Good day ladies and gentlemen and welcome to the Scholastic Reports Fiscal 2015 Third Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will be given at that time. [Operator Instructions]. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Gil Dickoff, Senior Vice President and Head of Investor Relations. You may begin.

Thank you very much Nicole and good morning everybody. Before we begin, I would like to point out that the slides of this presentation are available on our Investor Relations website at investor.scholastic.com. I would also like to note that this presentation contains certain forward-looking statements, which are subject to the various risks and uncertainties, including the condition of the children's book and educational materials markets, and acceptance of the company's products in those markets, and other risk factors that identified from time-to-time in the company's filings with the SEC. Actual results could differ materially from those currently anticipated. Our comments today include references to certain non-GAAP financial measures as defined in Regulation G. The reconciliation of these non-GAAP financial measures with the relevant GAAP financial information and other information required by Regulation G is provided in the company's earning release, which is now posted on the Investor Relations website, again, at investor.scholastic.com. Now I would like to introduce Dick Robinson, the Chairman, CEO and President of Scholastic to begin today's presentation.

Thank you, Gil. Good morning and thank you all for joining our third quarter earnings conference call. For this morning's prepared remarks I am joined by Maureen O'Connell, CFO and CAO. In our traditionally small third quarter, Scholastic's strong results in children's books and classroom publishing, continue to be helped by the enthusiasm in the market for children's independent reading. However, these gains were partly offset this quarter, by the adverse effect of foreign currency translations and a decline in Ed Tech, that is largely attributable to a tough comparison from last year, when we had a large MATH 180 sale that did not repeat this year, as well as lower consulting revenues. During the quarter, we took actions to restructure our media organization, to better align its operations with our core businesses, including moving our audio/video book operations to our book publishing group. Also while there is strong interest in Scholastic's programming, in today's evolving media landscape, it is no longer necessary for us to maintain the infrastructure required for production, and we will be closing down our Soup2Nuts production unit in this quarter. We have also agreed to enter into a three year agreement [indiscernible] Universal, NBC Universal, a first look at our trade publishing properties for live action movies. This gives us an opportunity to work with this top studio that has a direct stake in ensuring that our properties can become outstanding motion pictures. As brick and mortar retailers contract, more children are buying books through our club and fair channels. In fact, the kids and family reading report, released in January, found that our book clubs and book fairs rank second only to libraries, as the key sources for children's book. The 17% revenue growth this quarter in our clubs in particular, reflects higher engagement…

Thank you, Dick, and good morning everyone. Our third quarter revenue grew by just over 2% to $382.1 million, and excluding onetime items, loss per share from continuing operations was $0.59, an improvement over a loss of $0.68 last year. Before I get to the detail behind our operating performance, I'd like to quickly review the one time mostly non-cash items for the quarter, which were $0.09 per share in total. These are mostly comprised of $2.9 million in severance charges associated with the restructuring of our interactive media business, where we are streamlining operations, so they are better aligned with our growth opportunities in children's publishing. We also had an asset write-down of $1.5 million related to a warehouse consolidation in Canada, and a non-cash settlement charge of $0.6 million, connected to our defined benefit pension plan. As you may recall, we had a onetime net benefit of $0.30 per share in the third quarter last year, which included a favorable settlement of outstanding federal tax audits. Cost of goods sold, excluding onetime items increased about 1% to 52% of sales, mostly due to higher free book promotions and clubs, Minecraft margins, higher cost of product due to foreign exchange in Canada, higher trade fulfillment costs in Australia, and higher product amortization in our Educational Technology business. SG&A excluding one time items, was essentially flat to the prior year. Now turning to our segment results, children's book publishing and distribution segment performance was strong, with revenue growth of 7% to $202.9 million. On the strength of marketing strategies implemented last year, school book club revenues grew by 17%. In school book fairs, we increased revenue per fair for the eighth consecutive quarter and grew revenue overall to $91.2 million. The harsh winter weather did have an unfavorable impact on…

Thank you, Maureen. Nicole, we are ready to open up the lines for questions.

Thank you. [Operator Instructions]. Our first question comes from the line of Barry Lucas of Gabelli and Company. Your line is now open.

Thank you and good morning. I have several this morning, Dick, and maybe if we could start with kind of some thoughts about what that classroom business looks like, and I am talking primarily supplemental materials, clubs and fairs, on a more normalized basis, now that you're comping the spike in sales from a year ago. And specifically on the supplemental side, the business you've been in for a long time, what are you really doing differently to get the kinds of results that were seen most recently?

I think the result -- it's from several things Barry. As you know, we have been in this business for a long time, as you said. Right now the enthusiasm for independent reading and for books in schools, is at an all time high, somewhat comparable to the whole language period of the 1980s. Teachers are going back to books after some flirtation with digital, and trying to make that work. These are largely printbook sales, although there is an appetite for digital subscription programs. Our classroom magazines have been amazing in their growth over the past three or four years, because the non-fiction is so beautifully attuned to the common core, and at the same time, our digital companions make it possible for the teacher to, on one hand, take advantage of the simplicity of the print magazine program, which is beautifully orchestrated for their teaching, and also can tell their kids to go look at the digital supplements, and/or teach them themselves the digital supplements on their whiteboard. So that's boosted up to classroom magazine, but underlying all of this, I think there is a dissatisfaction to some extent with core printer basal textbooks. People are looking for different kinds of solutions, and they are customizing their own curriculums to a great degree, so we work with them on that, as well as providing a professional development and support services. So I think it's just a perfect storm of wonderful reception for our supplementary business, and its growing by leaps and bounds, and we are investing more heavily in it. In respect to the clubs going forward, I think we have achieved the remarkable increase in sales since January of 2014 through December of 2014, a one year turnaround program that produced 30% some increase in sales in clubs. Obviously, we are leveling off a little bit right now compared to the tremendous gains that we had last spring. But we see the clubs as part of this overall independent reading thrust, as gaining traction with more teacher sponsors and more child use as independent reading becomes more popular. So we continue to see growth in that business, but the one time growth that we had in the last year which has been so dramatic, we don't see that continuing at that level of sales. Does that answer the combined questions Barry? If not, I can also ask other members of the staff here to talk about those issues?

That would pretty much do it Dick, as -- I won't say for modeling purpose, but is it fair to think about, on a going forward basis, the clubs and fairs, more or less likely to mirror population growth in K6 or into middle school?

I think we are seeing the book business in general, if you look at the trades education and so forth, especially on the trade side, book business is pretty flat. We see more people buying books in clubs and fairs than we have in the past. So I think we see this low single digit growth in that business. That's what we see coming in the future. We think we have continued opportunities as people use our channels for getting children's books as opposed to going to book stores, which are unfortunately dwindling a bit overall in our country.

Great. Thanks Dick.

Yeah.

[Operator Instructions]. And I am showing no further questions at this time. I'd like to hand the call back over to Richard Robinson, for any closing remarks.

Thank you all for your attention in this third quarter earnings call. We will look forward to talking to you again July for our full year results, and we appreciate your continued support of Scholastic.