Good day, ladies and gentlemen and thank you for standing by. Welcome to the Scholastic Reports Fiscal 2017 Second Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Later we will host a question-and-answer session and our instructions will follow at that time. [Operator Instructions] As a reminder to our audience, this conference is being recorded for replay purposes. It is now my pleasure to hand the conference over to Mr. Gil Dickoff, Senior Vice President and Treasurer. Sir, the floor is yours.

Thank you very much, Brian, and good morning everyone. Before we begin, I would like to point out that the slides for 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 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 as well as other risks and factors identified from time-to-time in the company’s filings with the SEC. Actual results can differ materially from those currently anticipated. Our comments today also 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 earnings release, which is 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.

Good morning everybody, and thank you for joining the call today. This quarter we had revenue of $623.1 million, up 4% year-over-year and EPS from continuing operations was $1.99 versus $1.89 last year, excluding one-time items, driven by excellent results in children's trade publishing and international. Children's book publishing and distribution growth was driven by our strong trade publishing lineup led by Harry Potter and the Chamber of Secrets, the illustrated edition and the original screenplay book for Fantastic Beasts and Where to Find Them, which was released late in the quarter. Long-standing and newer fans of the world of Harry Potter have responded with great global support of the new Fantastic Beasts franchise and we look forward to the rollout of the next installments in years to come. On top of Harry Potter's strength, our core trade publishing grew with new titles including Dog Man by Dav Pilkey, Ghosts by Raina Telgemeier, and Five Nights at Freddy's: The Silver Eyes, which is the first of the multi-book series based on the popular Five Nights at Freddy's game franchise. As we told you on previous calls, our strategy for school, clubs, and fairs is to improve profitability by reducing costs on flat revenue. In book fairs, we are on-track to deliver annual revenue roughly in line with last year, while focusing on more profitable execution as we match our resources to each school size, interest and ability to conduct book fairs. As such we reduced the number of fairs held in the second quarter, but reduced revenue -- increased revenue per fair by 7%. In book clubs, our adjustments to our catalog mailings strategy succeeded in lowering costs that also had a more adverse impact on sales than expected. Therefore in the new calendar year, we're adapting our strategy and…

Thank you, Maureen. Brian, we're ready now to open the lines for questions.

Thank you, sir. [Operator Instructions] Our first question will come from the line of Drew Crum with Stifel. Please go ahead.

Okay. Thanks. Good morning everyone. Wanted to start with the clubs business, your commentary in terms of the second quarter performance and your expectations for improved performance in the second half, does that enable you to make up the shortfall you saw in fiscal 2Q and end of the year kind of flattish or levels you've characterized?

I think we may -- we'd be very happy to get back to the flat. We think we can make it most of the back Drew. It will turn this over to Judy to respond to the question.

Hey, Drew, how are you?

Hi Judy.

As Dick and Maureen said, we focused on profit and get reductions -- catalog reductions in the first half of the year, but we went a little bit too far. So, while the profit held up really well, the revenue declined too much. So, beginning in January, we are going to be restoring those classic kits, SeeSaw, lucky, arrow, more aggressively to market sponsors and we know those have typically higher revenue because they are broader grade spans and they appeal to customers. So, we're pretty optimistic that beginning in January, we're going to keep the flat revenue for the second half of the year and we know that our customers are to be responding quite well to that.

And you are comfortable you can achieve your profit target for fiscal 2017?

Yes, we are.

Okay, got it. Okay. And then on the trade business, I wonder if you'd be willing to comment on the performance of the Harry Potter franchise in fiscal 2Q versus fiscal 1Q. And just remind us what you have planned in terms of new content for the second half of fiscal 2017 as it relates to this franchise?

Well, the Cursed Child, in the first quarter, did extremely well. And exceeded our expectations and did -- was the number one best-selling book in the United States for weeks and as Amazon pointed out, it was the top-selling book in 2016 on Amazon. So, that gives you a sense of the strength of the Cursed Child. Fantastic Beasts, the movie did very well. Fantastic Beasts screenplay came out to coincide with the movie on November 18th, right at the end of the quarter, so, the initial sales is in those 12 days, were moderate. I mean they were up to expectations, but they just didn’t have enough time to sell and sell through. So, we will get some continuing Fantastic Beasts sales in the third quarter. We have no additional Fantastic Beasts publishing to introduce all of that is already out in the market.

Okay, got it. And then one last question and I'll jump back into the queue. Maureen, is there a number you can give us in terms of your expectations for overhead -- corporate overhead expense for fiscal 2017? Maureen O’Connell: Yes, Drew. The $20 million that we're reducing related HMH on was a profit against overhead last year. So, for that reason, overhead will go up $20 million. You'll see the benefits of the cost reduction still in the business segments. And then as I mentioned, we have increased our spend in technology and facilities roughly around $10 million. So, you should see overhead increase in total about $30 million, but know that other than the investments in facilities and technology, it's not a real increase. Year-to-date, we're at approximately $17 million, so it's been more frontloaded to the first half of the year.

Okay, very helpful. Thank you.

Thank you.

Thank you. Our next question will come from the line of Barry Lucas of Gabelli & Company. Please go ahead.

Great. Thank you. Good morning, Dick.

Good morning.

Maybe you can talk a little bit higher level and maybe you could talk a little bit about two things; school budgets, how you are viewing them at this point in time; and the appointment or the nominee for the Secretary of Education, Betsy DeVos.

Well, as you well know Barry, and I'm sure you know at least as much as I do about the ESSA legislation passed last year. The huge bulk of the $60 billion of federal contribution to education in the United States is already committed through the ESSA Act. And that money will be passing to the States with certain restrictions on it. But the federal government as already done its thing, the Congress has passed the Bill and it's in effect right now. So, whatever happens at the Federal Department of Education will not really strongly -- or cannot influence the progress of ESSA. And bearing in mind the federal contributions to education now will be 9% of the total spending for education in the United States because over $600 billion for K-12 as you know. So, -- and I think the budgets are -- in schools are of course, the states are going to have to come up with money to support education, and that's -- but I don't see any very substantial change. Education is a top priority of the voters and the people in the United States. We do see some move away from basal textbooks and toward the kind of materials that we publish. So, we're -- I mean our school customers are telling us that they are open to kind of a customized curriculum that we're publishing. So, we're getting a good response, but bear in mind that this is still a relatively small $300 million business for Scholastic and we're pouring significant resources in to response to the opportunities that the changes in curriculum are 40 plus the cries for more service and more support in professional learning and in family and community encouragement which is a requirement of ESSA. But we're running as fast as we can to advantage of the really great opportunities that we see in pre-K to 8 literacy for Scholastic.

Great. That's helpful, Dick, and actually a good segue into the next question. So, to the extent that there was some shortfall in the education segment in 2Q and you are optimistic about the pipeline that you're looking at in terms of opportunity, so is this shortfall strictly a timing issue? You have got enough stuff in the crystal ball there that can tell you that the back half of the year is going to be that much stronger?

Yes, we're very confident in the back of year. We have great pipeline. The second quarter is relatively small for that business. It’s a fourth quarter business for us primarily and our profits come in at the end of the year in that business and a lot of our sales. So, we're -- it's kind of irrelevant where we're right now. We're little bit behind, but we could be a little bit ahead. It's just the timing issue there. And we know that this is a strong area for us. Schools are responding to what we do and we have a very good pipeline for the second half.

Great. Last one for me and I'll let probably Drew take back the mantle. But we're over -- where are we at, just about $13 a share in cash, you bought back $6 million worth of stock in the quarter, the dividend that you declared yesterday evening was held at $0.15. It's piling up, what do you expect to do with the cash, Dick?

Well, we’re obviously looking for opportunities to utilize it. I'll turn that over to Maureen, Barry, and she will answer that question for you.

Thank you. Maureen O’Connell: We continue to look for opportunities to buy back shares. As you so we bought back $6 million in the quarter and we have ample of room to continue buying. And -- we do have ongoing discussions with the Board about how to utilize our cash and including returning cash to shareholders. So, that is certainly top of mind with our Board members and with our management team.

Thanks, Maureen. Maureen O’Connell: You're welcome.

Thank you. Ladies and gentle, this concludes our question-and-answer session for today. So now, it is my pleasure to hand the conference back over to Richard Robinson, Chief Executive Officer for closing comments and remarks. Sir?

Thank you all for your continued support. Have a good Holiday season. We look forward to our March call and we have confidence in the balance of our fiscal year. Thank you very much.

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude the program and you may all disconnect. Everybody have a wonderful day.