Scholastic Corp (SCHL) 2009 Q2 法說會逐字稿

Good morning.

My name is Kelly, and I will be your conference operator today.

At this time, I would like to welcome everyone to the Q2, 2009 earnings conference call.

(Operator Instructions).

I would now like to turn the call over to Jeffrey Mathews, Vice President of Corporate Strategies and Investor Relations.

Please go ahead.

Good morning, Kelly, and thank you.

Before we begin, I'd like to point out that the slides for this presentation are available for simultaneous viewing by going to our website, scholastic.com, clicking on Investor Relations and following the links on that page.

I would also like to note that this presentation contains certain forward-looking statements, which are subject to various risks and uncertainties, including the conditions of the children's book and educational materials market and the 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 Securities & Exchange Commission.

Actual results could differ materially from those currently anticipated.

Now, I will introduce Dick Robinson, the Chairman, CEO & President of Scholastic, to begin our presentation.

Thanks, Jeff, and good morning; and thank you, everyone, for joining us on our fiscal 2009 second quarter conference call.

This morning I'm joined by Scholastic's Chief Administrative Officer and CFO, Maureen 0'Connell, and members of the executive team are also available for Q&A at the end of this call.

In a tough 3-month period for most businesses, we are strongly encouraged that we held our revenues, reduced costs significantly and maintained a healthy balance sheet last quarter.

In the face of cutbacks in consumer and education spending, Scholastic had strong support from its customers, has seen an increased order in unit volumes and School Book Clubs, higher participation in per fair and School Book Fairs, and a strong solid list of best sellers in Trade Publishing.

In Educational Technology, in addition to sustaining our sales levels, we had solid sales of consulting services to our installed base of customers, who increasingly rely on us to help them raise student achievement.

Last quarter, we also achieved the top end of the cost savings target we announced in July in eliminating 35 million in annualized expenses, including 25 million in salaries.

While these will primarily benefit fiscal 2010, we will see some positive effect in the second half of fiscal 2009.

We also continued exiting unprofitable businesses.

While we continue to be solidly profitable, operating income declined by approximately 30 million last quarter.

This reduction was primarily due to 11 million in severance, and one-time expenses associated with our cost reduction actions, as well as an unfavorable foreign exchange impact of 7 million.

We also had higher royalty and bad-debt reserves in the US and international trade businesses of 6 million, reflecting a more conservative outlook.

The remaining year-over-year decline in operating income was due to increased investment and customer retention and acquisition in School Book Clubs, which I'll discuss in a moment.

Excluding these factors, operating income was approximately flat year-over-year, in line with revenue.

To provide further profitability this year, we have cut our spending plan for the second half of fiscal 2009 by an additional 20 million, and continue to streamline our key businesses, which Maureen will discuss in a moment.

Finally, we finished the second quarter with a healthy balance sheet, the result of five years of strong cash flow with which we have paid down debt and returned cash to shareholders.

Based on the Company's solid financial foundation, our rock solid relationships to our children's book and education customers and our growing eCommerce strength, we're positioned well to meet our goals in growth in our core businesses and long-term operating margins of 9 to 10%.

School Book Clubs, School Book Fairs and Trade Publishing all maintained second quarter sales level compared to last year, excluding an anticipated decline in Harry Potter sales.

September revenues have also been strong in each channel, boding positively for the third quarter.

These results reflect Scholastic's unique value proposition and the resilience of the children's book and educational public sectors during economic downturns.

In School Book Clubs, order volumes rose 6% in the quarter.

Strong unit growth showed that Club's value pricing is clearly attractive to our teacher, child and parent customers.

We also invested in customer retention and acquisition, offering more bonus points and increasing customer service staffing.

Club's strong bond with teachers and families has always been the foundation of this business, so we're encouraged by these results and by the strong December order volumes as well.

Book Club customers did buy lower-priced items last quarter, yielding lower revenue per order, which offset higher order volumes.

Gross margins actually improved because of the pricing changes we implemented for the school year.

We continue to focus on boosting revenue per order, and know that when teachers enable parents to order their kids' books online, the total classroom order grows significantly.

Last month, we began a staged rollout of New COOL the revamped online selling and marketing platform that is a key element of this strategy.

We expect full deployment by the end of this school year.

While this will have some benefit in the second half, the more substantial impact is expected in fiscal 2010 when New COOL will be operating for the whole year with all of our customers.

School Book Fairs' value proposition focuses on supporting schools and less on price.

Last quarter, revenue per fair rose a solid 6%, driven by increased fair traffic from kids, parents and grandparents.

This indicates success with a number of initiatives to drive participation, as well as greater interest in helping schools in the current environment on the part of families.

In a pattern similar to that in clubs, average purchase orders, though sizes were smaller reflecting tighter wallets and purses, partially offsetting the benefit of higher participation.

Fairs' other key revenue driver is the number of events held, which declined 5% in the second quarter.

However, this was largely the result of a late Thanksgiving holiday; as a consequence, December has been very strong compared to the prior year and we're confident of achieving solid December results and a full year fair count in line with last year.

Scholastic Trade Publishing also had another strong quarter in robust front and back list sales, excluding Harry Potter, which had strong revenues from boxed sets in the last year's quarter.

Earlier this mont,h we released One False Note, the second title in The 39 Clues series, our innovative new franchise that combines books with an interactive website, prizes and collectible cards.

This title immediately reached the top of the New York Times Best Seller list; meanwhile, The Maze of Bones, the first title, remains at Number 5.

The 39 Clues website has also seen great engagement, with user registrations growing quickly.

Given that successful series typically follow a stair-step pattern, with each successive release driving sales of previous titles, we're excited about such strong reaction to The 39 Clues after launching only two of the ten titles.

Our publishing shows broad strength, too, with six titles in the upcoming New York Times Best Seller list, including The Hunger Games by Suzanne Collins; and we're also seeing revenue for -- good revenue for the Charlie Bone series and Too Many Toys by David Shannon, among other front and back list titles.

On December 4th, we released The Tales of Beetle the Bard by J.K.

Rowling, which will improve third quarter revenue.

However, because most of the proceeds go to the author's charity, it will only have a modest impact on Scholastic's bottom line.

There has, however, been a positive impact on sales of the Harry Potter series' books which are rejoining this week's New York Times Children's Series Best Seller list.

In the International, revenue was up strongly in export to Australia, Canada and Asia, offset by unfavorable foreign exchange and an expected decline in UK sales.

Revenue in the Media, Licensing and Advertising segment was also up last year -- last quarter -- driven by strong results in the Consumer Magazine group, as well as sales of interactive products and programming such as WordGirl on PBS and Turbo Dogs on QUBO.

Turning to Scholastic Education, our leading educational technology business also largely sustained sales levels last quarter.

Despite tighter budgets and longer sales cycles, school districts continue seeking solutions like READ 180 and Fast Math that are proven effective to raise student achievement.

Providing services to our installed customer base also continues to be a growth area.

Last quarter's results did not include sales of System 44, the prequel to READ 180, for which we have already shipped 4 million in sales in December, or -- did not include a sale to a major urban district we announced last call -- both should benefit the second half.

In addition, last month the California State Board of Education by unanimous vote adopted READ 180 and System 44 for reading intervention with students, including English language learners in grades 4 to 8.

Total education segment revenue declined last quarter, primarily because of lower classroom and library sales.

However, this was largely a matter of timing, with a key sale occurring earlier this year than last.

For the first half of the fiscal year, total classroom library sales rose relative to last year.

Segment operating income and margin both increased despite lower sales, as a result of our actions to reduce sales force costs while improving operating efficiencies.

Overall, Scholastic Education's outlook for solid revenue and improving margins is positive, despite a difficult market for many educational publishers.

To sum up, our core children's book and education businesses held sales steady in the quarter, and we are having a strong December.

Our balance sheet and cash position remains strong, and we have achieved our 35 million cost reduction goal, and we have also reduced costs by an additional 20 million for the second half.

While we are conservatively reducing our full-year guidance to $1.20 to $1.50 to reflect the current business environment, our current operating plan calls for us to match last year's performance for the second half, with cost reductions providing an extra measure of profit.

We believe we will achieve this plan, bringing us to the higher end of the range.

Though the economy remains uncertain, our core children's book and education businesses are strongly based on parent, school and teacher need for our products and services, and deep loyalty and support for the service we provide to them.

This quarter, we saw increased engagement and involvement from our customers, leading to steady sales.

December revenues, which occur in our third quarter, are ahead of last year's level.

We have achieved solid cost savings and are committed to doing more; we are, therefore, confident in our business plans for the second half.

Now, Maureen O'Connell will provide further detail on our balance sheet and cost reduction program, as well as our current results and our outlook.

Thanks, Dick, and good morning, everyone.

Scholastic has had a strong track record of carefully managing its cash, debt and current assets.

As a result, our balance sheet is strong, with net debt levels at 30% of capitalization.

Our debt is mostly long-term with low-interest rates, and we have no refinancing needs until June 2012.

At the end of the second quarter, we had approximately 160 million in public debt, paying 5% interest and maturing in 2013.

We also had 234 million in bank debt.

This included 157 million in an amortizing loan, currently priced at LIBOR plus 87.5 basis points.

We pay quarterly principal payments of 10.7 million for June 2012.

We also had 45 million borrowed under our mostly uncapped 325 million revolving credit facility, which is contractually committed until June 1st, 2012.

We use this facility for working capital and other general purposes.

It is currently priced at LIBOR, plus 70 basis points.

Finally, we had 27 million in credit line advances for our international operations.

All of Scholastic's bank debt is unsecured.

Relative to a year ago, total debt was down last quarter, reflecting principal payments on the term loan and repurchases of some public debt.

Last year's very strong cash position was boosted by strong Harry Potter cash received before we made significant royalty payments later in the fiscal year.

Also impacting the year-over-year cash position were repurchases of 40.1 million in common stock, which was accretive to earnings.

We are also very focused on current assets, particularly receivables and inventories, in the current environment.

Collection is rarely an issue in Scholastic's businesses, where we collect cash with orders in the case of School Book Clubs and Fairs, or target the public sector in the case of Scholastic Education.

In Trade Publishing, where we extend credit to retailers and distributors, we are working very carefully with all of our accounts.

Our largest trade accounts include Wal-Mart, Costco, Target and Barnes & Noble, representing the majority of our total trade receivable.

We are confident in the ability of these key partners to pay.

Finally, we have been focused on reducing inventories, which are largely driven by School Book Fairs over the last several years.

Early buying this year to avoid a potential port strike has temporarily increased inventories; but beyond this timing factor, we expect to achieve continued progress by year end.

Cost reductions have also been a top focus this year, as we adapt to the economic environment and continue to target long-term margin improvement.

Many of our peers in the book and education industries have recently announced cost and head count reduction efforts.

Anticipating a challenging environment last year, in July we announced our plans to reduce annualized spending by 25 to 35 million.

Consequently, we have already made significant progress and achieved the high-end of that goal.

First, addressing external costs and vendors, we were able to avoid an offset of approximately 10 million in increases in significant cost areas, such as paper, manufacturing, shipping and temporary labor.

We then made the difficult decisions about salaries and head count.

By suspending annual salary increases for most of the staff and management, implementing a voluntary retirement program and eliminating other positions, we've reduced annualized salary expense by approximately 25 million.

In total, approximately 300 positions have been eliminated, representing 6% of domestic workforce, primarily in corporate and division headquarters.

These savings will primarily benefit the next fiscal year.

In addition to the 10.9 million of expenses incurred last quarter, we expect additional pretax severance and one-time expenses related to cost reductions of approximately 5 to 6 million in the second half, primarily in the third quarter.

As Dick mentioned, we reduced our spending plan for the second half of the fiscal year by 20 million by eliminating management bonuses, as well as discretionary spending, including consultings, T&E, training and sales conferences.

We are also continuing to improve efficiency in our core businesses, such as Children's Books.

Finally, we continue to review our portfolio of businesses, exiting unprofitable, non-core areas.

Last quarter, this included our Argentine subsidiary and door-to-door sales operation in Puerto Rico, as well as a trade magazine.

For accounting purposes, these businesses are now classified as discontinued operations in the current and prior-year period.

Last quarter's year-over-year increase and losses from discontinued operations primarily relates to non-cash write-downs associated with these businesses.

Turning now to the second quarter results, revenue declined 4% in US dollars or 1% in local currencies, excluding 21.5 million in foreign exchange impacts.

Cost of goods sold increased slightly as a percent of revenue, primarily due to higher royalty reserves and trade.

Sales, general and administrative expenses rose as a result of severance and one-time items related to cost reductions.

In addition to 10.9 million and one-time severance of stock compensation associated with accelerated vesting of restricted stock for employees who are eligible for retirement, it was 2.7 million of normal core severance last quarter compared to 2.6 million in the prior-year period.

Also recorded in SG&A was normal stock compensation of 2.4 million, up from 1.7 million a year ago.

SG&A was also higher because of increased investment in customer acquisition retention programs and Book Clubs.

Lower sales expense in Education partially offset these factors.

Bad debt expense rose 3.9 million due to higher reserves in the US and UK Trade businesses.

While now classified as a discontinued ops in the prior year, the significant bad debt associated with continuity business was eliminated when we sold the business.

These mostly one-time expenses and reserve adjustments, in addition to unfavorable foreign exchange, explain the year-over-year decrease in operating income.

Otherwise, operating income was approximately level and in line with revenues.

Scholastic's effective tax rate rose last quarter, reflecting losses in foreign operations for which we no longer expect to realize a benefit and the loss of deductions resulting from lower income tax.

Free cash flow in the quarter was 48.4 million compared to 299.3 in the prior-year period.

This difference is primarily because of Harry Potter-related working capital factors a year ago, including the timing of cash receipts and royalty payments, as I just mentioned.

As Dick and I have discussed this morning, the Company has taken significant actions to best position itself for the near and long-term.

Based on the current environment, year-to-date results and spending cuts, we have revived our outlook for fiscal 2009 earnings per diluted share from continuing operations to $1.20 to $1.50, excluding severance and one-time expenses related to cost savings.

This revised full-year outlook equates to approximately $0.65 to $0.95 per share in the second half, or flat to $0.30 above the prior year.

Our plan fills the second half gap in several ways: The additional 20 million in spending cuts that I just described; 10 million in salary savings that we expect to realize this year from the 25 million reduction in salaries we just achieved; higher educational technology sales following this month's launch of System 44, which is already generating strong second half sales; lower sales expense in that business should also continue to benefit operating income.

Partly offsetting these factors will be continued investment in new products, customer retention and acquisition, and strategic initiative such as COOL and point of sale systems, that position us for long-term growth.

As Dick indicated, this revised range for guidance reflects uncertainty in the current operating environment at the low end, and at the top end, our cost reductions and generally solid outlooks for Children's Books and Education.

Based on this outlook for earnings, free cash flow is now forecasted to be 55 to 80 million.

With solid profitability and free cash flow, we continue to expect our balance sheet to be stronger at year-end.

Now, I'll turn the call back over to Dick.

Thanks, Maureen.

As I mentioned earlier, our core business remains solidly based on the needs of schools and families.

In difficult times, this is particularly important.

Every day, 55 million children attend grades K through 12, and many more attend early childhood programs.

These children, along with their parents and teachers, use Scholastic clubs and Fairs, read Scholastic books and use our Educational Technology and supplementary materials.

This consistent renewable marketplace is the foundation for Scholastic's steady sales and long-term growth, as we saw last quarter in a difficult environment.

Based on these solid results and our success in reducing costs and managing our balance sheet, we remain confident that we'll reach the higher end of our guidance in the second half, based on our current operating plan and cost reductions.

Longer term, we will continue to grow our core business, serving our loyal customers while improving profitability and maintaining a solid financial foundation.

Now I will moderate a question-and-answer period.

In addition to Maureen, I'm joined this morning by Ellie Berger, President of Scholastic Trade Publishing; Deborah Forte, President of Scholastic Media; Margery Mayer, President of Scholastic Education; Judy Newman, President of Scholastic Book Clubs; and Hugh Roome, President of Scholastic International.

With that, let's open the call to questions.

(Operator Instructions).

Your first question comes from Drew Crum.

Thanks.

Good morning, everyone.

I want to start with the guidance for 2009.

Is there a revenue range you guys are looking at for 2009 now?

Maureen, will you take that question from Drew?

Yes.

Drew, in line to our current performance, we're looking for a slight increase to flat revenues in the second half of the year, excluding Harry Potter.

Okay.

And the $0.65 to $0.95 you mentioned the second half for '09, is that -- that's excluding the severance charges, one-time items?

Correct.

It includes normalized severances.

As you know, we've had severances in the past on a normal basis.

So we have included that 8 million of normalized severance; but this additional severance related to these cost actions programs we've put in place, such as the voluntary retirement and other cost programs, is not included.

Okay.

Okay, and what are you guys assuming as far as the allowance for doubtful accounts, which I believe was about 6 million pre-tax in the second quarter, in addition to foreign currency?

Can you talk about what your assumptions are there for the second half of '09?

Well, we prudently reserve for our trade receivables business -- trade receivables in both our domestic and UK businesses.

And so that does include an enhanced reserve for bad debt for those two businesses, looking more conservatively at the current outlook.

Okay.

Anything on foreign currency?

Well , we haven't -- we're assuming a flat foreign currency base in the second

Okay.

Also, I wanted to ask you about the pricing strategy you guys implemented -- at the beginning of the academic year, at least.

You know, what -- can you measure the success of that initiative?

What benefit -- can you quantify the benefit you got or you recognized during the second quarter?

You mentioned that you have seen a transition, or a flight to lower-ticket items.

Well, if we look at our cost of goods sold rate, which is where the impact of higher pricing will show up, that rate has actually improved when you factor -- before you factor in the increase in royalty reserves, and the higher amortization associated with our new product development.

So we are seeing a real benefit from the price increases.

Even though they're migrating to lower-priced items, there was still a big value gap there, and we were able to raise the prices on those lower priced items as well.

And so we're seeing in all our book businesses the benefit of the price increase.

Okay.

Last question, and I'll jump back into the queue.

The Harry Potter contributions in the second quarter -- I know you guys released the Tenth Anniversary book back in -- (Audio Missing).

Hello?

-- The Tales of the Beetle Bard --

We missed a little part of that question, Drew.

Would you mind repeating the tail end of it again?

Yes.

Just wanted to get a sense of the contributions from Harry Potter in the second quarter and what the comp is there.

Harry Potter Boxed Set was worth about $10 million on revenue.

Okay.

In Q2.

Okay.

Thanks, guys.

(Operator Instructions).

Your next question comes from Catriona Fallon.

Yes, hi, I just have a couple of questions.

I'm just trying to work out the after-tax impact of the severance.

My estimate tells me it is about $0.17 of severance before taxes and about $0.12 after-tax?

I believe it is in the press release.

Okay.

Let me find that number.

It's $0.17 after-tax.

$0.17 after-tax.

Okay.

Yes, our tax rate has gone up this year, so that's affecting that calculation.

Okay.

And then just regarding the Puerto Rican and Argentine businesses, can you walk me through the thought process a little bit there?

How long have you been thinking about discontinuing these businesses, and what other businesses are there similar that you might also look to discontinue?

Well, I think we'll ask Hugh Roome to answer that question, from our International group.

Okay.

Catriona, we have been looking closely at all our businesses overseas; and in the case of Argentina, difficulties in the local economic environment meant that we didn't see that that business, which had been making losses, was going to go into profitability in the next two years or more.

In the case of Puerto Rico, we have a good Scholastic business in Puerto Rico for Book Fairs and Book Clubs, and a very sound Educational business.

This was the door-to-door selling operation, where we sell encyclopedias, and it was the former Grolier business there.

That business, in a high unemployment and difficult economic environment, also did not look like it would make profits going forward.

So these were two examples.

And on the International side, we continue to look at all sides of the portfolio, but this will enhance our profitability going forward.

And I'll go back to Maureen regarding our view overall.

At this time, we're going through our strategic planning process and we're looking at all of our businesses in light of the current environment and looking, you know, what is the likelihood we'll achieve our margin goals in each of these businesses with a very critical eye.

And that is why we're saying that we're looking at our portfolios' businesses, and if there is businesses that were strategic investments in a better economy that may not pay out in this economy, we'll look at that and decide whether we should be in them for the long-term.

It seems a lot of my companies are taking another look at their operating margins in this type of environment.

I'm wondering, is there any change to your 9 to 10% operating margin goal?

No, we're very committed to that.

In fact, we're increasing our commitment to cost reduction in the second half of this year.

We achieved our $35 million first half goal, and we are continuing to sharpen our focus on margin, and we are holding steadfastly to our 9 to 10% operating margin goal.

Okay.

And then last question, just on The 39 Clues.

So there have been two books released so far.

Can you give us an update on the print volume and the sales volume of those books?

I'm asking Ellie Berger, Head of Trade, to answer that question.

Okay.

The second book that released earlier this month, we're really excited to see that sales actually doubled from what the first book had gone out at.

Back list sales on the first book continue to grow as card sales; and in fact, the second book will hit Number One on the Times Best Sellers this week, and we just learned it will be for the following week as well at Number One.

So we're very excited and look forward to the launch of the third book in March.

But no detail on the print runs?

We have over one million copies of the three.

The first two books and the card pack are out in the market right now.

Okay.

Thank you.

(Operator Instructions).

Your next question comes from Amy [Manila].

Good morning.

On the Fairs -- and you mentioned that in the second quarter some of the Fair revenue was pushed to the third quarter.

Could you tell us how much that is from a dollar point of view?

It is probably around 4 million, 5 million, Amy, for Fair revenue that got pushed to the December.

Okay.

Thank you.

(Operator Instructions).

At this time, there are no further questions.

Are there any closing remarks?

Yes, I would like to ask Judy Newman and Margery Mayer to briefly summarize their view of their current businesses and clubs and education, and then we'll make some final remarks.

Okay.

Thank you, Dick.

Well, you know, going into this market, we believed we had really a big opportunity to embrace our customers and really strengthen our relationship with the teachers, the students and the parents who turn to Book Clubs as a dependable source of source of books and learning products, really during all times.

So as we've been saying through this call, we strategically gave teachers more bonus points to reward them for participating in Book Clubs.

We promoted our low price, great value -- and, by the way, great margin product.

We added some additional catalogs, such as our "Vote for Reading" offer which tied into the election.

And we increased our customer service staffing to make sure that our customers had access to our experts so that they could have their questions about product and service answered immediately, with no wait.

So we had very low abandon rates, as we call them.

And so, as we said, you know, this did yield a little bit incremental promotion expense.

We saw an extraordinary customer response; and we've seen it through the second quarter, and we're continuing to see it through December.

And we literally had those trucks lined up at the warehouse until 1:30 in the morning shipping those boxes to make sure the teachers got their orders before the holiday break.

So customers have been purchasing the lower-priced, higher-margin product; and this offset kind of that trend toward the lower-priced product that they were buying, but this was really offset by a 6% increase in orders and a tremendous increase in units.

So we're really, really excited by this great response to our business.

It's just, once again, a validation of the resiliency of the Book Clubs in all times as a tremendous partner to teachers, parents and children.

So we're well positioned for the second half of the year, and we're very excited about that.

So with that, I'll turn it over to Margery.

Thanks, Judy.

Good morning, everybody.

We were really pleased with our quarter.

We felt that -- we had good margin improvement in the quarter.

We think we made some really wise decisions about re-engineering our selling costs.

We reduced some low productivity costs, while we invested more in service where our business is growing extremely well.

Our technology sales held up in the quarter.

And overall, we feel that there is opportunity in the marketplace if you follow the money.

A lot of our purchasing comes from funds that have not been cut.

They come from Title 1, from Special Ed, and we're seeing some good sustenance coming from those funds.

Going forward, we're excited about System 44.

We've had an incredible response to it.

The program is designed to teach skills that help children do well in READ 180 who are really not ready for READ 180.

And so we've been going back to our devoted customer base for READ 180, and we're getting an incredible reaction to it.

We are delighted that we got listed in California for the upcoming Intervention Call; and System 44 is our lead product in that adoption, so it's submitted with READ 180, but we have a combination product now of 44 and 180.

And overall, you know, we -- we're -- we believe that this can be a good market for us.

There's still kids who need achievement.

We're excited about the Obama administration, their investment in early childhood, and we think that they're going to be unrelenting about raising achievement for all kids.

So we go under the second half full of hope.

Thanks, Margery.

We obviously are proud of the fact that we sustained sales in a difficult quarter, that we achieved our operating cost target of 35 million, that we've added 20 more million to that cost reduction program for the second half, and that we have a strong balance sheet going forward.

Our businesses are rooted in deep need of schools, parents and families.

We believe that sustains us and sustains them in a difficult time.

Our staff is very, very committed to achieving the top end of our guidance for the second half, and we will do everything we can to reduce costs and achieve the sales that we believe we can achieve in this difficult environment.

Thank you all for your attention and for your support for Scholastic.

Thank you, this concludes today's conference call.

You may now disconnect.