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 211.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 211.25 Td (The Issuers may redeem the MHGE Senior Secured Notes at its option, in whole or in part, at any time on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 199.25 Td (or after ) Tj ET Q q 0 0 0 rg BT 103.09 199.25 Td (April1, 2016, at certain redemption prices.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 177.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 177.25 Td (The MHGE Senior Secured Notes are fully and unconditionally guaranteed by the MHGE Holdings and its ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 165.25 Td (direct parent, MHE US Holdings LLC, and each of MHGE domestic restricted subsidiaries that guarantee the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 153.25 Td (MHGE Facilities. In addition, the MHGE Senior Secured Notes and the related guarantees are secured by first ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 141.25 Td (priority lien on the same collateral that secure the MHGE Facilities, subject to certain exclusions.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 119.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 119.25 Td (The MHGE Facilities and the MHGE Senior Secured Notes contain certain customary af) Tj ET Q q 0 0 0 rg BT 463.27 119.25 Td (firmative ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 107.25 Td (covenants and events of default. In addition, the negative covenants in the MHGE Facilities and the MHGE Senior ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 95.25 Td (Secured Notes limit MHGE and its restricted subsidiaries) Tj ET Q q 0 0 0 rg BT 304.27 95.25 Td ( ability to, among other things: incur additional ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 83.25 Td (indebtedness or issue certain preferred shares, create liens on certain assets, pay dividends or prepay junior debt, ) Tj ET Q endstream endobj 45 0 obj <> endobj 46 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (19) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (make certain loans, acquisitions or investments, materially change its business, engage into transactions with ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (af) Tj ET Q q 0 0 0 rg BT 79.59 701.10 Td (filiates, conduct asset sales, restrict dividends from subsidiaries or restrict liens, or mer) Tj ET Q q 0 0 0 rg BT 426.81 701.10 Td (ge, consolidate, sell or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td (otherwise dispose of all or substantially all of MHGE's assets.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 667.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 667.10 Td (The fair value of the MHGE Senior Secured Notes was approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 391.53 667.10 Td ($864,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 429.03 667.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 448.46 667.10 Td ($848,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 485.96 667.10 Td ( as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 655.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 135.60 655.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 155.04 655.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 233.62 655.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 286.28 655.10 Td (. ) Tj ET Q q 0 0 0 rg BT 291.10 655.10 Td (The Company estimates the fair value of its MHGE Senior ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 643.10 Td (Secured Notes based on trades in the market. Since the MHGE Senior Secured Notes do not trade on a daily basis in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 631.10 Td (an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 619.10 Td (available for debt with similar terms and average maturities \(Level 2\). ) Tj ET Q q 0 0 0 rg BT 354.12 619.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 378.56 619.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 442.16 619.10 Td (, the remaining ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 607.10 Td (contractual life of the MHGE Senior Secured Notes is approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 350.81 607.10 Td (5) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 355.81 607.10 Td ( years.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 583.10 Td (MHGE Facilities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 561.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 561.10 Td (In connection with the Founding ) Tj ET Q q 0 0 0 rg BT 240.49 561.10 Td (Acquisition, on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 304.65 561.10 Td (March22, 2013) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 368.25 561.10 Td (, MHGE, our wholly owned subsidiary) Tj ET Q q 0 0 0 rg BT 523.42 561.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 549.10 Td (together with MHGE Holdings, entered into the MHGE Facilities, which are governed by a first lien credit ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 537.10 Td (agreement as amended and restated, with Credit Suisse ) Tj ET Q q 0 0 0 rg BT 293.88 537.10 Td (AG, as administrative agent, and the other agents and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 525.10 Td (lenders, as parties thereto, that provided senior secured financing of up to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 368.02 525.10 Td ($1,050,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 413.02 525.10 Td (, consisting of:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 503.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 503.10 Td (the MHGE ) Tj ET Q q 0 0 0 rg BT 154.48 503.10 Td (T) Tj ET Q q 0 0 0 rg BT 159.89 503.10 Td (erm Loan in an aggregate principal amount of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 345.93 503.10 Td ($810,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 383.43 503.10 Td ( with a maturity of six years; and) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 479.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 479.10 Td (the MHGE Revolving Facility in an aggregate principal amount of up to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 399.60 479.10 Td ($240,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 437.10 479.10 Td ( with a maturity of five ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 467.10 Td (years, including both a letter of credit sub-facility and a swingline loan sub-facility) Tj ET Q q 0 0 0 rg BT 438.64 467.10 Td (. ) Tj ET Q q 0 0 0 rg BT 443.46 467.10 Td (The amount available ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 455.10 Td (under the MHGE Revolving Facility as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 278.81 455.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 342.40 455.10 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 362.96 455.10 Td ($240,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 400.46 455.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 431.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 431.10 Td (On May4, 2015, MHGE Holdings made a voluntary principal payment of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 407.39 431.10 Td ($325) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 427.39 431.10 Td ( and refinanced the MHGE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 419.10 Td (T) Tj ET Q q 0 0 0 rg BT 77.41 419.10 Td (erm Loan in the aggregate principal of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 233.73 419.10 Td ($679,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 271.23 419.10 Td (. ) Tj ET Q q 0 0 0 rg BT 276.05 419.10 Td (The revised terms reduce the applicable LIBOR mar) Tj ET Q q 0 0 0 rg BT 485.51 419.10 Td (gin from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 407.10 Td (4.75%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 97.83 407.10 Td ( to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 110.61 407.10 Td (3.75%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 136.44 407.10 Td (. ) Tj ET Q q 0 0 0 rg BT 141.26 407.10 Td (The LIBOR floor remains at ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 257.62 407.10 Td (1%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 270.95 407.10 Td (. ) Tj ET Q q 0 0 0 rg BT 275.39 407.10 Td (All other terms remain unchanged. Quarterly principal payments ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 395.10 Td (were reduced from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 150.01 395.10 Td ($1,720) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 177.51 395.10 Td ( to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 190.29 395.10 Td ($1,698) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 217.79 395.10 Td (, maintaining the amortization rate at ) Tj ET Q BT /F1 10.00 Tf ET BT /F1 6.50 Tf ET q 0 0 0 rg BT 368.02 399.63 Td (1) Tj ET Q BT /F1 10.00 Tf ET /GS0 gs q 1.67 0 0 10.09 372.89 392.94 cm /I1 Do Q BT /F1 10.00 Tf ET BT /F1 6.50 Tf ET q 0 0 0 rg BT 374.56 393.67 Td (4) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 377.81 395.10 Td ( of 1% of the refinanced principal ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 383.10 Td (amount.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 359.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 359.10 Td (The interest rate on the borrowings under the MHGE Facilities is based on LIBOR or Prime, plus an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 347.10 Td (applicable mar) Tj ET Q q 0 0 0 rg BT 130.96 347.10 Td (gin. ) Tj ET Q q 0 0 0 rg BT 148.55 347.10 Td (The interest rate was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 234.07 347.10 Td (4.75%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 259.90 347.10 Td ( as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 284.06 347.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 347.66 347.10 Td ( for the MHGE ) Tj ET Q q 0 0 0 rg BT 410.80 347.10 Td (T) Tj ET Q q 0 0 0 rg BT 416.21 347.10 Td (erm Loan and there were no ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 335.10 Td (outstanding borrowings under the MHGE Revolving Facility) Tj ET Q q 0 0 0 rg BT 315.21 335.10 Td (. ) Tj ET Q q 0 0 0 rg BT 320.03 335.10 Td (The MHGE ) Tj ET Q q 0 0 0 rg BT 369.84 335.10 Td (T) Tj ET Q q 0 0 0 rg BT 375.25 335.10 Td (erm Loan and the MHGE Revolving ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 323.10 Td (Facility were issued at a discount of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 218.35 323.10 Td (3%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 231.68 323.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 251.12 323.10 Td (2%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 264.45 323.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 317.11 323.10 Td (. Debt issuance costs and the discount are amortized ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 311.10 Td (over the term of the respective facility using the ef) Tj ET Q q 0 0 0 rg BT 273.68 311.10 Td (fective interest method and are included in interest expense, net ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 299.10 Td (within the consolidated statements of operations. ) Tj ET Q q 0 0 0 rg BT 269.83 299.10 Td (The amount of amortization included in interest expense, net was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 287.10 Td ($3,180) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.50 287.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 118.94 287.10 Td ($3,137) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 146.44 287.10 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 177.82 287.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 197.80 287.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 258.63 287.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 322.22 287.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 341.66 287.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 361.66 287.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 414.32 287.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 265.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 265.10 Td (The MHGE ) Tj ET Q q 0 0 0 rg BT 157.81 265.10 Td (T) Tj ET Q q 0 0 0 rg BT 163.22 265.10 Td (erm Loan requires quarterly amortization payments totaling ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 404.53 265.10 Td (1%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 417.86 265.10 Td ( per annum of the refinanced ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 253.10 Td (principal amount of the facility) Tj ET Q q 0 0 0 rg BT 195.75 253.10 Td (, with the balance payable on the final maturity date. ) Tj ET Q q 0 0 0 rg BT 408.27 253.10 Td (The MHGE ) Tj ET Q q 0 0 0 rg BT 458.08 253.10 Td (T) Tj ET Q q 0 0 0 rg BT 463.49 253.10 Td (erm Loan also ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 241.10 Td (includes customary mandatory prepayment requirements based on certain events such as asset sales, debt issuances ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 229.10 Td (and defined levels of excess cash flow) Tj ET Q q 0 0 0 rg BT 224.63 229.10 Td (. ) Tj ET Q q 0 0 0 rg BT 229.08 229.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 253.52 229.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 332.10 229.10 Td (, the Company determined that a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 465.12 229.10 Td ($72,330) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 497.62 229.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 217.10 Td (mandatory prepayment of indebtedness is required and is payable five business days after the annual MHGE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 205.10 Td (Holdings financial statements are delivered.) Tj ET Q q 0 0 0 rg BT 250.09 205.10 Td (This amount was included within the current portion of long-term debt ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 193.10 Td (in the consolidated balance sheets as of March 31, 2016 and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 314.71 193.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 393.29 193.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 171.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 171.10 Td (All obligations under the MHGE Facilities are guaranteed by MHGE Holdings and its direct parent, MHE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 159.10 Td (US Holdings LLC, and each of MHGE's existing and future direct and indirect material, wholly owned domestic ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 147.10 Td (subsidiaries and are secured by first priority lien on substantially all tangible and intangible assets of MHGE and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 135.10 Td (each subsidiary guarantor) Tj ET Q q 0 0 0 rg BT 174.34 135.10 Td (, all of the MHGE's capital stock and the capital stock of each subsidiary guarantor and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 123.10 Td (65%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.33 123.10 Td ( of the capital stock of the first-tier foreign subsidiaries that are not subsidiary guarantors, in each case subject ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 111.10 Td (to exceptions.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 89.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 89.10 Td (The MHGE Revolving Facility includes a springing financial maintenance covenant that requires MHGE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 77.10 Td (net first lien leverage ratio not to exceed ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 235.82 77.10 Td (7.00) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 253.32 77.10 Td ( to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 266.10 77.10 Td (1.00) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 283.60 77.10 Td ( \(the ratio of consolidated net debt secured by first-priority liens ) Tj ET Q endstream endobj 47 0 obj <> endobj 48 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (20) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (on the collateral to ) Tj ET Q q 0 0 0 rg BT 148.64 713.10 Td (Adjusted EBITDA, as defined in the credit agreement governing the MHGE Facilities\). ) Tj ET Q q 0 0 0 rg BT 501.14 713.10 Td (The ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (covenant will be tested quarterly when the MHGE Revolving Facility is more than ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 404.98 701.10 Td (20%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 423.31 701.10 Td ( drawn \(including ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td (outstanding letters of credit\), beginning with the fiscal quarter ended June30, 2013, and will be a condition to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 677.10 Td (drawings under the revolving credit facility \(including for new letters of credit\) that would result in more than ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 514.09 677.10 Td (20%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 532.42 677.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 665.10 Td (drawn thereunder) Tj ET Q q 0 0 0 rg BT 141.69 665.10 Td (. ) Tj ET Q q 0 0 0 rg BT 146.14 665.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 170.58 665.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 234.18 665.10 Td (, the borrowings under the MHGE Revolving Facility were less than ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 510.24 665.10 Td (20%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 528.57 665.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 653.10 Td (and so the covenant was not in ef) Tj ET Q q 0 0 0 rg BT 204.84 653.10 Td (fect.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 631.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 631.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 182.72 631.10 Td ( reflects EBITDA) Tj ET Q q 0 0 0 rg BT 253.25 631.10 Td ( as defined in the credit agreement governing the MHGE Facilities. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 619.10 Td (Solely for the purpose of calculating the springing financial covenant, pre-publication investments should be ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 607.10 Td (excluded from the calculation of ) Tj ET Q q 0 0 0 rg BT 203.89 607.10 Td (Adjusted EBITDA.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 583.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 583.10 Td (The fair value of the MHGE ) Tj ET Q q 0 0 0 rg BT 223.89 583.10 Td (T) Tj ET Q q 0 0 0 rg BT 229.30 583.10 Td (erm Loan was approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 348.70 583.10 Td ($673,891) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 386.20 583.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 405.64 583.10 Td ($658,745) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.14 583.10 Td ( as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 467.30 583.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 530.90 583.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 571.10 Td (and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 88.94 571.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 167.52 571.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 220.18 571.10 Td (. ) Tj ET Q q 0 0 0 rg BT 225.00 571.10 Td (The Company estimates the fair value of the MHGE ) Tj ET Q q 0 0 0 rg BT 436.71 571.10 Td (T) Tj ET Q q 0 0 0 rg BT 442.12 571.10 Td (erm Loan utilizing the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 559.10 Td (market quotations for debt that have quoted prices in active markets. Since the MHGE ) Tj ET Q q 0 0 0 rg BT 419.77 559.10 Td (T) Tj ET Q q 0 0 0 rg BT 425.18 559.10 Td (erm Loan does not trade on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 547.10 Td (a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 535.10 Td (rates currently available for debt with similar terms and average maturities \(Level 2\). ) Tj ET Q q 0 0 0 rg BT 414.09 535.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 438.53 535.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 502.13 535.10 Td (, the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 523.10 Td (remaining contractual life of the MHGE ) Tj ET Q q 0 0 0 rg BT 235.10 523.10 Td (T) Tj ET Q q 0 0 0 rg BT 240.51 523.10 Td (erm Loan is approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 351.03 523.10 Td (3) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 356.03 523.10 Td ( years.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 499.10 Td (MHGE PIK T) Tj ET Q q 0 0 0 rg BT 129.42 499.10 Td (oggle Notes) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 475.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 475.10 Td (On July 17, 2014, MHGE Parent, LLC \("MHGE Parent"\) and MHGE Parent Finance, Inc. \("MHGE Parent ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 463.10 Td (Finance" and, together with MHGE Parent, the "Issuers"\), issued ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 334.19 463.10 Td ($400,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 371.69 463.10 Td ( aggregate principal amount of Senior ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 451.10 Td (PIK ) Tj ET Q q 0 0 0 rg BT 90.43 451.10 Td (T) Tj ET Q q 0 0 0 rg BT 95.84 451.10 Td (oggle Notes due 2019 \(the "MHGE PIK ) Tj ET Q q 0 0 0 rg BT 258.33 451.10 Td (T) Tj ET Q q 0 0 0 rg BT 263.74 451.10 Td (oggle Notes"\) in a private placement. ) Tj ET Q q 0 0 0 rg BT 415.09 451.10 Td (The MHGE PIK ) Tj ET Q q 0 0 0 rg BT 483.51 451.10 Td (T) Tj ET Q q 0 0 0 rg BT 488.92 451.10 Td (oggle Notes ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 439.10 Td (were issued at a discount of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 185.30 439.10 Td (1%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 198.63 439.10 Td (. ) Tj ET Q q 0 0 0 rg BT 203.45 439.10 Td (The proceeds were used to make a return of capital to the equity holders of MHGE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 427.10 Td (Parent and pay certain related transaction costs and expenses.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 405.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 405.10 Td (On ) Tj ET Q q 0 0 0 rg BT 122.17 405.10 Td (April6, 2015, additional aggregate principal amount of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 346.00 405.10 Td ($100,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 383.50 405.10 Td ( was issued under the same indenture, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 393.10 Td (and part of the same series, as the outstanding ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 258.06 393.10 Td ($400,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 295.56 393.10 Td ( of the MHGE PIK ) Tj ET Q q 0 0 0 rg BT 373.98 393.10 Td (T) Tj ET Q q 0 0 0 rg BT 379.39 393.10 Td (oggle Notes previously issued by the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 381.10 Td (Issuers. ) Tj ET Q q 0 0 0 rg BT 104.59 381.10 Td (The proceeds from this private of) Tj ET Q q 0 0 0 rg BT 237.98 381.10 Td (fering were used to make a return of capital to the equity holders of MHGE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 369.10 Td (Parent and pay certain related transaction costs and expenses.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 345.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 345.10 Td (Debt issuance costs and the discount are amortized over the term of the facility using the ef) Tj ET Q q 0 0 0 rg BT 472.70 345.10 Td (fective interest ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 333.10 Td (method and are included in interest expense, net within the consolidated statements of operations. ) Tj ET Q q 0 0 0 rg BT 465.04 333.10 Td (The amount of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 321.10 Td (amortization included in interest expense, net was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 274.16 321.10 Td ($671) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 294.16 321.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 313.60 321.10 Td ($608) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 333.60 321.10 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 364.97 321.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 384.96 321.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 445.78 321.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.38 321.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 309.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 92.00 309.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 144.66 309.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 285.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 285.10 Td (The MHGE PIK ) Tj ET Q q 0 0 0 rg BT 176.42 285.10 Td (T) Tj ET Q q 0 0 0 rg BT 181.83 285.10 Td (oggle Notes bear interest at ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 293.74 285.10 Td (8.5%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 314.57 285.10 Td ( for interest paid in cash and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 430.36 285.10 Td (9.25%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 456.19 285.10 Td ( for in-kind interest, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 273.10 Td ("PIK", by increasing the principal amount of the MHGE PIK ) Tj ET Q q 0 0 0 rg BT 318.55 273.10 Td (T) Tj ET Q q 0 0 0 rg BT 323.96 273.10 Td (oggle Notes by issuing new notes. Interest is payable ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 261.10 Td (semi-annually on February 1 and ) Tj ET Q q 0 0 0 rg BT 206.14 261.10 Td (August 1 of each year) Tj ET Q q 0 0 0 rg BT 293.48 261.10 Td (, commencing February 1, 2015. ) Tj ET Q q 0 0 0 rg BT 426.05 261.10 Td (The first semi-annual ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 249.10 Td (interest payment was required to be paid in cash and was paid on February 2, 2015 in the amount of $18,322. In ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 237.10 Td (addition, the Company paid $21,250 in cash on ) Tj ET Q q 0 0 0 rg BT 263.09 237.10 Td (August 3, 2015 and February 1, 2016 relating to the second and third ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 225.10 Td (semi-annual interest payments, respectively) Tj ET Q q 0 0 0 rg BT 246.29 225.10 Td (. ) Tj ET Q q 0 0 0 rg BT 251.11 225.10 Td (The determination as to whether interest is paid in cash or PIK is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 213.10 Td (determined based on restrictions in the credit agreement governing the MHGE Facilities and the indenture governing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 201.10 Td (the MHGE Senior Secured Notes for payments to MHGE Parent. PIK Interest may be paid either ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 463.29 201.10 Td (0%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 476.62 201.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 481.62 201.10 Td (50%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 499.95 201.10 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 513.28 201.10 Td (100%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 536.61 201.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 189.10 Td (of the amount of interest due, dependent on the amount of any restriction. ) Tj ET Q q 0 0 0 rg BT 368.68 189.10 Td (The MHGE PIK ) Tj ET Q q 0 0 0 rg BT 437.10 189.10 Td (T) Tj ET Q q 0 0 0 rg BT 442.51 189.10 Td (oggle Notes are ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 177.10 Td (structurally subordinate to all the debt of MHGE Holdings and its subsidiaries, are not guaranteed by any of MHGE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 165.10 Td (Holdings or its subsidiaries and are a contractual obligation of MHGE Parent.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 143.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 143.10 Td (The MHGE PIK ) Tj ET Q q 0 0 0 rg BT 176.42 143.10 Td (T) Tj ET Q q 0 0 0 rg BT 181.83 143.10 Td (oggle Notes are unsecured and are not subject to registration rights.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 119.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 119.10 Td (The MHGE PIK ) Tj ET Q q 0 0 0 rg BT 176.42 119.10 Td (T) Tj ET Q q 0 0 0 rg BT 181.83 119.10 Td (oggle Notes contain certain customary af) Tj ET Q q 0 0 0 rg BT 345.76 119.10 Td (firmative covenants and events of default that ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 107.10 Td (are similar to those contained in the indenture governing the MHGE Senior Secured Notes. In addition, the negative ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 95.10 Td (covenants in the MHGE PIK ) Tj ET Q q 0 0 0 rg BT 189.86 95.10 Td (T) Tj ET Q q 0 0 0 rg BT 195.27 95.10 Td (oggle Notes limit MHGE Parent and its restricted subsidiaries) Tj ET Q q 0 0 0 rg BT 445.59 95.10 Td ( ability to, among other ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 83.10 Td (things: incur additional indebtedness or issue certain preferred shares, create liens on certain assets, pay dividends or ) Tj ET Q endstream endobj 49 0 obj <> endobj 50 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (21) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (prepay junior debt, make certain loan, acquisitions or investments, materially change its business, engage into ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (transactions with af) Tj ET Q q 0 0 0 rg BT 150.13 701.10 Td (filiates, conduct asset sales, restrict dividends from subsidiaries or restrict liens, or mer) Tj ET Q q 0 0 0 rg BT 497.36 701.10 Td (ge, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td (consolidate, sell or otherwise dispose of all or substantially all of MHGE Parent) Tj ET Q q 0 0 0 rg BT 394.44 689.10 Td (s assets.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 665.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 665.10 Td (The fair value of the MHGE PIK ) Tj ET Q q 0 0 0 rg BT 242.50 665.10 Td (T) Tj ET Q q 0 0 0 rg BT 247.91 665.10 Td (oggle Notes was approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 376.77 665.10 Td ($495,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 414.27 665.10 Td ( as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 438.43 665.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 502.03 665.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 653.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 150.58 653.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 203.25 653.10 Td (. ) Tj ET Q q 0 0 0 rg BT 208.06 653.10 Td (The Company estimates the fair value of its MHGE PIK ) Tj ET Q q 0 0 0 rg BT 435.61 653.10 Td (T) Tj ET Q q 0 0 0 rg BT 441.02 653.10 Td (oggle Notes based on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 641.10 Td (trades in the market. Since the MHGE PIK ) Tj ET Q q 0 0 0 rg BT 245.95 641.10 Td (T) Tj ET Q q 0 0 0 rg BT 251.36 641.10 Td (oggle Notes do not trade on a daily basis in an active market, the fair ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 629.10 Td (value estimates are based on market observable inputs based on borrowing rates currently available for debt with ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 617.10 Td (similar terms and average maturities \(Level 2\). ) Tj ET Q q 0 0 0 rg BT 261.38 617.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 285.82 617.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 349.42 617.10 Td (, the remaining contractual life of the MHGE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 605.10 Td (Senior Secured Notes is approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 230.57 605.10 Td (3.25) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 248.07 605.10 Td ( years.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 581.10 Td (MHSE Revolving Facility) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 557.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 557.10 Td (In connection with the Founding ) Tj ET Q q 0 0 0 rg BT 240.49 557.10 Td (Acquisition, on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 304.65 557.10 Td (March22, 2013) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 368.25 557.10 Td (, MHSE entered into the MHSE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 545.10 Td (Revolving Facility) Tj ET Q q 0 0 0 rg BT 146.07 545.10 Td (, with Bank of Montreal, as ) Tj ET Q q 0 0 0 rg BT 257.72 545.10 Td (Administrative ) Tj ET Q q 0 0 0 rg BT 319.66 545.10 Td (Agent and the other agents and lenders, as parties ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 533.10 Td (thereto, that provides senior secured financing of up to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 293.04 533.10 Td ($150,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 330.54 533.10 Td ( based on seasonal levels of the collateral base, with ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 521.10 Td (a maturity of five years.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 499.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 499.10 Td (The interest rate on the borrowings under the MHSE Revolving Facility is based on LIBOR, plus an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 487.10 Td (applicable mar) Tj ET Q q 0 0 0 rg BT 130.96 487.10 Td (gin. ) Tj ET Q q 0 0 0 rg BT 148.55 487.10 Td (There were no outstanding obligations under the MHSE Revolving Facility as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 474.05 487.10 Td (March31, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 475.10 Td (2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 92.00 475.10 Td (. Debt issuance costs are amortized over the term of the facility and are included in interest expense, net within ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 463.10 Td (the consolidated statements of operations. ) Tj ET Q q 0 0 0 rg BT 241.78 463.10 Td (The amount of amortization included in interest expense, net was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 505.31 463.10 Td ($336) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 525.31 463.10 Td ( for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 451.10 Td (the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 86.72 451.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 106.70 451.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 167.53 451.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 231.13 451.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 250.56 451.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 270.56 451.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 323.23 451.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 429.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 429.10 Td (The MHSE Revolving Facility includes a springing covenant that requires MHSE Holdings to maintain a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 417.10 Td (fixed char) Tj ET Q q 0 0 0 rg BT 112.07 417.10 Td (ge coverage ratio of not less than ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 246.75 417.10 Td (1.0) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 259.25 417.10 Td ( to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 272.02 417.10 Td (1.0) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 284.52 417.10 Td (. ) Tj ET Q q 0 0 0 rg BT 289.34 417.10 Td (The ratio of EBITDA, as defined in the MHSE Revolving ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 405.10 Td (Facility) Tj ET Q q 0 0 0 rg BT 101.90 405.10 Td (, minus non-financed cash capital expenditures and cash income taxes, to scheduled principal payments, cash ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 393.10 Td (interest expense and certain restricted payments should be calculated on a pro forma basis. ) Tj ET Q q 0 0 0 rg BT 438.91 393.10 Td (The covenant is tested ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 381.10 Td (quarterly only when the availability under the MHSE Revolving Facility is less than or equal to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 456.37 381.10 Td (12.5%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 482.20 381.10 Td ( of the line ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 369.10 Td (cap, or when there is another covenant triggering event. ) Tj ET Q q 0 0 0 rg BT 299.14 369.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 323.58 369.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 387.18 369.10 Td (, the availability under the MHSE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 357.10 Td (Revolving Facility was more than ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 210.03 357.10 Td (12.5%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 235.86 357.10 Td (, and so the covenant was not in ef) Tj ET Q q 0 0 0 rg BT 373.70 357.10 Td (fect.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 335.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 335.10 Td (All obligations under the MHSE ) Tj ET Q q 0 0 0 rg BT 240.31 335.10 Td (T) Tj ET Q q 0 0 0 rg BT 245.72 335.10 Td (erm Loan and MHSE Revolving Facility are guaranteed by the MHSE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 323.10 Td (Holdings and each of MHSE) Tj ET Q q 0 0 0 rg BT 190.32 323.10 Td (s existing and future direct and indirect material wholly owned domestic subsidiaries, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 311.10 Td (and are secured by first priority lien on substantially all tangible and intangible assets of MHSE's and each ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 299.10 Td (subsidiary guarantor) Tj ET Q q 0 0 0 rg BT 153.52 299.10 Td (, all of the MHSE's capital stock, and the capital stock of each subsidiary guarantor and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 505.22 299.10 Td (65%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 523.55 299.10 Td ( of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 287.10 Td (the capital stock of the first-tier foreign subsidiaries that are not subsidiary guarantors, in each case subject to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 275.10 Td (exceptions.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 253.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 253.10 Td (The MHSE Revolving Facility and MHSE ) Tj ET Q q 0 0 0 rg BT 280.59 253.10 Td (T) Tj ET Q q 0 0 0 rg BT 286.00 253.10 Td (erm Loan contain certain customary af) Tj ET Q q 0 0 0 rg BT 440.47 253.10 Td (firmative covenants and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 241.10 Td (events of default. In addition, the negative covenants limit MHSE's and its restricted subsidiaries) Tj ET Q q 0 0 0 rg BT 461.58 241.10 Td ( ability to, among ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 229.10 Td (other things: incur additional indebtedness or issue certain preferred shares, create liens on certain assets, pay ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 217.10 Td (dividends or prepay junior debt, make certain loans, acquisitions or investments, materially change its business, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 205.10 Td (engage into transactions with af) Tj ET Q q 0 0 0 rg BT 199.00 205.10 Td (filiates, conduct asset sales, restrict dividends from subsidiaries or restrict liens, or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 193.10 Td (mer) Tj ET Q q 0 0 0 rg BT 87.37 193.10 Td (ge, consolidate, sell or otherwise dispose of all or substantially all of MHSE's assets.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 169.10 Td (MHSE T) Tj ET Q q 0 0 0 rg BT 108.59 169.10 Td (erm Loan) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 147.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 147.10 Td (On December 18, 2013, MHSE Holdings, MHSE, the Lenders, as parties thereto, and Bank of Montreal as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 135.10 Td (Administrative ) Tj ET Q q 0 0 0 rg BT 133.94 135.10 Td (Agent entered into a First-Lien Credit ) Tj ET Q q 0 0 0 rg BT 287.23 135.10 Td (Agreement providing for) Tj ET Q q 0 0 0 rg BT 386.80 135.10 Td (, amongst other things, the extension ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 123.10 Td (of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 82.83 123.10 Td ($250,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.33 123.10 Td ( of ) Tj ET Q q 0 0 0 rg BT 133.48 123.10 Td (T) Tj ET Q q 0 0 0 rg BT 138.89 123.10 Td (erm B Loan \(the MHSE ) Tj ET Q q 0 0 0 rg BT 241.74 123.10 Td (T) Tj ET Q q 0 0 0 rg BT 247.15 123.10 Td (erm Loan\) to MHSE to be used for general corporate purposes, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 111.10 Td (including a return of capital to the stockholders of McGraw-Hill Education, Inc. In connection with and in order to, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 99.10 Td (amongst other things, permit the extension of the MHSE ) Tj ET Q q 0 0 0 rg BT 300.68 99.10 Td (T) Tj ET Q q 0 0 0 rg BT 306.09 99.10 Td (erm Loan, the MHSE Holdings, MHSE, each Subsidiary ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 87.10 Td (Loan Party) Tj ET Q q 0 0 0 rg BT 115.51 87.10 Td (, as a party thereto, the Lenders, as parties thereto, and Bank of Montreal as ) Tj ET Q q 0 0 0 rg BT 419.57 87.10 Td (ABL) Tj ET Q q 0 0 0 rg BT 439.20 87.10 Td ( ) Tj ET Q q 0 0 0 rg BT 441.15 87.10 Td (Agent entered into ) Tj ET Q endstream endobj 51 0 obj <> endobj 52 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (22) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (amendments to MHSE Holdings) Tj ET Q q 0 0 0 rg BT 204.86 713.10 Td ( existing MHSE Revolving Facility on November 26, 2013 and December 18, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (2013.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 679.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 679.10 Td (The interest rate on the borrowings under the MHSE ) Tj ET Q q 0 0 0 rg BT 320.82 679.10 Td (T) Tj ET Q q 0 0 0 rg BT 326.23 679.10 Td (erm Loan is based on LIBOR or Prime, plus an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 667.10 Td (applicable mar) Tj ET Q q 0 0 0 rg BT 130.96 667.10 Td (gin. ) Tj ET Q q 0 0 0 rg BT 148.55 667.10 Td (The interest rate as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 237.68 667.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.28 667.10 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 321.83 667.10 Td (6.25%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 347.66 667.10 Td ( for the MHSE ) Tj ET Q q 0 0 0 rg BT 409.14 667.10 Td (T) Tj ET Q q 0 0 0 rg BT 414.55 667.10 Td (erm Loan as there is a floor of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 655.10 Td (1.25%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 97.83 655.10 Td ( for LIBOR. ) Tj ET Q q 0 0 0 rg BT 151.81 655.10 Td (The MHSE ) Tj ET Q q 0 0 0 rg BT 199.96 655.10 Td (T) Tj ET Q q 0 0 0 rg BT 205.37 655.10 Td (erm Loan was issued at a discount of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 355.89 655.10 Td (1%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 369.22 655.10 Td (. Debt issuance costs and the discount are ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 643.10 Td (amortized over the term of the MHSE ) Tj ET Q q 0 0 0 rg BT 225.94 643.10 Td (T) Tj ET Q q 0 0 0 rg BT 231.35 643.10 Td (erm Loan and are included in interest expense, net within the consolidated ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 631.10 Td (statements of operations. ) Tj ET Q q 0 0 0 rg BT 174.02 631.10 Td (The amount of amortization included in interest expense, net was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 437.55 631.10 Td ($316) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 457.55 631.10 Td ( for the three ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 619.10 Td (months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 130.33 619.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 193.92 619.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 213.36 619.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 233.36 619.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 286.02 619.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 597.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 597.10 Td (The MHSE ) Tj ET Q q 0 0 0 rg BT 156.15 597.10 Td (T) Tj ET Q q 0 0 0 rg BT 161.56 597.10 Td (erm Loan requires quarterly amortization payments totaling ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 402.87 597.10 Td (1%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 416.20 597.10 Td ( per annum of the original ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 585.10 Td (principal amount of the facility) Tj ET Q q 0 0 0 rg BT 195.75 585.10 Td (, with the balance payable on the final maturity date of December 18, 2019. ) Tj ET Q q 0 0 0 rg BT 500.19 585.10 Td (The ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 573.10 Td (MHSE ) Tj ET Q q 0 0 0 rg BT 102.10 573.10 Td (T) Tj ET Q q 0 0 0 rg BT 107.51 573.10 Td (erm Loan also includes customary mandatory prepayment requirements based on certain events such as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 561.10 Td (asset sales, debt issuances, and defined levels of excess cash flows.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 539.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 539.10 Td (The fair value of the MHSE ) Tj ET Q q 0 0 0 rg BT 222.23 539.10 Td (T) Tj ET Q q 0 0 0 rg BT 227.64 539.10 Td (erm Loan was approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 347.04 539.10 Td ($241,931) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 384.54 539.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 403.98 539.10 Td ($241,325) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 441.48 539.10 Td ( as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 465.64 539.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 529.24 539.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 527.10 Td (and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 88.94 527.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 167.52 527.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 220.18 527.10 Td (. ) Tj ET Q q 0 0 0 rg BT 225.00 527.10 Td (The Company estimates the fair value of the MHSE ) Tj ET Q q 0 0 0 rg BT 435.05 527.10 Td (T) Tj ET Q q 0 0 0 rg BT 440.46 527.10 Td (erm Loan utilizing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 515.10 Td (market quotations for debt that have quoted prices in active markets. Since the MHSE ) Tj ET Q q 0 0 0 rg BT 418.11 515.10 Td (T) Tj ET Q q 0 0 0 rg BT 423.52 515.10 Td (erm Loan does not trade on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 503.10 Td (a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 491.10 Td (rates currently available for debt with similar terms and average maturities \(Level 2\). ) Tj ET Q q 0 0 0 rg BT 414.09 491.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 438.53 491.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 502.13 491.10 Td (, the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 479.10 Td (remaining contractual life of the MHSE ) Tj ET Q q 0 0 0 rg BT 233.44 479.10 Td (T) Tj ET Q q 0 0 0 rg BT 238.85 479.10 Td (erm Loan is approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 349.37 479.10 Td (3.75) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 366.87 479.10 Td ( years.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 458.10 Td (Scheduled Principal Payments) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 437.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 437.10 Td (The scheduled principal payments required under the terms of the MHGE Senior Secured Notes, MHGE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 425.10 Td (Facilities, MHGE PIK ) Tj ET Q q 0 0 0 rg BT 164.04 425.10 Td (T) Tj ET Q q 0 0 0 rg BT 169.45 425.10 Td (oggle Notes and the MHSE ) Tj ET Q q 0 0 0 rg BT 281.75 425.10 Td (T) Tj ET Q q 0 0 0 rg BT 287.16 425.10 Td (erm Loan were as follows:) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 386.60 365.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 437.50 386.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 386.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 356.60 365.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 437.50 356.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 356.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 326.60 365.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 437.50 326.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 326.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 296.60 365.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 437.50 296.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 296.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 266.60 365.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 437.50 266.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 266.60 99.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 441.5 400.6 m 540.5 400.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 441.5 386.6 m 540.5 386.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 441.5 296.6 m 540.5 296.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 441.5 281.6 m 540.5 281.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 441.5 266.6 m 540.5 266.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 441.5 253.60000000000002 m 540.5 253.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 441.5 251.60000000000002 m 540.5 251.60000000000002 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 479.50 405.28 Td (As of) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 457.40 391.28 Td (March 31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 376.27 Td (Remainder of 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 444.00 376.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.15 376.27 Td (79,298) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 361.27 Td (2017) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 514.15 361.27 Td (9,290) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 346.27 Td (2018) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 514.15 346.27 Td (9,290) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 331.27 Td (2019) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 496.65 331.27 Td (1,318,708) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 316.27 Td (2020) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 526.65 316.27 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 301.27 Td (2021 and beyond) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.15 301.27 Td (800,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 496.65 286.27 Td (2,216,586) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 75.00 271.27 Td (Less: Current portion) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.15 271.27 Td (81,620) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 444.00 257.28 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 496.65 257.28 Td (2,134,966) Tj ET Q BT /F1 10.00 Tf ET BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 213.10 Td (7. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 90.00 213.10 Td (Segment Reporting) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 184.60 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 184.60 Td (The Company manages and reports its businesses in the following segments:) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 90.00 160.60 Td ( ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 108.00 160.60 Td (Higher) Tj ET Q q 0 0 0 rg BT 137.81 160.60 Td ( Education) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 184.22 160.60 Td (: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 190.05 160.60 Td (Provides instructional content, adaptive learning, assessment and institutional services ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 148.60 Td (to students, professors, provosts and presidents in the college, university and postgraduate markets in the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 136.60 Td (United States and around the world.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 112.60 Td ( ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 108.00 112.60 Td (K - 12: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 139.94 112.60 Td (Provides instructional and supplemental solutions and services to the PreK-12 market. K - 12 of) Tj ET Q q 0 0 0 rg BT 523.29 112.60 Td (fers ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 100.60 Td (a comprehensive portfolio of educational resources to elementary and secondary schools both in digital and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 88.60 Td (print, with a focus on supporting educators and aligning assessment and instruction to improve student ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 76.60 Td (achievement.) Tj ET Q endstream endobj 53 0 obj <> endobj 54 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (23) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 701.10 Td ( ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 108.00 701.10 Td (International) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 164.67 701.10 Td (: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 170.50 701.10 Td (Leverages our global scale, brand recognition and extensive product portfolio to serve ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 689.10 Td (educational and professional markets around the world. International pursues numerous product models to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 677.10 Td (drive growth, ranging from reselling primarily Higher Education and Professional of) Tj ET Q q 0 0 0 rg BT 446.34 677.10 Td (ferings to creating ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 665.10 Td (locally developed product suites customized for each region.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 641.10 Td ( ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 108.00 641.10 Td (Pr) Tj ET Q q 0 0 0 rg BT 118.37 641.10 Td (ofessional) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 160.04 641.10 Td (: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 165.87 641.10 Td (Provides content and subscription-based information services for the professional business, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 629.10 Td (medical, technical and education/test-preparation communities, including for professionals preparing for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 617.10 Td (entry into graduate programs.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 593.10 Td ( ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 108.00 593.10 Td (Other) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 133.55 593.10 Td (: Includes certain transactions or adjustments that our CODM considers to be unusual and/or non-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 581.10 Td (operational.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 557.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 557.10 Td (The Company) Tj ET Q q 0 0 0 rg BT 167.71 557.10 Td (s business segments are consistent with how management views the markets served by the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 545.10 Td (Company) Tj ET Q q 0 0 0 rg BT 110.24 545.10 Td (. ) Tj ET Q q 0 0 0 rg BT 115.06 545.10 Td (The CODM reviews their separate financial information to assess performance and to allocate resources. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 533.10 Td (W) Tj ET Q q 0 0 0 rg BT 80.64 533.10 Td (e measure and evaluate our reportable segments based on segment ) Tj ET Q q 0 0 0 rg BT 347.76 533.10 Td (Adjusted Revenue and ) Tj ET Q q 0 0 0 rg BT 440.24 533.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 514.96 533.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 521.10 Td (believe they provide additional information to management and investors to measure our performance and evaluate ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 509.10 Td (our ability to service our indebtedness. ) Tj ET Q q 0 0 0 rg BT 229.28 509.10 Td (W) Tj ET Q q 0 0 0 rg BT 237.92 509.10 Td (e include the change in deferred revenue to GAAP) Tj ET Q q 0 0 0 rg BT 439.69 509.10 Td ( revenue to arrive at ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 497.10 Td (Adjusted Revenue. ) Tj ET Q q 0 0 0 rg BT 152.54 497.10 Td (Adjusted Revenue is a key metric that we use to manage our business as it reflects the sales ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 485.10 Td (activity in a given period and provides comparability during this time of digital transition, particularly in the K-12 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 473.10 Td (market, in which our customers typically pay for five to eight-year contracts upfront. Furthermore, ) Tj ET Q q 0 0 0 rg BT 468.27 473.10 Td (Adjusted ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 461.10 Td (Revenue incorporates the change in deferred revenue that is reflected in the calculation of ) Tj ET Q q 0 0 0 rg BT 432.95 461.10 Td (Adjusted EBITDA. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 449.10 Td (Therefore when the Company uses a mar) Tj ET Q q 0 0 0 rg BT 236.20 449.10 Td (gin calculation based on ) Tj ET Q q 0 0 0 rg BT 335.07 449.10 Td (Adjusted EBITDA, the mar) Tj ET Q q 0 0 0 rg BT 445.42 449.10 Td (gin has to be based on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 435.90 Td (Adjusted Revenue.) Tj ET Q BT /F1 11.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0.12156862745098039 0.28627450980392155 0.49019607843137253 rg BT 148.09 435.90 Td ( ) Tj ET Q BT /F1 10.00 Tf ET 0 Tr /GS0 gs 0 Tw 0 Tc 100 Tz 0 TL q 0 0 0 rg BT 150.84 435.90 Td (W) Tj ET Q q 0 0 0 rg BT 159.48 435.90 Td (e exclude from segment ) Tj ET Q q 0 0 0 rg BT 257.23 435.90 Td (Adjusted EBITDA: interest expense \(income\), net, income tax ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 423.90 Td (\(benefit\) provision, depreciation, amortization and pre-publication amortization and certain transactions or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 411.90 Td (adjustments that our CODM does not consider for the purposes of making decisions to allocate resources among ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 399.90 Td (segments or assessing segment performance. ) Tj ET Q q 0 0 0 rg BT 253.06 399.90 Td (Although we exclude these amounts from segment ) Tj ET Q q 0 0 0 rg BT 457.74 399.90 Td (Adjusted EBITDA, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 387.90 Td (they are included in reported consolidated net income \(loss\) and are included in the reconciliation below) Tj ET Q q 0 0 0 rg BT 488.70 387.90 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 366.90 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 366.90 Td (Adjusted Revenue and ) Tj ET Q q 0 0 0 rg BT 200.48 366.90 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 275.20 366.90 Td ( are not presentations made in accordance with U.S. GAAP) Tj ET Q q 0 0 0 rg BT 512.26 366.90 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 354.90 Td (the use of the terms, ) Tj ET Q q 0 0 0 rg BT 154.76 354.90 Td (Adjusted Revenue and ) Tj ET Q q 0 0 0 rg BT 247.24 354.90 Td (Adjusted EBITDA, varies from others in our industry) Tj ET Q q 0 0 0 rg BT 461.00 354.90 Td (. ) Tj ET Q q 0 0 0 rg BT 465.45 354.90 Td (Adjusted Revenue ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 342.90 Td (and ) Tj ET Q q 0 0 0 rg BT 88.39 342.90 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 163.10 342.90 Td ( should be considered in addition to, not as a substitute for) Tj ET Q q 0 0 0 rg BT 396.00 342.90 Td (, revenue and net income \(loss\), or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 330.90 Td (other measures of financial performance derived in accordance with U.S. GAAP) Tj ET Q q 0 0 0 rg BT 393.73 330.90 Td ( as measures of operating ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 318.90 Td (performance or cash flows as measures of liquidity) Tj ET Q q 0 0 0 rg BT 275.45 318.90 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 294.90 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 294.90 Td (Segment asset disclosure is not used by the CODM as a measure of segment performance since the segment ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 282.90 Td (evaluation is driven by ) Tj ET Q q 0 0 0 rg BT 165.32 282.90 Td (Adjusted Revenue and ) Tj ET Q q 0 0 0 rg BT 257.80 282.90 Td (Adjusted EBITDA. ) Tj ET Q q 0 0 0 rg BT 337.51 282.90 Td (As such, segment assets are not disclosed in the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 270.90 Td (notes to the accompanying unaudited consolidated financial statements.) Tj ET Q endstream endobj 55 0 obj <> endobj 56 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (24) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 713.10 Td (The following tables set forth information about the Company) Tj ET Q q 0 0 0 rg BT 359.62 713.10 Td (s operations by its segments:) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 678.60 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 678.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 678.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 678.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 678.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 647.60 262.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 647.60 4.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 647.60 99.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 647.60 4.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 647.60 99.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 615.60 262.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 615.60 4.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 615.60 99.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 615.60 4.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 615.60 99.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 583.60 262.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 583.60 4.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 583.60 99.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 583.60 4.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 583.60 99.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 551.60 262.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 551.60 4.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 551.60 99.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 551.60 4.00 -16.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 551.60 99.00 -16.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 678.6 m 436.5 678.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 678.6 m 539.5 678.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 583.6 m 436.5 583.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 583.6 m 539.5 583.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 583.6 m 436.5 583.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 567.6 m 436.5 567.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 567.6 m 539.5 567.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 567.6 m 539.5 567.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 551.6 m 539.5 551.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 551.6 m 436.5 551.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 536.6 m 436.5 536.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 534.6 m 436.5 534.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 551.6 m 539.5 551.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 536.6 m 539.5 536.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 534.6 m 539.5 534.6 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 341.00 693.33 Td (Three Months Ended) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 352.15 683.33 Td (March 31, 2016) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 444.00 693.28 Td (Three Months Ended) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 455.15 683.28 Td (March 31, 2015) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 668.28 Td (Adjusted Revenue:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 86.00 652.27 Td (Higher Education) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 340.00 652.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 400.15 652.27 Td (127,296) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.00 652.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 652.27 Td (118,981) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 86.00 637.22 Td (K - 12) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 405.15 636.27 Td (46,200) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 636.27 Td (36,558) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 86.00 620.27 Td (International) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 405.15 620.27 Td (42,514) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 620.27 Td (42,969) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 86.00 604.27 Td (Professional) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 405.15 604.27 Td (22,048) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 604.27 Td (22,079) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 86.00 588.27 Td (Other) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 417.65 588.27 Td (369) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 520.65 588.27 Td (785) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 573.22 Td ( Total Adjusted Revenue \(1\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 400.15 573.22 Td (238,427) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 573.22 Td (221,372) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 557.22 Td ( Change in deferred revenue) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 405.15 556.27 Td (28,300) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 557.22 Td (25,535) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 541.33 Td ( Total Consolidated Revenue) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 340.00 541.33 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 400.15 541.33 Td (266,727) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 443.00 541.33 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 503.15 541.33 Td (246,907) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 524.10 Td (\(1\) ) Tj ET Q q 0 0 0 rg BT 85.98 524.10 Td (The elimination of inter) Tj ET Q q 0 0 0 rg BT 181.03 524.10 Td (-segment revenues was not significant to the revenues of any one segment.) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 513.60 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 513.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 513.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 513.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 513.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 483.60 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 483.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 483.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 483.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 483.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 453.60 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 453.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 453.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 453.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 453.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 423.60 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 423.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 423.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 423.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 423.60 99.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 423.6 m 436.5 423.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 423.6 m 539.5 423.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 423.6 m 436.5 423.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 409.6 m 436.5 409.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 407.6 m 436.5 407.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 409.6 m 539.5 409.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 407.6 m 539.5 407.6 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 503.28 Td (Adjusted EBITDA:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 86.00 488.27 Td (Higher Education) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 340.00 488.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 410.15 488.27 Td (8,117) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.00 488.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 520.65 488.27 Td (465) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 86.00 473.27 Td (K - 12) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 401.80 473.32 Td (\(76,027) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 473.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.80 473.32 Td (\(87,857) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 473.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 86.00 458.27 Td (International) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 406.80 458.32 Td (\(8,152) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 458.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.80 458.32 Td (\(9,533) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 458.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 86.00 443.27 Td (Professional) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 406.80 443.32 Td (\(1,468) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 443.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 520.65 443.27 Td (761) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 86.00 428.27 Td (Other) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 414.30 428.32 Td (\(439) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 428.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 525.65 428.27 Td (53) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 80.00 413.28 Td (Total Adjusted EBITDA) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 340.00 413.83 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 401.80 413.88 Td (\(77,969) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 432.65 413.83 Td (\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 443.00 413.83 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 504.80 413.88 Td (\(96,111) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 535.65 413.83 Td (\)) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 385.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 385.10 Td (Reconciliation of ) Tj ET Q q 0 0 0 rg BT 179.09 385.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 253.81 385.10 Td ( to the consolidated statements of operations is as follows:) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 343.60 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 343.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 343.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 343.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 343.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 313.60 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 313.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 313.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 313.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 313.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 283.60 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 283.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 283.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 283.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 283.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 253.60 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 253.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 253.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 253.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 253.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 223.60 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 223.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 223.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 223.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 223.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 193.60 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 193.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 193.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 193.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 193.60 99.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 343.6 m 436.5 343.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 343.6 m 539.5 343.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 343.6 m 436.5 343.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 343.6 m 539.5 343.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 208.60000000000002 m 436.5 208.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 208.60000000000002 m 539.5 208.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 208.60000000000002 m 436.5 208.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 208.60000000000002 m 539.5 208.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 178.60000000000002 m 436.5 178.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 178.60000000000002 m 539.5 178.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 178.60000000000002 m 436.5 178.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 155.60000000000002 m 436.5 155.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 153.60000000000002 m 436.5 153.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 178.60000000000002 m 539.5 178.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 155.60000000000002 m 539.5 155.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 153.60000000000002 m 539.5 153.60000000000002 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 341.00 358.33 Td (Three Months Ended) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 352.15 348.33 Td (March 31, 2016) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 444.00 358.28 Td (Three Months Ended) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 455.15 348.28 Td (March 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 333.27 Td (Total Adjusted EBITDA) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 340.00 333.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 401.80 333.32 Td (\(77,969) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 333.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.00 333.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.80 333.32 Td (\(96,111) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 333.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 318.27 Td (Interest \(expense\) income, net) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 401.80 318.32 Td (\(46,225) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 318.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.80 318.32 Td (\(48,284) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 318.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 303.27 Td (Benefit \(provision\) for taxes on income) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 417.65 303.27 Td (214) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 513.15 303.27 Td (2,685) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 288.27 Td (Depreciation, amortization and pre-publication amortization) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 401.80 288.32 Td (\(48,416) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 288.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.80 288.32 Td (\(42,692) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 288.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 273.27 Td (Change in deferred revenue) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 405.15 273.27 Td (28,300) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 273.27 Td (25,535) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 258.27 Td (Restructuring and cost savings implementation charges) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 406.80 258.32 Td (\(3,333) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 258.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.80 258.32 Td (\(7,677) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 258.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 243.27 Td (Sponsor fees) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 414.30 243.32 Td (\(875) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 243.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 517.30 243.32 Td (\(875) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 243.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 228.27 Td (Other) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 406.80 228.32 Td (\(3,535) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 228.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.80 228.32 Td (\(7,080) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 228.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 213.27 Td (Pre-publication investment) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 405.15 213.27 Td (12,959) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 213.27 Td (19,732) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 198.72 Td (Net \(loss\) income from continuing operations) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 396.80 198.77 Td (\(138,880) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 198.72 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 499.80 198.77 Td (\(154,767) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 198.72 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 183.27 Td (Net \(loss\) income from discontinued operations, net of taxes) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 414.30 183.32 Td (\(836) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 183.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.80 183.32 Td (\(7,570) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 183.27 Td (\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 169.28 Td (Net \(loss\) income attributable to McGraw-Hill Education,) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 159.28 Td (Inc.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 340.00 159.28 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 396.80 159.33 Td (\(139,716) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 432.65 159.28 Td (\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 443.00 159.28 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 499.80 159.33 Td (\(162,337) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 535.65 159.28 Td (\)) Tj ET Q BT /F1 10.00 Tf ET endstream endobj 57 0 obj <> endobj 58 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (25) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 713.10 Td (The ) Tj ET Q q 0 0 0 rg BT 126.05 713.10 Td (following ) Tj ET Q q 0 0 0 rg BT 167.43 713.10 Td (is ) Tj ET Q q 0 0 0 rg BT 176.60 713.10 Td (a ) Tj ET Q q 0 0 0 rg BT 183.54 713.10 Td (schedule ) Tj ET Q q 0 0 0 rg BT 221.03 713.10 Td (of ) Tj ET Q q 0 0 0 rg BT 231.86 713.10 Td (revenue ) Tj ET Q q 0 0 0 rg BT 266.00 713.10 Td (and ) Tj ET Q q 0 0 0 rg BT 282.94 713.10 Td (long-lived ) Tj ET Q q 0 0 0 rg BT 326.54 713.10 Td (assets ) Tj ET Q q 0 0 0 rg BT 352.38 713.10 Td (by ) Tj ET Q q 0 0 0 rg BT 364.88 713.10 Td (geographic ) Tj ET Q q 0 0 0 rg BT 411.80 713.10 Td (region:) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 652.60 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 652.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 652.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 652.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 652.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 622.60 262.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 622.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 622.60 99.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 622.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 622.60 99.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 676.6 m 436.5 676.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 436.5 676.6 m 440.5 676.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 676.6 m 539.5 676.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 676.6 m 436.5 676.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 652.6 m 436.5 652.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 676.6 m 539.5 676.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 652.6 m 539.5 652.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 652.6 m 539.5 652.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 622.6 m 539.5 622.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 622.6 m 436.5 622.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 609.6 m 436.5 609.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 607.6 m 436.5 607.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 622.6 m 539.5 622.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 609.6 m 539.5 609.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 607.6 m 539.5 607.6 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 412.55 681.28 Td (Revenue \(1\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 341.00 667.28 Td (Three Months Ended) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 352.15 657.28 Td (March 31, 2016) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 444.00 667.28 Td (Three Months Ended) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 455.15 657.28 Td (March 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 642.27 Td (United States) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 340.00 642.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 400.15 642.27 Td (224,075) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.00 642.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 642.27 Td (202,215) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 627.27 Td (International) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 405.15 627.27 Td (42,652) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 627.27 Td (44,692) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 613.28 Td (Total) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 340.00 613.28 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 400.15 613.28 Td (266,727) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 443.00 613.28 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 503.15 613.28 Td (246,907) Tj ET Q BT /F1 10.00 Tf ET 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 556.60 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 556.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 556.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 556.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 556.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 526.60 262.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 526.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 526.60 99.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 526.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 526.60 99.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 584.6 m 436.5 584.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 436.5 584.6 m 440.5 584.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 584.6 m 539.5 584.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 570.6 m 436.5 570.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 436.5 570.6 m 440.5 570.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 570.6 m 539.5 570.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 570.6 m 436.5 570.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 556.6 m 436.5 556.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 570.6 m 539.5 570.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 556.6 m 539.5 556.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 556.6 m 539.5 556.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 526.6 m 539.5 526.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 526.6 m 436.5 526.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 513.6 m 436.5 513.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 511.6 m 436.5 511.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 526.6 m 539.5 526.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 513.6 m 539.5 513.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 511.6 m 539.5 511.6 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 393.55 589.28 Td (Long-lived Assets \(2\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 427.00 575.28 Td (As of) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 353.40 561.28 Td (March 31, 2016) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 449.15 561.28 Td (December 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 546.27 Td (United States) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 340.00 546.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 400.15 546.27 Td (269,086) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.00 546.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 546.27 Td (266,959) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 531.27 Td (International) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 405.15 531.27 Td (35,021) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 531.27 Td (34,604) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 517.28 Td (Total) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 340.00 517.28 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 400.15 517.28 Td (304,107) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 443.00 517.28 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 503.15 517.28 Td (301,563) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 501.10 Td (\(1\) ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 501.10 Td (Revenues are attributed to a geographic region based on the location of customer) Tj ET Q q 0 0 0 rg BT 431.22 501.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 489.10 Td (\(2\) ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 489.10 Td (Reflects total assets less current assets, goodwill, intangible assets, investments, deferred financing costs ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 477.10 Td (and non-current deferred tax assets.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 453.10 Td (8. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 108.00 453.10 Td (T) Tj ET Q q 0 0 0 rg BT 113.75 453.10 Td (axes on Income) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 429.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 429.10 Td (For the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 139.11 429.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 159.09 429.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 219.92 429.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 283.52 429.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 302.96 429.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 322.96 429.10 Td (, the ef) Tj ET Q q 0 0 0 rg BT 350.26 429.10 Td (fective tax rate on continuing operations was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 417.10 Td (0.2%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 92.83 417.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 112.27 417.10 Td (1.7%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 133.10 417.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 185.76 417.10 Td (. ) Tj ET Q q 0 0 0 rg BT 190.21 417.10 Td (As of December31, 2014, a full valuation allowance was recorded for federal and state ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 405.10 Td (deferred tax assets due to negative evidence of cumulative book losses.For the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 390.23 405.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 410.22 405.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 471.04 405.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 534.64 405.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 393.10 Td (and March 31, 2015, no deferred income tax benefit was recognized for the domestic loss on operations. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 369.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 369.10 Td (At the end of each interim period, we estimate the annual ef) Tj ET Q q 0 0 0 rg BT 347.17 369.10 Td (fective tax rate and apply that rate to our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 357.10 Td (ordinary quarterly earnings. ) Tj ET Q q 0 0 0 rg BT 185.67 357.10 Td (The tax expense or benefit related to significant, unusual or extraordinary items that will ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 345.10 Td (be separately reported or reported net of their related tax ef) Tj ET Q q 0 0 0 rg BT 307.81 345.10 Td (fect that are individually computed, are recognized in the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 333.10 Td (interim period in which those items occur) Tj ET Q q 0 0 0 rg BT 238.07 333.10 Td (. In addition, the ef) Tj ET Q q 0 0 0 rg BT 313.98 333.10 Td (fect of changes in enacted tax laws or rates or tax status ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 321.10 Td (is recognized in the interim period in which the change occurs. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 297.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 297.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 132.44 297.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 196.04 297.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 215.48 297.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 294.06 297.10 Td (, the total amount of federal, state and local, and foreign ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 285.10 Td (unrecognized tax benefitswas ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 195.29 285.10 Td ($1,477) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 222.79 285.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 242.22 285.10 Td ($1,323) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 269.72 285.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 322.39 285.10 Td (, exclusive of interest and penalties, substantially all ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 273.10 Td (of which would impact the ef) Tj ET Q q 0 0 0 rg BT 189.29 273.10 Td (fective tax rate. ) Tj ET Q q 0 0 0 rg BT 253.51 273.10 Td (W) Tj ET Q q 0 0 0 rg BT 262.15 273.10 Td (e recognize accrued interest and penalties related to unrecognized tax ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 261.10 Td (benefits in interest expense and operating expense, respectively) Tj ET Q q 0 0 0 rg BT 325.14 261.10 Td (. In addition to the unrecognized tax benefits, as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 249.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 135.60 249.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 155.04 249.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 233.62 249.10 Td (, we had ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 269.72 249.10 Td ($805) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 289.72 249.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 309.16 249.10 Td ($806) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 329.16 249.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 381.82 249.10 Td (, of accrued interest and penalties ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 237.10 Td (associated with uncertain tax positions. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 213.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 213.10 Td (Under the terms of the Founding ) Tj ET Q q 0 0 0 rg BT 240.76 213.10 Td (Acquisition, MHC is contractually liable for income tax assessments for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 201.10 Td (Predecessor periods through March22, 2013. ) Tj ET Q q 0 0 0 rg BT 255.85 201.10 Td (An indemnification receivable from MHC of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 438.02 201.10 Td ($1,21) Tj ET Q q 0 0 0 rg BT 460.15 201.10 Td (1) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 465.15 201.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 484.59 201.10 Td ($1,224) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 512.09 201.10 Td ( has ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 189.10 Td (been recorded in non-current assets as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 237.77 189.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.37 189.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 320.80 189.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 399.39 189.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 452.05 189.10 Td (, for the unrecognized ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 177.10 Td (tax benefit, interest, and penalties related to controlled foreign corporations as taxpayers of record.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 153.10 Td (9. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 90.00 153.10 Td (Employee Benefits) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 129.10 Td (Defined Contribution Plans) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 107.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 107.10 Td (A) Tj ET Q q 0 0 0 rg BT 114.67 107.10 Td ( majority of the Company) Tj ET Q q 0 0 0 rg BT 220.76 107.10 Td (s employees are participants in voluntary 401\(k\) plans sponsored by the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 95.10 Td (Company under which the Company matches employee contributions up to certain levels of compensation.) Tj ET Q endstream endobj 59 0 obj <> endobj 60 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (26) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 713.25 Td (10. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 90.00 713.25 Td (Stock-Based Compensation) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 689.25 Td (The Company issues share based compensation under the Management Equity Plan \(the Plan\) which was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 677.25 Td (established during the quarter ended June 30, 2013. ) Tj ET Q q 0 0 0 rg BT 280.10 677.25 Td (The Plan permits the grant of stock options, restricted stock, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 665.25 Td (restricted stock units and other equity based awards to the Company) Tj ET Q q 0 0 0 rg BT 347.49 665.25 Td (s employees and directors.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 641.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 641.25 Td (Stock options granted generally vest over five years with 50% vesting on cumulative financial performance ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 629.25 Td (measures under the Plan and the remaining 50% vest in equal installments, over five years, in each case subject to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 617.25 Td (continued service. Stock options terminate on the earliest of the tenth year from the date of the grant or other ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 605.25 Td (committee action, as defined under the Plan. Restricted stock and restricted stock units issued during the year end ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 593.25 Td (December31, 2014 vest on December 31, 2016 subject to the achievement of certain performance measures and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 581.25 Td (continued service. In relation to restricted stock and restricted stock units issued during the year ended December31, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 569.25 Td (2015, 50% vest subject to the achievement of certain performance measures over a three year period and the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 557.25 Td (remaining 50% vest on December 31, 2017 and in each instance, are subject to continued service.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 533.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 533.25 Td (The Company measures compensation cost for share based awards according to the equity method. In ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 521.25 Td (accordance with the expense recognition provisions of those standards, the Company amortizes unearned ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 509.25 Td (compensation associated with share based awards on a straight-line basis over the vesting period of the option or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 497.25 Td (award.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 473.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 473.25 Td (The following table sets forth the total recognized compensation expense related to stock option grants and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 461.25 Td (restricted stock and restricted stock units issuances for all periods presented:) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 414.75 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 414.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 414.75 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 414.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 414.75 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 384.75 262.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 384.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 384.75 99.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 384.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 384.75 99.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 414.75 m 436.5 414.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 414.75 m 539.5 414.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 414.75 m 436.5 414.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 414.75 m 539.5 414.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 384.75 m 436.5 384.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 384.75 m 539.5 384.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 384.75 m 436.5 384.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 371.75 m 436.5 371.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 369.75 m 436.5 369.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 384.75 m 539.5 384.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 371.75 m 539.5 371.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 369.75 m 539.5 369.75 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 341.00 429.43 Td (Three Months Ended) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 352.15 419.43 Td (March 31, 2016) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 444.00 429.43 Td (Three Months Ended) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 455.15 419.43 Td (March 31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 404.42 Td (Stock option expense) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 340.00 404.42 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 410.15 404.42 Td (2,523) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.00 404.42 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 513.15 404.42 Td (2,557) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 389.42 Td (Restricted stock and unit awards expense) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 410.15 389.42 Td (1,264) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 513.15 389.42 Td (1,467) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 375.43 Td (Total stock-based compensation expense) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 340.00 375.43 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 410.15 375.43 Td (3,787) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 443.00 375.43 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 513.15 375.43 Td (4,024) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 347.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 347.25 Td (An income tax benefit for stock options and restricted stock units was not recognized for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 480.12 347.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 500.10 347.25 Td ( months ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 335.25 Td (ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 98.38 335.25 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 161.98 335.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 181.41 335.25 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 201.41 335.25 Td ( as a result of the Company recording a valuation allowance against these tax ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 323.25 Td (benefits.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 299.25 Td (Stock Options) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 274.05 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 274.05 Td (As of) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 129.94 274.05 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 132.69 274.05 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 196.29 274.05 Td (, there was) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 241.83 274.05 Td ($20,092) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 274.33 274.05 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 277.08 274.05 Td (of unrecognized compensation expense related to the Company's ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 262.05 Td (grant of nonvested stock options. Unrecognized compensation expense related to nonvested stock options granted to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 250.05 Td (employees is expected to be recognized over a weighted-average period of) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 372.70 250.05 Td (2.6) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 385.20 250.05 Td (years.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 226.05 Td (Restricted stock and restricted stock units) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 200.85 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 200.85 Td (As of) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 129.94 200.85 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 132.69 200.85 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 196.29 200.85 Td (, there was) Tj ET Q BT /F1 11.00 Tf ET q 0 0 0 rg BT 239.33 200.85 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 242.08 200.85 Td ($4,344) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 269.58 200.85 Td ( of unrecognized compensation expense related to the Company's ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 188.85 Td (grant of nonvested restricted shares and restricted stock units to employees. Unrecognized compensation expense ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 176.85 Td (related to nonvested restricted shares and restricted stock units granted to employees is expected to be recognized ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 164.85 Td (over a weighted-average period of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 211.65 164.85 Td (2.3) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 224.15 164.85 Td ( years.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 140.85 Td (1) Tj ET Q q 0 0 0 rg BT 76.45 140.85 Td (1. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 90.00 140.85 Td (Earnings \(Loss\) per) Tj ET Q q 0 0 0 rg BT 174.27 140.85 Td ( Shar) Tj ET Q q 0 0 0 rg BT 197.15 140.85 Td (e) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 116.85 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 116.85 Td (Basic earnings \(loss\) per share is computed by dividing net income \(loss\) by the weighted-average number ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 104.85 Td (of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income by ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 92.85 Td (the weighted-average number of common stock outstanding, including all potentially dilutive common stock.) Tj ET Q endstream endobj 61 0 obj <> endobj 62 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (27) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 713.10 Td (The following table sets forth reconciliations of the numerators and denominators used to compute basic ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (and diluted earnings per share of common stock for all periods presented:) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 654.60 262.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 654.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 654.60 99.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 654.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 654.60 99.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 625.60 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 625.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 625.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 625.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 625.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 595.60 262.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 595.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 595.60 99.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 595.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 595.60 99.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 567.60 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 567.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 567.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 567.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 567.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 537.60 262.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 537.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 537.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 537.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 537.60 99.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 508.60 262.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 508.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 508.60 99.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 508.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 508.60 99.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 480.60 262.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 333.50 480.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 337.50 480.60 99.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 436.50 480.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 440.50 480.60 99.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 654.6 m 436.5 654.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 654.6 m 539.5 654.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 654.6 m 436.5 654.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 610.6 m 436.5 610.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 610.6 m 539.5 610.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 610.6 m 436.5 610.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 596.6 m 436.5 596.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 594.6 m 436.5 594.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 610.6 m 539.5 610.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 596.6 m 539.5 596.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 594.6 m 539.5 594.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 537.6 m 436.5 537.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 537.6 m 539.5 537.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 537.6 m 436.5 537.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 523.6 m 436.5 523.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 337.5 521.6 m 436.5 521.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 537.6 m 539.5 537.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 523.6 m 539.5 523.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 440.5 521.6 m 539.5 521.6 l s BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 658.85 Td (\(in thousands, except per share data\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 341.00 669.33 Td (Three Months Ended) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 352.15 659.33 Td (March 31, 2016) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 444.00 669.28 Td (Three Months Ended) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 455.15 659.28 Td (March 31, 2015) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 645.28 Td (Numerator:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 80.00 630.27 Td (Net \(loss\) income from continuing operations) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 340.00 630.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 396.80 630.32 Td (\(138,880) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 630.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.00 630.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 499.80 630.32 Td (\(154,767) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 630.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 80.00 615.27 Td (\(Loss\) income from discontinued operations) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 414.30 615.32 Td (\(836) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 615.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.80 615.32 Td (\(7,570) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 615.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 80.00 600.27 Td (Net \(loss\) income) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 340.00 600.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 396.80 600.32 Td (\(139,716) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 600.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.00 600.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 499.80 600.32 Td (\(162,337) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 600.27 Td (\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 572.28 Td (Denominator:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 133.99 572.28 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 557.27 Td (Basic weighted - average number of shares outstanding) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 405.15 557.27 Td (10,569) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 557.27 Td (10,486) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 542.27 Td (Effect of dilutive securities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.65 542.27 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 525.65 542.27 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 527.27 Td (Diluted weighted-average number of shares outstanding) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 405.15 527.27 Td (10,569) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 527.27 Td (10,486) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 499.28 Td (Basic and Diluted EPS:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 485.17 Td (\(Loss\) income from continuing operations) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 340.00 485.17 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 406.80 485.22 Td (\(13.14) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 485.17 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 443.00 485.17 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.80 485.22 Td (\(14.76) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 485.17 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 471.17 Td (\(Loss\) income from discontinued operations, net of taxes) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 411.80 471.22 Td (\(0.08) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 471.17 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 514.80 471.22 Td (\(0.72) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 471.17 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 457.17 Td (Net \(loss\) income) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 406.80 457.22 Td (\(13.22) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.65 457.17 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.80 457.22 Td (\(15.48) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 457.17 Td (\)) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 429.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 429.10 Td (The number of anti-dilutive shares that have been excluded in the computation of diluted earnings per share ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 417.10 Td (for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 100.88 417.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.86 417.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 181.69 417.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 245.29 417.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 264.72 417.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 284.72 417.10 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 305.28 417.10 Td (334) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 320.28 417.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 339.71 417.10 Td (250) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 354.71 417.10 Td (.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 385.10 Td (12. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 90.00 385.10 Td (Restructuring) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 361.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 361.10 Td (In order to contain costs and mitigate the impact of current and expected future economic conditions, as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 349.10 Td (well as a continued focus on process improvements, we have initiated various restructuring plans over the last ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 337.10 Td (several years. ) Tj ET Q q 0 0 0 rg BT 131.23 337.10 Td (The char) Tj ET Q q 0 0 0 rg BT 166.31 337.10 Td (ges for each restructuring plan, except those included within Other) Tj ET Q q 0 0 0 rg BT 432.48 337.10 Td (, are classified as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 325.10 Td (operating and administration expenses within the consolidated statements of operations. ) Tj ET Q q 0 0 0 rg BT 425.90 325.10 Td (The restructuring char) Tj ET Q q 0 0 0 rg BT 514.57 325.10 Td (ges ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 313.10 Td (included within Other are classified within net \(loss\) income from discontinued operations, net of taxes.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 289.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 289.10 Td (In certain circumstances, reserves are no longer needed because of ef) Tj ET Q q 0 0 0 rg BT 384.06 289.10 Td (ficiencies in carrying out the plans, or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 277.10 Td (because employees previously identified for separation resigned from the Company and did not receive severance or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 265.10 Td (were reassigned due to circumstances not foreseen when the original plans were initiated. In these cases, we reverse ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 253.10 Td (reserves through the consolidated statements of operations when it is determined they are no longer needed.) Tj ET Q endstream endobj 63 0 obj <> endobj 64 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (28) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 713.10 Td (The following table summarizes restructuring information by reporting segment:) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 671.60 86.00 -23.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 158.50 671.60 61.00 -23.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 219.50 671.60 4.00 -23.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 223.50 671.60 60.00 -23.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 283.50 671.60 4.00 -23.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 287.50 671.60 60.00 -23.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 671.60 4.00 -23.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 351.50 671.60 60.00 -23.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 411.50 671.60 4.00 -23.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 415.50 671.60 60.00 -23.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 475.50 671.60 4.00 -23.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 479.50 671.60 61.00 -23.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 634.60 86.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 158.50 634.60 61.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 219.50 634.60 4.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 223.50 634.60 60.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 283.50 634.60 4.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 287.50 634.60 60.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 634.60 4.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 351.50 634.60 60.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 411.50 634.60 4.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 415.50 634.60 60.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 475.50 634.60 4.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 479.50 634.60 61.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 588.60 86.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 158.50 588.60 61.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 219.50 588.60 4.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 223.50 588.60 60.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 283.50 588.60 4.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 287.50 588.60 60.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 588.60 4.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 351.50 588.60 60.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 411.50 588.60 4.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 415.50 588.60 60.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 475.50 588.60 4.00 -32.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 479.50 588.60 61.00 -32.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 158.5 671.6 m 219.5 671.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 158.5 648.6 m 219.5 648.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 223.5 671.6 m 283.5 671.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 223.5 648.6 m 283.5 648.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 287.5 671.6 m 347.5 671.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 287.5 648.6 m 347.5 648.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 351.5 671.6 m 411.5 671.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 351.5 648.6 m 411.5 648.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 415.5 671.6 m 475.5 671.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 415.5 648.6 m 475.5 648.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 479.5 671.6 m 540.5 671.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 479.5 648.6 m 540.5 648.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 158.5 556.6 m 219.5 556.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 158.5 534.6 m 219.5 534.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 158.5 532.6 m 219.5 532.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 223.5 556.6 m 283.5 556.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 223.5 534.6 m 283.5 534.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 223.5 532.6 m 283.5 532.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 287.5 556.6 m 347.5 556.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 287.5 534.6 m 347.5 534.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 287.5 532.6 m 347.5 532.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 351.5 556.6 m 411.5 556.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 351.5 534.6 m 411.5 534.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 351.5 532.6 m 411.5 532.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 415.5 556.6 m 475.5 556.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 415.5 534.6 m 475.5 534.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 415.5 532.6 m 475.5 532.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 479.5 556.6 m 540.5 556.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 479.5 534.6 m 540.5 534.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 479.5 532.6 m 540.5 532.6 l s BT /F2 9.00 Tf ET q 0 0 0 rg BT 175.05 686.95 Td (Higher) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 168.70 676.15 Td (Education) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 243.50 681.55 Td (K-12) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 291.45 681.55 Td (International) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 357.55 681.55 Td (Professional) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 433.55 681.55 Td (Other) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 499.65 681.55 Td (Total) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 75.00 662.05 Td (Balance as of) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 75.00 653.05 Td (December 31, 2015) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 161.00 653.05 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 195.75 653.05 Td (2,805) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 226.00 653.05 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 271.00 653.05 Td () Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 290.00 653.05 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 323.75 653.05 Td (2,284) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 354.00 653.05 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 399.00 653.05 Td () Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 418.00 653.05 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 451.75 653.05 Td (9,630) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 482.00 653.05 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 512.25 653.05 Td (14,719) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 75.00 639.06 Td (Charges:) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 75.00 625.06 Td (Employee severance) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 75.00 616.06 Td (and other personal) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 75.00 607.06 Td (benefits) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 202.50 607.06 Td (678) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 271.00 607.06 Td () Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 330.50 607.06 Td (207) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 399.00 607.06 Td () Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 463.00 607.06 Td () Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 523.50 607.06 Td (885) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 75.00 593.06 Td (Payments:) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 75.00 579.06 Td (Employee severance) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 75.00 570.06 Td (and other personal) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 75.00 561.06 Td (benefits) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 192.75 561.06 Td (\(1,384) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 216.00 561.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 271.00 561.06 Td () Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 327.50 561.06 Td (\(575) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 344.00 561.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 399.00 561.06 Td () Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 448.75 561.06 Td (\(3,211) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 472.00 561.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 513.75 561.06 Td (\(5,170) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 537.00 561.06 Td (\)) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 75.00 547.05 Td (Balance as of March) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 75.00 538.05 Td (31, 2016) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 161.00 538.05 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 195.75 538.05 Td (2,099) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 226.00 538.05 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 271.00 538.05 Td () Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 290.00 538.05 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 323.75 538.05 Td (1,916) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 354.00 538.05 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 399.00 538.05 Td () Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 418.00 538.05 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 451.75 538.05 Td (6,419) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 482.00 538.05 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 512.25 538.05 Td (10,434) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 510.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 510.10 Td (The Company expects to utilize the remaining reserves of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 341.54 510.10 Td ($7,969) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 369.04 510.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 374.04 510.10 Td ($2,065) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 401.54 510.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 420.97 510.10 Td ($400) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 440.97 510.10 Td ( in 2016, 2017 and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 498.10 Td (2018, respectively) Tj ET Q q 0 0 0 rg BT 144.66 498.10 Td (.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 474.10 Td (13. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 90.00 474.10 Td (T) Tj ET Q q 0 0 0 rg BT 95.93 474.10 Td (ransactions with Sponsors) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 450.10 Td (Founding T) Tj ET Q q 0 0 0 rg BT 121.37 450.10 Td (ransactions Fee ) Tj ET Q q 0 0 0 rg BT 189.34 450.10 Td (Agreement) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 426.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 426.10 Td (In connection with the Founding ) Tj ET Q q 0 0 0 rg BT 240.49 426.10 Td (Acquisition, ) Tj ET Q q 0 0 0 rg BT 291.60 426.10 Td (Apollo Global Securities, LLC \(the Service Provider\) ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 414.10 Td (entered into a transaction fee agreement with MHE US Holdings, LLC and ) Tj ET Q q 0 0 0 rg BT 373.87 414.10 Td (AcquisitionCo \(the Founding ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 402.10 Td (T) Tj ET Q q 0 0 0 rg BT 77.76 402.10 Td (ransactions Fee ) Tj ET Q q 0 0 0 rg BT 141.63 402.10 Td (Agreement\) relating to the provision of certain structuring, financial, investment banking and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 390.10 Td (other similar advisory services by the Service Provider to ) Tj ET Q q 0 0 0 rg BT 303.33 390.10 Td (AcquisitionCo, its direct and indirect divisions and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 378.10 Td (subsidiaries, parent entities or controlled af) Tj ET Q q 0 0 0 rg BT 244.54 378.10 Td (filiates \(collectively) Tj ET Q q 0 0 0 rg BT 323.58 378.10 Td (, the Company Group\) in connection with the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 366.10 Td (Founding ) Tj ET Q q 0 0 0 rg BT 112.29 366.10 Td (Acquisition and future transactions. ) Tj ET Q q 0 0 0 rg BT 257.35 366.10 Td (The Company paid the Service Provider a one-time transaction fee of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 354.10 Td ($25,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 104.50 354.10 Td ( in the aggregate in exchange for services rendered in connection with structuring the Founding ) Tj ET Q q 0 0 0 rg BT 487.99 354.10 Td (Acquisition, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 342.10 Td (arranging the financing and performing other services in connection with the Founding ) Tj ET Q q 0 0 0 rg BT 421.91 342.10 Td (Acquisition. Subject to the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 330.10 Td (terms and conditions of the Founding ) Tj ET Q q 0 0 0 rg BT 224.03 330.10 Td (T) Tj ET Q q 0 0 0 rg BT 229.78 330.10 Td (ransactions Fee ) Tj ET Q q 0 0 0 rg BT 293.66 330.10 Td (Agreement, an additional transaction fee equal to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 493.02 330.10 Td (1%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 506.35 330.10 Td ( of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 318.10 Td (aggregate enterprise value is payable in connection with any mer) Tj ET Q q 0 0 0 rg BT 331.44 318.10 Td (ger) Tj ET Q q 0 0 0 rg BT 343.81 318.10 Td (, acquisition, disposition, recapitalization, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 306.10 Td (divestiture, sale of assets, joint venture, issuance of securities \(whether equity) Tj ET Q q 0 0 0 rg BT 384.59 306.10 Td (, equity-linked, debt or otherwise\), ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 294.10 Td (financing or any similar transaction ef) Tj ET Q q 0 0 0 rg BT 224.27 294.10 Td (fected by a member of the Company Group. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 270.10 Td (Management Fee ) Tj ET Q q 0 0 0 rg BT 146.62 270.10 Td (Agreement) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 246.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 246.10 Td (In connection with the Founding ) Tj ET Q q 0 0 0 rg BT 240.49 246.10 Td (Acquisition, ) Tj ET Q q 0 0 0 rg BT 291.60 246.10 Td (Apollo Management ) Tj ET Q q 0 0 0 rg BT 376.40 246.10 Td (VII, L.P) Tj ET Q q 0 0 0 rg BT 408.34 246.10 Td (. \(the Advisor\) entered into a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 234.10 Td (management fee agreement with MHE US Holdings, LLC and ) Tj ET Q q 0 0 0 rg BT 324.16 234.10 Td (AcquisitionCo \(the Management Fee ) Tj ET Q q 0 0 0 rg BT 478.57 234.10 Td (Agreement\) ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 222.10 Td (relating to the provision of certain management consulting and advisory services to the members of the Company ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 210.10 Td (Group. In exchange for the provision of such services, the ) Tj ET Q q 0 0 0 rg BT 305.82 210.10 Td (Advisor will receive a non-refundable annual ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 198.10 Td (management fee of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 151.13 198.10 Td ($3,500) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 178.63 198.10 Td ( in the aggregate. Subject to the terms and conditions of the Management Fee ) Tj ET Q q 0 0 0 rg BT 489.93 198.10 Td (Agreement, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 186.10 Td (upon a change of control or an initial public of) Tj ET Q q 0 0 0 rg BT 258.15 186.10 Td (fering \(IPO\) of a member of the Company Group, the ) Tj ET Q q 0 0 0 rg BT 483.36 186.10 Td (Advisor may ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 174.10 Td (elect to receive a lump sum payment in lieu of future management fees payable to them under the Management Fee ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 162.10 Td (Agreement. For the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 152.53 162.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 172.52 162.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 233.34 162.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 296.94 162.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 316.38 162.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 336.38 162.10 Td (, the Company recorded an expense of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 492.43 162.10 Td ($875) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 512.43 162.10 Td ( for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 150.10 Td (management fees, respectively) Tj ET Q q 0 0 0 rg BT 194.35 150.10 Td (.) Tj ET Q endstream endobj 65 0 obj <> endobj 66 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (29) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 713.25 Td (14. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 90.00 713.25 Td (Commitments and Contingencies) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 689.25 Td (Legal Matters) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 665.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 665.25 Td (In the normal course of business both in the United States and abroad, the Company is a defendant in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 653.25 Td (various lawsuits and legal proceedings which may result in adverse judgments, damages, fines or penalties and is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 641.25 Td (subject to inquiries and investigations by various governmental and regulatory agencies concerning compliance with ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 629.25 Td (applicable laws and regulations. In view of the inherent dif) Tj ET Q q 0 0 0 rg BT 307.30 629.25 Td (ficulty of predicting the outcome of legal matters, we ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 617.25 Td (cannot state with confidence what the timing, eventual outcome, or eventual judgment, damages, fines, penalties or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 605.25 Td (other impact of these pending matters will be. ) Tj ET Q q 0 0 0 rg BT 257.60 605.25 Td (W) Tj ET Q q 0 0 0 rg BT 266.24 605.25 Td (e believe, based on our current knowledge, that the outcome of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 593.25 Td (legal actions, proceedings and investigations currently pending should not have a material adverse ef) Tj ET Q q 0 0 0 rg BT 475.02 593.25 Td (fect on the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 581.25 Td (Company) Tj ET Q q 0 0 0 rg BT 113.67 581.25 Td (s financial condition.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 557.25 Td (15. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 90.00 557.25 Td (Related Party ) Tj ET Q q 0 0 0 rg BT 151.46 557.25 Td (T) Tj ET Q q 0 0 0 rg BT 157.39 557.25 Td (ransactions) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 533.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 533.25 Td (In the normal course of business, the Company has transactions with its wholly owned combined and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 521.25 Td (consolidated subsidiaries and af) Tj ET Q q 0 0 0 rg BT 199.29 521.25 Td (filiated entities.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 497.25 Td (Leader's Quest Ltd) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 473.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 473.25 Td (Leader) Tj ET Q q 0 0 0 rg BT 136.13 473.25 Td () Tj ET Q q 0 0 0 rg BT 138.90 473.25 Td (s Quest Ltd \(Quest\) is a UK-based non-profit enterprise at which Lindsay Levin is the founder ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 461.25 Td (and managing partner) Tj ET Q q 0 0 0 rg BT 158.64 461.25 Td (. Ms. Levin is the spouse of David Levin, who serves as our President and Chief Executive ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 449.25 Td (Of) Tj ET Q q 0 0 0 rg BT 82.37 449.25 Td (ficer) Tj ET Q q 0 0 0 rg BT 100.13 449.25 Td (. Beginning in 2014, the Company entered into an agreement with Quest pursuant to which Quest provided ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 437.25 Td (leadership workshops and other leadership training for twelve members of the Company) Tj ET Q q 0 0 0 rg BT 428.29 437.25 Td (s executive leadership ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 425.25 Td (team. During 2016 and 2015, the Company entered into agreements which Quest will provide additional leadership ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 413.25 Td (workshops and other leadership training for additional members of the Company) Tj ET Q q 0 0 0 rg BT 398.04 413.25 Td (s leadership team. ) Tj ET Q q 0 0 0 rg BT 472.27 413.25 Td (The Company ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 401.25 Td (will pay Quest total fees of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 182.53 401.25 Td ($180) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 202.53 401.25 Td ( during 2016 and paid total fees of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 342.49 401.25 Td ($293) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 362.49 401.25 Td ( during 2015 in connection with the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 389.25 Td (agreements.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 365.25 Td (Presidio T) Tj ET Q q 0 0 0 rg BT 113.58 365.25 Td (echnology Capital, LLC) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 341.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 341.25 Td (The Company entered into a master lease agreement with Presidio ) Tj ET Q q 0 0 0 rg BT 375.51 341.25 Td (T) Tj ET Q q 0 0 0 rg BT 380.92 341.25 Td (echnology Capital, LLC \("Presidio"\), a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 329.25 Td (portfolio company of the Sponsors, primarily for the lease of computer equipment and software. For the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 490.23 329.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 510.21 329.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 317.25 Td (months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 130.33 317.25 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 193.92 317.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 213.36 317.25 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 233.36 317.25 Td (, the Company paid Presidio ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 349.46 317.25 Td ($2,471) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 376.96 317.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 396.40 317.25 Td ($2,378) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 423.90 317.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 476.56 317.25 Td (.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 293.25 Td (Knovation) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 269.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 269.25 Td (Knovation is a privately owned education company that delivers personalized learning solutions to its ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 257.25 Td (customers. ) Tj ET Q q 0 0 0 rg BT 119.87 257.25 Td (The Company's K-12 President is a non-controlling shareholder in Knovation. During 2016, the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 245.25 Td (Company entered into a collaboration agreement with Knovation which provides Engrade users access to the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 233.25 Td (Knovation Content Collection online learning resources. ) Tj ET Q q 0 0 0 rg BT 300.38 233.25 Td (The Company paid Knovation ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 424.25 233.25 Td ($250) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 444.25 233.25 Td ( during the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 490.07 233.25 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 510.06 233.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 221.25 Td (months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 130.33 221.25 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 193.92 221.25 Td ( to cover usage of Knovation's online resources through June 30, 2017.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 197.25 Td (16. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 90.00 197.25 Td (Subsequent Events) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 173.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 173.25 Td (On ) Tj ET Q q 0 0 0 rg BT 122.17 173.25 Td (April 1, 2016, MHGE Holdings used free cash flow generated from operations to prepay $72.5 million ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 161.25 Td (of the MHGE ) Tj ET Q q 0 0 0 rg BT 129.31 161.25 Td (T) Tj ET Q q 0 0 0 rg BT 134.72 161.25 Td (erm Loan due 2019.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 137.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 137.25 Td (On May 4, 2016, MHGE and McGraw-Hill Global Education Finance, Inc. \(together with MHGE, the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 125.25 Td (Issuers\) have closed their of) Tj ET Q q 0 0 0 rg BT 192.88 125.25 Td (fering of $400 million aggregate principal amount of 7.875% Senior Notes due 2024 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 113.25 Td (\(the Notes\) in a private placement \(the Notes Issuance\).) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 89.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 89.25 Td (Concurrently with the closing of the Notes Issuance, MHGE entered into $1,925 million of new senior ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 77.25 Td (secured credit facilities \(the Senior Facilities\), consisting of a five-year $350million senior secured revolving ) Tj ET Q endstream endobj 67 0 obj <> endobj 68 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 207.35 772.75 Td (McGraw-Hill Education, Inc. and subsidiaries) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 205.30 760.75 Td (Notes to the Consolidated Financial Statements) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 176.25 748.75 Td (\(Unaudited, dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (30) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (credit facility \(the "Revolving Facility"\), which was undrawn at closing, and a six-year $1,575 million senior ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (secured term loan credit facility \(the "T) Tj ET Q q 0 0 0 rg BT 229.20 701.10 Td (erm Loan Facility"\). ) Tj ET Q q 0 0 0 rg BT 315.58 701.10 Td (The proceeds from the Notes Issuance and the Senior ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td (Facilities were used to repay the existing MHGE ) Tj ET Q q 0 0 0 rg BT 269.55 689.10 Td (T) Tj ET Q q 0 0 0 rg BT 274.96 689.10 Td (erm Loan and MHSE ) Tj ET Q q 0 0 0 rg BT 363.09 689.10 Td (T) Tj ET Q q 0 0 0 rg BT 368.50 689.10 Td (erm Loan, to repurchase the MHGE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 677.10 Td (Senior Secured Notes, pursuant to the previously announced tender of) Tj ET Q q 0 0 0 rg BT 351.75 677.10 Td (fer) Tj ET Q q 0 0 0 rg BT 362.44 677.10 Td (, to fund a $300 million return of capital to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 665.10 Td (the Company) Tj ET Q q 0 0 0 rg BT 128.38 665.10 Td (s shareholders and to pay certain related fees and expenses. ) Tj ET Q q 0 0 0 rg BT 370.33 665.10 Td (The remaining proceeds, together with ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 653.10 Td (cash on hand, will be used to repurchase or redeem the remaining MHGE Senior Secured Notes. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 629.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 629.10 Td (Concurrently with the closing of the Notes Issuance and the entry into the Senior Facilities, MHGE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 617.10 Td (Holdings completed a reor) Tj ET Q q 0 0 0 rg BT 178.18 617.10 Td (ganization in which all equity interests in MHSE Holdings, which owns the K-12 business ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 605.10 Td (of the Company) Tj ET Q q 0 0 0 rg BT 135.78 605.10 Td (, were contributed to MHGE Holdings, such that MHSE Holdings is a direct subsidiary of MHGE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 593.10 Td (Holdings.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 569.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 569.10 Td (On May 1) Tj ET Q q 0 0 0 rg BT 148.18 569.10 Td (1, 2016, MHGE borrowed $20 million on the Revolving Facility at an interest rate of LIBOR ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 557.10 Td (plus 4.00%.) Tj ET Q endstream endobj 69 0 obj <> endobj 70 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (31) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 701.10 Td (The following discussion and analysis of our r) Tj ET Q q 0 0 0 rg BT 292.92 701.10 Td (esults of operations and financial condition pr) Tj ET Q q 0 0 0 rg BT 478.10 701.10 Td (ovide a ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td (narrative of our r) Tj ET Q q 0 0 0 rg BT 141.91 689.10 Td (esults of operations and financial condition for the thr) Tj ET Q q 0 0 0 rg BT 358.75 689.10 Td (ee months ended Mar) Tj ET Q q 0 0 0 rg BT 444.75 689.10 Td (ch 31, 2016 and 2015. ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 72.00 677.10 Td (Y) Tj ET Q q 0 0 0 rg BT 76.64 677.10 Td (ou should r) Tj ET Q q 0 0 0 rg BT 121.83 677.10 Td (ead the following discussion of our r) Tj ET Q q 0 0 0 rg BT 268.13 677.10 Td (esults of operations and financial condition in conjunction with the ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 72.00 665.10 Td (accompanying unaudited financial statements and notes ther) Tj ET Q q 0 0 0 rg BT 314.92 665.10 Td (eto appearing elsewher) Tj ET Q q 0 0 0 rg BT 408.43 665.10 Td (e in this document.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 641.10 Td (The Science of Learning) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 617.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 617.10 Td (W) Tj ET Q q 0 0 0 rg BT 116.64 617.10 Td (e help unlock the potential of each learner by accelerating learning through intuitive, engaging, ef) Tj ET Q q 0 0 0 rg BT 506.86 617.10 Td (ficient ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 605.10 Td (and ef) Tj ET Q q 0 0 0 rg BT 96.53 605.10 Td (fective experiences. ) Tj ET Q q 0 0 0 rg BT 178.24 605.10 Td (W) Tj ET Q q 0 0 0 rg BT 186.88 605.10 Td (e define the Science of Learning as the understanding of how individuals learn and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 593.10 Td (apply that understanding, grounded in research, to our content, technology and user experience to produce learning ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 581.10 Td (solutions that directly and positively impact individual student outcomes. ) Tj ET Q q 0 0 0 rg BT 366.96 581.10 Td (As a learning science company) Tj ET Q q 0 0 0 rg BT 490.71 581.10 Td (, our goal is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 569.10 Td (to empower educators and learners with information and intuitive learning environments in which to engage more ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 557.10 Td (personally with each other and with critical concepts in order to promote more ef) Tj ET Q q 0 0 0 rg BT 395.87 557.10 Td (fective and ef) Tj ET Q q 0 0 0 rg BT 450.10 557.10 Td (ficient learning.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 533.10 Td (Company Overview) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 509.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 509.10 Td (W) Tj ET Q q 0 0 0 rg BT 116.64 509.10 Td (e are a leading provider of outcome-focused learning solutions, delivering both curated content and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 497.10 Td (digital learning tools and platforms to the students in the classrooms of approximately 250,000 higher education ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 485.10 Td (instructors, 13,000 pre-kinder) Tj ET Q q 0 0 0 rg BT 190.68 485.10 Td (garten through 12) Tj ET Q BT /F1 6.00 Tf ET q 0 0 0 rg BT 261.78 485.10 Td (th ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 267.94 485.10 Td (grade \(K-12\) school districts and a wide variety of academic ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 473.10 Td (institutions, professionals and companies in over 135 countries. ) Tj ET Q q 0 0 0 rg BT 328.45 473.10 Td (W) Tj ET Q q 0 0 0 rg BT 337.08 473.10 Td (e have evolved our business from a printcentric ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 461.10 Td (producer of textbooks and instructional materials to a leader in the development of digital content and technology-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 449.10 Td (enabled adaptive learning solutions that are delivered anywhere, anytime. ) Tj ET Q q 0 0 0 rg BT 368.65 449.10 Td (W) Tj ET Q q 0 0 0 rg BT 377.29 449.10 Td (e believe we have established a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 437.10 Td (reputation as an industry leader in the delivery of innovative educational content and methodologies.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 413.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 413.10 Td (As learners and educators have become increasingly outcome-focused in their search for more ef) Tj ET Q q 0 0 0 rg BT 495.15 413.10 Td (fective ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 401.10 Td (learning solutions, we have embraced adaptive learning tools as a central feature of our digital learning solutions. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 389.10 Td (Adaptive learning is based on educational theory and cognitive science that emphasizes personalized delivery of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 377.10 Td (concepts, continuous assessment of gained and retained knowledge and skills, and design of tar) Tj ET Q q 0 0 0 rg BT 453.11 377.10 Td (geted and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 365.10 Td (personalized study paths that help students improve in their areas of weakness while retaining competencies. ) Tj ET Q q 0 0 0 rg BT 508.91 365.10 Td (W) Tj ET Q q 0 0 0 rg BT 517.55 365.10 Td (e ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 353.10 Td (have developed a unique set of digital solutions by combining innovative adaptive learning methods with our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 341.10 Td (proprietary content and digital delivery platforms. ) Tj ET Q q 0 0 0 rg BT 274.26 341.10 Td (These solutions provide immediate feedback, and we believe they ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 329.10 Td (are more ef) Tj ET Q q 0 0 0 rg BT 117.34 329.10 Td (fective than traditional print textbooks in driving positive student outcomes. Students) Tj ET Q q 0 0 0 rg BT 460.71 329.10 Td ( year) Tj ET Q q 0 0 0 rg BT 480.22 329.10 Td (-over) Tj ET Q q 0 0 0 rg BT 501.12 329.10 Td (-year ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 317.10 Td (performance can be impacted by many factors outside the instructional materials used in class. ) Tj ET Q q 0 0 0 rg BT 452.52 317.10 Td (W) Tj ET Q q 0 0 0 rg BT 461.16 317.10 Td (e believe that even ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 305.10 Td (taking into account these factors, our learning solutions can contribute to significant improvements in students) Tj ET Q q 0 0 0 rg BT 515.88 305.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 293.10 Td (classroom performance as well as improved student retention. For the instructor) Tj ET Q q 0 0 0 rg BT 391.23 293.10 Td (, time spent on active learning ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 281.10 Td (experiences increases significantly as a result of a reduction in time spent on administrative tasks and the availability ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 269.10 Td (of critical data to help better focus in class instruction.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 245.10 Td (Our Business) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 221.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 221.10 Td (Our four businesses are:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 197.10 Td (\(1\) ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 122.16 197.10 Td (Higher Education) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 194.09 197.10 Td (: ) Tj ET Q q 0 0 0 rg BT 199.19 197.10 Td (W) Tj ET Q q 0 0 0 rg BT 207.83 197.10 Td (e are a top-three provider in the United States higher education market with a 21% ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 185.10 Td (market share for the year ended December 2015 according to MPI. ) Tj ET Q q 0 0 0 rg BT 377.71 185.10 Td (W) Tj ET Q q 0 0 0 rg BT 386.35 185.10 Td (e provide students, instructors and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 173.10 Td (institutions with adaptive digital learning tools, digital platforms, custom publishing solutions and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 161.10 Td (traditional printed textbook products. ) Tj ET Q q 0 0 0 rg BT 259.18 161.10 Td (The primary users of our solutions are students enrolled in two- and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 149.10 Td (four) Tj ET Q q 0 0 0 rg BT 124.46 149.10 Td (-year non-profit colleges and universities, and to a lesser extent, forprofit institutions. ) Tj ET Q q 0 0 0 rg BT 468.36 149.10 Td (W) Tj ET Q q 0 0 0 rg BT 476.99 149.10 Td (e sell our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 137.10 Td (Higher Education solutions to well-known online retailers, distribution partners and college bookstores, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 125.10 Td (who subsequently sell to students. ) Tj ET Q q 0 0 0 rg BT 246.70 125.10 Td (W) Tj ET Q q 0 0 0 rg BT 255.34 125.10 Td (e also increasingly sell directly to students via our proprietary e-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 113.10 Td (commerce platform, which currently represents one of our three lar) Tj ET Q q 0 0 0 rg BT 376.59 113.10 Td (gest distribution channels in this ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 101.10 Td (segment, with revenue having grown from $105 million for the year ended December 31, 2014 \(Successor\) ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 89.10 Td (to $140 million for the year ended December 31, 2015 \(Successor\). For the year ended December 31, 2015 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 77.10 Td (\(Successor\), 45% of Higher Education revenue was derived from digital learning solutions.) Tj ET Q endstream endobj 71 0 obj <> endobj 72 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (32) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 701.10 Td (\(2\) ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 122.16 701.10 Td (K-12) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 142.16 701.10 Td (: ) Tj ET Q q 0 0 0 rg BT 147.26 701.10 Td (W) Tj ET Q q 0 0 0 rg BT 155.90 701.10 Td (e are a top-three provider in the United States K-12 curriculum and learning solutions market ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 689.10 Td (with a 24% market share for the year ended December 2015 according to the ) Tj ET Q q 0 0 0 rg BT 417.32 689.10 Td (Association of ) Tj ET Q q 0 0 0 rg BT 477.32 689.10 Td (American ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 677.10 Td (Publishers \(AAP\). ) Tj ET Q q 0 0 0 rg BT 192.53 677.10 Td (W) Tj ET Q q 0 0 0 rg BT 201.17 677.10 Td (e sell our learning solutions directly to K-12 school districts across the United ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 665.10 Td (States. ) Tj ET Q q 0 0 0 rg BT 136.71 665.10 Td (While we of) Tj ET Q q 0 0 0 rg BT 185.95 665.10 Td (fer all of our major curriculum and learning solutions in digital format, given the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 653.10 Td (varying degrees of availability and maturity of our customers) Tj ET Q q 0 0 0 rg BT 355.51 653.10 Td ( technological infrastructure, a majority of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 641.10 Td (our sales are derived from selling blended print and digital solutions. ) Tj ET Q q 0 0 0 rg BT 385.53 641.10 Td (W) Tj ET Q q 0 0 0 rg BT 394.17 641.10 Td (e believe that the quality of our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 629.10 Td (blended of) Tj ET Q q 0 0 0 rg BT 150.30 629.10 Td (ferings has been driving significant growth in both print and digital revenue. For the year ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 617.10 Td (December 31, 2015, 17% of K-12 revenue was derived from digital learning solutions.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 593.10 Td (\(3\) ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 122.16 593.10 Td (International ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 177.43 593.10 Td (: ) Tj ET Q q 0 0 0 rg BT 182.53 593.10 Td (W) Tj ET Q q 0 0 0 rg BT 191.17 593.10 Td (e leverage our global scale, including approximately a 470 person sales force, brand ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 581.10 Td (recognition and extensive product portfolio to serve students in the higher education, K-12 and professional ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 569.10 Td (markets in over 135 countries outside of the United States. Our products and solutions for the International ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 557.10 Td (segment are produced in nearly 60 languages and primarily originate from our of) Tj ET Q q 0 0 0 rg BT 431.60 557.10 Td (ferings produced for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 545.10 Td (United States market and that are later adapted to dif) Tj ET Q q 0 0 0 rg BT 318.57 545.10 Td (ferent international markets. Sales of digital products ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 533.10 Td (are growing significantly in this market, and we continue to increase our inventory of digital solutions. For ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 521.10 Td (the year ended December 31, 2015, 10% of International revenue was derived from digital learning ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 509.10 Td (solutions.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 485.10 Td (\(4\) ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 122.16 485.10 Td (Pr) Tj ET Q q 0 0 0 rg BT 131.79 485.10 Td (ofessional ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 174.85 485.10 Td (:W) Tj ET Q q 0 0 0 rg BT 186.26 485.10 Td (e are a leading provider of medical, technical, engineering and business content for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 473.10 Td (professional, education and test preparation communities. Our digital subscription products had a 94% ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 461.10 Td (annual retention rate in 2015 and are sold to over 2,700 customers, including corporations, academic ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 449.10 Td (institutions, libraries and hospitals. For the year ended December 31, 2015, 46% of Professional revenue ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 437.10 Td (was derived from digital learning solutions, including digital subscription sales.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 413.10 Td (Company History) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 395.10 Td (On March22, 2013, MHE ) Tj ET Q q 0 0 0 rg BT 203.49 395.10 Td (Acquisition, LLC \("AcquisitionCo"\) completed the Founding ) Tj ET Q q 0 0 0 rg BT 451.36 395.10 Td (Acquisition, pursuant ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 383.10 Td (to which a wholly-owned subsidiary of the Company acquired all of the outstanding equity interests of certain ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 371.10 Td (subsidiaries of McGraw Hill Financial, Inc. \(MHC\) pursuant to a Purchase and Sale ) Tj ET Q q 0 0 0 rg BT 418.30 371.10 Td (Agreement, dated ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 359.10 Td (November26, 2012 and as amended March4, 2013 \(the Acquired Business\). ) Tj ET Q q 0 0 0 rg BT 392.01 359.10 Td (The ) Tj ET Q q 0 0 0 rg BT 409.50 359.10 Td (Acquired Business included all ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 347.10 Td (of MHC) Tj ET Q q 0 0 0 rg BT 108.39 347.10 Td (s educational materials and learning solutions business, which is comprised of \(i\)the Higher Education, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 335.10 Td (Professional, and International Group \(the HPI business\), which includes post-secondary education and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 323.10 Td (professional products both in the United States and internationally and \(ii\)the School Education Group business \(the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 311.10 Td (SEG business\), which includes school and formative assessment products tar) Tj ET Q q 0 0 0 rg BT 388.42 311.10 Td (geting students in the pre-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 299.10 Td (kinder) Tj ET Q q 0 0 0 rg BT 97.37 299.10 Td (garten through secondary school market. ) Tj ET Q q 0 0 0 rg BT 262.69 299.10 Td (W) Tj ET Q q 0 0 0 rg BT 271.33 299.10 Td (e refer to the purchase of the ) Tj ET Q q 0 0 0 rg BT 387.66 299.10 Td (Acquired Business and the related ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 287.10 Td (financing transactions as the Founding ) Tj ET Q q 0 0 0 rg BT 232.80 287.10 Td (Acquisition. Following the Founding ) Tj ET Q q 0 0 0 rg BT 387.53 287.10 Td (Acquisition, MHC has been known as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 275.10 Td (McGraw Hill Financial, Inc. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 251.10 Td (In connection with the Founding ) Tj ET Q q 0 0 0 rg BT 228.49 251.10 Td (Acquisition, a restructuring was completed, the result of which was that the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 239.10 Td (HPI business and the SEG business became held by separate wholly owned subsidiaries of MHE US Holdings, LLC. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 227.10 Td (The HPI business became held by McGraw-Hill Global Education Intermediate Holdings, LLC \("MHGE Holdings"\) ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 215.10 Td (and its wholly owned subsidiary McGraw-Hill Global Education Holdings, LLC \("MHGE"\), while the SEG ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 203.10 Td (business became held by McGraw-Hill School Education Intermediate Holdings, LLC \(MHSE\) and its wholly ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 191.10 Td (owned subsidiaries. In addition, concurrent with the closing of the Founding ) Tj ET Q q 0 0 0 rg BT 379.45 191.10 Td (Acquisition, subsidiaries of each of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 179.10 Td (MHGE and MHSE entered into certain credit facilities. Neither MHGE nor its subsidiary companies guarantee or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 167.10 Td (provide collateral to the financing of MHSE, and MHSE does not guarantee or provide collateral to the financing of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 155.10 Td (MHGE or its subsidiary companies. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 131.10 Td (The T) Tj ET Q q 0 0 0 rg BT 96.35 131.10 Td (ransactions) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 107.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 107.10 Td (On May 4, 2016, MHGE and McGraw-Hill Global Education Finance, Inc. issued $400.0 million aggregate ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 95.10 Td (principal amount of 7.875% Senior Notes due 2024 \(the MHGE Senior Notes\). Concurrently with the issuance of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 83.10 Td (the MHGE Senior Notes, MHGE entered into $1,925 million of senior secured credit facilities \(the Senior ) Tj ET Q endstream endobj 73 0 obj <> endobj 74 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (33) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (Facilities\), consisting of a six-year $1,575 million senior secured term loan \(the T) Tj ET Q q 0 0 0 rg BT 406.77 713.10 Td (erm Loan Facility\) and a five-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (year $350 million senior secured revolving credit facility \(the Revolving Facility\).) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 677.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 677.10 Td (The proceeds from the issuance of the MHGE Senior Notes and the Senior Facilities were used to repay ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 665.10 Td (each of the MHGE Facilities, the MHSE ) Tj ET Q q 0 0 0 rg BT 236.79 665.10 Td (T) Tj ET Q q 0 0 0 rg BT 242.20 665.10 Td (erm Loan and the MHSE Revolving Facility) Tj ET Q q 0 0 0 rg BT 419.29 665.10 Td (, fund a $300 million cash ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 653.10 Td (distribution to the Issuer) Tj ET Q q 0 0 0 rg BT 169.86 653.10 Td () Tj ET Q q 0 0 0 rg BT 172.64 653.10 Td (s stockholders, repurchase approximately $522 million of the MHGE Senior Secured ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 641.10 Td (Notes, defease and dischar) Tj ET Q q 0 0 0 rg BT 178.44 641.10 Td (ge the indenture governing the MHGE Senior Secured Notes, and pay related fees and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 629.10 Td (expenses. ) Tj ET Q q 0 0 0 rg BT 112.92 629.10 Td (The remaining MHGE Senior Secured Notes will be repurchased or redeemed on or prior to May 18, 2016 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 617.10 Td (using proceeds of MHGE Senior Notes and the Senior Facilities together with cash on hand.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 593.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 593.10 Td (Concurrently with the issuance of the MHGE Senior Notes and the entry into the Senior Facilities, we ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 581.10 Td (completed a reor) Tj ET Q q 0 0 0 rg BT 139.01 581.10 Td (ganization \(the Reor) Tj ET Q q 0 0 0 rg BT 224.90 581.10 Td (ganization\) such that MHSE became a direct subsidiary of MHGE.W) Tj ET Q q 0 0 0 rg BT 505.68 581.10 Td (e refer ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 569.10 Td (to the Reor) Tj ET Q q 0 0 0 rg BT 116.25 569.10 Td (ganization together with this of) Tj ET Q q 0 0 0 rg BT 241.04 569.10 Td (fering, the issuance of the MHGE Senior Notes, the entry into the Senior ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 557.10 Td (Facilities and the use of proceeds therefrom as the T) Tj ET Q q 0 0 0 rg BT 285.18 557.10 Td (ransactions.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 533.10 Td (Combined Consolidated Operating Results) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 509.10 Td (The following tables set forth certain historical combined consolidated financial information for the three ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 497.10 Td (months ended March31, 2016 and 2015. ) Tj ET Q q 0 0 0 rg BT 238.18 497.10 Td (The following tables and discussion should be read in conjunction with the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 485.10 Td (information contained in our historical consolidated financial statements and the notes thereto included elsewhere in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 473.10 Td (this document.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 449.10 Td (Consolidated Operating Results for the Three Months Ended March 31, 2016 and 2015) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 75.00 382.60 236.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 311.00 382.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 315.00 382.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 367.00 382.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 371.00 382.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 423.00 382.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 427.00 382.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 479.00 382.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 483.00 382.60 53.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 75.00 354.60 236.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 311.00 354.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 315.00 354.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 367.00 354.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 371.00 354.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 423.00 354.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 427.00 354.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 479.00 354.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 483.00 354.60 53.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 75.00 326.60 236.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 311.00 326.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 315.00 326.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 367.00 326.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 371.00 326.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 423.00 326.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 427.00 326.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 479.00 326.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 483.00 326.60 53.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 75.00 298.60 236.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 311.00 298.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 315.00 298.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 367.00 298.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 371.00 298.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 423.00 298.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 427.00 298.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 479.00 298.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 483.00 298.60 53.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 75.00 270.60 236.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 311.00 270.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 315.00 270.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 367.00 270.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 371.00 270.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 423.00 270.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 427.00 270.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 479.00 270.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 483.00 270.60 53.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 75.00 242.60 236.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 311.00 242.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 315.00 242.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 367.00 242.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 371.00 242.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 423.00 242.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 427.00 242.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 479.00 242.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 483.00 242.60 53.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 75.00 214.60 236.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 311.00 214.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 315.00 214.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 367.00 214.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 371.00 214.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 423.00 214.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 427.00 214.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 479.00 214.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 483.00 214.60 53.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 75.00 177.60 236.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 311.00 177.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 315.00 177.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 367.00 177.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 371.00 177.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 423.00 177.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 427.00 177.60 52.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 479.00 177.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 483.00 177.60 53.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 315 412.6 m 367 412.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 367 412.6 m 371 412.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 371 412.6 m 423 412.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 371 412.6 m 423 412.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 315 382.6 m 367 382.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 371 382.6 m 423 382.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 427 382.6 m 479 382.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 483 382.6 m 536 382.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 315 382.6 m 367 382.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 371 382.6 m 423 382.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 315 354.6 m 367 354.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 367 354.6 m 371 354.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 371 354.6 m 423 354.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 427 354.6 m 479 354.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 483 354.6 m 536 354.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 315 284.6 m 367 284.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 371 284.6 m 423 284.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 427 284.6 m 479 284.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 483 284.6 m 536 284.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 315 242.60000000000002 m 367 242.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 371 242.60000000000002 m 423 242.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 427 242.60000000000002 m 479 242.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 483 242.60000000000002 m 536 242.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 315 214.60000000000002 m 367 214.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 371 214.60000000000002 m 423 214.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 427 214.60000000000002 m 479 214.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 483 214.60000000000002 m 536 214.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 371 214.60000000000002 m 423 214.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 315 177.60000000000002 m 367 177.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 315 164.60000000000002 m 367 164.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 315 162.60000000000002 m 367 162.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 371 177.60000000000002 m 423 177.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 371 164.60000000000002 m 423 164.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 371 162.60000000000002 m 423 162.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 427 177.60000000000002 m 479 177.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 427 164.60000000000002 m 479 164.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 427 162.60000000000002 m 479 162.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 483 177.60000000000002 m 536 177.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 483 164.60000000000002 m 536 164.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 483 162.60000000000002 m 536 162.60000000000002 l s BT /F2 9.00 Tf ET q 0 0 0 rg BT 327.55 417.05 Td (Three Months Ended) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 320.80 396.05 Td (March 31,) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 331.50 387.05 Td (2016) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 376.80 396.05 Td (March 31,) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 387.50 387.05 Td (2015) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 434.35 387.05 Td ($ Change) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 488.60 387.05 Td (% Change) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 77.50 386.83 Td (\(Dollars in thousands\)) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 77.50 373.05 Td (Revenue) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 317.50 373.06 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 334.25 373.06 Td (266,727) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 373.50 373.06 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 390.25 373.06 Td (246,907) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 429.50 373.06 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 450.75 373.06 Td (19,820) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 513.75 373.06 Td (8.0) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 528.00 373.06 Td (%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 77.50 359.06 Td (Cost of sales) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 338.75 359.06 Td (62,939) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 394.75 359.06 Td (64,100) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 452.25 359.06 Td (\(1,161) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 475.50 359.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 510.75 359.06 Td (\(1.8) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 525.00 359.06 Td (\)%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 101.50 345.06 Td (Gross profit) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 334.25 345.06 Td (203,788) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 390.25 345.06 Td (182,807) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 450.75 345.06 Td (20,981) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 509.25 345.06 Td (11.5) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 528.00 345.06 Td (%) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 77.50 331.05 Td (Operating expenses) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 77.50 317.06 Td (Operating and administration expenses) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 334.25 317.06 Td (261,046) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 390.25 317.06 Td (260,636) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 462.00 317.06 Td (410) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 513.75 317.06 Td (0.2) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 528.00 317.06 Td (%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 77.50 303.06 Td (Depreciation) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 338.75 303.06 Td (12,796) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 399.25 303.06 Td (7,722) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 455.25 303.06 Td (5,074) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 509.25 303.06 Td (65.7) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 528.00 303.06 Td (%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 77.50 289.06 Td (Amortization of intangibles) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 338.75 289.06 Td (22,815) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 394.75 289.06 Td (23,617) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 459.00 289.06 Td (\(802) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 475.50 289.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 510.75 289.06 Td (\(3.4) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 525.00 289.06 Td (\)%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 101.50 275.06 Td (Total operating expenses) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 334.25 275.06 Td (296,657) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 390.25 275.06 Td (291,975) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 455.25 275.06 Td (4,682) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 513.75 275.06 Td (1.6) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 528.00 275.06 Td (%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 101.50 261.06 Td (Operating \(loss\) income) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 335.75 261.06 Td (\(92,869) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 363.50 261.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 387.25 261.06 Td (\(109,168) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 419.50 261.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 450.75 261.06 Td (16,299) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 506.25 261.06 Td (\(14.9) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 525.00 261.06 Td (\)%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 77.50 247.06 Td (Interest expense \(income\), net) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 338.75 247.06 Td (46,225) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 394.75 247.06 Td (48,284) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 452.25 247.06 Td (\(2,059) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 475.50 247.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 510.75 247.06 Td (\(4.3) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 525.00 247.06 Td (\)%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 101.50 233.06 Td (\(Loss\) income from operations before taxes on income) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 331.25 233.06 Td (\(139,094) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 363.50 233.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 387.25 233.06 Td (\(157,452) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 419.50 233.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 450.75 233.06 Td (18,358) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 506.25 233.06 Td (\(11.7) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 525.00 233.06 Td (\)%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 77.50 219.06 Td (Income tax \(benefit\) provision) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 347.00 219.06 Td (\(214) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 363.50 219.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 396.25 219.06 Td (\(2,685) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 419.50 219.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 455.25 219.06 Td (2,471) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 506.25 219.06 Td (\(92.0) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 525.00 219.06 Td (\)%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 101.50 205.06 Td (Net \(loss\) income from continuing operations) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 331.25 205.06 Td (\(138,880) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 363.50 205.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 387.25 205.06 Td (\(154,767) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 419.50 205.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 450.75 205.06 Td (15,887) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 506.25 205.06 Td (\(10.3) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 525.00 205.06 Td (\)%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 101.50 191.06 Td (Net \(loss\) income from discontinuing operations, net of) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 101.50 182.06 Td (taxes) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 347.00 182.06 Td (\(836) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 363.50 182.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 396.25 182.06 Td (\(7,570) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 419.50 182.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 455.25 182.06 Td (6,734) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 506.25 182.06 Td (\(89.0) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 525.00 182.06 Td (\)%) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 77.50 168.05 Td (Net \(loss\) income) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 317.50 168.06 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 331.25 168.06 Td (\(139,716) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 363.50 168.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 373.50 168.06 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 387.25 168.06 Td (\(162,337) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 419.50 168.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 429.50 168.06 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 450.75 168.06 Td (22,621) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 506.25 168.06 Td (\(13.9) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 525.00 168.06 Td (\)%) Tj ET Q BT /F1 10.00 Tf ET endstream endobj 75 0 obj <> endobj 76 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (34) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 713.25 Td (Revenue) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 653.75 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 293.50 653.75 58.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 351.50 653.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 355.50 653.75 59.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 414.50 653.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 418.50 653.75 58.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 476.50 653.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 480.50 653.75 59.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 625.75 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 293.50 625.75 58.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 351.50 625.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 355.50 625.75 59.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 414.50 625.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 418.50 625.75 58.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 476.50 625.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 480.50 625.75 59.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 597.75 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 293.50 597.75 58.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 351.50 597.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 355.50 597.75 59.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 414.50 597.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 418.50 597.75 58.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 476.50 597.75 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 480.50 597.75 59.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 676.75 m 351.5 676.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 351.5 676.75 m 355.5 676.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 355.5 676.75 m 414.5 676.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 676.75 m 351.5 676.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 653.75 m 351.5 653.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 355.5 653.75 m 414.5 653.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 418.5 653.75 m 476.5 653.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 480.5 653.75 m 539.5 653.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 653.75 m 351.5 653.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 355.5 653.75 m 414.5 653.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 583.75 m 351.5 583.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 570.75 m 351.5 570.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 568.75 m 351.5 568.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 355.5 583.75 m 414.5 583.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 355.5 570.75 m 414.5 570.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 355.5 568.75 m 414.5 568.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 418.5 583.75 m 476.5 583.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 418.5 570.75 m 476.5 570.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 418.5 568.75 m 476.5 568.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 480.5 583.75 m 539.5 583.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 480.5 570.75 m 539.5 570.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 480.5 568.75 m 539.5 568.75 l s BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 680.98 Td (\(Dollars in thousands\)) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 312.55 681.20 Td (Three Months Ended) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 428.85 658.20 Td ($ Change) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 489.10 658.20 Td (% Change) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 74.00 658.20 Td (Reported Revenue by segment:) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 302.30 667.20 Td (March 31,) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 313.00 658.20 Td (2016) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 364.80 667.20 Td (March 31,) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 375.50 658.20 Td (2015) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 74.00 644.21 Td (Higher Education) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 296.00 644.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 318.75 644.21 Td (134,634) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 358.00 644.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 381.75 644.21 Td (126,228) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 421.00 644.21 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 452.75 644.21 Td (8,406) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 517.25 644.21 Td (6.7) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 531.50 644.21 Td (%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 74.00 630.21 Td (K-12) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 323.25 630.21 Td (61,713) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 386.25 630.21 Td (47,093) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 448.25 630.21 Td (14,620) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 512.75 630.21 Td (31.0) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 531.50 630.21 Td (%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 74.00 616.21 Td (International) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 323.25 616.21 Td (42,652) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 386.25 616.21 Td (44,692) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 449.75 616.21 Td (\(2,040) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 473.00 616.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 514.25 616.21 Td (\(4.6) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 528.50 616.21 Td (\)%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 74.00 602.21 Td (Professional) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 323.25 602.21 Td (27,701) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 386.25 602.21 Td (26,092) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 452.75 602.21 Td (1,609) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 517.25 602.21 Td (6.2) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 531.50 602.21 Td (%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 74.00 588.21 Td (Other) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 339.00 588.21 Td (27) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 390.75 588.21 Td (2,802) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 449.75 588.21 Td (\(2,775) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 473.00 588.21 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 509.75 588.21 Td (\(99.0) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 528.50 588.21 Td (\)%) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 74.00 574.20 Td (Total Reported Revenue) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 296.00 574.20 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 318.75 574.20 Td (266,727) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 358.00 574.20 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 381.75 574.20 Td (246,907) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 421.00 574.20 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 448.25 574.20 Td (19,820) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 517.25 574.20 Td (8.0) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 530.00 574.20 Td (%) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 546.25 Td (Revenue for the three months ended March 31, 2016 and 2015 was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 366.76 546.25 Td ($266.7 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 425.65 546.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 445.09 546.25 Td ($246.9 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.98 546.25 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 534.25 Td (respectively) Tj ET Q q 0 0 0 rg BT 119.66 534.25 Td (, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 182.68 534.25 Td ($19.8 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 236.58 534.25 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 249.91 534.25 Td (8.0%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 270.74 534.25 Td (. Excluding the impact of purchase accounting \(which negatively ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 522.25 Td (impacted revenue as a result of the adjustment recorded to reduce the carrying value of deferred revenue on the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 510.25 Td (opening balance sheet\), revenue for the three months ended March 31, 2016 and 2015 was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 436.05 510.25 Td ($271.9 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 494.94 510.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 498.25 Td ($253.9 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 130.89 498.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 183.55 498.25 Td (, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 246.58 498.25 Td ($18.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 300.47 498.25 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 313.80 498.25 Td (7.1%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 334.63 498.25 Td (. ) Tj ET Q q 0 0 0 rg BT 339.45 498.25 Td (This increase was driven by the segment factors ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 486.25 Td (described below) Tj ET Q q 0 0 0 rg BT 136.60 486.25 Td (.) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 72.00 462.25 Td (Higher Education ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 438.25 Td (Higher Education revenue for the three months ended March 31, 2016 and 2015 was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 436.73 438.25 Td ($134.6 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 495.62 438.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 426.25 Td ($126.2 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 130.89 426.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 183.55 426.25 Td (, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 246.58 426.25 Td ($8.4 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 295.47 426.25 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 308.80 426.25 Td (6.7%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 329.63 426.25 Td (. Excluding the impact of purchase accounting, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 414.25 Td (revenue for the three months ended March 31, 2016 and 2015 was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 339.42 414.25 Td ($134.6 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 398.31 414.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 417.75 414.25 Td ($126.8 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 476.64 414.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 529.30 414.25 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 402.25 Td (an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 130.02 402.25 Td ($7.8 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 178.91 402.25 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 192.24 402.25 Td (6.2%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 213.07 402.25 Td (. ) Tj ET Q q 0 0 0 rg BT 217.89 402.25 Td (The increase was primarily due to: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 378.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 378.25 Td (favorable timing in sales as the ongoing digital transition is changing our selling patterns for digital and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 366.25 Td (print of) Tj ET Q q 0 0 0 rg BT 128.54 366.25 Td (ferings. ) Tj ET Q q 0 0 0 rg BT 160.75 366.25 Td (As we drive our digital first strategy) Tj ET Q q 0 0 0 rg BT 305.07 366.25 Td (, students are increasingly purchasing digital solutions ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 354.25 Td (directly from our proprietary e-commerce channel at the start of the semester) Tj ET Q q 0 0 0 rg BT 406.37 354.25 Td (. ) Tj ET Q q 0 0 0 rg BT 410.82 354.25 Td (As these sales transition from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 342.25 Td (the traditional distribution channel to our proprietary e-commerce channel, this has the ef) Tj ET Q q 0 0 0 rg BT 455.64 342.25 Td (fect of shifting our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 330.25 Td (sales from the end of 2015 to the beginning of 2016; ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 306.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 306.25 Td (digital revenue growth, primarily driven by growth in paid activations of our core digital learning solutions ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 99.00 294.25 Td (Connect/LearnSmart) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 182.89 294.25 Td ( \(paid activations of ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 265.08 294.25 Td (Connect/LearnSmart) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 348.97 294.25 Td ( grew by 13%\);) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 270.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 270.25 Td (a favorable product returns reserve rate adjustment consistent with the ongoing market shift to digital ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 258.25 Td (learning solutions which experience a lower return rate; partially of) Tj ET Q q 0 0 0 rg BT 368.44 258.25 Td (fset by) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 234.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 234.25 Td (decreased print revenues, resulting in part from our focused transition from print to digital which has led to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 222.25 Td (extended revision cycles for certain titles and a declining print front-list, which in turn has led to more used ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 210.25 Td (and rental alternatives for new print materials. ) Tj ET Q endstream endobj 77 0 obj <> endobj 78 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (35) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (K-12 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 689.10 Td (K-12 revenue for the three months ended March 31, 2016 and 2015 was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 386.47 689.10 Td ($61.7 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 440.37 689.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 459.80 689.10 Td ($47.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 513.70 689.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 677.10 Td (respectively) Tj ET Q q 0 0 0 rg BT 119.66 677.10 Td (, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 182.68 677.10 Td ($14.6 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 236.58 677.10 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 249.91 677.10 Td (31.0%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 275.74 677.10 Td (. Excluding the impact of purchase accounting, revenue for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 665.10 Td (three months ended March 31, 2016 and 2015 was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 276.40 665.10 Td ($66.9 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 330.29 665.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 349.73 665.10 Td ($53.4 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 403.62 665.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 456.28 665.10 Td (, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 653.10 Td ($13.5 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 125.89 653.10 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 139.22 653.10 Td (25.4%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 165.05 653.10 Td (. ) Tj ET Q q 0 0 0 rg BT 169.87 653.10 Td (The increase was primarily due to: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 629.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 629.10 Td (adoption sales growth driven by elementary reading and elementary math in Utah and California, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 617.10 Td (respectively as well as 6-12 social studies sales in South Carolina; and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 593.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 593.10 Td (open territory sales growth driven by elementary reading in Pennsylvania. ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 72.00 569.10 Td (International ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 545.10 Td (International revenue for the three months ended March 31, 2016 and 2015 was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 417.01 545.10 Td ($42.7 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 470.90 545.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 490.34 545.10 Td ($44.7 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 533.10 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 100.89 533.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 153.55 533.10 Td (, a decrease of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 213.24 533.10 Td ($2.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 262.13 533.10 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 275.46 533.10 Td (4.6%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 296.29 533.10 Td (. ) Tj ET Q q 0 0 0 rg BT 301.11 533.10 Td (The decrease was primarily due to: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 509.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 509.10 Td (a $2.8million unfavorable foreign exchange rate impact \(estimated by re-calculating current period results ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 497.10 Td (of foreign operations using the average exchange rate from the prior period\); and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 473.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 473.10 Td (a decline in print revenue; partially of) Tj ET Q q 0 0 0 rg BT 258.87 473.10 Td (fset by) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 449.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 449.10 Td (digital revenue growth primarily in higher education. ) Tj ET Q BT /F1 1.00 Tf ET q 0 0 0 rg BT 108.00 447.90 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 423.90 Td (Geographic performance was driven by Higher Education, K-12 and Professional sales growth in Latin ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 411.90 Td (America driven in part by a localized ) Tj ET Q q 0 0 0 rg BT 222.77 411.90 Td (ALEKS of) Tj ET Q q 0 0 0 rg BT 265.64 411.90 Td (fering and ) Tj ET Q q 0 0 0 rg BT 308.41 411.90 Td (Access Medicine, partially of) Tj ET Q q 0 0 0 rg BT 425.96 411.90 Td (fset by a decline in K-12 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 399.90 Td (and Professional sales in Canada and ) Tj ET Q q 0 0 0 rg BT 221.97 399.90 Td (Asia Pacific as well as a decline in professional sales in EMEA. ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 72.00 375.90 Td (Pr) Tj ET Q q 0 0 0 rg BT 81.63 375.90 Td (ofessional ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 351.90 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 351.90 Td (Professional revenue for the three months ended March 31, 2016 and 2015 was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 427.36 351.90 Td ($27.7 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 481.25 351.90 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 500.69 351.90 Td ($26.1 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 339.90 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 100.89 339.90 Td (, respectively) Tj ET Q q 0 0 0 rg BT 153.55 339.90 Td (, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 216.58 339.90 Td ($1.6 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 265.47 339.90 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 278.80 339.90 Td (6.2%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 299.63 339.90 Td (. Excluding the impact of purchase accounting, revenue for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 327.90 Td (the three months ended March 31, 2016 and 2015 was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 291.12 327.90 Td ($27.7 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 345.01 327.90 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 364.45 327.90 Td ($26.2 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 418.34 327.90 Td (, respectively) Tj ET Q q 0 0 0 rg BT 471.00 327.90 Td (, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 315.90 Td ($1.5 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.89 315.90 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 134.22 315.90 Td (5.8%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 155.05 315.90 Td (. ) Tj ET Q q 0 0 0 rg BT 159.87 315.90 Td (The increase was primarily due to: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 291.90 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 291.90 Td (new digital subscription renewals for our ) Tj ET Q q 0 0 0 rg BT 274.07 291.90 Td (Access platform of) Tj ET Q q 0 0 0 rg BT 349.98 291.90 Td (ferings; partially of) Tj ET Q q 0 0 0 rg BT 426.99 291.90 Td (fset by) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 267.90 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 267.90 Td (a decline in print and eBook revenue.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 243.90 Td (Cost of Sales ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 219.90 Td (Cost of sales for the three months ended March 31, 2016 and 2015 was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 382.88 219.90 Td ($62.9 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 436.78 219.90 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 456.21 219.90 Td ($64.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 510.11 219.90 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 207.90 Td (respectively) Tj ET Q q 0 0 0 rg BT 119.66 207.90 Td (, a decrease of $1.2 million or 1.9%. ) Tj ET Q q 0 0 0 rg BT 267.21 207.90 Td (This decrease was driven by lower manufacturing and freight costs ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 195.90 Td (due to the migration from the sale of print to digital learning solutions.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 171.90 Td (Operating and ) Tj ET Q q 0 0 0 rg BT 133.86 171.90 Td (Administration Expenses ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 147.90 Td (Operatingand administration expenses for the three months ended March 31, 2016 and 2015 were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 491.44 147.90 Td ($261.0 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 135.90 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 100.89 135.90 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.33 135.90 Td ($260.6 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 179.22 135.90 Td (, respectively) Tj ET Q q 0 0 0 rg BT 231.88 135.90 Td (, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 294.91 135.90 Td ($0.4 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 343.80 135.90 Td (. Included within operating and administration ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 123.90 Td (expense is the amortization of pre-publication expenditures which increased by $1.5 million or 12.8% primarily due ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 111.90 Td (to planned K-12 adoptions. ) Tj ET Q q 0 0 0 rg BT 183.19 111.90 Td (The remaining variance was driven by: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 94.50 87.90 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 87.90 Td (a $3.2 million increase in DPG expense as a result of our continued investment in digital;) Tj ET Q endstream endobj 79 0 obj <> endobj 80 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (36) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 94.50 713.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 713.10 Td (a $2.8 million increase in print samples in advance of California reading adoption opportunities; and) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 94.50 689.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 689.10 Td (a $0.5 million increase in selling and marketing expense; partially of) Tj ET Q q 0 0 0 rg BT 382.46 689.10 Td (fset by ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 94.50 665.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 665.10 Td (a $4.3million decrease in restructuring and cost savings implementation char) Tj ET Q q 0 0 0 rg BT 417.45 665.10 Td (ges; and) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 94.50 641.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 641.10 Td (the realization of cost savings associated with actions taken subsequent to the Founding ) Tj ET Q q 0 0 0 rg BT 460.43 641.10 Td (Acquisition ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 94.50 629.10 Td (including headcount reduction, facilities rationalization, technology optimization and outsourcing as part of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 94.50 617.10 Td (our comprehensive cost savings program.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 593.10 Td (Depreciation& ) Tj ET Q q 0 0 0 rg BT 137.73 593.10 Td (Amortization of Intangibles ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 569.10 Td (Depreciation and amortization expenses for the three months ended March 31, 2016 and 2015 were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 495.87 569.10 Td ($35.6 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 557.10 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 100.89 557.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.33 557.10 Td ($31.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 174.22 557.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 226.88 557.10 Td (, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 289.91 557.10 Td ($4.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 338.80 557.10 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 352.13 557.10 Td (13.6%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 377.96 557.10 Td (. ) Tj ET Q q 0 0 0 rg BT 382.78 557.10 Td (This increase was primarily the result ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 545.10 Td (of the acceleration of depreciation expense related to the early exit of a leased facility) Tj ET Q q 0 0 0 rg BT 413.40 545.10 Td (. ) Tj ET Q q 0 0 0 rg BT 418.22 545.10 Td (This is part of the continued ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 533.10 Td (cost saving initiatives associated with actions taken related to the optimization of our facilities spend subsequent to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 521.10 Td (the Founding ) Tj ET Q q 0 0 0 rg BT 127.00 521.10 Td (Acquisition.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 497.10 Td (Interest expense, net ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 473.10 Td (Interest expense, net, for the three months ended March 31, 2016 and 2015 was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 416.19 473.10 Td ($46.2 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 470.08 473.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 489.52 473.10 Td ($48.3 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 461.10 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 100.89 461.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 153.55 461.10 Td (, a decrease of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 213.24 461.10 Td ($2.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 262.13 461.10 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 275.46 461.10 Td (4.3%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 296.29 461.10 Td (. ) Tj ET Q q 0 0 0 rg BT 301.11 461.10 Td (The decrease was the result of the refinancing of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 449.10 Td (MHGE ) Tj ET Q q 0 0 0 rg BT 103.76 449.10 Td (T) Tj ET Q q 0 0 0 rg BT 109.17 449.10 Td (erm Loan on May4, 2015, which further reduced the applicable LIBOR mar) Tj ET Q q 0 0 0 rg BT 415.56 449.10 Td (gin of 4.75% to 3.75%. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 425.10 Td (Provision for T) Tj ET Q q 0 0 0 rg BT 133.86 425.10 Td (axes on Income ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 401.10 Td (T) Tj ET Q q 0 0 0 rg BT 101.41 401.10 Td (axes on income from continuing operations for the three months ended March 31, 2016 and 2015 were a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 389.10 Td (benefit of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 113.09 389.10 Td ($0.2 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 161.99 389.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 181.42 389.10 Td ($2.7 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 230.32 389.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 282.98 389.10 Td (. For the three months ended March 31, 2016 and 2015, the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 377.10 Td (ef) Tj ET Q q 0 0 0 rg BT 79.59 377.10 Td (fective tax rate on continuing operations was 0.2% and 1.7%, respectively) Tj ET Q q 0 0 0 rg BT 375.23 377.10 Td (. ) Tj ET Q q 0 0 0 rg BT 379.68 377.10 Td (As of December 31, 2014, a full ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 365.10 Td (valuation allowance was recorded for federal and state deferred tax assets due to negative evidence of cumulative ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 353.10 Td (book losses. For the three months ended March 31, 2016 and 2015, no deferred income tax benefit was recognized ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 341.10 Td (for the domestic loss on operations.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 317.10 Td (Non-GAAP) Tj ET Q q 0 0 0 rg BT 120.89 317.10 Td ( Measur) Tj ET Q q 0 0 0 rg BT 155.98 317.10 Td (es) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 293.10 Td (Adjusted Revenue, EBITDA) Tj ET Q q 0 0 0 rg BT 187.84 293.10 Td ( and ) Tj ET Q q 0 0 0 rg BT 208.04 293.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 283.33 293.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 275.10 Td (The SEC has adopted rules to regulate the use in filings with the SEC and in public disclosures of non-GAAP) Tj ET Q q 0 0 0 rg BT 538.61 275.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 263.10 Td (financial measures, such as ) Tj ET Q q 0 0 0 rg BT 187.23 263.10 Td (Adjusted Revenue, EBITDA) Tj ET Q q 0 0 0 rg BT 301.94 263.10 Td ( and ) Tj ET Q q 0 0 0 rg BT 320.82 263.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 395.54 263.10 Td ( and the ratios related thereto. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 251.10 Td (These measures are derived on the basis of methodologies other than in accordance with U.S. GAAP) Tj ET Q q 0 0 0 rg BT 474.39 251.10 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 227.10 Td (Adjusted Revenue is a non-GAAP) Tj ET Q q 0 0 0 rg BT 233.39 227.10 Td ( financial measure that we define as the total amount of revenue that would ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 215.10 Td (have been recognized in a period if we recognized all revenue immediately at the time of sale. ) Tj ET Q q 0 0 0 rg BT 450.54 215.10 Td (W) Tj ET Q q 0 0 0 rg BT 459.18 215.10 Td (e use ) Tj ET Q q 0 0 0 rg BT 481.39 215.10 Td (Adjusted ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 203.10 Td (Revenue as a performance measure given that we typically collect full payment for our digital and print solutions at ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 191.10 Td (the time of sale or shortly thereafter) Tj ET Q q 0 0 0 rg BT 214.88 191.10 Td (, but recognize revenue from digital solutions and multi-year deliverables ratably ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 179.10 Td (over the term of our customer contracts. ) Tj ET Q q 0 0 0 rg BT 234.17 179.10 Td (Adjusted Revenue is a key metric we use to manage our business as it ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 167.10 Td (reflects the sales activity in a given period, particularly in the K-12 market, in which customers typically pay for five ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 155.10 Td (to eight year contracts upfront. ) Tj ET Q q 0 0 0 rg BT 196.96 155.10 Td (Adjusted Revenue is U.S. GAAP) Tj ET Q q 0 0 0 rg BT 329.36 155.10 Td ( revenue plus the net change in deferred revenue. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 131.10 Td (EBITDA, a measure used by management to assess operating performance, is defined as net income from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 119.10 Td (continuing operations plus net interest, income taxes, depreciation and amortization \(including amortization of pre-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 107.10 Td (publication investment cash costs\). ) Tj ET Q q 0 0 0 rg BT 213.92 107.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 288.64 107.10 Td ( is defined as EBITDA) Tj ET Q q 0 0 0 rg BT 379.73 107.10 Td ( adjusted to exclude unusual items and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 95.10 Td (other adjustments required or permitted under our debt agreements. ) Tj ET Q q 0 0 0 rg BT 343.58 95.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 418.30 95.10 Td ( is the fundamental ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 83.10 Td (profitability metric we use to manage our business as it reflects the sales activity in a given period, as well as the ) Tj ET Q endstream endobj 81 0 obj <> endobj 82 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (37) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (impact of our continuing investment in pre-publication activities, which are important to the ongoing success of our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (business. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 677.10 Td (Each of the above described measures is not a recognized term under U.S. GAAP) Tj ET Q q 0 0 0 rg BT 421.91 677.10 Td ( and does not purport to be ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 665.10 Td (an alternative to revenue, income from continuing operations, income from operations or any other measure derived ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 653.10 Td (in accordance with U.S. GAAP) Tj ET Q q 0 0 0 rg BT 197.16 653.10 Td ( as a measure of operating performance or to cash flows from operations as a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 641.10 Td (measure of liquidity) Tj ET Q q 0 0 0 rg BT 151.89 641.10 Td (. ) Tj ET Q q 0 0 0 rg BT 156.34 641.10 Td (Additionally) Tj ET Q q 0 0 0 rg BT 206.24 641.10 Td (, each such measure is not intended to be a measure of free cash flows available for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 629.10 Td (management) Tj ET Q q 0 0 0 rg BT 125.87 629.10 Td (s discretionary use, as it does not consider certain cash requirements such as interest payments, tax ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 617.10 Td (payments and debt service requirements. Such measures have limitations as analytical tools, and you should not ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 605.10 Td (consider any of such measures in isolation or as substitutes for our results as reported under U.S. GAAP) Tj ET Q q 0 0 0 rg BT 487.21 605.10 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 593.10 Td (Management compensates for the limitations of using non-GAAP) Tj ET Q q 0 0 0 rg BT 334.64 593.10 Td ( financial measures by using them to supplement ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 581.10 Td (U.S.GAAP) Tj ET Q q 0 0 0 rg BT 119.14 581.10 Td ( results to provide a more complete understanding of the factors and trends af) Tj ET Q q 0 0 0 rg BT 428.58 581.10 Td (fecting the business than ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 569.10 Td (U.S. GAAP) Tj ET Q q 0 0 0 rg BT 119.14 569.10 Td ( results alone. Because not all companies use identical calculations, our measures may not be ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 557.10 Td (comparable to other similarly titled measures of other companies.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 533.10 Td (Management believes ) Tj ET Q q 0 0 0 rg BT 185.41 533.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 260.13 533.10 Td ( is helpful in highlighting trends because ) Tj ET Q q 0 0 0 rg BT 424.83 533.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 499.54 533.10 Td ( excludes ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 521.10 Td (the results of certain transactions or adjustments that are non-recurring and/or non-operational and can dif) Tj ET Q q 0 0 0 rg BT 495.00 521.10 Td (fer ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 509.10 Td (significantly from company to company depending on long-term strategic decisions regarding capital structure, the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 497.10 Td (tax rules in the jurisdictions in which companies operate, and capital investments. In addition, ) Tj ET Q q 0 0 0 rg BT 449.41 497.10 Td (Adjusted Revenue and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 485.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 146.72 485.10 Td ( provides more comparability between the historical operating results and operating results that ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 473.10 Td (reflect purchase accounting and the new capital structure post the Founding ) Tj ET Q q 0 0 0 rg BT 376.07 473.10 Td (Acquisition as well as the digital ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 461.10 Td (transformation that we are undertaking which requires dif) Tj ET Q q 0 0 0 rg BT 302.57 461.10 Td (ferent accounting treatment for digital and print solutions ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 449.10 Td (in accordance with U.S. GAAP) Tj ET Q q 0 0 0 rg BT 196.42 449.10 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 425.10 Td (Management believes that the inclusion of supplementary adjustments to ) Tj ET Q q 0 0 0 rg BT 389.54 425.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 464.26 425.10 Td ( applied in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 413.10 Td (presenting ) Tj ET Q q 0 0 0 rg BT 115.60 413.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 190.32 413.10 Td ( are appropriate to provide additional information to investors about certain material ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 401.10 Td (non-cash items and about unusual items that we do not expect to continue at the same level in the future. ) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 336.60 316.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 387.50 336.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 391.50 336.60 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 463.50 336.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 467.50 336.60 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 306.60 316.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 387.50 306.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 391.50 306.60 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 463.50 306.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 467.50 306.60 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 276.60 316.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 387.50 276.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 391.50 276.60 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 463.50 276.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 467.50 276.60 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 246.60 316.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 387.50 246.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 391.50 246.60 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 463.50 246.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 467.50 246.60 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 217.60 316.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 387.50 217.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 391.50 217.60 72.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 463.50 217.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 467.50 217.60 72.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 189.60 316.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 387.50 189.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 391.50 189.60 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 463.50 189.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 467.50 189.60 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 159.60 316.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 387.50 159.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 391.50 159.60 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 463.50 159.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 467.50 159.60 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 129.60 316.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 387.50 129.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 391.50 129.60 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 463.50 129.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 467.50 129.60 72.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 364.6 m 463.5 364.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 364.6 m 539.5 364.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 364.6 m 463.5 364.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 350.6 m 463.5 350.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 364.6 m 539.5 364.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 350.6 m 539.5 350.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 261.6 m 463.5 261.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 246.60000000000002 m 463.5 246.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 261.6 m 539.5 261.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 246.60000000000002 m 539.5 246.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 231.60000000000002 m 463.5 231.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 218.60000000000002 m 463.5 218.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 216.60000000000002 m 463.5 216.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 231.60000000000002 m 539.5 231.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 218.60000000000002 m 539.5 218.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 216.60000000000002 m 539.5 216.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 114.60000000000002 m 463.5 114.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 114.60000000000002 m 539.5 114.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 114.60000000000002 m 463.5 114.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 101.60000000000002 m 463.5 101.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 99.60000000000002 m 463.5 99.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 114.60000000000002 m 539.5 114.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 101.60000000000002 m 539.5 101.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 99.60000000000002 m 539.5 99.60000000000002 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 396.40 369.28 Td (Three Months Ended March 31,) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 355.28 Td (\(Dollars in thousands\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 417.00 355.28 Td (2016) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 493.00 355.28 Td (2015) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 341.28 Td (Reported Revenue by Segment:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 326.27 Td (Higher Education) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 394.00 326.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 427.15 326.27 Td (134,634) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 470.00 326.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 326.27 Td (126,228) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 311.27 Td (K-12) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.15 311.27 Td (61,713) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 311.27 Td (47,093) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 296.27 Td (International) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.15 296.27 Td (42,652) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 296.27 Td (44,692) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 281.72 Td (Professional) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.15 281.27 Td (27,701) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 281.27 Td (26,092) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 266.27 Td (Other) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 449.65 266.27 Td (27) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 513.15 266.27 Td (2,802) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 251.28 Td (Total Reported Revenue) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 427.15 251.27 Td (266,727) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 251.27 Td (246,907) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 236.27 Td (Change in deferred revenue \(a\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 428.80 236.32 Td (\(28,300) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 459.65 236.27 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.80 236.32 Td (\(25,535) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 236.27 Td (\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 222.33 Td (Adjusted Revenue) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 394.00 222.28 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 427.15 222.28 Td (238,427) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 470.00 222.28 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 503.15 222.28 Td (221,372) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 194.28 Td (Adjusted Revenue by Segment:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 179.27 Td (Higher Education) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 394.00 179.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 427.15 179.27 Td (127,296) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 470.00 179.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 179.27 Td (118,981) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 164.27 Td (K-12) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.15 164.27 Td (46,200) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 164.27 Td (36,558) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 149.27 Td (International) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.15 149.27 Td (42,514) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 149.27 Td (42,969) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 134.72 Td (Professional) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.15 134.27 Td (22,048) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 134.27 Td (22,079) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 119.27 Td (Other) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 444.65 119.27 Td (369) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 520.65 119.27 Td (785) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 105.33 Td (Total Adjusted Revenue) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 394.00 105.33 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 427.15 105.33 Td (238,427) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 470.00 105.33 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 503.15 105.33 Td (221,372) Tj ET Q BT /F1 10.00 Tf ET endstream endobj 83 0 obj <> endobj 84 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (38) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 676.50 317.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 388.50 676.50 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 676.50 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 676.50 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 468.50 676.50 71.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 646.50 317.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 388.50 646.50 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 646.50 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 646.50 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 468.50 646.50 71.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 617.50 317.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 388.50 617.50 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 617.50 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 617.50 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 468.50 617.50 71.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 587.50 317.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 388.50 587.50 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 587.50 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 587.50 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 468.50 587.50 71.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 557.50 317.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 388.50 557.50 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 557.50 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 464.50 557.50 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 468.50 557.50 71.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 392.5 705.5 m 464.5 705.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 464.5 705.5 m 468.5 705.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 468.5 705.5 m 539.5 705.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 392.5 691.5 m 464.5 691.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 468.5 691.5 m 539.5 691.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 392.5 631.5 m 464.5 631.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 392.5 617.5 m 464.5 617.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 468.5 631.5 m 539.5 631.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 468.5 617.5 m 539.5 617.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 392.5 542.5 m 464.5 542.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 392.5 529.5 m 464.5 529.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 392.5 527.5 m 464.5 527.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 468.5 542.5 m 539.5 542.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 468.5 529.5 m 539.5 529.5 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 468.5 527.5 m 539.5 527.5 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 396.90 710.18 Td (Three Months Ended March 31,) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 696.18 Td (\(Dollars in thousands\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 418.00 696.18 Td (2016) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 493.50 696.18 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 681.17 Td (Net income \(loss\) from continuing operations) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 395.00 681.17 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 424.80 681.22 Td (\(138,880) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 460.65 681.17 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 471.00 681.17 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 499.80 681.22 Td (\(154,767) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 681.17 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 666.17 Td (Interest \(income\) expense, net) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 433.15 666.17 Td (46,225) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 666.17 Td (48,284) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 651.17 Td (Income tax \(benefit\) provision) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 442.30 651.22 Td (\(214) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 460.65 651.17 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.80 651.22 Td (\(2,685) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 651.17 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 636.17 Td (Depreciation, amortization and pre-publication investment amortization) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 433.15 636.17 Td (48,416) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 636.17 Td (42,692) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 622.18 Td (EBITDA) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 395.00 622.18 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 429.80 622.23 Td (\(44,453) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 460.65 622.18 Td (\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 471.00 622.18 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 504.80 622.23 Td (\(66,476) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 535.65 622.18 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 607.17 Td (Deferred revenue \(a\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 429.80 607.22 Td (\(28,300) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 460.65 607.17 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.80 607.22 Td (\(25,535) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 607.17 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 592.17 Td (Restructuring and cost savings implementation charges \(b\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 438.15 592.17 Td (3,333) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 513.15 592.17 Td (7,677) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 577.17 Td (Sponsor fees \(c\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 445.65 577.17 Td (875) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 520.65 577.17 Td (875) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 562.17 Td (Other \(d\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 438.15 562.17 Td (3,535) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 513.15 562.17 Td (7,080) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 547.17 Td (Pre-publication investment cash costs \(e\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 429.80 547.22 Td (\(12,959) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 460.65 547.17 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.80 547.22 Td (\(19,732) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 547.17 Td (\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 533.18 Td (Adjusted EBITDA) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 395.00 533.18 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 429.80 533.23 Td (\(77,969) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 460.65 533.18 Td (\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 471.00 533.18 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 504.80 533.23 Td (\(96,111) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 535.65 533.18 Td (\)) Tj ET Q BT /F1 10.00 Tf ET BT /F1 9.00 Tf ET q 0 0 0 rg BT 71.00 499.20 Td (\(a\) ) Tj ET Q q 0 0 0 rg BT 96.00 499.20 Td (W) Tj ET Q q 0 0 0 rg BT 103.77 499.20 Td (e receive cash up-front for most product sales but recognize revenue \(primarily related to digital sales\) over time ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 96.00 488.40 Td (recording a liability for deferred revenue at the time of sale. ) Tj ET Q q 0 0 0 rg BT 313.24 488.40 Td (This adjustment represents the net ef) Tj ET Q q 0 0 0 rg BT 445.29 488.40 Td (fect of converting ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 96.00 477.60 Td (deferred revenues \(inclusive of deferred royalties\) to a cash basis assuming the collection of all receivable balances. ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 71.00 466.80 Td (\(b\) ) Tj ET Q q 0 0 0 rg BT 96.00 466.80 Td (Represents severance and other expenses associated with headcount reductions and other cost savings initiated as part of ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 96.00 456.00 Td (our formal restructuring initiatives to create a flatter and more agile or) Tj ET Q q 0 0 0 rg BT 348.48 456.00 Td (ganization. ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 71.00 445.20 Td (\(c\) ) Tj ET Q q 0 0 0 rg BT 96.00 445.20 Td (Beginning in 2014, $3.5 million of annual management fees was recorded and payable to ) Tj ET Q q 0 0 0 rg BT 418.91 445.20 Td (Apollo. ) Tj ET Q q 0 0 0 rg BT 448.25 445.20 Td (The amount recorded in ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 96.00 434.40 Td (the Successor period from March23, 2013 to December31, 2013 was $0.9 million. ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 71.00 423.60 Td (\(d\) ) Tj ET Q q 0 0 0 rg BT 96.00 423.60 Td (For the three months ended March 31, 2016 and 2015 \(Successor\), the amount represents \(i\)non-cash incentive ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 96.00 412.80 Td (compensation expense and \(ii\)other adjustments required or permitted in calculating covenant compliance under our debt ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 96.00 402.00 Td (agreements. ) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 71.00 391.20 Td (\(e\) ) Tj ET Q q 0 0 0 rg BT 96.00 391.20 Td (Represents the cash cost for pre-publication investment during the period excluding discontinued operations. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 368.40 Td (Operating Results based on Non-GAAP) Tj ET Q q 0 0 0 rg BT 234.98 368.40 Td ( Measures for the Three Months Ended March 31, 2016 and 2015) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 308.90 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 293.50 308.90 66.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.50 308.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.50 308.90 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 428.50 308.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 432.50 308.90 50.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 482.50 308.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 486.50 308.90 53.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 280.90 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 293.50 280.90 66.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.50 280.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.50 280.90 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 428.50 280.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 432.50 280.90 50.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 482.50 280.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 486.50 280.90 53.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 252.90 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 293.50 252.90 66.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.50 252.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.50 252.90 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 428.50 252.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 432.50 252.90 50.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 482.50 252.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 486.50 252.90 53.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 224.90 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 293.50 224.90 66.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.50 224.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.50 224.90 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 428.50 224.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 432.50 224.90 50.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 482.50 224.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 486.50 224.90 53.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 166.90 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 293.50 166.90 66.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.50 166.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.50 166.90 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 428.50 166.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 432.50 166.90 50.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 482.50 166.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 486.50 166.90 53.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 138.90 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 293.50 138.90 66.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.50 138.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.50 138.90 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 428.50 138.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 432.50 138.90 50.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 482.50 138.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 486.50 138.90 53.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 110.90 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 293.50 110.90 66.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.50 110.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.50 110.90 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 428.50 110.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 432.50 110.90 50.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 482.50 110.90 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 486.50 110.90 53.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 336.9 m 359.5 336.9 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 359.5 336.9 m 363.5 336.9 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 336.9 m 428.5 336.9 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 336.9 m 359.5 336.9 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 322.9 m 359.5 322.9 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 359.5 336.9 m 363.5 336.9 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 336.9 m 428.5 336.9 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 322.9 m 428.5 322.9 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 432.5 322.9 m 482.5 322.9 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 486.5 322.9 m 539.5 322.9 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 238.89999999999998 m 359.5 238.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 238.89999999999998 m 428.5 238.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 432.5 238.89999999999998 m 482.5 238.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 238.89999999999998 m 359.5 238.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 225.89999999999998 m 359.5 225.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 223.89999999999998 m 359.5 223.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 238.89999999999998 m 428.5 238.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 225.89999999999998 m 428.5 225.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 223.89999999999998 m 428.5 223.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 432.5 238.89999999999998 m 482.5 238.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 432.5 225.89999999999998 m 482.5 225.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 432.5 223.89999999999998 m 482.5 223.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 486.5 238.89999999999998 m 539.5 238.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 486.5 225.89999999999998 m 539.5 225.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 486.5 223.89999999999998 m 539.5 223.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 223.89999999999998 m 359.5 223.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 225.89999999999998 m 359.5 225.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 210.89999999999998 m 359.5 210.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 223.89999999999998 m 428.5 223.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 225.89999999999998 m 428.5 225.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 210.89999999999998 m 428.5 210.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 210.89999999999998 m 359.5 210.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 197.89999999999998 m 359.5 197.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 195.89999999999998 m 359.5 195.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 210.89999999999998 m 428.5 210.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 197.89999999999998 m 428.5 197.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 195.89999999999998 m 428.5 195.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 428.5 210.89999999999998 m 432.5 210.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 428.5 197.89999999999998 m 432.5 197.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 428.5 195.89999999999998 m 432.5 195.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 432.5 210.89999999999998 m 482.5 210.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 432.5 197.89999999999998 m 482.5 197.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 432.5 195.89999999999998 m 482.5 195.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 486.5 210.89999999999998 m 539.5 210.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 486.5 197.89999999999998 m 539.5 197.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 486.5 195.89999999999998 m 539.5 195.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 428.5 195.89999999999998 m 432.5 195.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 428.5 197.89999999999998 m 432.5 197.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 96.89999999999998 m 359.5 96.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 96.89999999999998 m 428.5 96.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 96.89999999999998 m 359.5 96.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 83.89999999999998 m 359.5 83.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 81.89999999999998 m 359.5 81.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 96.89999999999998 m 428.5 96.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 83.89999999999998 m 428.5 83.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 81.89999999999998 m 428.5 81.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 432.5 96.89999999999998 m 482.5 96.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 432.5 83.89999999999998 m 482.5 83.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 432.5 81.89999999999998 m 482.5 81.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 486.5 96.89999999999998 m 539.5 96.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 486.5 83.89999999999998 m 539.5 83.89999999999998 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 486.5 81.89999999999998 m 539.5 81.89999999999998 l s BT /F2 9.00 Tf ET q 0 0 0 rg BT 298.75 341.35 Td (Three Months Ended March 31,) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 74.00 327.35 Td (\(Dollars in thousands\)) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 317.00 327.85 Td (2016) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 386.50 327.85 Td (2015) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 438.85 327.35 Td ($ Change) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 492.10 327.35 Td (% Change) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 74.00 313.35 Td (Reported Revenue by segment:) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 80.00 299.36 Td (Higher Education) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 296.00 299.36 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 326.75 299.36 Td (134,634) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 366.00 299.36 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 395.75 299.36 Td (126,228) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 435.00 299.36 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 458.75 299.36 Td (8,406) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 517.25 299.36 Td (6.7) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 531.50 299.36 Td (%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 80.00 285.36 Td (K-12) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 331.25 285.36 Td (61,713) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 400.25 285.36 Td (47,093) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 454.25 285.36 Td (14,620) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 512.75 285.36 Td (31.0) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 531.50 285.36 Td (%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 80.00 271.36 Td (International) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 331.25 271.36 Td (42,652) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 400.25 271.36 Td (44,692) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 455.75 271.36 Td (\(2,040) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 479.00 271.36 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 514.25 271.36 Td (\(4.6) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 528.50 271.36 Td (\)%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 80.00 257.76 Td (Professional) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 331.25 257.36 Td (27,701) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 400.25 257.36 Td (26,092) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 458.75 257.36 Td (1,609) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 517.25 257.36 Td (6.2) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 531.50 257.36 Td (%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 80.00 243.36 Td (Other) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 347.00 243.36 Td (27) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 404.75 243.36 Td (2,802) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 455.75 243.36 Td (\(2,775) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 479.00 243.36 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 509.75 243.36 Td (\(99.0) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 528.50 243.36 Td (\)%) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 74.00 229.85 Td (Total Reported Revenue) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 296.00 229.85 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 326.75 229.85 Td (266,727) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 366.00 229.85 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 395.75 229.85 Td (246,907) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 435.00 229.85 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 454.25 229.85 Td (19,820) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 517.25 229.35 Td (8.0) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 530.00 229.35 Td (%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 80.00 215.76 Td (Change in deferred revenue) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 328.25 215.36 Td (\(28,300) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 356.00 215.36 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 397.25 215.36 Td (\(25,535) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 425.00 215.36 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 455.75 215.36 Td (\(2,765) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 479.00 215.36 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 512.75 215.36 Td (10.8) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 531.50 215.36 Td (%) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 74.00 201.85 Td (Adjusted Revenue) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 296.00 201.85 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 326.75 201.85 Td (238,427) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 366.00 201.85 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 395.75 201.85 Td (221,372) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 435.00 201.85 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 454.25 201.85 Td (17,055) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 517.25 201.35 Td (7.7) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 530.00 201.35 Td (%) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 74.00 172.35 Td (Adjusted Revenue by segment:) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 80.00 157.36 Td (Higher Education) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 296.00 157.36 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 326.75 157.36 Td (127,296) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 366.00 157.36 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 395.75 157.36 Td (118,981) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 435.00 157.36 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 458.75 157.36 Td (8,315) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 517.25 157.36 Td (7.0) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 531.50 157.36 Td (%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 80.00 143.36 Td (K-12) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 331.25 143.36 Td (46,200) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 400.25 143.36 Td (36,558) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 458.75 143.36 Td (9,642) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 512.75 143.36 Td (26.4) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 531.50 143.36 Td (%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 80.00 129.36 Td (International) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 331.25 129.36 Td (42,514) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 400.25 129.36 Td (42,969) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 462.50 129.36 Td (\(455) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 479.00 129.36 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 514.25 129.36 Td (\(1.1) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 528.50 129.36 Td (\)%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 80.00 115.76 Td (Professional) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 331.25 115.36 Td (22,048) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 400.25 115.36 Td (22,079) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 467.00 115.36 Td (\(31) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 479.00 115.36 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 514.25 115.36 Td (\(0.1) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 528.50 115.36 Td (\)%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 80.00 101.76 Td (Other) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 342.50 101.36 Td (369) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 411.50 101.36 Td (785) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 462.50 101.36 Td (\(416) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 479.00 101.36 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 509.75 101.36 Td (\(53.0) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 528.50 101.36 Td (\)%) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 74.00 87.85 Td (Total Adjusted Revenue) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 296.00 87.85 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 326.75 87.85 Td (238,427) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 366.00 87.85 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 395.75 87.85 Td (221,372) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 435.00 87.85 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 454.25 87.85 Td (17,055) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 517.25 87.35 Td (7.7) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 530.00 87.35 Td (%) Tj ET Q BT /F1 10.00 Tf ET endstream endobj 85 0 obj <> endobj 86 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (39) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 660.60 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 293.50 660.60 66.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.50 660.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.50 660.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 428.50 660.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 432.50 660.60 50.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 482.50 660.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 486.50 660.60 53.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 632.60 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 293.50 632.60 66.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.50 632.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.50 632.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 428.50 632.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 432.50 632.60 50.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 482.50 632.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 486.50 632.60 53.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 604.60 222.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 293.50 604.60 66.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 359.50 604.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 363.50 604.60 65.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 428.50 604.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 432.50 604.60 50.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 482.50 604.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 486.50 604.60 53.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 688.6 m 359.5 688.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 359.5 688.6 m 363.5 688.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 688.6 m 428.5 688.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 688.6 m 359.5 688.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 674.6 m 359.5 674.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 359.5 688.6 m 363.5 688.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 688.6 m 428.5 688.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 674.6 m 428.5 674.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 432.5 674.6 m 482.5 674.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 486.5 674.6 m 539.5 674.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 590.6 m 359.5 590.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 577.6 m 359.5 577.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 293.5 575.6 m 359.5 575.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 590.6 m 428.5 590.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 577.6 m 428.5 577.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 363.5 575.6 m 428.5 575.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 432.5 590.6 m 482.5 590.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 432.5 577.6 m 482.5 577.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 432.5 575.6 m 482.5 575.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 486.5 590.6 m 539.5 590.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 486.5 577.6 m 539.5 577.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 486.5 575.6 m 539.5 575.6 l s BT /F2 9.00 Tf ET q 0 0 0 rg BT 298.75 693.05 Td (Three Months Ended March 31,) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 74.00 679.05 Td (\(Dollars in thousands\)) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 317.00 679.55 Td (2016) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 386.50 679.55 Td (2015) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 438.85 679.05 Td ($ Change) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 492.10 679.05 Td (% Change) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 74.00 665.05 Td (Adjusted EBITDA by segment:) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 651.06 Td (Higher Education) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 296.00 651.06 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 335.75 651.06 Td (8,117) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 366.00 651.06 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 411.50 651.06 Td (465) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 435.00 651.06 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 458.75 651.06 Td (7,652) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 500.00 651.06 Td (1,645.6) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 531.50 651.06 Td (%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 637.06 Td (K-12) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 328.25 637.06 Td (\(76,027) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 356.00 637.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 397.25 637.06 Td (\(87,857) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 425.00 637.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 454.25 637.06 Td (11,830) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 508.25 637.06 Td (\(13.5) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 528.50 637.06 Td (\)%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 623.06 Td (International) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 332.75 623.06 Td (\(8,152) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 356.00 623.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 401.75 623.06 Td (\(9,533) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 425.00 623.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 458.75 623.06 Td (1,381) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 508.25 623.06 Td (\(14.5) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 528.50 623.06 Td (\)%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 609.46 Td (Professional) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 332.75 609.06 Td (\(1,468) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 356.00 609.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 411.50 609.06 Td (761) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 455.75 609.06 Td (\(2,229) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 479.00 609.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 503.75 609.06 Td (\(292.9) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 528.50 609.06 Td (\)%) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 86.00 595.46 Td (Other) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 339.50 595.06 Td (\(439) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 356.00 595.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 416.00 595.06 Td (53) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 462.50 595.06 Td (\(492) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 479.00 595.06 Td (\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 503.75 595.06 Td (\(928.3) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 528.50 595.06 Td (\)%) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 74.00 581.55 Td (Total Adjusted EBITDA) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 296.00 581.55 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 328.25 581.55 Td (\(77,969) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 356.00 581.55 Td (\)) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 366.00 581.55 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 397.25 581.55 Td (\(96,111) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 425.00 581.55 Td (\)) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 435.00 581.55 Td ($) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 454.25 581.55 Td (18,142) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 508.25 581.55 Td (\(18.9) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 527.00 581.55 Td (\)%) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 553.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 553.10 Td (Adjusted Revenue for the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 293.78 553.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 357.38 553.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 376.82 553.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 396.82 553.10 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 417.37 553.10 Td ($238.4 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 476.26 553.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 495.70 553.10 Td ($221.4 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 541.10 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 100.89 541.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 153.55 541.10 Td (, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 216.58 541.10 Td ($17.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 270.47 541.10 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 283.80 541.10 Td (7.7%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 304.63 541.10 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 517.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 170.72 517.10 Td ( for the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 282.90 517.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 346.50 517.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 365.94 517.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 385.94 517.10 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 406.49 517.10 Td ($\(78.0\) million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 467.04 517.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 486.48 517.10 Td ($\(96.1\) ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 505.10 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 100.89 505.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 153.55 505.10 Td (, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 216.58 505.10 Td ($18.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 270.47 505.10 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 283.80 505.10 Td (18.9%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 309.63 505.10 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 481.10 Td (These variances were driven by the segment factors described below) Tj ET Q q 0 0 0 rg BT 369.96 481.10 Td (. ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 84.00 457.10 Td (Higher Education ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 96.00 439.10 Td (Adjusted Revenue) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 167.36 439.10 Td (. ) Tj ET Q q 0 0 0 rg BT 171.81 439.10 Td (Adjusted Revenue for the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 357.59 439.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 421.19 439.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 440.62 439.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 460.62 439.10 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 481.18 439.10 Td ($127.3 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 427.10 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 100.89 427.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.33 427.10 Td ($1) Tj ET Q q 0 0 0 rg BT 129.96 427.10 Td (19.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 178.85 427.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 231.51 427.10 Td (, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 294.53 427.10 Td ($8.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 343.43 427.10 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 356.76 427.10 Td (7.0%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 377.59 427.10 Td (. ) Tj ET Q q 0 0 0 rg BT 382.41 427.10 Td (The increase was due to:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 403.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 403.10 Td (favorable timing in sales as the ongoing digital transition is changing our selling patterns for digital and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 391.10 Td (print of) Tj ET Q q 0 0 0 rg BT 128.54 391.10 Td (ferings. ) Tj ET Q q 0 0 0 rg BT 160.75 391.10 Td (As we drive our digital first strategy) Tj ET Q q 0 0 0 rg BT 305.07 391.10 Td (, students are increasingly purchasing digital solutions ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 379.10 Td (directly from our proprietary e-commerce channel at the start of the semester) Tj ET Q q 0 0 0 rg BT 406.37 379.10 Td (. ) Tj ET Q q 0 0 0 rg BT 410.82 379.10 Td (As these sales transition from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 367.10 Td (the traditional distribution channel to our proprietary e-commerce channel, this has the ef) Tj ET Q q 0 0 0 rg BT 455.64 367.10 Td (fect of shifting our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 355.10 Td (sales from the end of 2015 to the beginning of 2016; ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 331.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 331.10 Td (digital revenue growth, primarily driven by growth in paid activations of our core digital learning solutions ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 99.00 319.10 Td (Connect/LearnSmart) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 182.89 319.10 Td ( \(paid activations of ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 265.08 319.10 Td (Connect/LearnSmart) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 348.97 319.10 Td ( grew by 13%\);) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 295.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 295.10 Td (a favorable product returns reserve rate adjustment consistent with the ongoing market shift to digital ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 283.10 Td (learning solutions which experience a much lower return rate; partially of) Tj ET Q q 0 0 0 rg BT 393.16 283.10 Td (fset by) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 259.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 259.10 Td (decreased print revenues, resulting in part from our focused transition from print to digital which has led to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 247.10 Td (extended revision cycles for certain titles and a declining print front-list, which in turn has led to more used ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 235.10 Td (and rental alternatives for new print materials. ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 96.00 211.10 Td (Adjusted EBITDA) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 167.93 211.10 Td (. ) Tj ET Q q 0 0 0 rg BT 172.38 211.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 247.10 211.10 Td ( for the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 359.29 211.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.88 211.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 442.32 211.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 462.32 211.10 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 482.88 211.10 Td ($8.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 531.77 211.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 199.10 Td (and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 88.94 199.10 Td ($0.5 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 137.83 199.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 190.49 199.10 Td (, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 253.51 199.10 Td ($7.7 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 302.41 199.10 Td (. ) Tj ET Q q 0 0 0 rg BT 307.22 199.10 Td (The increase was due to: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 175.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 175.10 Td (the profit impact of the aforementioned ) Tj ET Q q 0 0 0 rg BT 267.39 175.10 Td (Adjusted Revenue variance;) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 151.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 151.10 Td (timing related reduction in pre-publication cash cost expenditures; partially of) Tj ET Q q 0 0 0 rg BT 419.67 151.10 Td (fset by) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 127.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 127.10 Td (continued investment in digital capabilities, primarily through DPG.) Tj ET Q endstream endobj 87 0 obj <> endobj 88 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (40) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 84.00 713.10 Td (K-12 ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 96.00 695.10 Td (Adjusted Revenue) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 167.36 695.10 Td (. ) Tj ET Q q 0 0 0 rg BT 171.81 695.10 Td (Adjusted Revenue for the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 357.59 695.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 421.19 695.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 440.62 695.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 460.62 695.10 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 481.18 695.10 Td ($46.2 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.07 695.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 683.10 Td (and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 88.94 683.10 Td ($36.6 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 142.83 683.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 195.49 683.10 Td (, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 258.51 683.10 Td ($9.6 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 307.41 683.10 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 320.74 683.10 Td (26.4%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 346.57 683.10 Td (. ) Tj ET Q q 0 0 0 rg BT 351.38 683.10 Td (The increase was due to: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 659.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 659.10 Td (an increase in total adoption ) Tj ET Q q 0 0 0 rg BT 222.69 659.10 Td (Adjusted Revenue of 90% or $1) Tj ET Q q 0 0 0 rg BT 350.90 659.10 Td (1.3 million due to:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 135.00 635.10 Td (- elementary reading sales in Utah;) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 135.00 623.10 Td (- middle school and high school social studies sales in South Carolina;) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 135.00 611.10 Td (- elementary math sales in California; partially of) Tj ET Q q 0 0 0 rg BT 332.25 611.10 Td (fset by) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 135.00 599.10 Td (- elementary math sales in ) Tj ET Q q 0 0 0 rg BT 242.28 599.10 Td (V) Tj ET Q q 0 0 0 rg BT 248.90 599.10 Td (ir) Tj ET Q q 0 0 0 rg BT 254.83 599.10 Td (ginia. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 575.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 575.10 Td (a 1) Tj ET Q q 0 0 0 rg BT 119.57 575.10 Td (1% or $1.6 million increase in total open territory ) Tj ET Q q 0 0 0 rg BT 320.08 575.10 Td (Adjusted Revenue driven by elementary reading sales ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 563.10 Td (in Pennsylvania.) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 96.00 539.10 Td (Adjusted EBITDA) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 167.93 539.10 Td (. ) Tj ET Q q 0 0 0 rg BT 172.38 539.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 247.10 539.10 Td ( for the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 359.29 539.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.88 539.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 442.32 539.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 462.32 539.10 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 482.88 539.10 Td ($\(76.0\) ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 527.10 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 100.89 527.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.33 527.10 Td ($\(87.9\) million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 180.88 527.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 233.54 527.10 Td (, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 296.57 527.10 Td ($1) Tj ET Q q 0 0 0 rg BT 306.19 527.10 Td (1.8 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 350.09 527.10 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 363.42 527.10 Td (13.5%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 389.25 527.10 Td (. ) Tj ET Q q 0 0 0 rg BT 394.07 527.10 Td (The increase was due to: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 503.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 503.10 Td (the profit impact of the aforementioned ) Tj ET Q q 0 0 0 rg BT 267.39 503.10 Td (Adjusted Revenue variance; and) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 479.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 479.10 Td (reduced pre-publication investment cash costs; partially of) Tj ET Q q 0 0 0 rg BT 341.63 479.10 Td (fset by) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 455.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 455.10 Td (continued investment in digital capabilities, primarily through DPG; and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 431.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 431.10 Td (increased samples expense primarily related to California new adoption reading opportunities.) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 84.00 407.10 Td (International ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 96.00 389.10 Td (Adjusted Revenue) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 167.36 389.10 Td (. ) Tj ET Q q 0 0 0 rg BT 171.81 389.10 Td (Adjusted Revenue for the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 357.59 389.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 421.19 389.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 440.62 389.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 460.62 389.10 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 481.18 389.10 Td ($42.5 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.07 389.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 377.10 Td (and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 88.94 377.10 Td ($43.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 142.83 377.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 195.49 377.10 Td (, a decrease of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 255.17 377.10 Td ($0.5 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 304.07 377.10 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 317.40 377.10 Td (1.1%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 338.23 377.10 Td (. ) Tj ET Q q 0 0 0 rg BT 343.04 377.10 Td (The decrease was due to: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 353.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 353.10 Td (a $1.9 million unfavorable foreign exchange rate impact \(estimated by re-calculating current period results ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 341.10 Td (of foreign operations using the average exchange rate from the prior period\);) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 317.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 317.10 Td (decline in print revenue; partially of) Tj ET Q q 0 0 0 rg BT 251.93 317.10 Td (fset by ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 293.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 293.10 Td (digital revenue growth primarily in the higher education market.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 269.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 269.10 Td (Geographic performance was driven by Higher Education, K-12 and Professional sales growth in Latin ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 257.10 Td (America driven in part by a localized ) Tj ET Q q 0 0 0 rg BT 222.77 257.10 Td (ALEKS of) Tj ET Q q 0 0 0 rg BT 265.64 257.10 Td (fering and ) Tj ET Q q 0 0 0 rg BT 308.41 257.10 Td (Access Medicine, partially of) Tj ET Q q 0 0 0 rg BT 425.96 257.10 Td (fset by a decline in K-12 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 245.10 Td (and Professional sales in Canada and ) Tj ET Q q 0 0 0 rg BT 221.97 245.10 Td (Asia Pacific as well as a decline in Professional sales in EMEA. ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 96.00 221.10 Td (Adjusted EBITDA) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 167.93 221.10 Td (. ) Tj ET Q q 0 0 0 rg BT 172.38 221.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 247.10 221.10 Td ( for the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 359.29 221.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.88 221.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 442.32 221.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 462.32 221.10 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 482.88 221.10 Td ($\(8.2\) million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 538.43 221.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 209.10 Td (and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 88.94 209.10 Td ($\(9.5\) million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 144.49 209.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 197.15 209.10 Td (, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 260.17 209.10 Td ($1.4 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 309.07 209.10 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 322.40 209.10 Td (14.5%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 348.23 209.10 Td (. ) Tj ET Q q 0 0 0 rg BT 353.04 209.10 Td (The increase was due to a $1.2 million ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 197.10 Td (favorable foreign exchange rate impact \(estimated by re-calculating current period results of foreign operations ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 185.10 Td (using the average exchange rate from the prior period\) and gross mar) Tj ET Q q 0 0 0 rg BT 348.10 185.10 Td (gin improvement partially of) Tj ET Q q 0 0 0 rg BT 463.17 185.10 Td (fset by an increase ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 173.10 Td (in operating expenses. ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 84.00 149.10 Td (Pr) Tj ET Q q 0 0 0 rg BT 93.63 149.10 Td (ofessional ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 96.00 131.10 Td (Adjusted Revenue) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 167.36 131.10 Td (. ) Tj ET Q q 0 0 0 rg BT 171.81 131.10 Td (Adjusted Revenue for the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 357.59 131.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 421.19 131.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 440.62 131.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 460.62 131.10 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 481.18 131.10 Td ($22.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.07 131.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 119.10 Td (and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 88.94 119.10 Td ($22.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 142.83 119.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 195.49 119.10 Td (. ) Tj ET Q q 0 0 0 rg BT 200.31 119.10 Td (The decrease was due to: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 95.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 95.10 Td (a decline in print revenue; partially of) Tj ET Q q 0 0 0 rg BT 258.87 95.10 Td (fset by ) Tj ET Q endstream endobj 89 0 obj <> endobj 90 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (41) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 713.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 713.10 Td (the timing of subscription renewals for our ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 281.57 713.10 Td (Access) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 308.78 713.10 Td ( platform of) Tj ET Q q 0 0 0 rg BT 356.36 713.10 Td (ferings.) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 96.00 689.10 Td (Adjusted EBITDA) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 167.93 689.10 Td (. ) Tj ET Q q 0 0 0 rg BT 172.38 689.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 247.10 689.10 Td ( for the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 359.29 689.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.88 689.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 442.32 689.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 462.32 689.10 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 482.88 689.10 Td ($\(1.5\) million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 538.43 689.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 677.10 Td (and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 88.94 677.10 Td ($0.8 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 137.83 677.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 190.49 677.10 Td (, a decrease of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 250.17 677.10 Td ($2.2 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 299.07 677.10 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 312.40 677.10 Td (292.9%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 343.23 677.10 Td (. ) Tj ET Q q 0 0 0 rg BT 348.04 677.10 Td (The decrease was due to: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 653.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 653.10 Td (continued investment in digital capabilities, primarily through DPG; and) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 629.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 629.10 Td (an increase in compensation related costs.) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 84.00 605.10 Td (Other ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 96.00 587.10 Td (Adjusted EBITDA) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 167.93 587.10 Td (. ) Tj ET Q q 0 0 0 rg BT 172.38 587.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 247.10 587.10 Td ( for the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 359.29 587.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 422.88 587.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 442.32 587.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 462.32 587.10 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 482.88 587.10 Td ($\(0.4\) million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 538.43 587.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 575.10 Td (and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 88.94 575.10 Td ($0.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 137.83 575.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 190.49 575.10 Td (, a decrease of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 250.17 575.10 Td ($0.5 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 299.07 575.10 Td (. ) Tj ET Q q 0 0 0 rg BT 303.88 575.10 Td (The decrease was due to: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 551.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 551.10 Td (impact of adjustments made for in-transit product sales in accordance with U.S. GAAP;) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 527.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 527.10 Td (timing related corporate expense adjustments; and) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 99.00 503.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 503.10 Td (various costs not attributable to a single operating segment.) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 479.10 Td (Seasonality and Comparability) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 455.10 Td (Our revenues, operating profit and operating cash flows are af) Tj ET Q q 0 0 0 rg BT 344.06 455.10 Td (fected by the inherent seasonality of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 443.10 Td (academic calendar) Tj ET Q q 0 0 0 rg BT 145.56 443.10 Td (. In 2015 we realized approximately 14%, 23%, 40% and 23% of our revenues during the first, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 431.10 Td (second, third and fourth quarters, respectively) Tj ET Q q 0 0 0 rg BT 254.90 431.10 Td (. ) Tj ET Q q 0 0 0 rg BT 259.72 431.10 Td (This seasonality af) Tj ET Q q 0 0 0 rg BT 334.52 431.10 Td (fects operating cash flow from quarter to quarter ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 419.10 Td (and there are certain months when we operate at a net cash deficit. Changes in our customers) Tj ET Q q 0 0 0 rg BT 446.39 419.10 Td ( ordering patterns may ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 407.10 Td (af) Tj ET Q q 0 0 0 rg BT 79.59 407.10 Td (fect the comparison of our current results to comparable periods in prior years where our customers may shift the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 395.10 Td (timing of material orders for any number of reasons, including, but not limited to, changes in academic semester ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 383.10 Td (start dates or changes to their inventory management practices. ) Tj ET Q endstream endobj 91 0 obj <> endobj 92 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (42) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 713.25 Td (Quarterly Results of Operations) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 632.75 80.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 151.50 632.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 196.50 632.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 200.50 632.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 245.50 632.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 249.50 632.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 294.50 632.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 298.50 632.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 632.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 632.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 632.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 396.50 632.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 632.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 632.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 490.50 632.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.50 632.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 606.75 80.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 151.50 606.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 196.50 606.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 200.50 606.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 245.50 606.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 249.50 606.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 294.50 606.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 298.50 606.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 606.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 606.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 606.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 396.50 606.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 606.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 606.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 490.50 606.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.50 606.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 580.75 80.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 151.50 580.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 196.50 580.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 200.50 580.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 245.50 580.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 249.50 580.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 294.50 580.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 298.50 580.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 580.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 580.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 580.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 396.50 580.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 580.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 580.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 490.50 580.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.50 580.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 546.75 80.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 151.50 546.75 45.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 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0.8 0.9333333333333333 1 rg /GS0 gs 445.50 477.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 490.50 477.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.50 477.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 451.75 80.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 151.50 451.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 196.50 451.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 200.50 451.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 245.50 451.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 249.50 451.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 294.50 451.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 298.50 451.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 451.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 451.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 451.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 396.50 451.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 451.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 451.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 490.50 451.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.50 451.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 425.75 80.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 151.50 425.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 196.50 425.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 200.50 425.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 245.50 425.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 249.50 425.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 294.50 425.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 298.50 425.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 425.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 425.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 425.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 396.50 425.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 425.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 425.75 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 490.50 425.75 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.50 425.75 45.00 -13.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 682.75 m 196.5 682.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 653.75 m 196.5 653.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 196.5 682.75 m 200.5 682.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 682.75 m 245.5 682.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 653.75 m 245.5 653.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 245.5 682.75 m 249.5 682.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 682.75 m 294.5 682.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 653.75 m 294.5 653.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 682.75 m 343.5 682.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 653.75 m 343.5 653.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 682.75 m 347.5 682.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 682.75 m 392.5 682.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 653.75 m 392.5 653.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 392.5 682.75 m 396.5 682.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 682.75 m 441.5 682.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 653.75 m 441.5 653.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 441.5 682.75 m 445.5 682.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 682.75 m 490.5 682.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 653.75 m 490.5 653.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 682.75 m 539.5 682.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 653.75 m 539.5 653.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 567.75 m 196.5 567.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 567.75 m 245.5 567.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 567.75 m 294.5 567.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 567.75 m 343.5 567.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 567.75 m 392.5 567.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 567.75 m 441.5 567.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 567.75 m 490.5 567.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 567.75 m 539.5 567.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 547.75 m 196.5 547.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 545.75 m 196.5 545.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 567.75 m 245.5 567.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 547.75 m 245.5 547.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 545.75 m 245.5 545.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 567.75 m 294.5 567.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 547.75 m 294.5 547.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 545.75 m 294.5 545.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 567.75 m 343.5 567.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 547.75 m 343.5 547.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 545.75 m 343.5 545.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 567.75 m 392.5 567.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 547.75 m 392.5 547.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 545.75 m 392.5 545.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 567.75 m 441.5 567.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 547.75 m 441.5 547.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 545.75 m 441.5 545.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 567.75 m 490.5 567.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 547.75 m 490.5 547.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 545.75 m 490.5 545.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 567.75 m 539.5 567.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 547.75 m 539.5 547.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 545.75 m 539.5 545.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 525.75 m 196.5 525.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 513.75 m 196.5 513.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 511.75 m 196.5 511.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 525.75 m 245.5 525.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 513.75 m 245.5 513.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 511.75 m 245.5 511.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 525.75 m 294.5 525.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 513.75 m 294.5 513.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 511.75 m 294.5 511.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 525.75 m 343.5 525.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 513.75 m 343.5 513.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 511.75 m 343.5 511.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 525.75 m 392.5 525.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 513.75 m 392.5 513.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 511.75 m 392.5 511.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 525.75 m 441.5 525.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 513.75 m 441.5 513.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 511.75 m 441.5 511.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 525.75 m 490.5 525.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 513.75 m 490.5 513.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 511.75 m 490.5 511.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 525.75 m 539.5 525.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 513.75 m 539.5 513.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 511.75 m 539.5 511.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 412.75 m 196.5 412.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 412.75 m 245.5 412.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 412.75 m 294.5 412.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 412.75 m 343.5 412.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 412.75 m 392.5 412.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 412.75 m 441.5 412.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 412.75 m 490.5 412.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 412.75 m 539.5 412.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 412.75 m 196.5 412.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 392.75 m 196.5 392.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 390.75 m 196.5 390.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 412.75 m 245.5 412.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 392.75 m 245.5 392.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 390.75 m 245.5 390.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 412.75 m 294.5 412.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 392.75 m 294.5 392.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 390.75 m 294.5 390.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 412.75 m 343.5 412.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 392.75 m 343.5 392.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 390.75 m 343.5 390.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 412.75 m 392.5 412.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 392.75 m 392.5 392.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 390.75 m 392.5 390.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 412.75 m 441.5 412.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 392.75 m 441.5 392.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 390.75 m 441.5 390.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 412.75 m 490.5 412.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 392.75 m 490.5 392.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 390.75 m 490.5 390.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 412.75 m 539.5 412.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 392.75 m 539.5 392.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 390.75 m 539.5 390.75 l s BT /F2 8.00 Tf ET q 0 0 0 rg BT 214.50 686.98 Td (2014) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 386.00 686.98 Td (2015) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 508.50 686.98 Td (2016) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 665.98 Td (\(Dollars in) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 657.98 Td (thousands\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 161.25 673.98 Td (Second) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 159.55 665.98 Td (Quarter) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 165.50 657.98 Td (2014) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 212.45 673.98 Td (Third) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 208.55 665.98 Td (Quarter) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 214.50 657.98 Td (2014) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 259.50 673.98 Td (Fourth) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 257.55 665.98 Td (Quarter) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 263.50 657.98 Td (2014) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 312.25 673.98 Td (First) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 306.55 665.98 Td (Quarter) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 312.50 657.98 Td (2015) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 357.25 673.98 Td (Second) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 355.55 665.98 Td (Quarter) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 361.50 657.98 Td (2015) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 408.45 673.98 Td (Third) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 404.55 665.98 Td (Quarter) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 410.50 657.98 Td (2015) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 455.50 673.98 Td (Fourth) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 453.55 665.98 Td (Quarter) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 459.50 657.98 Td (2015) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 508.25 673.98 Td (First) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 502.55 665.98 Td (Quarter) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 508.50 657.98 Td (2016) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 644.98 Td (Reported Revenue by) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 636.98 Td (Segment:) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 624.00 Td (Higher Education) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 154.00 624.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 167.25 624.00 Td (144,718) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 203.00 624.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 216.25 624.00 Td (322,159) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 252.00 624.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 265.25 624.00 Td (245,571) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 301.00 624.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 314.25 624.00 Td (126,228) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 350.00 624.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 363.25 624.00 Td (149,053) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 399.00 624.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 412.25 624.00 Td (310,466) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 448.00 624.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 461.25 624.00 Td (223,198) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 497.00 624.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 510.25 624.00 Td (134,634) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 611.00 Td (K-12) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 167.25 611.00 Td (178,041) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 216.25 611.00 Td (278,632) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 269.25 611.00 Td (63,904) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 318.25 611.00 Td (47,093) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 363.25 611.00 Td (172,310) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 412.25 611.00 Td (298,606) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 465.25 611.00 Td (75,490) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 514.25 611.00 Td (61,713) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 598.00 Td (International) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 171.25 598.00 Td (79,805) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 216.25 598.00 Td (108,840) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 269.25 598.00 Td (96,062) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 318.25 598.00 Td (44,692) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 367.25 598.00 Td (74,056) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 416.25 598.00 Td (93,952) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 465.25 598.00 Td (92,321) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 514.25 598.00 Td (42,652) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 585.35 Td (Professional) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 171.25 585.00 Td (27,368) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 220.25 585.00 Td (31,830) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 269.25 585.00 Td (31,792) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 318.25 585.00 Td (26,092) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 367.25 585.00 Td (27,576) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 416.25 585.00 Td (32,812) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 465.25 585.00 Td (33,109) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 514.25 585.00 Td (27,701) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 572.35 Td (Other) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 178.60 572.00 Td (\(146) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 193.30 572.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 227.60 572.00 Td (\(700) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 242.30 572.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 270.60 572.00 Td (\(1,391) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 291.30 572.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 322.25 572.00 Td (2,802) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 377.30 572.00 Td (241) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 420.25 572.00 Td (3,954) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 475.30 572.00 Td (530) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 528.30 572.00 Td (27) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 559.43 Td (Total Reported) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 551.43 Td (Revenue) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 154.00 550.98 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 167.25 550.98 Td (429,786) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 203.00 550.98 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 216.25 550.98 Td (740,761) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 252.00 550.98 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 265.25 550.98 Td (435,938) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 301.00 550.98 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 314.25 550.98 Td (246,907) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 350.00 550.98 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 363.25 550.98 Td (423,236) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 399.00 550.98 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 412.25 550.98 Td (739,790) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 448.00 550.98 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 461.25 550.98 Td (424,648) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 497.00 550.98 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 510.25 550.98 Td (266,727) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 538.35 Td (Change in deferred) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 530.35 Td (revenue) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 171.25 529.98 Td (28,660) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 216.25 529.98 Td (171,662) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 270.60 529.98 Td (\(4,806) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 291.30 529.98 Td (\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 315.60 529.98 Td (\(25,535) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 340.30 529.98 Td (\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 367.25 529.98 Td (66,013) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 412.25 529.98 Td (212,458) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 462.60 529.98 Td (\(32,042) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 487.30 529.98 Td (\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 511.60 529.98 Td (\(28,300) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 536.30 529.98 Td (\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 517.43 Td (Adjusted Revenue) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 154.00 516.98 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 167.25 516.98 Td (458,446) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 203.00 516.98 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 216.25 516.98 Td (912,423) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 252.00 516.98 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 265.25 516.98 Td (431,132) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 301.00 516.98 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 314.25 516.98 Td (221,372) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 350.00 516.98 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 363.25 516.98 Td (489,249) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 399.00 516.98 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 412.25 516.98 Td (952,248) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 448.00 516.98 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 461.25 516.98 Td (392,606) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 497.00 516.98 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 510.25 516.98 Td (238,427) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 489.98 Td (Adjusted Revenue by) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 481.98 Td (Segment:) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 469.00 Td (Higher Education) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 154.00 469.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 167.25 469.00 Td (114,359) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 203.00 469.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 216.25 469.00 Td (382,753) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 252.00 469.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 265.25 469.00 Td (226,116) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 301.00 469.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 314.25 469.00 Td (118,981) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 350.00 469.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 363.25 469.00 Td (124,868) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 399.00 469.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 412.25 469.00 Td (386,182) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 448.00 469.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 461.25 469.00 Td (194,920) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 497.00 469.00 Td ($) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 510.25 469.00 Td (127,296) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 456.00 Td (K-12) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 167.25 456.00 Td (230,544) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 216.25 456.00 Td (384,911) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 269.25 456.00 Td (73,170) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 318.25 456.00 Td (36,558) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 363.25 456.00 Td (259,167) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 412.25 456.00 Td (435,364) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 465.25 456.00 Td (66,421) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 514.25 456.00 Td (46,200) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 443.00 Td (International) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 171.25 443.00 Td (79,143) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 216.25 443.00 Td (114,109) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 269.25 443.00 Td (94,420) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 318.25 443.00 Td (42,969) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 367.25 443.00 Td (73,603) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 412.25 443.00 Td (100,155) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 465.25 443.00 Td (91,205) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 514.25 443.00 Td (42,514) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 430.35 Td (Professional) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 171.25 430.00 Td (33,451) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 220.25 430.00 Td (30,593) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 269.25 430.00 Td (39,712) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 318.25 430.00 Td (22,079) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 367.25 430.00 Td (29,996) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 416.25 430.00 Td (30,241) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 465.25 430.00 Td (40,721) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 514.25 430.00 Td (22,048) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 417.35 Td (Other) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 181.30 417.00 Td (949) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 234.30 417.00 Td (57) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 270.60 417.00 Td (\(2,286) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 291.30 417.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 328.30 417.00 Td (785) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 371.25 417.00 Td (1,615) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 426.30 417.00 Td (306) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 472.60 417.00 Td (\(661) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 487.30 417.00 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 524.30 417.00 Td (369) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 404.43 Td (Total Adjusted) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 396.43 Td (Revenue) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg 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(Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (43) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (Reconciliation of ) Tj ET Q q 0 0 0 rg BT 143.09 713.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 217.81 713.10 Td ( to the consolidated financial statements of operations is as follows:) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 660.60 80.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 151.50 660.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 196.50 660.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 200.50 660.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 245.50 660.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 249.50 660.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 294.50 660.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 298.50 660.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 660.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 660.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 660.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 396.50 660.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 660.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 660.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 490.50 660.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.50 660.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 626.60 80.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 151.50 626.60 45.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 196.50 626.60 4.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 200.50 626.60 45.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 245.50 626.60 4.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 249.50 626.60 45.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 294.50 626.60 4.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 298.50 626.60 45.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 626.60 4.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 626.60 45.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 626.60 4.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 396.50 626.60 45.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 626.60 4.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 626.60 45.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 490.50 626.60 4.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.50 626.60 45.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 568.60 80.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 151.50 568.60 45.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 196.50 568.60 4.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 200.50 568.60 45.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 245.50 568.60 4.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 249.50 568.60 45.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 294.50 568.60 4.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 298.50 568.60 45.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 568.60 4.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 568.60 45.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 568.60 4.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 396.50 568.60 45.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 568.60 4.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 568.60 45.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 490.50 568.60 4.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.50 568.60 45.00 -21.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 510.60 80.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 151.50 510.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 196.50 510.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 200.50 510.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 245.50 510.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 249.50 510.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 294.50 510.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 298.50 510.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 510.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 510.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 510.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 396.50 510.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 510.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 510.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 490.50 510.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.50 510.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 484.60 80.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 151.50 484.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 196.50 484.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 200.50 484.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 245.50 484.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 249.50 484.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 294.50 484.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 298.50 484.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 484.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 484.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 484.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 396.50 484.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 484.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 484.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 490.50 484.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.50 484.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 458.60 80.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 151.50 458.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 196.50 458.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 200.50 458.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 245.50 458.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 249.50 458.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 294.50 458.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 298.50 458.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 458.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 458.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 458.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 396.50 458.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 458.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 458.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 490.50 458.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.50 458.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 424.60 80.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 151.50 424.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 196.50 424.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 200.50 424.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 245.50 424.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 249.50 424.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 294.50 424.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 298.50 424.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 424.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 424.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 424.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 396.50 424.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 424.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 424.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 490.50 424.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.50 424.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 390.60 80.00 -29.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 151.50 390.60 45.00 -29.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 196.50 390.60 4.00 -29.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 200.50 390.60 45.00 -29.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 245.50 390.60 4.00 -29.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 249.50 390.60 45.00 -29.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 294.50 390.60 4.00 -29.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 298.50 390.60 45.00 -29.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 390.60 4.00 -29.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 390.60 45.00 -29.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 390.60 4.00 -29.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 396.50 390.60 45.00 -29.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 390.60 4.00 -29.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 390.60 45.00 -29.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 490.50 390.60 4.00 -29.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.50 390.60 45.00 -29.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 332.60 80.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 151.50 332.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 196.50 332.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 200.50 332.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 245.50 332.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 249.50 332.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 294.50 332.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 298.50 332.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 332.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 332.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 332.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 396.50 332.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 332.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 332.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 490.50 332.60 4.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.50 332.60 45.00 -13.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 282.60 80.00 -37.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 151.50 282.60 45.00 -37.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 196.50 282.60 4.00 -37.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 200.50 282.60 45.00 -37.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 245.50 282.60 4.00 -37.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 249.50 282.60 45.00 -37.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 294.50 282.60 4.00 -37.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 298.50 282.60 45.00 -37.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 343.50 282.60 4.00 -37.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 347.50 282.60 45.00 -37.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 392.50 282.60 4.00 -37.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 396.50 282.60 45.00 -37.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 441.50 282.60 4.00 -37.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 282.60 45.00 -37.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 490.50 282.60 4.00 -37.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 494.50 282.60 45.00 -37.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 689.6 m 196.5 689.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 660.6 m 196.5 660.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 196.5 689.6 m 200.5 689.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 689.6 m 245.5 689.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 660.6 m 245.5 660.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 245.5 689.6 m 249.5 689.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 689.6 m 294.5 689.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 660.6 m 294.5 660.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 689.6 m 343.5 689.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 660.6 m 343.5 660.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 689.6 m 347.5 689.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 689.6 m 392.5 689.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 660.6 m 392.5 660.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 392.5 689.6 m 396.5 689.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 689.6 m 441.5 689.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 660.6 m 441.5 660.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 441.5 689.6 m 445.5 689.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 689.6 m 490.5 689.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 660.6 m 490.5 660.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 689.6 m 539.5 689.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 660.6 m 539.5 660.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 660.6 m 196.5 660.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 647.6 m 196.5 647.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 660.6 m 245.5 660.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 647.6 m 245.5 647.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 660.6 m 294.5 660.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 647.6 m 294.5 647.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 660.6 m 343.5 660.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 647.6 m 343.5 647.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 660.6 m 392.5 660.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 647.6 m 392.5 647.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 660.6 m 441.5 660.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 647.6 m 441.5 647.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 660.6 m 490.5 660.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 647.6 m 490.5 647.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 660.6 m 539.5 660.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 647.6 m 539.5 647.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 390.6 m 196.5 390.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 390.6 m 245.5 390.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 390.6 m 294.5 390.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 390.6 m 343.5 390.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 390.6 m 392.5 390.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 390.6 m 441.5 390.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 390.6 m 490.5 390.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 390.6 m 539.5 390.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 332.6 m 196.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 332.6 m 245.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 245.5 332.6 m 249.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 332.6 m 294.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 294.5 332.6 m 298.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 332.6 m 343.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 343.5 332.6 m 347.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 332.6 m 392.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 392.5 332.6 m 396.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 332.6 m 441.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 441.5 332.6 m 445.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 332.6 m 490.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 490.5 332.6 m 494.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 332.6 m 539.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 332.6 m 196.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 319.6 m 196.5 319.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 332.6 m 245.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 319.6 m 245.5 319.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 332.6 m 294.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 319.6 m 294.5 319.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 332.6 m 343.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 319.6 m 343.5 319.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 332.6 m 392.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 319.6 m 392.5 319.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 332.6 m 441.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 319.6 m 441.5 319.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 332.6 m 490.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 319.6 m 490.5 319.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 332.6 m 539.5 332.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 319.6 m 539.5 319.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 319.6 m 196.5 319.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 282.6 m 196.5 282.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 319.6 m 245.5 319.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 282.6 m 245.5 282.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 319.6 m 294.5 319.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 282.6 m 294.5 282.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 319.6 m 343.5 319.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 282.6 m 343.5 282.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 319.6 m 392.5 319.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 282.6 m 392.5 282.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 319.6 m 441.5 319.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 282.6 m 441.5 282.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 319.6 m 490.5 319.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 282.6 m 490.5 282.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 319.6 m 539.5 319.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 282.6 m 539.5 282.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 282.6 m 196.5 282.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 246.60000000000002 m 196.5 246.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 151.5 244.60000000000002 m 196.5 244.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 282.6 m 245.5 282.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 246.60000000000002 m 245.5 246.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 200.5 244.60000000000002 m 245.5 244.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 282.6 m 294.5 282.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 246.60000000000002 m 294.5 246.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 249.5 244.60000000000002 m 294.5 244.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 282.6 m 343.5 282.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 246.60000000000002 m 343.5 246.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 298.5 244.60000000000002 m 343.5 244.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 282.6 m 392.5 282.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 246.60000000000002 m 392.5 246.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 347.5 244.60000000000002 m 392.5 244.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 282.6 m 441.5 282.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 246.60000000000002 m 441.5 246.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 396.5 244.60000000000002 m 441.5 244.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 282.6 m 490.5 282.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 246.60000000000002 m 490.5 246.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 244.60000000000002 m 490.5 244.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 282.6 m 539.5 282.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 246.60000000000002 m 539.5 246.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 494.5 244.60000000000002 m 539.5 244.60000000000002 l s BT /F2 8.00 Tf ET q 0 0 0 rg BT 214.50 693.83 Td (2014) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 386.00 693.83 Td (2015) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 508.50 693.83 Td (2016) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 672.83 Td (\(Dollars in) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 664.83 Td (thousands\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 161.25 680.83 Td (Second) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 159.55 672.83 Td (Quarter) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 165.50 664.83 Td (2014) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 212.45 680.83 Td (Third) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 208.55 672.83 Td (Quarter) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 214.50 664.83 Td (2014) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 259.50 680.83 Td (Fourth) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 257.55 672.83 Td (Quarter) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 263.50 664.83 Td (2014) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 312.25 680.83 Td (First) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 306.55 672.83 Td (Quarter) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 312.50 664.83 Td (2015) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 357.25 680.83 Td (Second) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 355.55 672.83 Td (Quarter) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 361.50 664.83 Td (2015) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 408.45 680.83 Td (Third) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 404.55 672.83 Td (Quarter) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 410.50 664.83 Td (2015) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 455.50 680.83 Td (Fourth) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 453.55 672.83 Td (Quarter) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 459.50 664.83 Td (2015) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 508.25 680.83 Td (First) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 502.55 672.83 Td (Quarter) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 508.50 664.83 Td (2016) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 651.83 Td (Adjusted EBITDA) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 154.00 651.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 171.25 651.83 Td (91,948) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 203.00 651.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 216.25 651.83 Td (455,369) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 252.00 651.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 273.25 651.83 Td (9,009) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 301.00 651.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 315.60 651.83 Td (\(96,111) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 340.30 651.83 Td (\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 350.00 651.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 363.25 651.83 Td (104,668) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 399.00 651.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 412.25 651.83 Td (488,982) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 448.00 651.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 462.60 651.83 Td (\(11,143) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 487.30 651.83 Td (\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 497.00 651.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 511.60 651.83 Td (\(77,969) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 536.30 651.83 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 638.85 Td (Interest \(expense\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 630.85 Td (income, net) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 168.60 630.85 Td (\(40,736) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 193.30 630.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 217.60 630.85 Td (\(47,836) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 242.30 630.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 266.60 630.85 Td (\(44,428) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 291.30 630.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 315.60 630.85 Td (\(48,284) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 340.30 630.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 364.60 630.85 Td (\(48,481) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 389.30 630.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 413.60 630.85 Td (\(47,633) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 438.30 630.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 462.60 630.85 Td (\(48,245) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 487.30 630.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 511.60 630.85 Td (\(46,225) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 536.30 630.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 617.85 Td (Benefit \(provision\) for) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 609.85 Td (taxes on income) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 171.25 609.85 Td (31,981) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 217.60 609.85 Td (\(72,183) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 242.30 609.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 262.60 609.85 Td (\(148,970) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 291.30 609.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 322.25 609.85 Td (2,685) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 374.60 609.85 Td (\(158) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 389.30 609.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 417.60 609.85 Td (\(4,087) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 438.30 609.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 466.60 609.85 Td (\(4,301) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 487.30 609.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 524.30 609.85 Td (214) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 596.85 Td (Depreciation,) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 588.85 Td (amortization and pre-) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 580.85 Td (publication investment) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 572.85 Td (amortization) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 168.60 572.85 Td (\(51,205) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 193.30 572.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 217.60 572.85 Td (\(59,118) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 242.30 572.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 266.60 572.85 Td (\(50,123) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 291.30 572.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 315.60 572.85 Td (\(42,692) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 340.30 572.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 364.60 572.85 Td (\(46,601) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 389.30 572.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 413.60 572.85 Td (\(69,729) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 438.30 572.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 462.60 572.85 Td (\(53,829) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 487.30 572.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 511.60 572.85 Td (\(48,416) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 536.30 572.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 559.85 Td (Change in deferred) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 551.85 Td (revenue) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 168.60 551.85 Td (\(28,660) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 193.30 551.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 213.60 551.85 Td (\(171,662) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 242.30 551.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 273.25 551.85 Td (4,806) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 318.25 551.85 Td (25,535) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 364.60 551.85 Td (\(66,013) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 389.30 551.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 409.60 551.85 Td (\(212,458) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 438.30 551.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 465.25 551.85 Td (32,042) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 514.25 551.85 Td (28,300) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 538.85 Td (Restructuring and cost) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 530.85 Td (savings) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 522.85 Td (implementation) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 514.85 Td (charges) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 172.60 514.85 Td (\(7,725) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 193.30 514.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 221.60 514.85 Td (\(5,532) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 242.30 514.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 266.60 514.85 Td (\(15,331) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 291.30 514.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 319.60 514.85 Td (\(7,677) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 340.30 514.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 368.60 514.85 Td (\(6,053) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 389.30 514.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 417.60 514.85 Td (\(4,246) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 438.30 514.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 466.60 514.85 Td (\(5,910) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 487.30 514.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 515.60 514.85 Td (\(3,333) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 536.30 514.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 501.85 Td (Sponsor fees) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 178.60 501.85 Td (\(875) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 193.30 501.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 227.60 501.85 Td (\(875) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 242.30 501.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 276.60 501.85 Td (\(875) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 291.30 501.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 325.60 501.85 Td (\(875) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 340.30 501.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 374.60 501.85 Td (\(875) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 389.30 501.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 423.60 501.85 Td (\(875) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 438.30 501.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 472.60 501.85 Td (\(875) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 487.30 501.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 521.60 501.85 Td (\(875) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 536.30 501.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 488.85 Td (Impairment charge) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 185.30 488.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 234.30 488.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 266.60 488.85 Td (\(23,800) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 291.30 488.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 332.30 488.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 381.30 488.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 430.30 488.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 479.30 488.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 528.30 488.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 475.85 Td (Purchase accounting) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 168.60 475.85 Td (\(33,216) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 193.30 475.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 234.30 475.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 283.30 475.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 332.30 475.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 381.30 475.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 430.30 475.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 479.30 475.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 528.30 475.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 462.85 Td (Transaction costs) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 178.60 462.85 Td (\(856) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 193.30 462.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 227.60 462.85 Td (\(162) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 242.30 462.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 276.60 462.85 Td (\(349) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 291.30 462.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 332.30 462.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 381.30 462.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 430.30 462.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 479.30 462.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 528.30 462.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 449.85 Td (Acquisition costs) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 178.60 449.85 Td (\(435) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 193.30 449.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 227.60 449.85 Td (\(295) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 242.30 449.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 280.60 449.85 Td (\(36) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 291.30 449.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 332.30 449.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 381.30 449.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 430.30 449.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 479.30 449.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 528.30 449.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 436.85 Td (Physical separation) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 428.85 Td (costs) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 168.60 428.85 Td (\(11,590) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 193.30 428.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 217.60 428.85 Td (\(15,237) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 242.30 428.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 270.60 428.85 Td (\(9,872) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 291.30 428.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 332.30 428.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 381.30 428.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 430.30 428.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 479.30 428.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 528.30 428.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 415.85 Td (Other) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 172.60 415.85 Td (\(8,523) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 193.30 415.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 221.60 415.85 Td (\(8,461) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 242.30 415.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 266.60 415.85 Td (\(11,886) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 291.30 415.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 319.60 415.85 Td (\(7,080) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 340.30 415.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 374.60 415.85 Td (\(627) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 389.30 415.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 417.60 415.85 Td (\(9,168) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 438.30 415.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 466.60 415.85 Td (\(8,227) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 487.30 415.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 515.60 415.85 Td (\(3,535) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 536.30 415.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 402.85 Td (Pre-publication) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 394.85 Td (investment cash costs) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 171.25 394.85 Td (20,980) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 220.25 394.85 Td (21,476) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 269.25 394.85 Td (27,995) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 318.25 394.85 Td (19,732) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 367.25 394.85 Td (24,870) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 416.25 394.85 Td (22,579) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 465.25 394.85 Td (31,636) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 514.25 394.85 Td (12,959) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 381.85 Td (Net \(loss\) income) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 373.85 Td (from continuing) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 365.85 Td (operations) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 168.60 365.85 Td (\(38,912) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 193.30 365.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 220.25 365.85 Td (95,484) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 262.60 365.85 Td (\(263,860) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 291.30 365.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 311.60 365.85 Td (\(154,767) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 340.30 365.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 364.60 365.85 Td (\(39,270) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 389.30 365.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 412.25 365.85 Td (163,365) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 462.60 365.85 Td (\(68,852) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 487.30 365.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 507.60 365.85 Td (\(138,880) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 536.30 365.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 352.85 Td (Net \(loss\) income) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 344.85 Td (from discontinued) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 336.85 Td (operations, net of tax) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 175.25 336.85 Td (9,085) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 221.60 336.85 Td (\(6,860) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 242.30 336.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 266.60 336.85 Td (\(21,977) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 291.30 336.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 319.60 336.85 Td (\(7,570) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 340.30 336.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 364.60 336.85 Td (\(54,593) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 389.30 336.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 417.60 336.85 Td (\(7,206) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 438.30 336.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 466.60 336.85 Td (\(6,306) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 487.30 336.85 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 521.60 336.85 Td (\(836) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 536.30 336.85 Td (\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 323.83 Td (Net \(loss\) income) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 154.00 323.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 168.60 323.83 Td (\(29,827) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 193.30 323.83 Td (\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 203.00 323.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 220.25 323.83 Td (88,624) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 252.00 323.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 262.60 323.83 Td (\(285,837) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 291.30 323.83 Td (\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 301.00 323.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 311.60 323.83 Td (\(162,337) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 340.30 323.83 Td (\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 350.00 323.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 364.60 323.83 Td (\(93,863) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 389.30 323.83 Td (\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 399.00 323.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 412.25 323.83 Td (156,159) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 448.00 323.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 462.60 323.83 Td (\(75,158) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 487.30 323.83 Td (\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 497.00 323.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 507.60 323.83 Td (\(139,716) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 536.30 323.83 Td (\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 310.85 Td (Less: Net \(income\)) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 302.85 Td (loss attributable to) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 294.85 Td (noncontrolling) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 74.00 286.85 Td (interests) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 181.30 286.85 Td (181) Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 234.30 286.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 283.30 286.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 332.30 286.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 381.30 286.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 430.30 286.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 479.30 286.85 Td () Tj ET Q BT /F1 8.00 Tf ET q 0 0 0 rg BT 528.30 286.85 Td () Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 273.83 Td (Net \(loss\) income) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 265.83 Td (attributable to) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 257.83 Td (McGraw-Hill) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 74.00 249.83 Td (Education, Inc.) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 154.00 249.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 168.60 249.83 Td (\(29,646) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 193.30 249.83 Td (\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 203.00 249.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 220.25 249.83 Td (88,624) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 252.00 249.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 262.60 249.83 Td (\(285,837) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 291.30 249.83 Td (\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 301.00 249.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 311.60 249.83 Td (\(162,337) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 340.30 249.83 Td (\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 350.00 249.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 364.60 249.83 Td (\(93,863) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 389.30 249.83 Td (\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 399.00 249.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 412.25 249.83 Td (156,159) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 448.00 249.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 462.60 249.83 Td (\(75,158) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 487.30 249.83 Td (\)) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 497.00 249.83 Td ($) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 507.60 249.83 Td (\(139,716) Tj ET Q BT /F2 8.00 Tf ET q 0 0 0 rg BT 536.30 249.83 Td (\)) Tj ET Q BT /F1 10.00 Tf ET BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 215.10 Td (Indebtedness and Liquidity) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 159.60 316.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 387.50 159.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 391.50 159.60 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 463.50 159.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 467.50 159.60 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 129.60 316.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 387.50 129.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 391.50 129.60 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 463.50 129.60 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 467.50 129.60 72.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 183.60000000000002 m 463.5 183.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 463.5 183.60000000000002 m 467.5 183.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 183.60000000000002 m 539.5 183.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 159.60000000000002 m 463.5 159.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 159.60000000000002 m 539.5 159.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 159.60000000000002 m 463.5 159.60000000000002 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 159.60000000000002 m 539.5 159.60000000000002 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 454.00 188.28 Td (As of) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 405.15 174.28 Td (March 31,) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 417.00 164.28 Td (2016) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 473.90 174.28 Td (December 31,) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 493.00 164.28 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 149.27 Td (Cash and cash equivalents) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 394.00 149.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 427.15 149.27 Td (346,888) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 470.00 149.27 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 503.15 149.27 Td (553,194) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 134.27 Td (Current portion of long-term debt) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.15 134.27 Td (81,620) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 508.15 134.27 Td (81,620) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 119.27 Td (Long-term debt) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 419.65 119.27 Td (2,055,638) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 495.65 119.27 Td (2,053,175) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 91.10 Td (Historically) Tj ET Q q 0 0 0 rg BT 142.56 91.10 Td (, we have generated operating cash flows suf) Tj ET Q q 0 0 0 rg BT 321.76 91.10 Td (ficient to fund our seasonal working capital, capital ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 79.10 Td (requirements, expenditure and financing requirements. ) Tj ET Q q 0 0 0 rg BT 293.13 79.10 Td (W) Tj ET Q q 0 0 0 rg BT 301.77 79.10 Td (e use our cash generated from operating activities for a ) Tj ET Q endstream endobj 95 0 obj <> endobj 96 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (44) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (variety of needs, including among others: working capital requirements, pre-publication investment cash costs, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (capital expenditures and strategic acquisitions. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 677.10 Td (Our operating cash flows are af) Tj ET Q q 0 0 0 rg BT 221.60 677.10 Td (fected by the inherent seasonality of the academic calendar) Tj ET Q q 0 0 0 rg BT 457.04 677.10 Td (. ) Tj ET Q q 0 0 0 rg BT 461.86 677.10 Td (This seasonality ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 665.10 Td (also impacts cash flow patterns as investments are typically made in the first half of the year to support the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 653.10 Td (significant selling period that occurs in the second half of the year) Tj ET Q q 0 0 0 rg BT 335.53 653.10 Td (. ) Tj ET Q q 0 0 0 rg BT 339.98 653.10 Td (As a result, our cash flow is typically lower in the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 641.10 Td (first half of the fiscal year and higher in the second half of the fiscal year) Tj ET Q q 0 0 0 rg BT 362.72 641.10 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 617.10 Td (Going forward, we may need cash to fund operating activities, working capital, pre-publication investment ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 605.10 Td (cash costs, capital expenditures and strategic investments. Our ability to fund our capital needs will depend on our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 593.10 Td (ongoing ability to generate cash from operations and our access to the bank and capital markets. ) Tj ET Q q 0 0 0 rg BT 458.64 593.10 Td (W) Tj ET Q q 0 0 0 rg BT 467.27 593.10 Td (e believe that our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 581.10 Td (future cash flow from operations, together with our access to funds on hand and capital markets, will provide ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 569.10 Td (adequate resources to fund our operating and financing needs for at least the next twelve months. ) Tj ET Q q 0 0 0 rg BT 462.52 569.10 Td (W) Tj ET Q q 0 0 0 rg BT 471.16 569.10 Td (e also expect our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 557.10 Td (working capital requirements to be positively impacted by our migration from print products to digital learning ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 545.10 Td (solutions. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 521.10 Td (If our cash flows from operations are less than we require, we may need to incur debt or issue equity) Tj ET Q q 0 0 0 rg BT 497.45 521.10 Td (. From ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 509.10 Td (time to time we may need to access the long-term and short-term capital markets to obtain financing. ) Tj ET Q q 0 0 0 rg BT 477.43 509.10 Td (Although we ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 497.10 Td (believe we can currently finance our operations on acceptable terms and conditions, our access to, and the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 485.10 Td (availability of, financing on acceptable terms and conditions in the future will be af) Tj ET Q q 0 0 0 rg BT 405.04 485.10 Td (fected by many factors, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 473.10 Td (including: \(i\)our credit ratings, \(ii\)the liquidity of the overall capital markets and \(iii\)the current state of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 461.10 Td (economy) Tj ET Q q 0 0 0 rg BT 108.01 461.10 Td (. ) Tj ET Q q 0 0 0 rg BT 112.83 461.10 Td (There can be no assurance that we will continue to have access to the capital markets on terms acceptable ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 449.10 Td (to us. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 425.10 Td (The Founding ) Tj ET Q q 0 0 0 rg BT 154.33 425.10 Td (Acquisition was financed by: ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 95.00 407.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.00 407.10 Td (the issuance by MHGE Holdings and McGraw-Hill Global Education Finance, Inc. of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 466.59 407.10 Td ($800.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 525.48 407.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.00 395.10 Td (aggregate principal amount of MHGE Senior Secured Notes; ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 95.00 377.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.00 377.10 Td ( borrowings under the MHGE Facilities, consisting of a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 344.97 377.10 Td ($810.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 403.86 377.10 Td (, 6-year MHGE ) Tj ET Q q 0 0 0 rg BT 468.66 377.10 Td (T) Tj ET Q q 0 0 0 rg BT 474.07 377.10 Td (erm Loan, all of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.00 365.10 Td (which was drawn at closing and a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 257.46 365.10 Td ($240.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 316.35 365.10 Td (, 5-year MHGE Revolving Facility) Tj ET Q q 0 0 0 rg BT 455.40 365.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 460.40 365.10 Td ($35.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 514.29 365.10 Td ( of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.00 353.10 Td (which was drawn at closing; ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 95.00 335.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.00 335.10 Td (the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 134.72 335.10 Td ($150.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 193.61 335.10 Td (, 5-year MHSE Revolving Facility) Tj ET Q q 0 0 0 rg BT 331.00 335.10 Td (, which was undrawn at closing; and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 95.00 317.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.00 317.10 Td ( an equity contribution of $1,000.0 million funded by ) Tj ET Q q 0 0 0 rg BT 335.25 317.10 Td (Apollo and co-investors. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 293.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.44 293.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 199.03 293.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 218.47 293.10 Td (2014) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 238.47 293.10 Td (, we had cash and cash equivalents of $553 million and $414 million, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 281.10 Td (respectively) Tj ET Q q 0 0 0 rg BT 119.66 281.10 Td (. ) Tj ET Q q 0 0 0 rg BT 124.48 281.10 Td (The cash held by foreign subsidiaries as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 297.77 281.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 376.35 281.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 395.79 281.10 Td (2014) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 415.79 281.10 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 436.34 281.10 Td ($52.7 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 490.23 281.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.67 281.10 Td ($46.3 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 269.10 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 100.89 269.10 Td (. ) Tj ET Q q 0 0 0 rg BT 105.71 269.10 Td (These cash balances held outside the United States will be used to fund international operations and to make ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 257.10 Td (investments outside of the United States. In the event funds from international operations were needed to fund ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 245.10 Td (operations in the United States, we would provide for taxes in the United States, if any) Tj ET Q q 0 0 0 rg BT 417.66 245.10 Td (, on the repatriated funds. ) Tj ET Q BT /F1 1.00 Tf ET q 0 0 0 rg BT 72.00 230.40 Td () Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 218.40 Td (MHGE Senior Secured Notes) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 196.40 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 196.40 Td (In connection with the Founding ) Tj ET Q q 0 0 0 rg BT 240.49 196.40 Td (Acquisition, on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 304.65 196.40 Td (March22, 2013) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 368.25 196.40 Td (, the Issuers issued ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 445.74 196.40 Td ($800.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.63 196.40 Td ( in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 184.40 Td (principal amount of the MHGE Senior Secured Notes in a private placement. ) Tj ET Q q 0 0 0 rg BT 382.56 184.40 Td (The MHGE Senior Secured Notes bear ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 172.40 Td (interest at a rate of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 148.90 172.40 Td (9.75%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 174.73 172.40 Td ( per annum, payable semi-annually in arrears on ) Tj ET Q q 0 0 0 rg BT 369.39 172.40 Td (April1 and October1 of each year) Tj ET Q q 0 0 0 rg BT 508.09 172.40 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 160.40 Td (commencing on October1, 2013. ) Tj ET Q q 0 0 0 rg BT 208.18 160.40 Td (The MHGE Senior Secured Notes were issued at a discount of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 460.61 160.40 Td (1.36%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 486.44 160.40 Td (. Debt ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 148.40 Td (issuance costs and the discount are amortized to interest expense over the term of the MHGE Senior Secured Notes ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 136.40 Td (using the ef) Tj ET Q q 0 0 0 rg BT 118.47 136.40 Td (fective interest method. ) Tj ET Q q 0 0 0 rg BT 214.92 136.40 Td (The amount of amortization included in interest expense, net was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 478.46 136.40 Td ($1.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 527.35 136.40 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 124.40 Td (and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 88.94 124.40 Td ($1.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 137.83 124.40 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 169.21 124.40 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 189.19 124.40 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 250.02 124.40 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 313.62 124.40 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 333.05 124.40 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 353.05 124.40 Td (, respectively) Tj ET Q q 0 0 0 rg BT 405.72 124.40 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 102.40 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 102.40 Td (The Issuers may redeem the MHGE Senior Secured Notes at its option, in whole or in part, at any time on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 90.40 Td (or after ) Tj ET Q q 0 0 0 rg BT 103.09 90.40 Td (April1, 2016, at certain redemption prices.) Tj ET Q endstream endobj 97 0 obj <> endobj 98 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (45) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 713.10 Td (The MHGE Senior Secured Notes are fully and unconditionally guaranteed by the MHGE Holdings and its ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (direct parent, MHE US Holdings LLC, and each of MHGE domestic restricted subsidiaries that guarantee the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td (MHGE Facilities. In addition, the MHGE Senior Secured Notes and the related guarantees are secured by first ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 677.10 Td (priority lien on the same collateral that secure the MHGE Facilities, subject to certain exclusions.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 655.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 655.10 Td (The MHGE Facilities and the MHGE Senior Secured Notes contain certain customary af) Tj ET Q q 0 0 0 rg BT 463.27 655.10 Td (firmative ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 643.10 Td (covenants and events of default. In addition, the negative covenants in the MHGE Facilities and the MHGE Senior ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 631.10 Td (Secured Notes limit MHGE and its restricted subsidiaries) Tj ET Q q 0 0 0 rg BT 304.27 631.10 Td ( ability to, among other things: incur additional ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 619.10 Td (indebtedness or issue certain preferred shares, create liens on certain assets, pay dividends or prepay junior debt, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 607.10 Td (make certain loans, acquisitions or investments, materially change its business, engage into transactions with ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 595.10 Td (af) Tj ET Q q 0 0 0 rg BT 79.59 595.10 Td (filiates, conduct asset sales, restrict dividends from subsidiaries or restrict liens, or mer) Tj ET Q q 0 0 0 rg BT 426.81 595.10 Td (ge, consolidate, sell or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 583.10 Td (otherwise dispose of all or substantially all of MHGE's assets.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 561.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 561.10 Td (The fair value of the MHGE Senior Secured Notes was approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 391.53 561.10 Td ($864.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 450.42 561.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 469.86 561.10 Td ($848.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 528.75 561.10 Td ( as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 549.10 Td (of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 82.83 549.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 146.43 549.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 165.87 549.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 244.45 549.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 297.11 549.10 Td (. ) Tj ET Q q 0 0 0 rg BT 301.93 549.10 Td (The Company estimates the fair value of its MHGE Senior ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 537.10 Td (Secured Notes based on trades in the market. Since the MHGE Senior Secured Notes do not trade on a daily basis in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 525.10 Td (an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 513.10 Td (available for debt with similar terms and average maturities \(Level 2\). ) Tj ET Q q 0 0 0 rg BT 354.12 513.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 378.56 513.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 442.16 513.10 Td (, the remaining ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 501.10 Td (contractual life of the MHGE Senior Secured Notes is approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 350.81 501.10 Td (5) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 355.81 501.10 Td ( years.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 477.10 Td (MHGE Facilities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 455.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 455.10 Td (In connection with the Founding ) Tj ET Q q 0 0 0 rg BT 240.49 455.10 Td (Acquisition, on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 304.65 455.10 Td (March22, 2013) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 368.25 455.10 Td (, MHGE, our wholly owned subsidiary) Tj ET Q q 0 0 0 rg BT 523.42 455.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 443.10 Td (together with MHGE Holdings, entered into the MHGE Facilities, which are governed by a first lien credit ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 431.10 Td (agreement as amended and restated, with Credit Suisse ) Tj ET Q q 0 0 0 rg BT 293.88 431.10 Td (AG, as administrative agent, and the other agents and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 419.10 Td (lenders, as parties thereto, that provided senior secured financing of up to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 368.02 419.10 Td ($1,050.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 434.41 419.10 Td (, consisting of:) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 397.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 397.10 Td (the MHGE ) Tj ET Q q 0 0 0 rg BT 154.48 397.10 Td (T) Tj ET Q q 0 0 0 rg BT 159.89 397.10 Td (erm Loan in an aggregate principal amount of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 345.93 397.10 Td ($810.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 404.82 397.10 Td ( with a maturity of six years; and) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 373.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 373.10 Td (the MHGE Revolving Facility in an aggregate principal amount of up to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 399.60 373.10 Td ($240.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 458.49 373.10 Td ( with a maturity of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 361.10 Td (five years, including both a letter of credit sub-facility and a swingline loan sub-facility) Tj ET Q q 0 0 0 rg BT 456.69 361.10 Td (. ) Tj ET Q q 0 0 0 rg BT 461.51 361.10 Td (The amount ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 349.10 Td (available under the MHGE Revolving Facility as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 317.39 349.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 380.99 349.10 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 401.54 349.10 Td ($240.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 460.44 349.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 325.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 325.10 Td (On May4, 2015, MHGE Holdings made a voluntary principal payment of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 407.39 325.10 Td ($0.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 456.28 325.10 Td ( and refinanced the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 313.10 Td (MHGE ) Tj ET Q q 0 0 0 rg BT 103.76 313.10 Td (T) Tj ET Q q 0 0 0 rg BT 109.17 313.10 Td (erm Loan in the aggregate principal of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 265.50 313.10 Td ($679.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 324.39 313.10 Td (. ) Tj ET Q q 0 0 0 rg BT 329.21 313.10 Td (The revised terms reduce the applicable LIBOR ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 301.10 Td (mar) Tj ET Q q 0 0 0 rg BT 87.37 301.10 Td (gin from ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 124.58 301.10 Td (4.75%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 150.41 301.10 Td ( to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 163.19 301.10 Td (3.75%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 189.02 301.10 Td (. ) Tj ET Q q 0 0 0 rg BT 193.84 301.10 Td (The LIBOR floor remains at ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 310.20 301.10 Td (1%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 323.53 301.10 Td (. ) Tj ET Q q 0 0 0 rg BT 327.98 301.10 Td (All other terms remain unchanged.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 277.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 277.10 Td (The interest rate on the borrowings under the MHGE Facilities is based on LIBOR or Prime, plus an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 265.10 Td (applicable mar) Tj ET Q q 0 0 0 rg BT 130.96 265.10 Td (gin. ) Tj ET Q q 0 0 0 rg BT 148.55 265.10 Td (The interest rate was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 234.07 265.10 Td (4.75%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 259.90 265.10 Td ( as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 284.06 265.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 347.66 265.10 Td ( for the MHGE ) Tj ET Q q 0 0 0 rg BT 410.80 265.10 Td (T) Tj ET Q q 0 0 0 rg BT 416.21 265.10 Td (erm Loan and there were no ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 253.10 Td (outstanding borrowings under the MHGE Revolving Facility) Tj ET Q q 0 0 0 rg BT 315.21 253.10 Td (. ) Tj ET Q q 0 0 0 rg BT 320.03 253.10 Td (The MHGE ) Tj ET Q q 0 0 0 rg BT 369.84 253.10 Td (T) Tj ET Q q 0 0 0 rg BT 375.25 253.10 Td (erm Loan and the MHGE Revolving ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 241.10 Td (Facility were issued at a discount of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 218.35 241.10 Td (3%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 231.68 241.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 251.12 241.10 Td (2%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 264.45 241.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 317.11 241.10 Td (. Debt issuance costs and the discount are amortized ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 229.10 Td (over the term of the respective facility using the ef) Tj ET Q q 0 0 0 rg BT 273.68 229.10 Td (fective interest method and are included in interest expense, net ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 217.10 Td (within the consolidated statements of operations. ) Tj ET Q q 0 0 0 rg BT 269.83 217.10 Td (The amount of amortization included in interest expense, net was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 205.10 Td ($3.2 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 120.89 205.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 140.33 205.10 Td ($3.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 189.22 205.10 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 220.60 205.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 240.58 205.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.41 205.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 365.01 205.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 384.45 205.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 404.45 205.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 457.11 205.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 183.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 183.10 Td (The MHGE ) Tj ET Q q 0 0 0 rg BT 157.81 183.10 Td (T) Tj ET Q q 0 0 0 rg BT 163.22 183.10 Td (erm Loan requires quarterly amortization payments totaling ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 404.53 183.10 Td (1%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 417.86 183.10 Td ( per annum of the refinanced ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 171.10 Td (principal amount of the facility) Tj ET Q q 0 0 0 rg BT 195.75 171.10 Td (, with the balance payable on the final maturity date. ) Tj ET Q q 0 0 0 rg BT 408.27 171.10 Td (The MHGE ) Tj ET Q q 0 0 0 rg BT 458.08 171.10 Td (T) Tj ET Q q 0 0 0 rg BT 463.49 171.10 Td (erm Loan also ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 159.10 Td (includes customary mandatory prepayment requirements based on certain events such as asset sales, debt issuances ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 147.10 Td (and defined levels of excess cash flow) Tj ET Q q 0 0 0 rg BT 224.63 147.10 Td (. ) Tj ET Q q 0 0 0 rg BT 229.08 147.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 253.52 147.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 332.10 147.10 Td (, the Company determined that a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 465.12 147.10 Td ($72.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 519.01 147.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 135.10 Td (mandatory prepayment of indebtedness is required and is payable five business days after the annual MHGE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 123.10 Td (Holdings financial statements are delivered.) Tj ET Q q 0 0 0 rg BT 250.09 123.10 Td (This amount was included within the current portion of long-term debt ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 111.10 Td (in the consolidated balance sheets as of March 31, 2016 and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 314.71 111.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 393.29 111.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 89.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 89.10 Td (All obligations under the MHGE Facilities are guaranteed by MHGE Holdings and its direct parent, MHE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 77.10 Td (US Holdings LLC, and each of MHGE's existing and future direct and indirect material, wholly owned domestic ) Tj ET Q endstream endobj 99 0 obj <> endobj 100 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (46) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (subsidiaries and are secured by first priority lien on substantially all tangible and intangible assets of MHGE and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (each subsidiary guarantor) Tj ET Q q 0 0 0 rg BT 174.34 701.10 Td (, all of the MHGE's capital stock and the capital stock of each subsidiary guarantor and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td (65%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.33 689.10 Td ( of the capital stock of the first-tier foreign subsidiaries that are not subsidiary guarantors, in each case subject ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 677.10 Td (to exceptions.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 655.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 655.10 Td (The MHGE Revolving Facility includes a springing financial maintenance covenant that requires MHGE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 643.10 Td (net first lien leverage ratio not to exceed ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 235.82 643.10 Td (7.00) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 253.32 643.10 Td ( to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 266.10 643.10 Td (1.00) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 283.60 643.10 Td ( \(the ratio of consolidated net debt secured by first-priority liens ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 631.10 Td (on the collateral to ) Tj ET Q q 0 0 0 rg BT 148.64 631.10 Td (Adjusted EBITDA, as defined in the credit agreement governing the MHGE Facilities\). ) Tj ET Q q 0 0 0 rg BT 501.14 631.10 Td (The ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 619.10 Td (covenant will be tested quarterly when the MHGE Revolving Facility is more than ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 404.98 619.10 Td (20%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 423.31 619.10 Td ( drawn \(including ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 607.10 Td (outstanding letters of credit\), beginning with the fiscal quarter ended June30, 2013, and will be a condition to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 595.10 Td (drawings under the revolving credit facility \(including for new letters of credit\) that would result in more than ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 514.09 595.10 Td (20%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 532.42 595.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 583.10 Td (drawn thereunder) Tj ET Q q 0 0 0 rg BT 141.69 583.10 Td (. ) Tj ET Q q 0 0 0 rg BT 146.14 583.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 170.58 583.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 234.18 583.10 Td (, the borrowings under the MHGE Revolving Facility were less than ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 510.24 583.10 Td (20%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 528.57 583.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 571.10 Td (and so the covenant was not in ef) Tj ET Q q 0 0 0 rg BT 204.84 571.10 Td (fect.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 549.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 549.10 Td (Adjusted EBITDA) Tj ET Q q 0 0 0 rg BT 182.72 549.10 Td ( reflects EBITDA) Tj ET Q q 0 0 0 rg BT 253.25 549.10 Td ( as defined in the credit agreement governing the MHGE Facilities. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 537.10 Td (Solely for the purpose of calculating the springing financial covenant, pre-publication investments should be ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 525.10 Td (excluded from the calculation of ) Tj ET Q q 0 0 0 rg BT 203.89 525.10 Td (Adjusted EBITDA.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 501.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 501.10 Td (The fair value of the MHGE ) Tj ET Q q 0 0 0 rg BT 223.89 501.10 Td (T) Tj ET Q q 0 0 0 rg BT 229.30 501.10 Td (erm Loan was approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 348.70 501.10 Td ($673.9 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 407.59 501.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 427.03 501.10 Td ($658.7 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 485.92 501.10 Td ( as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 489.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 135.60 489.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 155.04 489.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 233.62 489.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 286.28 489.10 Td (. ) Tj ET Q q 0 0 0 rg BT 291.10 489.10 Td (The Company estimates the fair value of the MHGE ) Tj ET Q q 0 0 0 rg BT 502.81 489.10 Td (T) Tj ET Q q 0 0 0 rg BT 508.22 489.10 Td (erm ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 477.10 Td (Loan utilizing the market quotations for debt that have quoted prices in active markets. Since the MHGE ) Tj ET Q q 0 0 0 rg BT 493.37 477.10 Td (T) Tj ET Q q 0 0 0 rg BT 498.78 477.10 Td (erm Loan ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 465.10 Td (does not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 453.10 Td (based on borrowing rates currently available for debt with similar terms and average maturities \(Level 2\). ) Tj ET Q q 0 0 0 rg BT 496.02 453.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 441.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 135.60 441.10 Td (, the remaining contractual life of the MHGE ) Tj ET Q q 0 0 0 rg BT 318.41 441.10 Td (T) Tj ET Q q 0 0 0 rg BT 323.82 441.10 Td (erm Loan is approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 434.34 441.10 Td (3) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 439.34 441.10 Td ( years.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 417.10 Td (MHGE PIK T) Tj ET Q q 0 0 0 rg BT 129.42 417.10 Td (oggle Notes) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 393.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 393.10 Td (On July 17, 2014, MHGE Parent, LLC \("MHGE Parent"\) and MHGE Parent Finance, Inc. \("MHGE Parent ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 381.10 Td (Finance" and, together with MHGE Parent, the "Issuers"\), issued ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 334.19 381.10 Td ($400.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 393.08 381.10 Td ( aggregate principal amount of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 369.10 Td (Senior PIK ) Tj ET Q q 0 0 0 rg BT 119.04 369.10 Td (T) Tj ET Q q 0 0 0 rg BT 124.45 369.10 Td (oggle Notes due 2019 \(the "MHGE PIK ) Tj ET Q q 0 0 0 rg BT 286.94 369.10 Td (T) Tj ET Q q 0 0 0 rg BT 292.35 369.10 Td (oggle Notes"\) in a private placement. ) Tj ET Q q 0 0 0 rg BT 443.70 369.10 Td (The MHGE PIK ) Tj ET Q q 0 0 0 rg BT 512.12 369.10 Td (T) Tj ET Q q 0 0 0 rg BT 517.53 369.10 Td (oggle ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 357.10 Td (Notes were issued at a discount of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 211.13 357.10 Td (1%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 224.46 357.10 Td (. ) Tj ET Q q 0 0 0 rg BT 229.28 357.10 Td (The proceeds were used to make a return of capital to the equity holders of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 345.10 Td (MHGE Parent and pay certain related transaction costs and expenses.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 323.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 323.10 Td (On ) Tj ET Q q 0 0 0 rg BT 122.17 323.10 Td (April6, 2015, additional aggregate principal amount of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 346.00 323.10 Td ($100.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 404.89 323.10 Td ( was issued under the same ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 311.10 Td (indenture, and part of the same series, as the outstanding ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 300.82 311.10 Td ($400.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 359.71 311.10 Td ( of the MHGE PIK ) Tj ET Q q 0 0 0 rg BT 438.14 311.10 Td (T) Tj ET Q q 0 0 0 rg BT 443.55 311.10 Td (oggle Notes previously ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 299.10 Td (issued by the Issuers. ) Tj ET Q q 0 0 0 rg BT 159.31 299.10 Td (The proceeds from this private of) Tj ET Q q 0 0 0 rg BT 292.69 299.10 Td (fering were used to make a return of capital to the equity ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 287.10 Td (holders of MHGE Parent and pay certain related transaction costs and expenses.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 263.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 263.10 Td (Debt issuance costs and the discount are amortized over the term of the facility using the ef) Tj ET Q q 0 0 0 rg BT 472.70 263.10 Td (fective interest ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 251.10 Td (method and are included in interest expense, net within the combined consolidated statements of operations. ) Tj ET Q q 0 0 0 rg BT 506.98 251.10 Td (The ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 239.10 Td (amount of amortization included in interest expense, net was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 317.48 239.10 Td ($0.7 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 366.38 239.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 385.81 239.10 Td ($0.6 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 434.71 239.10 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 466.08 239.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 486.07 239.10 Td ( months ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 227.10 Td (ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 98.38 227.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 161.98 227.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 181.41 227.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 201.41 227.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 254.08 227.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 203.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 203.10 Td (The MHGE PIK ) Tj ET Q q 0 0 0 rg BT 176.42 203.10 Td (T) Tj ET Q q 0 0 0 rg BT 181.83 203.10 Td (oggle Notes bear interest at ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 293.74 203.10 Td (8.5%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 314.57 203.10 Td ( for interest paid in cash and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 430.36 203.10 Td (9.25%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 456.19 203.10 Td ( for in-kind interest, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 191.10 Td ("PIK", by increasing the principal amount of the MHGE PIK ) Tj ET Q q 0 0 0 rg BT 318.55 191.10 Td (T) Tj ET Q q 0 0 0 rg BT 323.96 191.10 Td (oggle Notes by issuing new notes. Interest is payable ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 179.10 Td (semi-annually on February 1 and ) Tj ET Q q 0 0 0 rg BT 206.14 179.10 Td (August 1 of each year) Tj ET Q q 0 0 0 rg BT 293.48 179.10 Td (, commencing February 1, 2015. ) Tj ET Q q 0 0 0 rg BT 426.05 179.10 Td (The first semi-annual ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 167.10 Td (interest payment was required to be paid in cash and was paid on February 2, 2015 in the amount of $18.3 million. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 155.10 Td (In addition, the Company paid $21.3 million in cash on ) Tj ET Q q 0 0 0 rg BT 295.31 155.10 Td (August 3, 2015 and February 1, 2016 relating to the second ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 143.10 Td (and third semi-annual interest payments, respectively) Tj ET Q q 0 0 0 rg BT 284.62 143.10 Td (. ) Tj ET Q q 0 0 0 rg BT 289.44 143.10 Td (The determination as to whether interest is paid in cash or PIK ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 131.10 Td (is determined based on restrictions in the credit agreement governing the MHGE Facilities and the indenture ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 119.10 Td (governing the MHGE Senior Secured Notes for payments to MHGE Parent. PIK Interest may be paid either ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 506.34 119.10 Td (0%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 519.67 119.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 107.10 Td (50%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.33 107.10 Td ( or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 103.66 107.10 Td (100%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 126.99 107.10 Td ( of the amount of interest due, dependent on the amount of any restriction. ) Tj ET Q q 0 0 0 rg BT 426.17 107.10 Td (The MHGE PIK ) Tj ET Q q 0 0 0 rg BT 494.59 107.10 Td (T) Tj ET Q q 0 0 0 rg BT 500.00 107.10 Td (oggle ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 95.10 Td (Notes are structurally subordinate to all the debt of MHGE Holdings and its subsidiaries, are not guaranteed by any ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 83.10 Td (of MHGE Holdings or its subsidiaries and are a contractual obligation of MHGE Parent.) Tj ET Q endstream endobj 101 0 obj <> endobj 102 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (47) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 713.10 Td (The MHGE PIK ) Tj ET Q q 0 0 0 rg BT 176.42 713.10 Td (T) Tj ET Q q 0 0 0 rg BT 181.83 713.10 Td (oggle Notes are unsecured and are not subject to registration rights.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 689.10 Td (The MHGE PIK ) Tj ET Q q 0 0 0 rg BT 176.42 689.10 Td (T) Tj ET Q q 0 0 0 rg BT 181.83 689.10 Td (oggle Notes contain certain customary af) Tj ET Q q 0 0 0 rg BT 345.76 689.10 Td (firmative covenants and events of default that ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 677.10 Td (are similar to those contained in the indenture governing the MHGE Senior Secured Notes. In addition, the negative ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 665.10 Td (covenants in the MHGE PIK ) Tj ET Q q 0 0 0 rg BT 189.86 665.10 Td (T) Tj ET Q q 0 0 0 rg BT 195.27 665.10 Td (oggle Notes limit MHGE Parent and its restricted subsidiaries) Tj ET Q q 0 0 0 rg BT 445.59 665.10 Td ( ability to, among other ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 653.10 Td (things: incur additional indebtedness or issue certain preferred shares, create liens on certain assets, pay dividends or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 641.10 Td (prepay junior debt, make certain loan, acquisitions or investments, materially change its business, engage into ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 629.10 Td (transactions with af) Tj ET Q q 0 0 0 rg BT 150.13 629.10 Td (filiates, conduct asset sales, restrict dividends from subsidiaries or restrict liens, or mer) Tj ET Q q 0 0 0 rg BT 497.36 629.10 Td (ge, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 617.10 Td (consolidate, sell or otherwise dispose of all or substantially all of MHGE Parent) Tj ET Q q 0 0 0 rg BT 394.44 617.10 Td (s assets.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 593.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 593.10 Td (The fair value of the MHGE PIK ) Tj ET Q q 0 0 0 rg BT 242.50 593.10 Td (T) Tj ET Q q 0 0 0 rg BT 247.91 593.10 Td (oggle Notes was approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 376.77 593.10 Td ($495.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 435.66 593.10 Td ( as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 459.82 593.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 523.42 593.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 581.10 Td (and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 88.94 581.10 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 167.52 581.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 220.18 581.10 Td (. ) Tj ET Q q 0 0 0 rg BT 225.00 581.10 Td (The Company estimates the fair value of its MHGE PIK ) Tj ET Q q 0 0 0 rg BT 452.55 581.10 Td (T) Tj ET Q q 0 0 0 rg BT 457.96 581.10 Td (oggle Notes based ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 569.10 Td (on trades in the market. Since the MHGE PIK ) Tj ET Q q 0 0 0 rg BT 258.45 569.10 Td (T) Tj ET Q q 0 0 0 rg BT 263.86 569.10 Td (oggle Notes do not trade on a daily basis in an active market, the fair ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 557.10 Td (value estimates are based on market observable inputs based on borrowing rates currently available for debt with ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 545.10 Td (similar terms and average maturities \(Level 2\). ) Tj ET Q q 0 0 0 rg BT 261.38 545.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 285.82 545.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 349.42 545.10 Td (, the remaining contractual life of the MHGE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 533.10 Td (Senior Secured Notes is approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 230.57 533.10 Td (3.25) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 248.07 533.10 Td ( years.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 509.10 Td (MHSE Revolving Facility) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 485.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 485.10 Td (In connection with the Founding ) Tj ET Q q 0 0 0 rg BT 240.49 485.10 Td (Acquisition, on ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 304.65 485.10 Td (March22, 2013) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 368.25 485.10 Td (, MHSE entered into the MHSE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 473.10 Td (Revolving Facility) Tj ET Q q 0 0 0 rg BT 146.07 473.10 Td (, with Bank of Montreal, as ) Tj ET Q q 0 0 0 rg BT 257.72 473.10 Td (Administrative ) Tj ET Q q 0 0 0 rg BT 319.66 473.10 Td (Agent and the other agents and lenders, as parties ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 461.10 Td (thereto, that provides senior secured financing of up to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 293.04 461.10 Td ($150.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 351.94 461.10 Td ( based on seasonal levels of the collateral base, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 449.10 Td (with a maturity of five years.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 427.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 427.10 Td (The interest rate on the borrowings under the MHSE Revolving Facility is based on LIBOR, plus an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 415.10 Td (applicable mar) Tj ET Q q 0 0 0 rg BT 130.96 415.10 Td (gin. ) Tj ET Q q 0 0 0 rg BT 148.55 415.10 Td (There were no outstanding obligations under the MHSE Revolving Facility as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 474.05 415.10 Td (March31, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 403.10 Td (2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 92.00 403.10 Td (. Debt issuance costs are amortized over the term of the facility and are included in interest expense, net within ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 391.10 Td (the combined consolidated statements of operations. ) Tj ET Q q 0 0 0 rg BT 283.71 391.10 Td (The amount of amortization included in interest expense, net ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 379.10 Td (was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.05 379.10 Td ($0.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 138.94 379.10 Td ( for the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 170.32 379.10 Td (three) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 190.31 379.10 Td ( months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 251.13 379.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 314.73 379.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 334.17 379.10 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 354.17 379.10 Td (, respectively) Tj ET Q q 0 0 0 rg BT 406.83 379.10 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 357.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 357.10 Td (The MHSE Revolving Facility includes a springing covenant that requires MHSE Holdings to maintain a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 345.10 Td (fixed char) Tj ET Q q 0 0 0 rg BT 112.07 345.10 Td (ge coverage ratio of not less than ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 246.75 345.10 Td (1.0) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 259.25 345.10 Td ( to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 272.02 345.10 Td (1.0) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 284.52 345.10 Td (. ) Tj ET Q q 0 0 0 rg BT 289.34 345.10 Td (The ratio of EBITDA, as defined in the MHSE Revolving ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 333.10 Td (Facility) Tj ET Q q 0 0 0 rg BT 101.90 333.10 Td (, minus non-financed cash capital expenditures and cash income taxes, to scheduled principal payments, cash ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 321.10 Td (interest expense and certain restricted payments should be calculated on a pro forma basis. ) Tj ET Q q 0 0 0 rg BT 438.91 321.10 Td (The covenant is tested ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 309.10 Td (quarterly only when the availability under the MHSE Revolving Facility is less than or equal to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 456.37 309.10 Td (12.5%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 482.20 309.10 Td ( of the line ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 297.10 Td (cap, or when there is another covenant triggering event. ) Tj ET Q q 0 0 0 rg BT 299.14 297.10 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 323.58 297.10 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 387.18 297.10 Td (, the availability under the MHSE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 285.10 Td (Revolving Facility was more than ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 210.03 285.10 Td (12.5%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 235.86 285.10 Td (, and so the covenant was not in ef) Tj ET Q q 0 0 0 rg BT 373.70 285.10 Td (fect.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 263.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 263.10 Td (All obligations under the MHSE ) Tj ET Q q 0 0 0 rg BT 240.31 263.10 Td (T) Tj ET Q q 0 0 0 rg BT 245.72 263.10 Td (erm Loan and MHSE Revolving Facility are guaranteed by the MHSE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 251.10 Td (Holdings and each of MHSE) Tj ET Q q 0 0 0 rg BT 190.32 251.10 Td (s existing and future direct and indirect material wholly owned domestic subsidiaries, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 239.10 Td (and are secured by first priority lien on substantially all tangible and intangible assets of MHSE's and each ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 227.10 Td (subsidiary guarantor) Tj ET Q q 0 0 0 rg BT 153.52 227.10 Td (, all of the MHSE's capital stock, and the capital stock of each subsidiary guarantor and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 505.22 227.10 Td (65%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 523.55 227.10 Td ( of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 215.10 Td (the capital stock of the first-tier foreign subsidiaries that are not subsidiary guarantors, in each case subject to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 203.10 Td (exceptions.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 181.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 181.10 Td (The MHSE Revolving Facility and MHSE ) Tj ET Q q 0 0 0 rg BT 280.59 181.10 Td (T) Tj ET Q q 0 0 0 rg BT 286.00 181.10 Td (erm Loan contain certain customary af) Tj ET Q q 0 0 0 rg BT 440.47 181.10 Td (firmative covenants and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 169.10 Td (events of default. In addition, the negative covenants limit MHSE's and its restricted subsidiaries) Tj ET Q q 0 0 0 rg BT 461.58 169.10 Td ( ability to, among ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 157.10 Td (other things: incur additional indebtedness or issue certain preferred shares, create liens on certain assets, pay ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 145.10 Td (dividends or prepay junior debt, make certain loans, acquisitions or investments, materially change its business, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 133.10 Td (engage into transactions with af) Tj ET Q q 0 0 0 rg BT 199.00 133.10 Td (filiates, conduct asset sales, restrict dividends from subsidiaries or restrict liens, or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 121.10 Td (mer) Tj ET Q q 0 0 0 rg BT 87.37 121.10 Td (ge, consolidate, sell or otherwise dispose of all or substantially all of MHSE's assets.) Tj ET Q endstream endobj 103 0 obj <> endobj 104 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (48) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 713.25 Td (MHSE T) Tj ET Q q 0 0 0 rg BT 108.59 713.25 Td (erm Loan) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 691.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 691.25 Td (On December 18, 2013, MHSE Holdings, MHSE, the Lenders, as parties thereto, and Bank of Montreal as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 679.25 Td (Administrative ) Tj ET Q q 0 0 0 rg BT 133.94 679.25 Td (Agent entered into a First-Lien Credit ) Tj ET Q q 0 0 0 rg BT 287.23 679.25 Td (Agreement providing for) Tj ET Q q 0 0 0 rg BT 386.80 679.25 Td (, amongst other things, the extension ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 667.25 Td (of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 82.83 667.25 Td ($250.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 141.72 667.25 Td ( of ) Tj ET Q q 0 0 0 rg BT 154.87 667.25 Td (T) Tj ET Q q 0 0 0 rg BT 160.28 667.25 Td (erm B Loan \(the MHSE ) Tj ET Q q 0 0 0 rg BT 263.13 667.25 Td (T) Tj ET Q q 0 0 0 rg BT 268.54 667.25 Td (erm Loan\) to MHSE to be used for general corporate purposes, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 655.25 Td (including a return of capital to the stockholders of McGraw-Hill Education, Inc. In connection with and in order to, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 643.25 Td (amongst other things, permit the extension of the MHSE ) Tj ET Q q 0 0 0 rg BT 300.68 643.25 Td (T) Tj ET Q q 0 0 0 rg BT 306.09 643.25 Td (erm Loan, the MHSE Holdings, MHSE, each Subsidiary ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 631.25 Td (Loan Party) Tj ET Q q 0 0 0 rg BT 115.51 631.25 Td (, as a party thereto, the Lenders, as parties thereto, and Bank of Montreal as ) Tj ET Q q 0 0 0 rg BT 419.57 631.25 Td (ABL) Tj ET Q q 0 0 0 rg BT 439.20 631.25 Td ( ) Tj ET Q q 0 0 0 rg BT 441.15 631.25 Td (Agent entered into ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 619.25 Td (amendments to MHSE Holdings) Tj ET Q q 0 0 0 rg BT 204.86 619.25 Td ( existing MHSE Revolving Facility on November 26, 2013 and December 18, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 607.25 Td (2013.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 585.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 585.25 Td (The interest rate on the borrowings under the MHSE ) Tj ET Q q 0 0 0 rg BT 320.82 585.25 Td (T) Tj ET Q q 0 0 0 rg BT 326.23 585.25 Td (erm Loan is based on LIBOR or Prime, plus an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 573.25 Td (applicable mar) Tj ET Q q 0 0 0 rg BT 130.96 573.25 Td (gin. ) Tj ET Q q 0 0 0 rg BT 148.55 573.25 Td (The interest rate as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 237.68 573.25 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 301.28 573.25 Td ( was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 321.83 573.25 Td (6.25%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 347.66 573.25 Td ( for the MHSE ) Tj ET Q q 0 0 0 rg BT 409.14 573.25 Td (T) Tj ET Q q 0 0 0 rg BT 414.55 573.25 Td (erm Loan as there is a floor of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 561.25 Td (1.25%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 97.83 561.25 Td ( for LIBOR. ) Tj ET Q q 0 0 0 rg BT 151.81 561.25 Td (The MHSE ) Tj ET Q q 0 0 0 rg BT 199.96 561.25 Td (T) Tj ET Q q 0 0 0 rg BT 205.37 561.25 Td (erm Loan was issued at a discount of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 355.89 561.25 Td (1%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 369.22 561.25 Td (. Debt issuance costs and the discount are ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 549.25 Td (amortized over the term of the MHSE ) Tj ET Q q 0 0 0 rg BT 225.94 549.25 Td (T) Tj ET Q q 0 0 0 rg BT 231.35 549.25 Td (erm Loan and are included in interest expense, net within the combined ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 537.25 Td (consolidated statements of operations. ) Tj ET Q q 0 0 0 rg BT 227.06 537.25 Td (The amount of amortization included in interest expense, net was ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 490.59 537.25 Td ($0.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 539.48 537.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 525.25 Td (for the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 181.69 525.25 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 245.29 525.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 264.72 525.25 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 284.72 525.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 337.39 525.25 Td (.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 503.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 503.25 Td (The MHSE ) Tj ET Q q 0 0 0 rg BT 156.15 503.25 Td (T) Tj ET Q q 0 0 0 rg BT 161.56 503.25 Td (erm Loan requires quarterly amortization payments totaling ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 402.87 503.25 Td (1%) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 416.20 503.25 Td ( per annum of the original ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 491.25 Td (principal amount of the facility) Tj ET Q q 0 0 0 rg BT 195.75 491.25 Td (, with the balance payable on the final maturity date of December 18, 2019. ) Tj ET Q q 0 0 0 rg BT 500.19 491.25 Td (The ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 479.25 Td (MHSE ) Tj ET Q q 0 0 0 rg BT 102.10 479.25 Td (T) Tj ET Q q 0 0 0 rg BT 107.51 479.25 Td (erm Loan also includes customary mandatory prepayment requirements based on certain events such as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 467.25 Td (asset sales, debt issuances, and defined levels of excess cash flows.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 445.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 445.25 Td (The fair value of the MHSE ) Tj ET Q q 0 0 0 rg BT 222.23 445.25 Td (T) Tj ET Q q 0 0 0 rg BT 227.64 445.25 Td (erm Loan was approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 347.04 445.25 Td ($241.9 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 405.93 445.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 425.37 445.25 Td ($241.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 484.26 445.25 Td ( as of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 433.25 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 135.60 433.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 155.04 433.25 Td (December31, 2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 233.62 433.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 286.28 433.25 Td (. ) Tj ET Q q 0 0 0 rg BT 291.10 433.25 Td (The Company estimates the fair value of the MHSE ) Tj ET Q q 0 0 0 rg BT 501.15 433.25 Td (T) Tj ET Q q 0 0 0 rg BT 506.56 433.25 Td (erm ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 421.25 Td (Loan utilizing market quotations for debt that have quoted prices in active markets. Since the MHSE ) Tj ET Q q 0 0 0 rg BT 476.99 421.25 Td (T) Tj ET Q q 0 0 0 rg BT 482.40 421.25 Td (erm Loan ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 409.25 Td (does not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 397.25 Td (based on borrowing rates currently available for debt with similar terms and average maturities \(Level 2\). ) Tj ET Q q 0 0 0 rg BT 496.02 397.25 Td (As of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 385.25 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 135.60 385.25 Td (, the remaining contractual life of the MHSE ) Tj ET Q q 0 0 0 rg BT 316.75 385.25 Td (T) Tj ET Q q 0 0 0 rg BT 322.16 385.25 Td (erm Loan is approximately ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 432.68 385.25 Td (3.75) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 450.18 385.25 Td ( years.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 361.25 Td (Scheduled Principal Payments) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 337.25 Td (The scheduled principal payments required under the terms of the MHGE Senior Secured Notes, MHGE ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 325.25 Td (Facilities, MHGE PIK ) Tj ET Q q 0 0 0 rg BT 164.04 325.25 Td (T) Tj ET Q q 0 0 0 rg BT 169.45 325.25 Td (oggle Notes and the MHSE ) Tj ET Q q 0 0 0 rg BT 281.75 325.25 Td (T) Tj ET Q q 0 0 0 rg BT 287.16 325.25 Td (erm Loan were as follows: ) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 77.50 290.75 368.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 290.75 88.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 77.50 260.75 368.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 260.75 88.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 77.50 230.75 368.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 230.75 88.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 77.50 200.75 368.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 200.75 88.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 77.50 170.75 368.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 445.50 170.75 88.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 290.75 m 533.5 290.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 200.75 m 533.5 200.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 200.75 m 533.5 200.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 170.75 m 533.5 170.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 170.75 m 533.5 170.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 157.75 m 533.5 157.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 445.5 155.75 m 533.5 155.75 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 454.90 305.43 Td (As of March 31,) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 479.00 295.43 Td (2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 80.00 280.42 Td (Remainder of 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 448.00 280.42 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 502.15 280.42 Td (79,298) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 80.00 265.42 Td (2017) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 507.15 265.42 Td (9,290) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 80.00 250.42 Td (2018) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 507.15 250.42 Td (9,290) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 80.00 235.42 Td (2019) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 489.65 235.42 Td (1,318,708) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 80.00 220.42 Td (2020) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 519.65 220.42 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 80.00 205.42 Td (2021 and beyond) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 497.15 205.42 Td (800,000) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 489.65 190.42 Td (2,216,586) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 80.00 175.42 Td (Less: Current portion) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 502.15 175.42 Td (81,620) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 448.00 161.43 Td ($) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 489.65 161.43 Td (2,134,966) Tj ET Q BT /F1 10.00 Tf ET endstream endobj 105 0 obj <> endobj 106 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (49) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 713.25 Td (Cash Flows) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.25 Td (Cash flows from operating, investing and financing activities are presented in the following table:) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 621.75 320.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 391.50 621.75 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 463.50 621.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 467.50 621.75 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 71.50 591.75 320.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 391.50 591.75 72.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 463.50 591.75 4.00 -15.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 467.50 591.75 72.00 -15.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 635.75 m 463.5 635.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 463.5 635.75 m 467.5 635.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 635.75 m 539.5 635.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 621.75 m 463.5 621.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 621.75 m 539.5 621.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 391.5 621.75 m 463.5 621.75 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 467.5 621.75 m 539.5 621.75 l s BT /F2 10.00 Tf ET q 0 0 0 rg BT 396.40 640.43 Td (Three Months Ended March 31,) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 74.00 626.43 Td (\(Dollars in thousands\)) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 417.00 626.43 Td (2016) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 493.00 626.43 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 611.42 Td (Cash flows from operating activities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 394.00 611.42 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 423.80 611.47 Td (\(177,275) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 459.65 611.42 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 470.00 611.42 Td ($) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 499.80 611.47 Td (\(165,822) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 611.42 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 596.42 Td (Cash flows from investing activities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 428.80 596.47 Td (\(19,487) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 459.65 596.42 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 504.80 596.47 Td (\(29,283) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 596.42 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 74.00 581.42 Td (Cash flows from financing activities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 428.80 581.47 Td (\(10,182) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 459.65 581.42 Td (\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 509.80 581.47 Td (\(3,613) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 535.65 581.42 Td (\)) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 553.25 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 553.25 Td (Net cash flows from operating activities consist of profit after income tax, adjusted for changes in net ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 541.25 Td (working capital and non-cash items such as depreciation, amortization and write-of) Tj ET Q q 0 0 0 rg BT 404.76 541.25 Td (fs, and movements in provisions ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 529.25 Td (and pensions. For the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 240.86 529.25 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 304.46 529.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 323.89 529.25 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 343.89 529.25 Td (, respectively:) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 84.00 505.25 Td (Operating ) Tj ET Q q 0 0 0 rg BT 127.43 505.25 Td (Activities ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 487.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 487.25 Td (Cash flows used for operating activities for the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 378.76 487.25 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 442.36 487.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 461.80 487.25 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 481.80 487.25 Td ( were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 506.23 487.25 Td ($177.3 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 475.25 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 136.89 475.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 156.33 475.25 Td ($165.8 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 215.22 475.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 267.88 475.25 Td (, an increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 330.91 475.25 Td ($1) Tj ET Q q 0 0 0 rg BT 340.53 475.25 Td (1.5 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 384.43 475.25 Td (. ) Tj ET Q q 0 0 0 rg BT 389.25 475.25 Td (The increase in cash used for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 463.25 Td (operating activities was primarily driven by unfavorable net changes in operating assets and liabilities of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 451.25 Td ($40.8 million, partially of) Tj ET Q q 0 0 0 rg BT 210.86 451.25 Td (fset by a favorable net change in non-cash items of $6.7 million and a favorable ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 439.25 Td (change in net loss of $22.6 million. ) Tj ET Q q 0 0 0 rg BT 251.41 439.25 Td (These unfavorable net changes in operating assets and liabilities were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 427.25 Td (primarily due to unfavorable changes to accounts receivable and inventories, of) Tj ET Q q 0 0 0 rg BT 425.75 427.25 Td (fset by favorable changes in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 415.25 Td (accounts payable due to timing.) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 84.00 385.25 Td (Investing ) Tj ET Q q 0 0 0 rg BT 122.97 385.25 Td (Activities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 160.18 385.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 367.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 367.25 Td (Cash flows used for investing activities for the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 377.66 367.25 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 441.26 367.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 460.70 367.25 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 480.70 367.25 Td ( were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 505.13 367.25 Td ($19.5 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 355.25 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 136.89 355.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 156.33 355.25 Td ($29.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 210.22 355.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 262.88 355.25 Td (, a decrease of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 322.57 355.25 Td ($9.8 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 371.46 355.25 Td (. Cash flows used for investing activities ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 343.25 Td (decreased as a result of a $7.1 million and a $2.8 million decrease in pre-publication costs and capital ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 331.25 Td (expenditures, respectively) Tj ET Q q 0 0 0 rg BT 211.75 331.25 Td (. ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 84.00 301.25 Td (Financing ) Tj ET Q q 0 0 0 rg BT 127.42 301.25 Td (Activities) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 164.63 301.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 90.00 283.25 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 283.25 Td (Cash flows used for financing activities for the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 378.76 283.25 Td (March31, 2016) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 442.36 283.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 461.80 283.25 Td (2015) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 481.80 283.25 Td ( were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 506.23 283.25 Td ($10.2 ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 271.25 Td (million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 136.89 271.25 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 156.33 271.25 Td ($3.6 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 205.22 271.25 Td (, respectively) Tj ET Q q 0 0 0 rg BT 257.88 271.25 Td (, a increase of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 315.91 271.25 Td ($6.6 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 364.80 271.25 Td (. Cash flows used for financing activities ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 259.25 Td (increased primarily as a result of $2.5 million in repurchases of vested stock options and restricted stock ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 247.25 Td (units as well as $4.7 million paid dividends on vested restricted stock units during the three months ended ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 108.00 235.25 Td (March 31, 2016.) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 205.25 Td (Capital Expenditures and Pre-publication Expenditures) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 181.25 Td (Part of our plan for growth and stability includes disciplined capital expenditures and pre-publication ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 169.25 Td (expenditures. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 145.25 Td (An important component of our cash flow generation is our pre-publication ef) Tj ET Q q 0 0 0 rg BT 407.67 145.25 Td (ficiency) Tj ET Q q 0 0 0 rg BT 439.23 145.25 Td (. ) Tj ET Q q 0 0 0 rg BT 444.05 145.25 Td (W) Tj ET Q q 0 0 0 rg BT 452.68 145.25 Td (e have been focused ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 133.25 Td (on optimizing our pre-publication expenditures to generate content that can be leveraged across our full range of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 121.25 Td (products, maximizing long-term return on investment. Pre-publication expenditures, principally external preparation ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 109.25 Td (costs, are amortized from the year of publication over their estimated useful lives, one to six years, using either an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 97.25 Td (accelerated or straight-line method. ) Tj ET Q q 0 0 0 rg BT 215.92 97.25 Td (The majority of the programs are amortized using an accelerated methodology) Tj ET Q q 0 0 0 rg BT 529.04 97.25 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 85.25 Td (W) Tj ET Q q 0 0 0 rg BT 80.64 85.25 Td (e periodically evaluate the amortization methods, rates, remaining lives and recoverability of such costs. In ) Tj ET Q endstream endobj 107 0 obj <> endobj 108 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (50) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (evaluating recoverability) Tj ET Q q 0 0 0 rg BT 171.03 713.10 Td (, we consider our current assessment of the market place, industry trends, and the projected ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (success of programs. Our pre-publication expenditures were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 315.25 701.10 Td ($13.0 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 369.14 701.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 388.58 701.10 Td ($20.1 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 442.47 701.10 Td ( for the three months ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td (ended March 31, 2016 and 2015, respectively) Tj ET Q q 0 0 0 rg BT 254.08 689.10 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 665.10 Td (Capital expenditures include purchases of property) Tj ET Q q 0 0 0 rg BT 298.90 665.10 Td (, plant and equipment and capitalized technology costs that ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 653.10 Td (meet certain internal and external criteria. Capital expenditures were ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 348.53 653.10 Td ($6.5 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 397.42 653.10 Td ( and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 416.86 653.10 Td ($9.3 million) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 465.75 653.10 Td ( for the three ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 641.10 Td (months ended March 31, 2016 and 2015, respectively) Tj ET Q q 0 0 0 rg BT 286.02 641.10 Td (. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 617.10 Td (Our planned capital expenditures and pre-publication expenditures will require, individually and in the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 605.10 Td (aggregate, significant capital commitments and, if completed, may result in significant additional revenues. Cash ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 593.10 Td (needed to finance investments and projects currently in progress, as well as additional investments being pursued, is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 581.10 Td (expected to be made available from operating cash flows and our credit facilities. See Indebtedness and Liquidity ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 569.10 Td (for further information. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 545.10 Td (Of) Tj ET Q q 0 0 0 rg BT 82.37 545.10 Td (f-Balance Sheet ) Tj ET Q q 0 0 0 rg BT 150.33 545.10 Td (Arrangements) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 521.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 521.10 Td (As of March 31, 2016 we did not have any relationships with uncombined entities, such as entities often ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 509.10 Td (referred to as specific purpose or variable interest entities where we are the primary beneficiary) Tj ET Q q 0 0 0 rg BT 452.83 509.10 Td (, which would have ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 497.10 Td (been established for the purpose of facilitating of) Tj ET Q q 0 0 0 rg BT 268.14 497.10 Td (f-balance sheet arrangements or other contractually narrow or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 485.10 Td (limited purposes. ) Tj ET Q q 0 0 0 rg BT 142.83 485.10 Td (As such we are not exposed to any financial liquidity) Tj ET Q q 0 0 0 rg BT 354.63 485.10 Td (, market or credit risk that could arise if we ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 473.10 Td (had engaged in such relationships. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 449.10 Td (Contractual Obligations) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 425.10 Td (W) Tj ET Q q 0 0 0 rg BT 104.64 425.10 Td (e typically have various contractual obligations, which are recorded as liabilities in our combined ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 413.10 Td (consolidated balance sheets, while other items, such as certain purchase commitments and other executory contracts, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 401.10 Td (are not recognized, but are disclosed herein. For example, we are contractually committed to acquire paper and other ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 389.10 Td (printing services and make certain minimum lease payments for the use of property under operating lease ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 377.10 Td (agreements. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 353.10 Td (The following table summarizes our significant contractual obligations and commercial commitments over the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 341.10 Td (next several years that relate to our continuing operations as of March31, 2016: ) Tj ET Q 0.8 0.9333333333333333 1 rg /GS0 gs 72.50 293.60 196.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 268.50 293.60 54.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 322.50 293.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 326.50 293.60 53.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 379.50 293.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 383.50 293.60 47.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 430.50 293.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 434.50 293.60 47.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 481.50 293.60 4.00 -14.00 re f /GS0 gs 0.8 0.9333333333333333 1 rg /GS0 gs 485.50 293.60 55.00 -14.00 re f /GS0 gs 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 268.5 316.6 m 322.5 316.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 322.5 316.6 m 326.5 316.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 326.5 316.6 m 379.5 316.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 379.5 316.6 m 383.5 316.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 383.5 316.6 m 430.5 316.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 430.5 316.6 m 434.5 316.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 434.5 316.6 m 481.5 316.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 481.5 316.6 m 485.5 316.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 485.5 316.6 m 540.5 316.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 268.5 293.6 m 322.5 293.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 326.5 293.6 m 379.5 293.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 379.5 293.6 m 383.5 293.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 383.5 293.6 m 430.5 293.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 434.5 293.6 m 481.5 293.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 485.5 293.6 m 540.5 293.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 326.5 293.6 m 379.5 293.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 379.5 293.6 m 383.5 293.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 383.5 293.6 m 430.5 293.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 434.5 293.6 m 481.5 293.6 l s 0 0 0 RG /GS0 gs 1.00 w 0 i [] 0 d 0 J 0 j 3 M 485.5 293.6 m 540.5 293.6 l s BT /F2 9.00 Tf ET q 0 0 0 rg BT 357.35 321.05 Td (Payments due by Period) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 285.15 298.05 Td (Total) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 331.05 307.05 Td (Remainder) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 337.50 298.05 Td (of 2016) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 387.00 298.05 Td (2017-2018) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 438.00 298.05 Td (2019-2020) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 495.10 307.05 Td (2021 and) Tj ET Q BT /F2 9.00 Tf ET q 0 0 0 rg BT 498.45 298.05 Td (beyond) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 75.00 284.06 Td (Long-term debt, including current portion) Tj ET Q BT /F1 9.00 Tf ET BT /F1 5.85 Tf ET q 0 0 0 rg BT 225.71 288.14 Td (\(1\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 271.00 284.06 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 283.00 284.06 Td (2,216,586) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 329.00 284.06 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 351.25 284.06 Td (79,298) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 386.00 284.06 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 402.25 284.06 Td (18,580) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 437.00 284.06 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 442.00 284.06 Td (1,318,708) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 488.00 284.06 Td ($) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 507.75 284.06 Td (800,000) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 75.00 270.06 Td (Interest on long-term debt) Tj ET Q BT /F1 9.00 Tf ET BT /F1 5.85 Tf ET q 0 0 0 rg BT 168.72 274.14 Td (\(2\)) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 289.75 270.06 Td (719,643) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 346.75 270.06 Td (157,222) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 397.75 270.06 Td (328,233) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 448.75 270.06 Td (195,188) Tj ET Q BT /F1 9.00 Tf ET q 0 0 0 rg BT 512.25 270.06 Td (39,000) Tj ET Q BT /F1 10.00 Tf ET BT /F1 10.00 Tf ET q 0 0 0 rg BT 71.00 235.10 Td (\(1\) ) Tj ET Q q 0 0 0 rg BT 96.00 235.10 Td (Amounts shown include principal on the MHGE Facilities, the MHGE Senior Secured Notes, the MHGE PIK ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 223.10 Td (T) Tj ET Q q 0 0 0 rg BT 101.41 223.10 Td (oggle Notes, the MHSE Revolving Facility and the MHSE ) Tj ET Q q 0 0 0 rg BT 338.43 223.10 Td (T) Tj ET Q q 0 0 0 rg BT 343.84 223.10 Td (erm Loan. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 71.00 211.10 Td (\(2\) ) Tj ET Q q 0 0 0 rg BT 96.00 211.10 Td (Amounts shown include interest on the MHGE Facilities, the MHGE Senior Secured Notes, the MHGE PIK ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 199.10 Td (T) Tj ET Q q 0 0 0 rg BT 101.41 199.10 Td (oggle Notes, the MHSE Revolving Facility and the MHSE ) Tj ET Q q 0 0 0 rg BT 338.43 199.10 Td (T) Tj ET Q q 0 0 0 rg BT 343.84 199.10 Td (erm Loan. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 72.00 170.90 Td (Critical ) Tj ET Q q 0 0 0 rg BT 106.71 170.90 Td (Accounting Policies and Estimates) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 146.90 Td (Critical accounting policies are those that require the Company to make significant judgments, estimates or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 134.90 Td (assumptions that af) Tj ET Q q 0 0 0 rg BT 149.03 134.90 Td (fect amounts reported in the financial statements and accompanying notes. On an on-going basis, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 122.90 Td (we evaluate our estimates and assumptions, including, but not limited to, revenue recognition, allowance for ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 110.90 Td (doubtful accounts and sales returns, inventories, pre-publication costs, accounting for the impairment of long-lived ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 98.90 Td (assets \(including other intangible assets\), goodwill and indefinite-lived intangible assets, stock-based compensation, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 86.90 Td (income taxes and contingencies. ) Tj ET Q q 0 0 0 rg BT 203.72 86.90 Td (The Company bases its judgments, estimates and assumptions on current facts, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 74.90 Td (historical experience and various other factors that the Company believes to be reasonable and prudent under the ) Tj ET Q endstream endobj 109 0 obj <> endobj 110 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (51) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (circumstances. ) Tj ET Q q 0 0 0 rg BT 133.09 713.10 Td (Actual results may dif) Tj ET Q q 0 0 0 rg BT 221.50 713.10 Td (fer materially from these estimates. For a complete description of our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (significant accounting policies, see Note 1 of Notes to the Consolidated Financial Statements included elsewhere in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td (this document. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 659.10 Td (Allowance for Doubtful ) Tj ET Q q 0 0 0 rg BT 171.92 659.10 Td (Accounts and Sales Returns ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 641.10 Td (The allowance for doubtful accounts and sales returns reserves methodology is based on historical analysis, a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 629.10 Td (review of outstanding balances and current conditions. In determining these reserves, we consider) Tj ET Q q 0 0 0 rg BT 463.14 629.10 Td (, among other ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 617.10 Td (factors, the financial condition and risk profile of our customers, areas of specific or concentrated risk as well as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 605.10 Td (applicable industry trends or market indicators. ) Tj ET Q q 0 0 0 rg BT 263.15 605.10 Td (The allowance for sales returns is a significant estimate, which is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 593.10 Td (based on historical rates of return and current market conditions. ) Tj ET Q q 0 0 0 rg BT 332.57 593.10 Td (The provision for sales returns is reflected as a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 581.10 Td (reduction to revenues in our combined consolidated statements of operations. Sales returns are char) Tj ET Q q 0 0 0 rg BT 478.35 581.10 Td (ged against the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 569.10 Td (reserve as products are returned to inventory) Tj ET Q q 0 0 0 rg BT 249.61 569.10 Td (. ) Tj ET Q q 0 0 0 rg BT 254.06 569.10 Td (Accounts receivable losses for bad debt are char) Tj ET Q q 0 0 0 rg BT 446.85 569.10 Td (ged against the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 557.10 Td (allowance for doubtful accounts when the receivable is determined to be uncollectible. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 527.10 Td (Inventories ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 509.10 Td (Inventories, consisting principally of books, are stated at the lower of cost \(first-in, first-out\) or market value. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 497.10 Td (The majority of our inventories relate to finished goods. ) Tj ET Q q 0 0 0 rg BT 298.06 497.10 Td (A) Tj ET Q q 0 0 0 rg BT 304.73 497.10 Td ( significant estimate, the reserve for inventory ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 485.10 Td (obsolescence, is reflected in operating and administration expenses. In determining this reserve, we consider ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 473.10 Td (management) Tj ET Q q 0 0 0 rg BT 125.87 473.10 Td (s current assessment of the marketplace, industry trends and projected product demand as compared to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 461.10 Td (the number of units currently on hand. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 431.10 Td (Pre-publication Costs ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 413.10 Td (Pre-publication costs include both the cost of developing educational content and the development of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 401.10 Td (assessment solution products. Costs incurred prior to the publication date of a title or release date of a product ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 389.10 Td (represent activities associated with product development. ) Tj ET Q q 0 0 0 rg BT 303.13 389.10 Td (These may be performed internally or outsourced to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 377.10 Td (subject matter specialists and include, but are not limited to, editorial review and fact verification, graphic art design ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 365.10 Td (and layout and the process of conversion from print to digital media or within various formats of digital media. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 335.10 Td (Deferred T) Tj ET Q q 0 0 0 rg BT 116.34 335.10 Td (echnology Costs ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 317.10 Td (W) Tj ET Q q 0 0 0 rg BT 104.64 317.10 Td (e capitalize certain software development and website implementation costs. Capitalized costs only include ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 305.10 Td (incremental, direct costs of materials and services incurred to develop the software after the preliminary project ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 293.10 Td (stage is completed, funding has been committed and it is probable that the project will be completed and used to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 281.10 Td (perform the function intended. Incremental costs are expenditures that are out-of-pocket to us and are not part of an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 269.10 Td (allocation or existing expense base. Software development and website implementation costs are expensed as ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 257.10 Td (incurred during the preliminary project stage. Capitalized costs are amortized from the period the software is ready ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 245.10 Td (for its intended use over its estimated useful life, three to seven years, using the straight-line method. Periodically) Tj ET Q q 0 0 0 rg BT 525.68 245.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 233.10 Td (we evaluate the amortization methods, remaining lives and recoverability of such costs. Capitalized software ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 221.10 Td (development and website implementation costs are included in other non-current assets in the combined ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 209.10 Td (consolidated balance sheets and are presented net of accumulated amortization. ) Tj ET Q BT /F1 1.00 Tf ET q 0 0 0 rg BT 72.00 194.40 Td () Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 182.40 Td (Accounting for the Impairment of Long-Lived ) Tj ET Q q 0 0 0 rg BT 264.41 182.40 Td (Assets \(Including Other Intangible ) Tj ET Q q 0 0 0 rg BT 410.18 182.40 Td (Assets\) ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 164.40 Td (W) Tj ET Q q 0 0 0 rg BT 104.64 164.40 Td (e evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 152.40 Td (carrying amount of an asset may not be recoverable. Upon such an occurrence, recoverability of assets to be held ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 140.40 Td (and used is measured by comparing the carrying amount of an asset to current forecasts of undiscounted future net ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 128.40 Td (cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 116.40 Td (cash flows, an impairment char) Tj ET Q q 0 0 0 rg BT 197.05 116.40 Td (ge is recognized equal to the amount by which the carrying amount of the asset ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 104.40 Td (exceeds the fair value of the asset. Long-lived assets held for sale are written down to fair value, less cost to sell. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 92.40 Td (Fair value is determined based on market evidence, discounted cash flows, appraised values or management) Tj ET Q q 0 0 0 rg BT 506.85 92.40 Td (s ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 80.40 Td (estimates, depending upon the nature of the assets. ) Tj ET Q endstream endobj 111 0 obj <> endobj 112 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (52) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 713.25 Td (Goodwill and Indefinite-Lived Intangible ) Tj ET Q q 0 0 0 rg BT 243.86 713.25 Td (Assets ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 695.25 Td (Goodwill represents the excess of purchase price and related costs over the fair value of identifiable assets ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 683.25 Td (acquired and liabilities assumed in a business combination. Indefinite-lived intangible assets consist of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 671.25 Td (Company) Tj ET Q q 0 0 0 rg BT 113.67 671.25 Td (s acquired brands. Goodwill and indefinite-lived intangible assets are not amortized, but instead are tested ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 659.25 Td (for impairment annually during the fourth quarter each year) Tj ET Q q 0 0 0 rg BT 310.39 659.25 Td (, or more frequently if events or changes in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 647.25 Td (circumstances indicate that the asset might be impaired. ) Tj ET Q q 0 0 0 rg BT 297.58 647.25 Td (W) Tj ET Q q 0 0 0 rg BT 306.21 647.25 Td (e have three reporting units, Higher Education, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 635.25 Td (Professional and International with goodwill and indefinite-lived intangible assets that are evaluated for impairment. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 611.25 Td (W) Tj ET Q q 0 0 0 rg BT 104.64 611.25 Td (e initially perform a qualitative analysis evaluating whether there are events or circumstances that provide ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 599.25 Td (evidence that it is more likely than not that the fair value of any of our reporting units or indefinite-lived intangible ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 587.25 Td (assets are less than their carrying amount. If, based on our evaluation we do not believe that it is more likely than not ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 575.25 Td (that the fair value of any of our reporting units or indefinite-lived intangible assets are less than their carrying ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 563.25 Td (amount, no quantitative impairment test is performed. Conversely) Tj ET Q q 0 0 0 rg BT 334.90 563.25 Td (, if the results of our qualitative assessment ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 551.25 Td (determine that it is more likely than not that the fair value of any of our reporting units or indefinite-lived intangible ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 539.25 Td (assets are less than their respective carrying amounts we perform a two-step quantitative impairment test. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 515.25 Td (During the first step, the estimated fair value of the reporting units are compared to their carrying value ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 503.25 Td (including goodwill and the estimated fair value of the intangible assets is compared to their carrying value. Fair ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 491.25 Td (values of the reporting units are estimated using the income approach, which incorporates the use of a discounted ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 479.25 Td (free cash flow analysis, and are corroborated using the market approach, which incorporates the use of revenue and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 467.25 Td (earnings multiples based on market data. ) Tj ET Q q 0 0 0 rg BT 237.61 467.25 Td (The discounted free cash flow analyses are based on the current operating ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 455.25 Td (budgets and estimated long-term growth projections for each reporting unit. Future cash flows are discounted based ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 443.25 Td (on a market comparable weighted average cost of capital rate for each reporting unit, adjusted for market and other ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 431.25 Td (risks where appropriate. Fair values of indefinite-lived intangible assets are estimated using avoided royalty ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 419.25 Td (discounted free cash flow analyses. Significant judgments inherent in these analyses include the selection of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 407.25 Td (appropriate royalty and discount rates and estimating the amount and timing of expected future cash flows. ) Tj ET Q q 0 0 0 rg BT 501.97 407.25 Td (The ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 395.25 Td (discount rates used in the discounted free cash flow analyses reflect the risks inherent in the expected future cash ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 383.25 Td (flows generated by the respective intangible assets. ) Tj ET Q q 0 0 0 rg BT 278.97 383.25 Td (The royalty rates used in the discounted free cash flow analyses ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 371.25 Td (are based upon an estimate of the royalty rates that a market participant would pay to license the Company) Tj ET Q q 0 0 0 rg BT 501.30 371.25 Td (s trade ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 359.25 Td (names and trademarks. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 335.25 Td (If the fair value of the reporting units or indefinite-lived intangible assets are less than their carrying value, a ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 323.25 Td (second step is performed which compares the implied fair value of the reporting unit) Tj ET Q q 0 0 0 rg BT 413.28 323.25 Td (s goodwill or indefinite-lived ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 311.25 Td (intangible assets to the carrying value. ) Tj ET Q q 0 0 0 rg BT 227.61 311.25 Td (The fair value of the goodwill or indefinite-lived intangible assets is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 299.25 Td (determined based on the dif) Tj ET Q q 0 0 0 rg BT 182.89 299.25 Td (ference between the fair value of the reporting unit and the net fair value of the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 287.25 Td (identifiable assets and liabilities of the reporting unit or carrying value of the indefinite-lived intangible asset. If the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 275.25 Td (implied fair value of the goodwill or indefinite-lived intangible assets is less than the carrying value, the dif) Tj ET Q q 0 0 0 rg BT 501.70 275.25 Td (ference ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 263.25 Td (is recognized as an impairment char) Tj ET Q q 0 0 0 rg BT 215.93 263.25 Td (ge. Significant judgments inherent in this analysis include estimating the amount ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 251.25 Td (and timing of future cash flows and the selection of appropriate discount rates, royalty rate and long-term growth ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 239.25 Td (rate assumptions. Changes in these estimates and assumptions could materially af) Tj ET Q q 0 0 0 rg BT 398.14 239.25 Td (fect the determination of fair value ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 227.25 Td (for each reporting unit and indefinite-lived intangible asset and for some of the reporting units and indefinite-lived ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 215.25 Td (intangible assets could result in an impairment char) Tj ET Q q 0 0 0 rg BT 277.60 215.25 Td (ge, which could be material to our financial position and results ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 203.25 Td (of operations. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 173.25 Td (Stock-Based Compensation ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 155.25 Td (The Company issues stock options and other stock-based compensation to eligible employees, directors and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 143.25 Td (consultants and accounts for these transactions under the provisions of ) Tj ET Q q 0 0 0 rg BT 355.82 143.25 Td (Accounting Standards Codification \(ASC\) ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 131.25 Td (718, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 92.00 131.25 Td (Compensation-Stock Compensation) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 235.04 131.25 Td (. For equity awards, total compensation cost is based on the grant date fair ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 119.25 Td (value. For liability awards, total compensation cost is based on the fair value of the award on the date the award is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 107.25 Td (granted and is remeasured at each reporting date until settlement. For performance-based options issued, the value of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 95.25 Td (the instrument is measured at the grant date as the fair value of the common stock and expensed over the vesting ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 83.25 Td (term when the performance tar) Tj ET Q q 0 0 0 rg BT 195.09 83.25 Td (gets are considered probable of being achieved. ) Tj ET Q q 0 0 0 rg BT 387.61 83.25 Td (The Company recognizes stock-based ) Tj ET Q endstream endobj 113 0 obj <> endobj 114 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (53) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (compensation expense for all awards, on a straight-line basis, over the service period required to earn the award, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (which is typically the vesting period. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 671.10 Td (Revenue Recognition ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 653.10 Td (Revenue is recognized as it is earned when goods are shipped to customers or services are rendered. ) Tj ET Q q 0 0 0 rg BT 498.45 653.10 Td (W) Tj ET Q q 0 0 0 rg BT 507.09 653.10 Td (e ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 641.10 Td (consider amounts to be earned once evidence of an arrangement has been obtained, services are performed, fees are ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 629.10 Td (fixed or determinable and collectability is reasonably assured. ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 84.00 599.10 Td (Arrangements with multiple deliverables ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 581.10 Td (Revenue relating to products that provide for more than one deliverable is recognized based upon the relative ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 569.10 Td (fair value to the customer of each deliverable as each deliverable is provided. Revenue relating to agreements that ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 557.10 Td (provide for more than one service is recognized based upon the relative fair value to the customer of each service ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 545.10 Td (component as each component is earned. If the fair value to the customer for each service is not determinable based ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 533.10 Td (on stand-alone selling price, we make our best estimate of the services) Tj ET Q q 0 0 0 rg BT 356.16 533.10 Td ( stand-alone selling price and recognize ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 521.10 Td (revenue as earned as the services are delivered. Because we determine the basis for allocating consideration to each ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 509.10 Td (deliverable primarily on prices experienced from completed sales, the portion of consideration allocated to each ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 497.10 Td (deliverable in a multiple deliverable arrangement may increase or decrease depending on the most recent selling ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 485.10 Td (price of a comparable product or service sold on a stand-alone basis. For example, as the demand for) Tj ET Q q 0 0 0 rg BT 474.51 485.10 Td (, and prevalence ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 473.10 Td (of, digital products increases, as new sales occur we may be required to increase the amount of consideration ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 461.10 Td (allocable to digital products included in multiple deliverable arrangements because the fair value of such products or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 449.10 Td (services may increase relative to other products or services bundled in the arrangement. Conversely) Tj ET Q q 0 0 0 rg BT 469.54 449.10 Td (, in the event that ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 437.10 Td (demand for our print products decreases, thereby causing us to experience reduced prices on our print products, we ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 425.10 Td (may be required to allocate less consideration to our print products in our arrangements that include multiple ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 413.10 Td (deliverables. ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 84.00 383.10 Td (Subscription-based pr) Tj ET Q q 0 0 0 rg BT 172.24 383.10 Td (oducts ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 365.10 Td (Subscription income is recognized over the related subscription period that the subscription is available and is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 353.10 Td (used by the customer) Tj ET Q q 0 0 0 rg BT 156.15 353.10 Td (. Subscription revenue received or receivable in advance of the delivery of services or ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 341.10 Td (publications is included in deferred revenue. Incremental costs that are directly related to the subscription revenue ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 329.10 Td (are deferred and amortized over the subscription period. Included among the underlying assumptions related to our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 317.10 Td (estimates that impact the recognition of subscription income is the extent of our responsibility to provide access to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 305.10 Td (our subscription-based products, and the extent of complementary support services customers demand to access our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 293.10 Td (products. ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 84.00 263.10 Td (Service arrangements ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 245.10 Td (Revenue relating to arrangements that provide for more than one service is recognized based upon the relative ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 233.10 Td (fair value to the customer of each service component as each component is earned. Such arrangements may include ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 221.10 Td (digital products bundled with traditional print products, obligations to provide products and services in the future at ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 209.10 Td (no additional cost, and periodic training pertinent to products and services previously provided. If the fair value to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 197.10 Td (the customer for each service is not objectively determinable, we make our best estimate of the services) Tj ET Q q 0 0 0 rg BT 489.15 197.10 Td ( stand-alone ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 185.10 Td (selling price and recognize revenue as earned as the services are delivered. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 155.10 Td (Income T) Tj ET Q q 0 0 0 rg BT 110.80 155.10 Td (axes ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 137.10 Td (W) Tj ET Q q 0 0 0 rg BT 104.64 137.10 Td (e determine the provision for income taxes using the asset and liability approach. Under this approach, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 125.10 Td (deferred income taxes represent the expected future tax consequences of temporary dif) Tj ET Q q 0 0 0 rg BT 418.60 125.10 Td (ferences between the carrying ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 113.10 Td (amounts and tax bases of assets and liabilities. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 89.10 Td (V) Tj ET Q q 0 0 0 rg BT 102.11 89.10 Td (aluation allowances are established when management determines that it is more likely than not that some ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 77.10 Td (portion or all of the deferred tax asset will not be realized. Management evaluates the weight of both positive and ) Tj ET Q endstream endobj 115 0 obj <> endobj 116 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (54) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td (negative evidence in determining whether a deferred tax asset will be realized. Management will look to a history of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (losses, future reversal of existing taxable temporary dif) Tj ET Q q 0 0 0 rg BT 292.30 701.10 Td (ferences, taxable income in carryback years, feasibility of tax ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td (planning strategies, and estimated future taxable income. ) Tj ET Q q 0 0 0 rg BT 302.02 689.10 Td (The valuation allowance can also be af) Tj ET Q q 0 0 0 rg BT 457.32 689.10 Td (fected by changes in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 677.10 Td (tax laws and changes to statutory tax rates. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 653.10 Td (W) Tj ET Q q 0 0 0 rg BT 104.64 653.10 Td (e prepare and file tax returns based on management) Tj ET Q q 0 0 0 rg BT 313.44 653.10 Td (s interpretation of tax laws and regulations. ) Tj ET Q q 0 0 0 rg BT 488.39 653.10 Td (As with all ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 641.10 Td (businesses, our tax returns are subject to examination by various taxing authorities. Such examinations may result in ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 629.10 Td (future tax assessments based on dif) Tj ET Q q 0 0 0 rg BT 212.62 629.10 Td (ferences in interpretation of the tax law and regulations. ) Tj ET Q q 0 0 0 rg BT 438.46 629.10 Td (W) Tj ET Q q 0 0 0 rg BT 447.10 629.10 Td (e adjust our estimated ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 617.10 Td (uncertain tax positions reserves based on audits by and settlements with various taxing authorities as well as changes ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 605.10 Td (in tax laws, regulations, and interpretations. ) Tj ET Q q 0 0 0 rg BT 249.28 605.10 Td (W) Tj ET Q q 0 0 0 rg BT 257.91 605.10 Td (e recognize interest and penalties on uncertain tax positions as part of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 593.10 Td (interest expense and operating expenses, respectively) Tj ET Q q 0 0 0 rg BT 284.60 593.10 Td (. ) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 130.10 561.00 Td (QUANTIT) Tj ET Q q 0 0 0 rg BT 176.03 561.00 Td (A) Tj ET Q q 0 0 0 rg BT 182.51 561.00 Td (TIVE ) Tj ET Q q 0 0 0 rg BT 208.91 561.00 Td (AND QUALIT) Tj ET Q q 0 0 0 rg BT 271.79 561.00 Td (A) Tj ET Q q 0 0 0 rg BT 278.27 561.00 Td (TIVE DISCLOSURE ) Tj ET Q q 0 0 0 rg BT 372.19 561.00 Td (ABOUT) Tj ET Q q 0 0 0 rg BT 407.57 561.00 Td ( MARKET) Tj ET Q q 0 0 0 rg BT 454.89 561.00 Td ( RISK) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 72.00 539.00 Td (For) Tj ET Q q 0 0 0 rg BT 86.63 539.00 Td (eign Exchange Risk) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 517.00 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 517.00 Td (Our exposure to market risk includes changes in foreign exchange rates. ) Tj ET Q q 0 0 0 rg BT 398.83 517.00 Td (W) Tj ET Q q 0 0 0 rg BT 407.47 517.00 Td (e have operations in various ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 505.00 Td (foreign countries where the functional currency is primarily the local currency) Tj ET Q q 0 0 0 rg BT 384.55 505.00 Td (. For international operations that are ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 493.00 Td (determined to be extensions of the parent company) Tj ET Q q 0 0 0 rg BT 275.45 493.00 Td (, the United States dollar is the functional currency) Tj ET Q q 0 0 0 rg BT 478.35 493.00 Td (. Our principal ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 481.00 Td (currency exposures relate to the ) Tj ET Q q 0 0 0 rg BT 201.11 481.00 Td (Australian Dollar) Tj ET Q q 0 0 0 rg BT 270.41 481.00 Td (, British Pound, Canadian Dollar) Tj ET Q q 0 0 0 rg BT 401.11 481.00 Td (, Euro, Mexican Peso and ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 469.00 Td (Singapore Dollar) Tj ET Q q 0 0 0 rg BT 140.04 469.00 Td (. From time to time, we may enter into hedging arrangements with respect to foreign currency ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 457.00 Td (exposures.) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 72.00 435.00 Td (Inter) Tj ET Q q 0 0 0 rg BT 91.07 435.00 Td (est Rate Risk) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 84.00 411.00 Td (MHGE Facilities ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 393.00 Td (W) Tj ET Q q 0 0 0 rg BT 104.64 393.00 Td (e have issued fixed and floating-rate debt and will be subject to variations in interest rates in respect of our ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 381.00 Td (floating-rate debt. Borrowings under our MHGE Facilities will accrue interest at variable rates with a LIBOR floor ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 369.00 Td (of 1%, and a 100 basis point increase in the LIBOR on our debt balances outstanding as of March 31, 2016 would ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 357.00 Td (increase our annual interest expense by $3.8 million. ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 84.00 333.00 Td (MHSE T) Tj ET Q q 0 0 0 rg BT 117.80 333.00 Td (erm Loan ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 315.00 Td (W) Tj ET Q q 0 0 0 rg BT 104.64 315.00 Td (e have issued floating-rate debt and will be subject to variations in interest rates in respect of our floating-) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 303.00 Td (rate debt. Borrowings under our MHSE ) Tj ET Q q 0 0 0 rg BT 232.63 303.00 Td (T) Tj ET Q q 0 0 0 rg BT 238.04 303.00 Td (erm Loan will accrue interest at variable rates with a LIBOR floor of ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 291.00 Td (1.25%, and a 100 basis point increase in the LIBOR on our debt balances outstanding as of March 31, 2016 would ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 279.00 Td (increase our annual interest expense by $0.9 million. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 255.00 Td (While we may enter into agreements limiting our exposure to higher interest rates, any such agreements may ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 243.00 Td (not of) Tj ET Q q 0 0 0 rg BT 95.43 243.00 Td (fer complete protection from this risk. From time to time we may enter into hedging arrangements with respect ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 231.00 Td (to LIBOR borrowings under our MHSE Revolving Facility or MHSE ) Tj ET Q q 0 0 0 rg BT 352.36 231.00 Td (T) Tj ET Q q 0 0 0 rg BT 357.77 231.00 Td (erm Loan or MHGE Facilities. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 96.00 207.00 Td (W) Tj ET Q q 0 0 0 rg BT 104.64 207.00 Td (e do not purchase or hold any derivative financial instruments for trading purposes. ) Tj ET Q BT /F4 10.00 Tf ET q 0 0 0 rg BT 72.00 183.00 Td (Recent ) Tj ET Q q 0 0 0 rg BT 102.45 183.00 Td (Accounting Standards ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 159.00 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 159.00 Td (In March 2016, the the Financial ) Tj ET Q q 0 0 0 rg BT 241.02 159.00 Td (Accounting Standards Board \(F) Tj ET Q q 0 0 0 rg BT 371.64 159.00 Td (ASB\) issued ) Tj ET Q q 0 0 0 rg BT 428.31 159.00 Td (Accounting Standards ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 147.00 Td (Update \(ASU\) No. 2016-09, "CompensationStock Compensation \(T) Tj ET Q q 0 0 0 rg BT 363.12 147.00 Td (opic 718\)." ) Tj ET Q q 0 0 0 rg BT 410.07 147.00 Td (This standard makes several ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 135.00 Td (modifications to ) Tj ET Q q 0 0 0 rg BT 139.59 135.00 Td (T) Tj ET Q q 0 0 0 rg BT 145.00 135.00 Td (opic 718 related to the accounting for forfeitures, employer tax withholding on share-based ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 123.00 Td (compensation and the financial statement presentation of excess tax benefits or deficiencies. ) Tj ET Q q 0 0 0 rg BT 443.07 123.00 Td (This standard also ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 111.00 Td (clarifies the statement of cash flows presentation for certain components of share-based awards. ) Tj ET Q q 0 0 0 rg BT 457.79 111.00 Td (The standard is ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 99.00 Td (ef) Tj ET Q q 0 0 0 rg BT 79.59 99.00 Td (fective for interim and annual reporting periods beginning after December 15, 2016, with early adoption permitted. ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 87.00 Td (The Company is currently evaluating the impact of this guidance on its consolidated financial statements.) Tj ET Q endstream endobj 117 0 obj <> endobj 118 0 obj <> stream BT /F2 10.00 Tf ET q 0 0 0 rg BT 222.50 772.75 Td (Management's Discussion and ) Tj ET Q q 0 0 0 rg BT 353.35 772.75 Td (Analysis) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 201.25 760.75 Td (of Financial Condition and Results of Operations) Tj ET Q BT /F2 10.00 Tf ET q 0 0 0 rg BT 200.40 748.75 Td (\(Dollars in thousands, unless otherwise indicated\)) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 552.00 60.60 Td (55) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 713.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 713.10 Td (In February 2016, the F) Tj ET Q q 0 0 0 rg BT 201.96 713.10 Td (ASB issued ) Tj ET Q q 0 0 0 rg BT 250.87 713.10 Td (ASU No. 2016-02, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 333.36 713.10 Td (Leases) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 360.58 713.10 Td (. ) Tj ET Q q 0 0 0 rg BT 369.84 713.10 Td (This ) Tj ET Q q 0 0 0 rg BT 389.57 713.10 Td (ASU requires that a lessee record an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 701.10 Td (operating lease in the balance sheet with a liability to make lease payments and a right-of-use asset representing its ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 689.10 Td (right to use the underlying asset for the lease term. ) Tj ET Q q 0 0 0 rg BT 276.48 689.10 Td (This standard is ef) Tj ET Q q 0 0 0 rg BT 349.90 689.10 Td (fective for annual and interim periods ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 677.10 Td (beginning after December 15, 2018, with early adoption permitted. ) Tj ET Q q 0 0 0 rg BT 341.92 677.10 Td (Adoption of this standard will be on a modified ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 665.10 Td (retrospective approach, which includes a number of optional practical expedients that the Company may elect to ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 653.10 Td (apply) Tj ET Q q 0 0 0 rg BT 93.57 653.10 Td (. ) Tj ET Q q 0 0 0 rg BT 98.39 653.10 Td (The Company is currently evaluating the impact of this guidance on its consolidated financial statements.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 629.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 629.10 Td (In July 2015, the F) Tj ET Q q 0 0 0 rg BT 182.54 629.10 Td (ASB issued ) Tj ET Q q 0 0 0 rg BT 231.44 629.10 Td (ASU No. 2015-1) Tj ET Q q 0 0 0 rg BT 299.12 629.10 Td (1, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 309.12 629.10 Td (Inventory \(T) Tj ET Q q 0 0 0 rg BT 363.47 629.10 Td (opic 330\) Related to Simplifying the ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 72.00 617.10 Td (Measur) Tj ET Q q 0 0 0 rg BT 102.18 617.10 Td (ement of Inventory) Tj ET Q q 0 0 0 rg BT 176.60 617.10 Td (, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 187.16 617.10 Td (that applies to all inventory except that which is measured using last-in, first-out \(LIFO\) ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 605.10 Td (or the retail inventory method. Inventory measured using first-in, first-out \(FIFO\) or average cost is within the scope ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 593.10 Td (of the new guidance and should be measured at the lower of cost and net realizable value. Net realizable value is the ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 581.10 Td (estimated selling price in the ordinary course of business, less reasonably predictable cost of completion, disposal, ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 569.10 Td (and transportation. Subsequent measurement is unchanged for inventory measured using LIFO of the retail ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 557.10 Td (inventory method. ) Tj ET Q q 0 0 0 rg BT 147.64 557.10 Td (The amendments are ef) Tj ET Q q 0 0 0 rg BT 241.02 557.10 Td (fective for public business entities for fiscal years beginning after ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 545.10 Td (December 15, 2016, including interim periods within those fiscal years. ) Tj ET Q q 0 0 0 rg BT 360.92 545.10 Td (The new guidance should be applied ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 533.10 Td (prospectively) Tj ET Q q 0 0 0 rg BT 125.22 533.10 Td (, and earlier application is permitted as of the beginning of an interim or annual reporting period. ) Tj ET Q q 0 0 0 rg BT 514.64 533.10 Td (The ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 521.10 Td (Company is currently evaluating the impact of this guidance on its consolidated financial statements.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 497.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 497.10 Td (In ) Tj ET Q q 0 0 0 rg BT 118.28 497.10 Td (April 2015, F) Tj ET Q q 0 0 0 rg BT 171.71 497.10 Td (ASB issued ) Tj ET Q q 0 0 0 rg BT 220.61 497.10 Td (ASU No.2015-03, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 298.66 497.10 Td (Simplifying the Pr) Tj ET Q q 0 0 0 rg BT 376.62 497.10 Td (esentation of Debt Issuance Costs) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 512.17 497.10 Td (.) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 514.67 497.10 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 520.23 497.10 Td ( ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 485.10 Td (This ) Tj ET Q q 0 0 0 rg BT 91.73 485.10 Td (ASU changes the presentation of debt issuance costs by requiring an entity to present such costs as a direct ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 473.10 Td (deduction from the related debt liability rather than as an asset. ) Tj ET Q q 0 0 0 rg BT 325.80 473.10 Td (Amortization of the costs will continue to be ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 461.10 Td (reported as interest expense. ) Tj ET Q q 0 0 0 rg BT 187.61 461.10 Td (This guidance should be applied retrospectively and is ef) Tj ET Q q 0 0 0 rg BT 415.13 461.10 Td (fective for interim and annual ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 449.10 Td (reporting periods beginning after December15, 2015. ) Tj ET Q q 0 0 0 rg BT 289.81 449.10 Td (This guidance is reflected within these consolidated financial ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 437.10 Td (statements.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 413.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 413.10 Td (In ) Tj ET Q q 0 0 0 rg BT 118.28 413.10 Td (August 2014, the F) Tj ET Q q 0 0 0 rg BT 194.21 413.10 Td (ASB issued ) Tj ET Q q 0 0 0 rg BT 243.11 413.10 Td (ASU No.2014-15, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 321.16 413.10 Td (Disclosur) Tj ET Q q 0 0 0 rg BT 365.25 413.10 Td (e of Uncertainties about an Entity) Tj ET Q q 0 0 0 rg BT 503.10 413.10 Td (s ) Tj ET Q q 0 0 0 rg BT 509.31 413.10 Td (Ability ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 72.00 401.10 Td (to Continue as a Going Concern,) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 210.33 401.10 Td ( to provide guidance on management) Tj ET Q q 0 0 0 rg BT 361.12 401.10 Td (s responsibility in evaluating whether there ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 389.10 Td (is substantial doubt about a company) Tj ET Q q 0 0 0 rg BT 222.81 389.10 Td (s ability to continue as a going concern and to provide related footnote ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 377.10 Td (disclosures. ) Tj ET Q q 0 0 0 rg BT 123.76 377.10 Td (This guidance is ef) Tj ET Q q 0 0 0 rg BT 199.39 377.10 Td (fective for the annual period ending after December15, 2016, and for annual periods ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 365.10 Td (and interim periods thereafter) Tj ET Q q 0 0 0 rg BT 190.01 365.10 Td (. Early application is permitted. ) Tj ET Q q 0 0 0 rg BT 318.40 365.10 Td (The adoption of this guidance will not have a material ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 353.10 Td (impact on the Company) Tj ET Q q 0 0 0 rg BT 170.59 353.10 Td (s consolidated financial statements.) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 331.10 Td ( ) Tj ET Q q 0 0 0 rg BT 108.00 331.10 Td (In May 2014, the F) Tj ET Q q 0 0 0 rg BT 184.20 331.10 Td (ASB issued ) Tj ET Q q 0 0 0 rg BT 233.10 331.10 Td (ASU No. 2014-09, ) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 311.15 331.10 Td (Revenue fr) Tj ET Q q 0 0 0 rg BT 359.38 331.10 Td (om Contracts with Customers) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 478.56 331.10 Td (,) Tj ET Q BT /F3 10.00 Tf ET q 0 0 0 rg BT 481.06 331.10 Td () Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 486.62 331.10 Td ( which ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 319.10 Td (supersedes most of the current revenue recognition requirements. ) Tj ET Q q 0 0 0 rg BT 337.84 319.10 Td (The core principle of the new guidance is that an ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 307.10 Td (entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 295.10 Td (reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. New ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 283.10 Td (disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 271.10 Td (customers are also required. Entities must adopt the new guidance using one of two retrospective application ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 259.10 Td (methods. ) Tj ET Q q 0 0 0 rg BT 110.71 259.10 Td (This guidance is ef) Tj ET Q q 0 0 0 rg BT 186.34 259.10 Td (fective for annual periods beginning after December 15, 2017 and interim periods ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 247.10 Td (within annual periods beginning after December 15, 2018. Early adoption is permitted. ) Tj ET Q q 0 0 0 rg BT 422.00 247.10 Td (The Company is currently ) Tj ET Q BT /F1 10.00 Tf ET q 0 0 0 rg BT 72.00 235.10 Td (evaluating the impact of this guidance on its consolidated financial statements.) Tj ET Q endstream endobj 119 0 obj <> /View <>>>>> endobj 120 0 obj <> /View <>>>>> endobj 121 0 obj <> endobj 122 0 obj <> stream xy\E7~n{{w'd'52 HaGPPA!"" b-&h,+TLy?:uk?uΩoH""?W~.Xv3&rm 2\jMgwm'CڴzlycǏ\ rBjx\DsV@{twocmC{Iwl11z:1m!t-\q3D.:yz'Wɨp[_F=>E"ǢӦ/|K&_~=!wn-az3¦h$7,ؑ2Oo_eSFLlk}Fg[F>|;