Good day, ladies and gentlemen and welcome to the Scholastic Reports for the Fourth Quarter and Fiscal 2016 Results and Fiscal 2017 outlook. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, the conference is being recorded. I would now like to hand the meeting over to Gil Dickoff, Senior Vice President and Treasurer. Please go ahead, sir.

Thank you so much, Karen and good morning everyone. Before we begin, I would like to point out that the slides in this presentation are available on our investor relations website at investor.scholastic.com. I'd 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, and other risks and factors 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 those 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 also posted on the investor relations website at investor.scholastic.com. Now I'd like to introduce Dick Robinson, the Chairman, CEO and President of Scholastic, to begin today's presentation.

Good morning, and welcome to our fiscal ’16 yearend call. Last year at this time, just after we’d sold our educational technology business to HMH, we shared our plans to focus on our significant growth opportunities in children’s books publishing and distribution and the education segment where our magazines and comprehension literacy solutions business was growing dynamically. Our fiscal year results demonstrate the success of the strategy with revenue growth of 2% to $1.67 billion or 5% when excluding foreign exchange, double digit operating income growth and earnings from continued operations of $1.26 per share or $1.70 after one-time items, which exceeded our guidance of approximately $1..35 per share. With our focus on just three segments, children’s books publishing and distribution, education and international, we are a nimbler company with teams who are deeply connected by the mission of providing high quality book and educational materials in support of children’s reading and learning and our opportunities continue to expand. In children’s books publishing, we saw a 14% growth in trade revenues from the renewed strength of Harry Potter as well as solid performance from our core front list and back list titles. We expect another year of double digit growth in 2017, largely driven by the upcoming Harry Potter releases, as well as new multi-platform series such as Horizon, with the story arc and first book written by Scott Westerfield, Dav Pilkey's new series Dog Man, and Raina Telgemeier’s Ghosts. We’re expanding our list in strong niches such as early childhood, global licenses and continue series publishing, and we’ve entered into a multi-year agreement with American Girl, giving us the rights to publish books based on their characters starting in January 2017. In book clubs and book fairs, we expect to maintain our current levels of revenue while focusing on…

Thank you, Dick and good morning everyone. I will refer to fiscal year results from continuing operations, excluding one-time items in my remarks, unless otherwise indicated. Total fiscal year revenues were $1.67 billion, an increase of 2% from 2015 dues to higher children's book publishing and distribution and education sales, but partially offset by the impact of foreign currency in our international segment. The adverse FX impact on revenues was $43.2 million for the year. Operating income was $93.4 million, a 17% increase over last year. And earnings per diluted increased over last year by 32% to $1.70. Turning now to segment results, in children's book publishing and distribution, annual revenue was $1 billion, an increase of 5%, and operating income increased by 20% to $115.8 million. Performance was driven in part by double digit increase in trade sales. In our book club channels, we improved margins and revenue per sponsor, with a particularly good spring performance. In education, annual revenue was $298.1 million, an increase of 8% over fiscal 2015 and operating income increased by 16% to $56 million. We’re seeing continued strength in classroom books and classroom magazines and we increased investment in our sales force to capitalize on favorable trends and our strong positioning to continue to grow market share. In international, revenue was $372.2 million compared to $401.2 million in 2015, and operating income fell $40 million, primarily due to high US dollar product costs, the labor action in Ontario schools earlier in the year, higher bad debt in Asia and an insurance recovery for a warehouse fire in India in the prior year, as well as the impact of foreign exchange. Fiscal year corporate overhead was $90.7 million, approximately even with $91.3 million in the prior year. Incremental facility costs and our multi-year strategic technology…

Karen, we are now ready to open the lines for questions. Thanks so much.

[Operator Instructions] Our first question comes from the line of Drew Crum from Stifel.

Okay, thanks. Good morning everyone. Maureen, I was interested in how you’re thinking about normalized CapEx and pre-pub spend. It sure looks like level of spend is going to be elevated. Should we expect that to continue beyond fiscal ’17? And again, what are the normalized levels of spend we would expect for those line items? Thanks.

As you see, our capital expenditure is expected to be between 70 and 80 this year. We believe that will be for a two year period as we remodel and construct our office building and retail space. So you should expect that level for fiscal 2017 and ’18 and then go back to normalized levels after that.

And the pre-pub spend, is this year’s planned spend in line with the notional model?

Yes. Pre-pub is in line with our ongoing rate of spend.

Okay. And on Harry Potter, would you be willing to provide any numbers around print runs for the Curse Child or Fantastic Beasts? Remind us again where you have rights for those pieces of content and on what platforms. And I guess the final question on Harry Potter, in your press release you indicated you expect to get strong revenue contributions from Harry Potter, but there was no mention of profitability. Have the margin characteristic, the profitability characteristics of this franchise changed or are they similar to what we saw several years ago? Thanks.

Let me start off with that, Drew. This is Dick. First, the margin has not changed. So in terms of print runs and so forth, I’m going to ask Ellie Berger, President of Trade to answer to those questions.

Hi. Our initial laydown for Curse Child North America is going to be roughly $4.5 million. We’re working very closely with our accounts and a very short production schedule, so we’re very excited to be delivering those books to them right now.

Our rights are North American at this point, Drew. Before they were just US. Now we have US and Canada for the new publishing.

Any thoughts around the lift that you get by adding Canada?

It’s generally about 10% of the US market.

Got it. Okay, that’s helpful. All right, I’ll jump back into the queue. Thanks guys.

Our next question comes from the line of Ian Zaffino from Oppenheimer.

Just wanted to hone in on the comments about the cumulative rent revenues that you expect to get from the real estate. You’re saying it's back end loaded. Are you seeing something now like maybe a softening that means you’re going to recoup it later? Or kind of just walk us through the cadence of that rental revenue.

We still expect the same cumulative rental increase that we talked about on previous calls. However, as we’re talking to these premium retailers, it depend on what type of configuration they want and how expensive their capital changes are going to be. And so that’s why we said we feel it will be more back end loaded. We had initially thought we would start to see that incremental rent in ’17 or ’18 and now we think it will be a little bit later than that as we -- but we won’t know for sure until we sign those leases and we narrow down to the premium retailer that we will rent to.

Okay. So if you can just break this down a little bit more for us. So this means that you’re going to have a retailer coming in that’s going to have a smaller space initially and then would take a larger space. I’m just trying to get a sense of what you’re assuming versus what you’re seeing now.

There are multiple versions of configuration. It depends on whether you have one very large retailer that wants a lot of space or some smaller retailers and we’re talking to both types. And so once we’ve signed the lease, we can be more specific to the exact amount of rent increase and when they’ll occur, but we’re very confident that the numbers that we said, incremental $10 million a year over 10 years is still going to be realized on a cumulative basis.

Okay. And then when we will start to hit maybe the run rate of $10 million? You’re seeing …

I’d say that’s going to depend on who we sign the lease with and what construction they want and what they’re going to do to the space. It could be smaller retailers who have multiple spaces or it could be one large retailer. We’re talking to both types of tenants.

Okay. All right, thank you very much.

Thank you. That concludes our question-and-answer session for today. I would like to turn the conference back over to Richard Robinson for any additional comments.

We’re very excited about 2017. It’s off to a good start. We’re delighted for your support and we’ll hope to have good news for you in September. All the best. Thank you.

Thank you. Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may now disconnect. Everyone have a good day.