Good day, ladies and gentlemen, and welcome to the Scholastic Reports Fiscal 2018 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 follow at that time. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to turn the conference over to Mr. Gil Dickoff, Senior Vice President, Treasurer and Head of Investor Relations. Please go ahead.

Thanks so much, Sabrina, and good afternoon, everyone, and thank you for accommodating the new time for our call this quarter. Welcome to Scholastic's third quarter 2018 earnings call. Joining me here today are Dick Robinson, our Chairman, President and Chief Executive Officer; and Ken Cleary, the Company’s Chief Financial Officer. We have posted an investor presentation on our IR website at investor.scholastic.com, which we encourage you to download if you have not already done so. I’d like to point out that certain statements made today will be forward-looking. These forward-looking statements by their nature are uncertain and may differ materially from actual results. In addition, we will be discussing some non-GAAP financial measures, as defined in Regulation G and the reconciliations of those measures to the most directly comparable GAAP measures can be found in the company's earnings release filed this afternoon on a Form 8-K, which has also been posted to our Investor Relations website. We encourage you to review the disclaimers in our press release and investor presentation and to review the risk factors contained in our annual and quarterly reports filed with the SEC. And now, I’d like to turn the call over to Dick Robinson.

Good afternoon and thank you for participating on today’s call from snowy New York. The third quarter was very active at Scholastic. We continue to grow key publishing franchises, while investing in technology driven improvements, real estate upgrades, new product introductions, and the expansion of our education sales force. Our operating results were firmly in line with our expectations with revenue up 3% from the prior year period and the operating loss from continuing operations showing a 4% improvement and what is traditionally a loss quarter for Scholastic. We’ve also raised our fiscal 2018 outlook for earnings per share to reflect the partial year impact of the recent passage of the Tax Cut bill. From a financial reporting perspective, we had two significant non-operating non-cash charges this quarter that affected EPS. Ken will provide more details on these charges in a moment. Excluding these and other one-time charges, our loss per share from continuing operations in the quarter improved by $0.06 or 17% versus the third quarter of last year. We were also active in repurchasing our common stock with $27 million worth of shares acquired in our FY 2018 to date. And as you saw in the release we issued earlier today, our board has increased our stock repurchase authorization by 50 million. Looking forward, our core businesses are performing well and we see growing momentum in the Scholastic 2020 initiatives, which are designed to deliver margin expansion through technology driven process improvements leading to increased productivity and more targeted data driven marketing. Our tax rate will be lower as a result of tax reform. The termination of our domestic pension plan will eliminate future funding requirements and we anticipate additional cash flow beginning in FY 2019 as the transformation of our headquarters building is nearing completion and we…

Thank you, Dick and good afternoon. On this call, I will refer to our adjusted results from continuing operations for the quarter, excluding one-time items unless otherwise indicated. Revenues were $344.7 million versus $336.2 million in the third quarter last year. Operating loss for the third quarter was $19 million, an improvement compared to an operating loss of $19.8 million in the third quarter of fiscal 2017. Going through some housekeeping items first. There were $4.7 million in one-time items included in the third quarter operating loss, primarily related to our headquarters renovation versus $4.9 million in the third quarter of fiscal 2017, primarily related to severance associated with our cost reduction programs. We also had two significant one-time items that were reported below the operating income line. The first was a $39.6 million non-cash pretax charge related to the termination of our domestic defined benefit retirement plan. The second was an $8.3 million non-cash charge related to the estimated remeasurement of our U.S. deferred tax assets following the passage of last December's tax reform legislation. These charges were reflected in our GAAP earnings per share. Turning to our segments, children's book publishing and distribution segment revenues were $199.4 million versus $199 million last year. We reported the segment operating loss of $900,000 versus an operating profit of $6.3 million in the prior year period. The decline reflects a favorable inventory adjustment we took in the third quarter of fiscal 2017 along with higher costs related to the roll-out of a new point-of-sale system for book fairs, as well as higher cost of product and trade. Education segment revenue was $61.7 million, compared to $60.1 million last year. We reported segment operating loss of $200,000, compared to operating income of $3.5 million last year. The decline in operating income is…

Thank you very much Ken. Sabrina, we are now ready to open the lines for questions.

Thank you. [Operator Instructions] And our first question will come from the line of Barry Lucas with Gabelli & Company. Your line is now open.

Thank you and good evening. Thank you. Good enough to talk a little bit about the opportunity in reading, I just wondered if you could take that back to the expansion and the sales force, how far along are you in there, how far up the learning curve is the new sales force and then specifically what you think the opportunity for the market that Scholastic addresses within the overall reading spend?

Thanks very much Barry. As you know, we’ve been in the reading business before. We published a basal reader back in 1990. We then introduced, what was called Literacy Place. We dropped out of that business, but we developed a lot of expertise in selling it, which we transferred it over to our READ 180 business. And meantime, we also had a supplementary paperback book-based business, in the institutional sales to schools, which was prospering but was sort of number 2 to our tech business. So, we have a strong background for many, many years in the reading market and instructional materials. We are – to address the question of how far along we are? We are introducing a core reading program called Scholastic Literacy in a few months and that is, we are introducing it in this summer and for sale next year, which will compete in the core reading market, which as I indicated is an opportunity there, the market size is over $1 billion. Our current education revenues are about 320 million-ish and we expect that business to grow by double digits significantly over the next three years as we get new revenues from the increased size of our salesforce, return to our core competency of selling core instructional materials and reading, and our fantastic position in the reading market. Now just to amplify it, on one more point that you have you and I have talked about before in these calls, the core reading market, which was formerly basal textbook driven and continues to be heavily basal textbook is now moving much more to balance literacy and combinations with paperback books. And so those libraries and programs that we have are now being asked for by schools to become core reading materials. So, we’ve [indiscernible] the skills part of these programs, so you know will be able to get all of the essentially skills that are needed to teach kids how to read in pre-K to six through Scholastic literacy. We also have lots of supplementary material and libraries that complement the core Scholastic Literacy. Probably to longer an answer Barry, but I hope that covers most of which you wanted to here.

Just one other thing on the reading part, when you talk about a kind of a comprehensive program for K-6m does that suggest that this is a product that could be applicable for adoption states?

Absolutely, yes. We are seeing adoption states. Thanks for asking that because that’s an important part of our strategy. We’re seeing adoption states as per these kinds of programs. Their restrictions are being loosened up considerably. They are taking many more flexible kinds of materials in the state adoptions, and we have successfully competed in a few of them, but we’re expanding our strength in that area right now and will be in those adoptions over the next several years.

Great. And Dick, if we could just switch gears to the real estate side, with a definitive lease in place with Sephora and active marketing on the balance of the retail space, when would we expect to see revenues and rent contribution – lease contributions in the – hit the P&L?

I think it’s going to be 2020. We will sign leases in fiscal 2019, but these leases include free trajectory release abatements. So, the rent will – even if we sign them and get people moved in, in 2019 or early in 2020 the revenues really won’t be good to start until fiscal 2020. They will add significantly to our bottom line when they occur.

Great. Thank you, Dick.

Thank you.

Thank you. [Operator Instructions] And I'm showing no further questions at this time.

Thank you very much. Thanks to everybody for listening in. We look forward to our July call with you when we report year-end and our guidance for 2019. Many thanks.