FORM 10-K


SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

[x]           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended:  April 30, 2010

OR

[  ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)


For the transition period from       to
Commission file number     1-11507


JOHN WILEY & SONS, INC.
(Exact name of Registrant as specified in its charter)


NEW YORK
 
13-5593032
State or other jurisdiction of incorporation or organization
 
I.R.S. Employer Identification No.
     
     
111 River Street, Hoboken, NJ
 
07030
Address of principal executive offices
 
Zip Code
     
     
 
(201) 748-6000
 
 
Registrant’s telephone number including area code
 
     
     
Securities registered pursuant to Section 12(b) of the Act: Title of each class
 
Name of each exchange on which registered
Class A Common Stock, par value $1.00 per share
 
New York Stock Exchange
Class B Common Stock, par value $1.00 per share
 
New York Stock Exchange
     
 
Securities registered pursuant to Section 12(g) of the Act:
 
 
None
 

 
 
1

 

 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 
 
Yes |X|     No |    |
 
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the    Exchange Act.
 
 
Yes |   |     No |X |
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
 
Yes |X|     No |    |
 
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |   |
 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
 
 
Large accelerated filer   |X|           Accelerated filer   |    |           Non-accelerated filer   |    |
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
 
Yes |    |      No |X|
 
 
The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the closing price as of the last business day of the registrant’s most recently completed second fiscal quarter, October 31, 2009, was approximately $1,565.6 million.  The registrant has no non-voting common stock.
 
 
The number of shares outstanding of the registrant’s Class A and Class B Common Stock as of May 31, 2010 was 50,533,570 and 9,582,095 respectively.
 
DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for use in connection with its annual meeting of stockholders scheduled to be held on September 16, 2010, are incorporated by reference into Part III of this form 10-K.

 
 
2

 

JOHN WILEY AND SONS, INC. AND SUBSIDIARIES
FORM 10-K
FOR THE FISCAL YEAR ENDED APRIL 30, 2010
INDEX


PART I
 
PAGE
ITEM 1.
Business
4
ITEM 1A.
Risk Factors
4-8
ITEM 1B.
Unresolved Staff Comments
8
ITEM 2.
Properties
9
ITEM 3.
Legal Proceedings
9
ITEM 4
[Removed and Reserved]
10
     
PART II
 
 
ITEM 5.
Market for the Company’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities
10
ITEM 6.
Selected Financial Data
10
ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
10
ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk
10
ITEM 8.
Financial Statements and Supplemental Data
10
ITEM 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
79
ITEM 9A.
Controls and Procedures
79
ITEM 9B.
Other Information
79
     
PART III
   
ITEM 10.
Directors and Executive Officers of the Registrant
80-81
ITEM 11.
Executive Compensation
81
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
81
ITEM 13.
Certain Relationships and Related Transactions
81
ITEM 14.
Principal Accounting Fees and Services
81
   
81
PART IV
   
ITEM 15.
Exhibits, Financial Statement Schedules and Reports on Form 8-K
82-84
     
SIGNATURES
 
 

 
 
3

 

PART I

Item 1.
Business
 
The Company, founded in 1807, was incorporated in the state of New York on January 15, 1904. (As used herein the term “Company” means John Wiley & Sons, Inc., and its subsidiaries and affiliated companies, unless the context indicates otherwise.)
 
The Company is a global publisher of print and electronic products, providing content and digital solutions to customers worldwide. Core businesses produce scientific, technical, medical and scholarly journals, encyclopedias, books, online products and services; professional and consumer books, subscription products, certification and training materials, online applications and websites; and educational materials in all media, including integrated online teaching and learning resources, for undergraduate, graduate and advanced placement students, educators, and lifelong learners worldwide as well as secondary school students in Australia. The Company takes full advantage of its content from all three core businesses in developing and cross-marketing products to its diverse customer base of professionals, consumers, researchers, students, and educators. The use of technology enables the Company to make its content more accessible to its customers around the world. The Company maintains publishing, marketing, and distribution centers in the United States, Canada, Europe, Asia, and Australia.
 
Further description of the Company’s business is incorporated herein by reference in the Management’s Discussion and Analysis section of this 10-K.
 
Employees
 
As of April 30, 2010, the Company employed approximately 5,100 people on a full-time equivalent basis worldwide .
 
Financial Information About Industry Segments
 
The note entitled “Segment Information” of the Notes to Consolidated Financial Statements and the Management’s Discussion and Analysis section of this 10-K, both listed in the attached index, are incorporated herein by reference.
 
Financial Information About Foreign and Domestic Operations and Export Sales
 
The note entitled “Segment Information” of the Notes to Consolidated Financial Statements and the Management’s Discussion and Analysis section of this 10-K, both listed in the attached index, are incorporated herein by reference.

Item 1A. 
Risk Factors
 
You should carefully consider all of the information set forth in this Form 10-K, including the following risk factors, before deciding to invest in any of the Company’s securities. The risks below are not the only ones the Company faces. Additional risks not currently known to the Company or that the Company presently deems immaterial may also impair its business operations. The Company’s business, financial condition, results of operations or prospects could be materially adversely affected by any of these risks.
 
Cautionary Statement Under the Private Securities Litigation Reform Act of 1995:
 
 
4

 
 
This 10-K and our Annual Report to Shareholders for the year ending April 30, 2010 contain certain forward-looking statements concerning the Company’s operations, performance and financial condition.  In addition, the Company provides forward-looking statements in other materials released to the public as well as oral forward-looking information.  Statements which contain the words anticipate, expect, believes, estimate, project, forecast, plan, outlook, intend and similar expressions constitute forward-looking statements that involve risk and uncertainties.   Reliance should not be placed on forward-looking statements, as actual results may differ materially from those in any forward-looking statements.
 
Any such forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond the control of the Company, and are subject to change based on many important factors. Such factors include, but are not limited to (i) the level of investment in new technologies and products; (ii) subscriber renewal rates for the Company’s journals; (iii) the financial stability and liquidity of journal subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and financial stability of key retailers; (vi) the impact of the used-book market; (vii) worldwide economic and political conditions; and (viii) the Company’s ability to protect its copyrights and other intellectual property worldwide (ix) other factors detailed from time to time in the Company’s filings with the Securities and Exchange Commission.  The Company undertakes no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances.
 
Operating Costs and Expenses
 
The Company has a significant investment, and cost, in its employee base around the world.  The Company offers competitive salaries and benefits in order to attract and retain the highly skilled workforce needed to sustain and develop new products and services required for growth.  Employment and benefit costs are affected by competitive market conditions for qualified individuals, and factors such as healthcare, pension and retirement benefits costs.  The Company is a large paper purchaser, and paper prices may fluctuate significantly from time-to-time.  The Company attempts to moderate the exposure to fluctuations in price by entering into multi-year supply contracts and having alternative suppliers available.  In general, however, any significant increase in the costs of goods and services provided to the Company may adversely affect the Company’s costs of operation.
 
Protection of Intellectual Property Rights
 
Substantially all of the Company’s publications are protected by copyright, held either in the Company’s name, in the name of the author of the work, or in the name of the sponsoring professional society. Such copyrights protect the Company’s exclusive right to publish the work in many countries abroad for specified periods, in most cases the author’s life plus 70 years, but in any event a minimum of 50 years for works published after 1978.  The ability of the Company to continue to achieve its expected results depends, in part, upon the Company’s ability to protect its intellectual property rights. The Company’s results may be adversely affected by lack of legal and/or technological protections for its intellectual property in some jurisdictions and markets.
 
The Scientific, Technical, Medical and Scholarly (“STMS”) publishing industry generates much of its revenue from paid customer subscriptions to print and online journal content. There is debate within the academic and government communities whether such journal content should be made available for free, immediately or following a period of embargo after publication. For instance, certain governments are considering mandating that all publications containing information derived from government-funded research be made available to the public at no cost. These mandates have the potential to put pressure on subscription-based publications and favor business models funded by author fees or government and private subsidies. If such regulations are widely implemented, the Company’s operating results could be adversely affected.
 
 
5

 
 
Maintaining the Company’s Reputation
 
Professionals worldwide rely upon many of the Company’s publications to perform their jobs . It is imperative that the Company consistently demonstrates its ability to maintain the integrity of the information included in its publications. Adverse publicity, whether or not valid, may reduce demand for the Company’s publications.
 
Trade Concentration and Credit Risk
 
In the journal publishing business, subscriptions are primarily sourced through independent journal subscription agents who, acting as agents for library customers, facilitate ordering by consolidating the subscription orders/billings of each subscriber with various publishers. Cash is generally collected in advance from subscribers by the subscription agent and is remitted to the journal publisher, including the Company, generally prior to the commencement of the subscription. Although at fiscal year-end the Company had minimal credit risk exposure to these agents, future calendar-year subscription receipts from these agents are highly dependent on their financial condition and liquidity. Subscription agents account for approximately 24% of consolidated book and journal revenue and no one agent accounts for more than 10% of total consolidated revenue.
 
The Company’s business is not dependent upon a single customer; however, the book industry is concentrated in national, regional, and online bookstore chains. Although no one book customer accounts for more than 8% of consolidated revenue, the top 10 book customers account for approximately 20% of total consolidated revenue and approximately 45% of accounts receivable, before reserves at April 30, 2010.  Payments for the sale of subscription journals are predominantly collected in advance.
 
Changes in Regulation and Accounting Standards
 
The Company maintains publishing, marketing and distribution centers in Asia, Australia, Canada, Europe and the United States. The conduct of our business, including the sourcing of content, distribution, sales, marketing and advertising is subject to various laws and regulations administered by governments around the world. Changes in laws, regulations or government policies, including tax regulations and accounting standards, may adversely affect the Company’s future financial results.
 
Introduction of New Technologies or Products
 
The Company must continue to invest in technological and other innovations and adapt in order to continue to add value to its products and services and remain competitive. There are uncertainties whenever developing new products and services, and it is often possible that such new products and services may not be launched or if launched, may not be profitable or as profitable as existing products and services.
 
In July 2010, the Company plans to launch a new online publishing platform Wiley Online Library. Wiley Online Library will host the vast majority of the Company’s online content, replacing the current platform Wiley Interscience . All existing Wiley Interscience content and licensees will be transferred to Wiley Online Library. The new online service will include enhanced discoverability, expanded functionality and a range of new personalization options. The Company has formal plans and procedures to effect the transformation. Any disruption to the online service during implementation or unforeseen issue could adversely impact results and the Company’s reputation.
 
 
6

 
 
Competition for Market Share and Author and Society Relationships
 
The Company operates in highly competitive markets.  Success and continued growth depends greatly on developing new products and the means to deliver them in an environment of rapid technological change.   Attracting new authors and professional societies, while retaining our existing business relationships, are also critical to our success.
 
Introduction of Higher Education Textbook Rental Programs
 
The Company’s Higher Education business publishes educational materials for two and four-year colleges and universities, for-profit career colleges, advanced placement classes and secondary schools in Australia.  Due to a growing demand by students for less expensive textbooks, a growing number of college bookstores are offering textbook rental programs to students.  In addition, there are a variety of online national textbook rental companies already offering textbooks on a rental basis. In many ways, the textbook rental business model is an adaptation of the used book model that has been in place in the higher education market for many years.  Due to its recent introduction it is uncertain whether such textbook rental programs will have any impact on Wiley results.
 
Interest Rate and Foreign Exchange Risk
 
International-based revenues, as well as our substantial international net assets, expose the Company’s results to foreign currency exchange rate volatility. Fiscal year 2010 revenue was recognized in the following currencies: approximately 55% U.S dollar; 28% British pound sterling; 8% Euro and 9% other currencies. In addition, our interest-bearing loans and borrowings are subject to risk from changes in interest rates. These risks and the measures we have taken to help contain them are discussed in the Market Risk section of this 10-K. For additional details, see Note 11 to our consolidated financial statements, Debt and Available Credit Facilities, in this 10-K. Those sections of our 2010 10-K are incorporated by reference.  Notwithstanding our efforts to foresee and mitigate the effects of changes in fiscal circumstances, we cannot predict with certainty changes in currency and interest rates, inflation or other related factors affecting our business.
 
Risk of Doing Business in Developing and Emerging Markets
 
The Company sells its products to customers in the Middle East (including Iran and Syria), Africa (including Sudan), Cuba, and other developing markets where it does not have operating subsidiaries.  The Company does not own any assets or liabilities in these markets except for trade receivables. Challenges and uncertainties associated with operating in developing markets may entail a relatively higher risk due to political instability, economic volatility, crime, terrorism, corruption, social and ethnic unrest, and other factors.  While sales in these markets do not have a material effect on the Company’s business results, adverse developments related to the risks associated with these markets may cause actual results to differ from historical and forecasted future operating results.  Disruption in these markets could also trigger a decrease in consumer purchasing power, resulting in a reduced demand for our products.

 
 
7

 
 
Liquidity and Global Economic Conditions
 
The recent changes in global financial markets have not had, nor do we anticipate they will have, a significant impact on our liquidity. Due to our significant operating cash flow, financial assets, access to capital markets and available lines of credit and revolving credit agreements, we continue to believe that we have the ability to meet our financing needs for the foreseeable future. As market conditions change, we will continue to monitor our liquidity position. However, there can be no assurance that our liquidity or our results of operations will not be affected by recent and possible future changes in global financial markets and global economic conditions. Similar to other global businesses, we face the potential effects of the global economic recession. Unprecedented market conditions including illiquid credit markets, volatile equity markets, dramatic fluctuations in foreign currency rates and economic recession could affect future results.
 
Effects of Inflation and Cost Increases
 
The Company, from time to time, experiences cost increases reflecting, in part, general inflationary factors. There is no guarantee that the Company can increase selling prices or reduce costs to fully mitigate the effect of inflation on company costs.
 
Ability to Successfully Integrate Key Acquisitions
 
The Company’s growth strategy includes title, imprint and business acquisitions which complement the Company’s existing businesses; the development of new products and services; designing and implementing new methods of delivering products to our customers, and organic growth of existing brands and titles.  Acquisitions may have a substantial impact on the Company’s costs, revenues, cash flows, and financial position. Acquisitions involve risks and uncertainties, including difficulties in integrating acquired operations and in realizing expected opportunities; diversions of management resources and loss of key employees; challenges with respect to operating new businesses; debt incurred in financing such acquisitions; and other unanticipated problems and liabilities.
 
Attracting and Retaining Key Employees
 
The Company’s success is highly dependent upon the retention of key employees globally.  In addition, we are dependent upon our ability to continue to attract new employees with key skills to support the continued organic growth of the business.
 

Item 1B.
Unresolved Staff Comments

None

 
 
8

 


Item 2.
Properties
 
The Company occupies office, warehouse, and distribution facilities in various parts of the world, as listed below (excluding those locations with less than 10,000 square feet of floor area, none of which is considered material property).  All of the buildings and the equipment owned or leased are believed to be in good condition and are generally fully utilized.


Location
Purpose
Owned or Leased
Approx. Sq. Ft.
       
United States:
     
       
New Jersey
Corporate Headquarters
Leased
386,000
       
New Jersey
Warehouse
Leased
380,000
       
New Jersey
Office & Warehouse
Leased
185,000
       
Indiana
Office
Leased
123,000
       
Massachusetts
Office
Leased
43,000
       
California
Office
Leased
38,000
       
Iowa
Office & Warehouse
Owned
27,000
       
International:
     
       
Australia
Office & Warehouse
  Leased
93,000
 
Office
  Leased
33,000
 
Office
 Leased
26,000
       
Canada
Office & Warehouse
Leased
87,000
 
Office
Leased
20,000
       
England
Warehouse
Leased
143,000
 
Warehouse
Leased
85,000
 
Office
Leased
63,000
 
Office
Leased
17,000
 
Office
Owned
49,000
 
Office
Owned
21,000
       
Germany
Office
Leased
29,000
 
Office
Leased
19,000
 
Office
Owned
58,000
       
India
Office & Warehouse
Leased
16,000
       
Singapore
Office & Warehouse
 Leased
67,000
 
Office
 Leased
15,000
       

Item 3.
Legal Proceedings
 
The Company is involved in routine litigation in the ordinary course of its business. In the opinion of management, the ultimate resolution of all pending litigation will not have a material effect upon the financial condition or results of operations of the Company.

 
9

 
 
Item 4.
[Removed and Reserved]


PART II


Item 5.
Market for the Company’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities
 
The Quarterly Share Prices, Dividends, and Related Stockholder Matters and Issuer Purchases of Equity Securities listed in the index on page 11 are incorporated herein by reference.
 
On September 17, 2009, 14,130 shares of restricted stock were granted to the Company's non-employee directors under the Company's 2009 Director Stock Plan. These shares were equal in value to 100 percent of the directors' annual total cash compensation, excluding the additional fees paid to committee chairmen and any expense reimbursements. These awards do not vest until the director retires from the Board of Directors and were made as partial compensation for the recipients’ services as directors. On December 16, 2009, 30,000 shares of restricted stock were granted to William J. Pesce, the Company's President and Chief Executive Officer in recognition of his role in reorganizing the company into three global lines of business and on selecting and developing successors for the three global lines of business. These issuances of shares were not registered under the Securities Act of 1933, as amended (the Securities Act), pursuant to the exemption under Section 4(2) of the Securities Act for transactions not involving any public offering. No underwriters participated in these transactions, and the Company did not receive any proceeds in connection with these transactions.
 
Item 6.
Selected Financial Data

The Selected Financial Data listed in the index on page 11 is incorporated herein by reference.

 
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Management’s Discussion and Analysis of Business, Financial Condition and Results of Operations listed in the index on page 11 are incorporated herein by reference.

Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
 
The information appearing under the caption “Market Risk” in Management’s Discussion and Analysis of Financial Condition and Results of Operations listed in the index on page 11 is incorporated herein by reference.

Item 8.
Financial Statements and Supplemental Data
 
The Financial Statements and Supplemental Data listed in the index on page 11 is incorporated herein by reference.

 
 
10

 

 
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES


The following financial statements and information appearing on the pages indicated are filed as part of this report:

 
 
Page(s)
Management’s Discussion and Analysis of Business, Financial Condition and Results of Operations
12-42
Results by Quarter
43
Quarterly Share Prices, Dividends, and Related Stockholder Matters and Issuer Purchases of Equity Securities
44
Selected Financial Data
45
Management’s Report on Internal Control over Financial Reporting
46
Reports of Independent Registered Public Accounting Firm
47-48
Consolidated Statements of Financial Position as of April 30, 2010 and 2009
49
Consolidated Statements of Income for the years ended April 30, 2010, 2009, and 2008
50
Consolidated Statements of Cash Flows for the years ended April 30, 2010, 2009, and 2008
51
Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the years ended April 30, 2010, 2009, and 2008
52
Notes to Consolidated Financial Statements
53-77
Schedule II — Valuation and Qualifying Accounts for the years ended April 30, 2010, 2009, and 2008
78

Other schedules are omitted because of the absence of conditions under which they apply or because the information required is included in the Notes to Consolidated Financial Statements.


 
 
11

 


Management’s Discussion and Analysis of Business,
Financial Condition and Results of Operations
 
The Company is a global publisher of print and electronic products, providing content and digital solutions to customers worldwide. Core businesses produce scientific, technical, medical and scholarly journals, encyclopedias,  books, online products and services; professional and consumer books, subscription products, certification and training materials, online applications and websites; and educational materials in all media, notably through Wiley PLUS , the Company’s integrated online learning environment, for undergraduate and graduate students, educators, and lifelong learners worldwide as well as secondary school students in Australia. The Company takes full advantage of its content from all three core businesses in developing and cross-marketing products to its diverse customer base of professionals, consumers, researchers, students, and educators.  The use of technology enables the Company to make its content more accessible to its customers around the world. The Company maintains publishing, marketing, and distribution centers in the United States, Canada, Europe, Asia, and Australia.
 
Business growth comes from a combination of title, imprint and business acquisitions which complement the Company’s existing businesses; from the development of new products and services; from designing and implementing new methods of delivering products to our customers; and from organic growth of existing brands and titles.  The Company’s revenue grew at a compound annual rate of 12% over the past five years, including the acquisition of Blackwell in February 2007.
 
Core Businesses
 
Scientific, Technical, Medical and Scholarly (STMS):
 
The Company is one of the leading publishers for the scientific, technical, medical and scholarly communities worldwide, including academic, corporate, government, and public libraries; researchers; scientists; clinicians; engineers and technologists; scholarly and professional societies; and students and professors. STMS products include journals, books, major reference works, databases and laboratory manuals. STMS publishing areas include the physical sciences, health sciences, social science and humanities and life sciences. The Company’s STMS products are sold and distributed globally, online and in print through multiple channels, including research libraries and library consortia, independent subscription agents, direct sales to professional society members, bookstores, online booksellers and other customers. Publishing centers include Australia, Germany, Singapore, the United Kingdom and the United States. STMS accounted for approximately 58% of total Company revenue in fiscal year 2010 and generated revenue growth at a compound annual rate of 20% over the past five years, including the acquisition of Blackwell in February 2007.  The graph below presents STMS revenue by product type for fiscal year 2010:
 
 
STMS GRAPH
 
 
12

 
 
Approximately 53% of journal subscription revenue is derived from publishing rights owned by the Company. Publishing alliances also play a major role in STMS’s success. The Company publishes the journals of prestigious societies, including the American Cancer Society, the British Journal of Surgery Society, the Federation of European Biochemical Societies, The European Molecular Biology Organization, the American Anthropological Association and the German Chemical Society. Approximately 47% of journal subscription revenue is derived from publication rights which are owned by professional societies and published by the Company pursuant to a long-term contract or owned jointly with a professional society. These society alliances bring mutual benefit, with the societies gaining Wiley’s publishing, marketing, sales and distribution expertise, while Wiley benefits from being affiliated with prestigious societies and their members.
 
STMS is a leading provider of evidence-based medicine (EBM). The Cochrane Collaboration database, a premier source of high-quality independent evidence to inform healthcare decision-making, provides the foundation for the Company’s growing suite of EBM products designed to improve patient healthcare. EBM facilitates the effective management of patients through clinical expertise informed by best practice evidence that is derived from medical literature.
 
In late July 2010, the Company plans to launch Wiley Online Library , which will host the world’s broadest and deepest multidisciplinary collection of online resources covering life, health and physical sciences, medicine, humanities and social science. Built on the latest technology and designed with extensive input from scholars around the world, Wiley Online Library will deliver seamless integrated access to over 4 million articles from 1,500 journals, 8,000 books, and hundreds of reference works, laboratory protocols and databases from John Wiley & Sons and key imprints including Wiley-Blackwell, Wiley-VCH and Jossey-Bass. Featuring a clean and simple interface, this new online service will combine intuitive navigation, enhanced discoverability, expanded functionalities and a range of personalization options. Wiley Online Library will completely replace Wiley InterScience , the Company’s current online publishing platform for its scientific, technical, medical and scholarly content, previously introduced in 1999. All existing Wiley InterScience content and licensees will be transferred to the new site to enable seamless access for users and subscribers.
 
Access to Wiley Online Library and Wiley InterScience is sold through licenses with institutional and corporate libraries, consortia and other academic, government and corporate customers. The Company offers a range of licensing options including customized suites of journal publications for individual customer needs as well as subscriptions for individual journal and online book publications. Licenses are typically sold in durations of one to three years.  The Company also provides fee-based access to its content through its Article Select and PayPerView programs which offer non-subscribed journal content, book chapters and major reference work articles.
 
Wiley Online Library and Wiley InterScience take advantage of technology to update content frequently and to add new features and resources on an ongoing basis to increase the productivity of scientists, professionals and students. Two examples are EarlyView , through which customers can access individual articles well in advance of print publication, and MobileEditions , which enables users to view tables of content and abstracts on wireless handheld devices and Web-enabled phones.
 
In 2008, the Company introduced its open access business model, OnlineOpen. Under this open access business model, the author, the author's funding agency, or the author's institution pays a fee to ensure that an article is made available globally via Wiley InterScience to all non-subscribers including the general public upon publication. The article is also deposited in the funding agency's preferred repository. In return for the service fee, the Company provides its customary publishing, editing and peer review and technology services.
 
 
13

 
 
In 2005, the Company began a program to digitize its entire historical journal content, dating back to the 1800s.  The Company’s digitization of legacy content is designed to improve the research pathway and ensure content discovery is as seamless and efficient as possible.  The backfile collection, which is available online through Wiley InterScience, spans three centuries of scientific research and comprise over 13.6 million pages – one of the largest archives of its kind issued by a single publisher. As of April 30, 2010 all of Wiley’s and Blackwell’s existing journal content is digitized and made available to customers.
 
The Company has been focused on reducing costs associated with the STMS business to finance investments in enabling technology and new businesses.  The cost savings are principally the result of increased off-shoring and out-sourcing of certain functions and activities from high cost locations to Singapore and other countries in Asia.  Significant portions of the STMS journals and books content management functions, in addition to certain customer support activities, have been off-shored as of the end of fiscal year 2010, with central marketing roles expected to be transferred during fiscal year 2011.  In addition to cost savings, the off-shoring and out-sourcing of these functions has enabled the Company to focus its resources on value-added activities, such as process and service enhancements.
 
Significant Acquisitions: In February 2007, the Company acquired Blackwell Publishing (Holdings) Ltd. (“Blackwell”), a leading publisher of journals and books for the academic, research and professional markets focused on science, technology, medicine and social sciences and humanities.  Headquartered in Oxford, England, Blackwell also maintained publishing locations in the United States, Asia, Australia, Denmark and Germany. Approximately 50% of Blackwell’s annual revenue was derived from the United States. Blackwell employed approximately 1,000 individuals worldwide with just over half located in the United Kingdom.  The acquisition of Blackwell enhanced Wiley’s global position as a provider of content and services, expanded and added diversity to the journal portfolio, increased both print and online advertising revenue and added more professional society relationships.
 
Professional/Trade:
 
The Company’s Professional/Trade business acquires, develops and publishes books, subscription products and information services in all media, in the subject areas of business, technology, architecture, cooking, psychology, education, travel, health, religion, consumer reference, pets and general interest. Products are developed for worldwide distribution through multiple channels, including major chains and online booksellers, independent bookstores, libraries, colleges and universities, warehouse clubs, corporations, direct marketing, and websites. The Company’s Professional/Trade customers are professionals, consumers, and students worldwide. Publishing centers include Australia, Canada, Germany, Singapore, the United Kingdom and the United States. Professional/Trade publishing accounted for approximately 25% of total Company revenue in fiscal year 2010 and generated revenue growth at a compound annual rate of 3% over the past five years.  The graph below presents P/T revenue by product type for fiscal year 2010:
 
PT GRAPH
 
 
 
14

 
 
Key revenue growth strategies of the Professional/Trade business include adding value to its content, developing its leading brands and franchises, and executing strategic acquisitions. The Company’s leading Professional/Trade brands include the For Dummies series, the Frommer’s and Unofficial Guide travel series, the Bible and Visual technology series, the CliffsNotes study guides, Webster’s New World dictionaries, and Betty Crocker and Weight Watchers cookbooks.
 
Publishing alliances and franchise products are also central to the Company’s strategy. The ability to bring together Wiley’s product development, sales, marketing, distribution and technological capabilities with a partner’s content and brand name recognition has been a driving factor in its success. Professional/Trade alliance partners include General Mills, the Culinary Institute of America, Bloomberg Press, the American Institute of Architects, the Graduate Management Admission Council, the Leader to Leader Institute, Fisher Investments, Meredith Corporation and Weight Watchers, among many others.
 
The Company promotes an active and growing Professional/Trade custom publishing program. Custom publications are typically used by organizations for internal promotional or incentive programs.  Books that are specifically written for a customer or an existing Professional/Trade publication can be customized, such as having the cover art include custom imprint, messages or slogans. Of special note are customized For Dummies publications, which leverage the power of this well-known brand to meet the specific information needs of a wide range of organizations around the world.
 
Higher Education:
 
The Company publishes educational materials in all media, for two and four-year colleges and universities, for-profit career colleges, advanced placement classes and secondary schools in Australia. Higher Education products focus on courses in business and accounting, sciences, engineering, computer science, mathematics, statistics, geography, hospitality and the culinary arts, education, psychology and modern languages.
 
Higher Education customers include undergraduate, graduate, and advanced placement students, educators, and lifelong learners worldwide as well as secondary school students in Australia. Product is delivered online and in print, principally through college bookstores, online booksellers, and websites. Higher Education accounted for approximately 17% of total Company revenue in fiscal year 2010 and generated revenue growth at a compound annual rate of 6% over the past five years.
 
Higher Education’s mission is to help teachers teach and students learn. Our strategy is to provide value-added quality materials and services through textbooks, supplemental study aids, course and homework management tools and more, in print and electronic formats. The Higher Education website offers online learning materials with links to thousands of companion sub-sites to support and supplement textbooks.

 
 
15

 

Higher Education delivers high-quality online learning materials that offer more opportunities for customization and accommodate diverse learning styles. A prime example is WileyPLUS , the Company’s integrated online learning environment focused on both teaching and learning. By offering an electronic version of a text along with additional integrated materials, custom content provided by the instructor, and administrative tools, WileyPLUS supports a full range of course-oriented activities, including online planning, presentations, study, homework, and testing. The graph below presents global Higher Education revenue by product type for fiscal year 2010:
 
HE GRAPH

The Company also provides the services of the Wiley Faculty Network, a peer-to-peer network of faculty/professors supporting the use of online course material tools and discipline-specific software in the classroom. The Company believes this unique, reliable, and accessible service gives the Company a competitive advantage.
 
Higher Education is also leveraging the internet in its sales and marketing efforts.  The internet enhances the Company’s ability to have direct contact with students and faculty at universities worldwide through the use of interactive electronic brochures and e-mail campaigns.
 
Publishing relationships are key to Higher Education’s strategy. The ability to bring Wiley’s product development, sales, marketing, distribution and technology with a partner’s content and/or brand name has contributed to the Company’s success. Alliance partners include Microsoft and National Geographic.
 
Publishing Operations
 
Journal Products:
 
The Company now publishes over 1,600 Scientific, Technical, Medical and Scholarly and Professional/Trade journals. Journal subscription revenue and other related publishing income, such as advertising, backfile sales, the sale of publishing rights, journal reprints and individual article sales accounted for approximately 49% of the Company’s consolidated fiscal year 2010 revenue. The journal portfolio includes titles owned by the Company, in which case they may or may not be sponsored by a professional society; titles owned jointly with a professional society; and titles owned by professional societies and published by the Company pursuant to long-term contract.
 
Societies that sponsor or own such journals generally receive a royalty and/or other consideration. The Company may procur editorial services from such societies on a pre negotiated fee basis. The Company also enters into agreements with outside independent editors of journals that state the duties of the editors, and the fees and expenses for their services. Contributors of journal articles transfer publication rights to the Company or a professional society, as applicable. Journal articles may be based on funded research through government or charitable grants.  In certain cases the terms of the grant may require the grantholder to make articles (either the published version or an earlier unedited version) available free of charge to the public, typically after an embargo period.  The Company provides various services for a fee to enable the grantholder to comply.
 
 
16

 
 
The Company sells journal subscriptions directly through sales representatives; indirectly through independent subscription agents; through promotional campaigns; and through memberships in professional societies for those journals that are sponsored by societies. Journal subscriptions are primarily licensed through contracts for online content delivered through the Company’s web-based platform, WileyInterScience. The Company plans to launch Wiley Online Library in late July 2010 which will replace WileyInterscience. Contracts are negotiated by the Company directly with customers or their subscription agents.  Licenses range from one to three years in duration and typically cover calendar years.
 
Printed journals are generally mailed to subscribers directly from independent printers.  The Company does not own or manage printing facilities. The print journal content is also available online. Subscription revenue is generally collected in advance, and deferred until the related issue is shipped or made available online at which time the revenue is earned.
 
Book Products:
 
Book products and book related publishing revenue, such as advertising revenue and the sale of publishing rights, accounted for approximately 51% of the Company’s consolidated fiscal year 2010 revenue.  Materials for book publications are obtained from authors throughout most of the world through the efforts of an editorial staff, outside editorial advisors, and advisory boards. Most materials originate with authors, or as a result of suggestion or solicitations by editors and advisors. The Company enters into agreements with authors that state the terms and conditions under which the materials will be published, the name in which the copyright will be registered, the basis for any royalties, and other matters. Most of the authors are compensated by royalties, which vary with the nature of the product and its anticipated potential profitability. The Company may make advance payments against future royalties to authors of certain publications.  Royalty advances are reviewed for recoverability and a reserve for loss is maintained, if appropriate.
 
The Company continues to add new titles, revise existing titles, and discontinue the sale of others in the normal course of its business, also creating adaptations of original content for specific markets fulfilling customer demand. The Company’s general practice is to revise its textbooks every three to five years, if warranted, and to revise other titles as appropriate. Subscription-based products are updated more frequently on a regular schedule. Approximately 30% of the Company’s fiscal year 2010 U.S. book-publishing revenue was from titles published or revised in the current fiscal year.
 
Professional and consumer books are sold to bookstores and online booksellers serving the general public; wholesalers who supply such bookstores; warehouse clubs; college bookstores for their non-textbook requirements; individual practitioners; and research institutions, libraries (including public, professional, academic, and other special libraries), industrial organizations, and government agencies.  The Company employs sales representatives who call upon independent bookstores, national and regional chain bookstores and wholesalers. Sales of professional and consumer books also result from direct mail campaigns, telemarketing, online access, advertising and reviews in periodicals. Trade sales to bookstores and wholesalers are generally made on a returnable basis with certain restrictions. The Company provides for estimated future returns on sales made during the year principally based on historical return experience and current market trends.
 
 
17

 
 
Adopted textbooks, related supplementary material, and online products such as WileyPLUS , are sold primarily to bookstores, including online bookstores, serving educational institutions. The Company employs sales representatives who call on faculty responsible for selecting books to be used in courses, and on the bookstores that serve such institutions and their students. Textbook sales are generally made on a returnable basis with certain restrictions.  The textbook business is seasonal, with the majority of textbook sales occurring during the June through August and November through January periods. There is an active used textbook market, which adversely affects the sale of new textbooks.
 
Like most other publishers, the Company generally contracts with independent printers and binderies for their services. The Company purchases its paper from independent suppliers and printers. The fiscal year 2010 weighted average U.S. paper prices decreased approximately 8% from fiscal year 2009. Approximately 64% of the Company’s paper inventory is held in the United States. Management believes that adequate printing and binding facilities, sources of paper and other required materials are available to it, and that it is not dependent upon any single supplier.  Printed book products are distributed from both Company-operated warehouses and independent distributors.
 
The Company develops content in a digital format that can be used for online and print products, resulting in productivity and efficiency savings, as well as enabling the Company to offer customized publishing and print-on-demand products. Book content is increasingly being made available online through Wiley InterScience , WileyPLUS and other platforms, and in eBook formats through licenses with alliance partners. The Company also sponsors online communities of interest, both on its own and in partnership with others, to expand the market for its products.
 
The Company believes that the demand for new electronic technology products will continue to increase.  Accordingly, to properly service its customers and to remain competitive, the Company has increased its expenditures related to such new technologies and anticipates it will continue to do so over the next several years.
 
The Company’s online presence not only enables it to deliver content online, but also to sell more books.  The growth of online booksellers benefits the Company because they provide unlimited virtual “shelf space” for the Company’s entire backlist.
 
Marketing and distribution services are made available to other publishers under agency arrangements. The Company also engages in co-publishing of titles with international publishers and in publication of adaptations of works from other publishers for particular markets. The Company also receives licensing revenue from photocopies, reproductions, translations, and electronic uses of its content.
 
Advertising Revenue:
 
The Company generates advertising revenue from print and online journal subscription products; controlled circulation magazines which are issued free to a specific target audience; its online publishing platforms, Wiley Online Library and Wiley Interscience ; and the websites of its consumer brands, including Frommers.com , Dummies.com and Cliffsnotes.com . These revenues accounted for approximately 3% of the Company’s consolidated fiscal year 2010 revenue.
 
Advertisements are sold by the Company’s sales representatives to advertising agencies representing the Company’s target customers. Typical customers include worldwide pharmaceutical companies; equipment manufacturers and distributors servicing the pharmaceutical industry; and a variety of businesses targeting the Company’s consumer brand customers.  The Company’s advertising growth strategy focuses on increasing the volume of advertising on its online publishing platforms; leveraging the brand recognition of its consumer titles in all media; the development of new advertising products such as online video promotions or event sponsorship arrangements; and advertising in new and emerging technologies such as the mobile devices market (i.e. smart phone and iPad applications).
 
 
18

 
 
Global Operations
 
The Company’s publications are sold throughout most of the world through operations located in Europe, Canada, Australia, Asia, and the United States.  All operations market their indigenous publications, as well as publications produced by other parts of the Company. The Company also markets publications through independent agents as well as independent sales representatives in countries not served by the Company. John Wiley & Sons International Rights, Inc., a wholly owned subsidiary of the Company, sells reprint and translations rights worldwide. The Company publishes or licenses others to publish its products, which are distributed throughout the world in many languages. Approximately 45% of the Company’s consolidated fiscal year 2010 revenue was derived from non-U.S. markets.

The global nature of the Company’s business creates an exposure to foreign currency fluctuations relative to the U.S dollar. Each of the Company’s geographic locations sell products worldwide in multiple currencies. Revenue and deferred revenue, although billed in multiple currencies are accounted for in the local currency of the selling location. Fiscal year 2010 revenue was recognized in the following currencies: approximately 55% U.S dollar; 28% British pound sterling; 8% Euro and 9% other currencies.
 
Competition and Economic Drivers within the Publishing Industry
 
The sectors of the publishing industry in which the Company is engaged are highly competitive.  The principal competitive criteria for the publishing industry are considered to be the following: product quality, customer service, suitability of format and subject matter, author reputation, price, timely availability of both new titles and revisions of existing books, online availability of published information, and timely delivery of products to customers.
 
The Company is in the top rank of publishers of scientific, technical, medical and scholarly journals worldwide,  a leading commercial research chemistry publisher; the leading society journal publisher; one of the leading publishers of university and college textbooks and related materials for the “hardside” disciplines, (i.e. sciences, engineering, and mathematics), and a leading publisher in its targeted professional/trade markets. The Company knows of no reliable industry statistics that would enable it to determine its share of the various international markets in which it operates.
 
Performance Measurements
 
The Company measures its performance based upon revenue, operating income, earnings per share and cash flow, excluding unusual or one-time events, and considering worldwide and regional economic and market conditions. The Company evaluates market share statistics for publishing programs in each of its businesses.  STMS uses various reports to monitor competitor performance and industry financial metrics.  Specifically for STMS journal titles, the ISI Impact Factor, published by the Institute for Scientific Information, is used as a key metric of a journal title’s influence in scientific publishing.  For Professional/Trade, the Company evaluates market share statistics published by BOOKSCAN, a statistical clearinghouse for book industry point of sale data in the United States. The statistics include survey data from all major retail outlets, online booksellers, mass merchandisers, small chain and independent retail outlets. For Higher Education, the Company subscribes to Management Practices Inc., which publishes customized comparative sales reports.
 
 
19

 
 
Results of Operations
 
Fiscal Year 2010 Summary Results

Revenue for fiscal year 2010 increased 5% to $1,699.1 million, or 4% excluding the favorable impact of foreign exchange. Excluding foreign exchange, Higher Education (“HE”) and Professional/Trade (“P/T”) experienced strong growth, while Scientific, Technical, Medical and Scholarly (“STMS”) was flat with the prior year.

Gross profit margin for fiscal year 2010 of 68.6% was 0.6% higher than prior year, or 0.4% excluding the favorable impact of foreign exchange mainly due to increased sales of higher margin digital products.

Operating and administrative expenses for fiscal year 2010 of $872.2 million were 4% higher than the prior year.  The increase was mainly due to higher accrued performance-based incentive compensation costs; higher planned HE editorial and production costs to support business growth; increased technology spending; and a $2.0 million bankruptcy recovery in the prior year activity. The increases in cost were partially offset by lower distribution costs; less Blackwell integration activity; and cost savings initiatives.

The Company performed a strategic review of certain non-core businesses within the STMS reporting segment. The review led the Company to consider alternatives for GIT Verlag, a business-to-business German-language controlled circulation magazine business, which was acquired by the Company in 2002.  Based on the outlook for the print advertising business in German language publishing, the Company performed an impairment test on the intangible assets related to GIT Verlag. This test resulted in an $11.5 million pre-tax impairment charge in fiscal year 2010. The Company also identified a similar decline in the financial outlook for three smaller business-to-business controlled circulation advertising magazines. An impairment test on the intangible assets associated with those magazines resulted an additional $0.9 million pre-tax impairment charge in fiscal year 2010.  After considering a variety of strategic alternatives for GIT Verlag, the Company implemented a restructuring plan in fiscal year 2010 to reduce certain staffing levels and the number of journals published by GIT Verlag. As a result, the Company recorded a pre-tax restructuring charge of approximately $1.6 million within the STMS reporting segment during fiscal year 2010 for GIT Verlag severance-related costs.
 
The Company recorded severance costs of $1.1 million related to offshoring and outsourcing certain central marketing and content management activities to Singapore and other countries in Asia. These charges are expected to be fully recovered within 18 months from implementation as a result of lower operating expenses. The impairment and restructuring charges described above, totaling $15.1 million, or $0.17 per share, are reflected in the Impairment and Restructuring Charges line item in the Consolidated Statements of Income.
 
Operating income for fiscal year 2010 increased 11% to $242.6 million, or 7% excluding the favorable impact of foreign exchange and the impairment and restructuring charges.  The 7% increase was mainly driven by HE and P/T revenue growth, margin improvement, cost savings initiatives, partially offset by higher performance-based compensation, editorial, production and technology costs to support growth.

Interest expense decreased $16.1 million to $32.3 million.  Lower interest rates contributed approximately $12.1 million towards the improvement, while lower average debt outstanding contributed approximately $4.0 million.  Losses on foreign currency transactions for fiscal years 2010 and 2009 were $10.9 million and $11.8 million, respectively. The foreign currency transaction losses for fiscal year 2010 were primarily due to the revaluation of U.S. dollar cash balances held by the Company’s non-U.S. locations. The losses incurred in fiscal year 2009 were primarily due to the strengthening of the U.S. dollar in the prior year against U.S. dollar third party loans and intercompany payables maintained in non-U.S. locations during that period. Since these amounts were held in U.S. dollars, the transaction loss did not represent an economic loss to the Company. Fiscal year 2009 included a favorable $4.6 million ($0.08 per share) insurance settlement reported as Interest Income and Other.
 
 
20

 
 
The effective tax rate for fiscal year 2010 was 28.3% compared to 22.0% in the prior year. The effective tax rate for fiscal year 2009 includes the reversal of a previously accrued income tax reserve of approximately $3.2 million ($0.05 per share) due to an income tax settlement with tax authorities in non-U.S. jurisdictions. The Company’s effective tax rate for fiscal year 2009 excluding the reversal was approximately 24.0%. The increase in the effective tax rate excluding the reversal was principally due to lower foreign tax benefits and a non-taxable insurance receipt in the prior year.

Earnings per diluted share for fiscal years 2010 and 2009 was $2.41 and $2.15, respectively, while net income for the same periods was $143.5 million and $128.3 million, respectively. On a currency neutral basis and excluding the impairment and restructuring charges of approximately $0.17 per share from the current year, earnings per diluted share increased 6%. Higher operating income and lower interest expense was partially offset by a prior year insurance receipt ($0.08 per share), a prior year tax reserve reversal ($0.05 per share) and lower foreign tax benefits.

Throughout this report, references to amounts “excluding foreign exchange”, “currency neutral” and “performance basis” exclude both foreign currency translation effects and transactional gains and losses. Foreign currency translation effects are based on the change in average exchange rates for each reporting period multiplied by the current period’s volume of activity in local currency for each non-U.S. location.

Fiscal Year 2010 Segment Results
 
As of May 1, 2009, the Company transferred management responsibilities and reporting for certain textbooks from the Professional/Trade segment to the Higher Education segment. All prior periods have been restated for comparability. These changes had no impact on the Company’s consolidated revenue, net income or earnings per share.

Scientific, Technical, Medical and Scholarly (STMS):
   
       
        % change
Dollars in thousands
            2010
           2009
       % change
       w/o FX (a)
Revenue
$986,683
$969,184
2%
0 %
Direct Contribution
$405,244
$399,156
2%
0 %
Contribution Margin
   41.1%
    41.2%
   

(a)  
Adjusted to exclude fiscal year 2010 impairment and restructuring charges of $15.1 million from direct contribution.

Global STMS revenue for fiscal year 2010 increased 2% to $986.7 million, but was flat excluding the favorable impact of foreign exchange. Increased revenue from rights, individual articles and the Cochrane Library , were offset by lower revenue from business-to-business advertising, journal subscriptions (mainly due to production scheduling) and individual member subscriptions. The improvement in rights income principally relates to a legal settlement of approximately $2.0 million.

Direct contribution to profit for fiscal year 2010 increased 2% to $405.2 million, but was flat excluding the $15.1 million asset impairment and restructuring charges recorded in fiscal year 2010 and the favorable impact of foreign exchange. Lower journal production costs, the completion of Blackwell-related integration activities and other cost savings initiatives were offset by increased costs associated with new business and a $2.0 million bad debt recovery in fiscal year 2009. Direct contribution margin declined 10 basis points to 41.1% and was flat with the prior year excluding the favorable impact of foreign exchange and the asset impairment and restructuring charges.
 
 
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Calendar Year 2010 Journals Update
Due to the fact that the majority of the Company’s journal subscriptions are licensed on a calendar year basis, the Company also monitors and analyzes its journal subscription revenue on that basis. As of April 30, 2010, calendar year 2010 journal subscription billings increased 3% to 4% over prior year on a currency neutral basis, with approximately 95% of expected business closed. There was solid growth in Europe, Middle East, and Africa (“EMEA”), Asia-Pacific and Latin America and modest growth in the U.S. and Canada. Licensed journal business now accounts for 71% of the subscription business as compared to 60% at the same time last year. New licenses included journal subscriptions, backfiles, online books and ArticleSelect sales.
 
Journals
Journals revenue for fiscal year 2010 increased 2% to $803.0 million, but was flat excluding the favorable impact of foreign exchange.  Increased revenue from rights, individual articles and the Cochrane Library , were offset by lower revenue from business-to-business advertising, journal subscriptions (mainly due to production scheduling) and individual member subscriptions. The improvement in rights income principally relates to a legal settlement of approximately $2.0 million.
 
Society Journal Activity
·  
31 new signings
·  
90 renewed/extended contracts
·  
2 contracts not renewed
 
Key New Contracts
·  
Journal of Midwifery and Women's Health on behalf of the American College of Nurse Midwives
·  
Australian Journal of Psychology, Australian Psychologist and Clinical Psychologist, the three flagship journals of Australian Psychological Society
·  
Legislative Studies Quarterly on behalf of the Comparative Legislative Research Center at the University of Iowa
·  
Allergy & Rhinology on behalf of the American Academy of Otolaryngic Allergy and the American Rhinologic Society
·  
Thoracic Cancer on behalf of the Tianjin Lung Cancer Institute
·  
The Bulletin of the Institute of Classical Studies ( BICS ), one of the world’s most prestigious classics journals
·  
Four academic journals of the Royal Pharmaceutical Society of Great Britain, which were previously self-published ( Journal of Pharmacy and Pharmacology , International Journal of Pharmacy Practice, Focus on Alternative and Complementary Therapies , and Journal of Pharmaceutical Health Services Research )
·  
Equine Veterinary Journal and Equine Veterinary Education, previously self- published by the British Equine Veterinary Association
·  
Contemporary Accounting Research and Accounting Perspectives, previously self-published   by   the Canadian Academic Accounting Association
·  
Steel Research International on behalf of the German Steel Makers Association

 
 
22

 
 
Books and Reference
Books and reference revenue for fiscal year 2010 declined 1% to $172.6 million. The decrease is principally due to the transfer of certain books to HE in the current fiscal year which generated revenue of approximately $3.6 million in fiscal year 2009.  On a currency neutral basis and excluding the effect of the transfer, books and reference revenue increased 2% over prior year mainly due to increased revenue from licensing rights.

Wiley Online Library
In late July 2010, the Company plans to launch Wiley Online Library , which will host one of the world’s broadest and deepest multidisciplinary collection of online resources covering life, health and physical sciences, medicine, humanities and social science. Built on the latest technology and designed with extensive input from scholars around the world, Wiley Online Library will deliver seamless integrated access to over 4 million articles from 1,500 journals, 8,000 books, and hundreds of reference works, laboratory protocols and databases from John Wiley & Sons and key imprints including Wiley-Blackwell, Wiley-VCH and Jossey-Bass. Featuring a clean and simple interface, this new online service will combine intuitive navigation, enhanced discoverability, expanded functionalities and a range of personalization options.  Users will be able to discover, read, download and cite current journal and book content, EarlyView articles, backfiles, related materials and supporting data. Wiley Online Library will completely replace Wiley InterScience , the Company’s current online publishing platform for its scientific, technical, medical and scholarly content, previously introduced in 1999. All existing Wiley InterScience content and licensees will be transferred to the new site to enable seamless access for users and subscribers.
 
Digital Update
·  
Online book revenue grew 44% in fiscal year 2010 to approximately $6 million. There is a growing trend for institutional library customers to purchase digital books. Online books are sold individually or through subscriptions, similar to journal licenses.
·  
Wiley’s Chinese language website launched in April. Designed to enhance customers’ experience with tailored sections for librarians, authors, societies and industry partners, wileychina.com will feature general information about Wiley’s presence in China, as well as specific details about core content of particular interest to the Chinese community. In addition, this site will include hyper-links and cross references to wiley.com , Wiley InterScience (and ultimately Wiley Online Library ) and the Press Room , where all local news and events will be highlighted.
·  
The Cochrane Library is now available to more than 650,000 students and faculty at 47 universities in Germany as part of a new agreement with Universitätsbibliothek Johann Christian Senckenberg in Frankfurt.  The agreement allows access for a period of ten years to the Cochrane Library , a collection of regularly updated evidence-based healthcare databases, including the highly regarded Cochrane Systematic Reviews. In addition, a national license agreement in India will provide about 60 million Internet users with access to The Cochrane Library.
·  
In April, Wiley announced that it will extend licensed electronic content to emergency workers, students, faculty and academic institutions affected by a local, national or global natural disaster. Under the Natural Disaster Access Clause, Wiley will allow a licensee to provide affected groups with electronic access to its licensed products via the licensee’s secure network. Such an arrangement was put in place after Hurricane Katrina.
·  
Essential Evidence,   a new product added to the online, evidence-based Essential Evidence Plus, was launched This resource tool will help clinicians make diagnoses, chart treatment plans and determine prognoses. The product currently features approximately 700 structured medical topics with approximately 100 more in development.

 
 
23

 

New Alliances
·  
A co-publication agreement with Higher Education Press (HEP) in Beijing was signed in the fourth quarter.  HEP is the second largest science and technology publisher in China.
·  
A books co-publishing agreement was signed with The Minerals, Metals & Materials Society. The society is closely affiliated with the American Ceramic Society (ACerS) and ASM International.
·  
An agreement was signed with the Royal Geographical Society for a book series. Wiley also publishes The Royal Geographical Society’s Geographical Journal , Area and Transactions of the Institute of British Geographers.
·  
An agreement was signed with The American Geographical Society to co-publish both the Geographical Review and FOCUS on Geography . Geographical Review is a leading scholarly periodical.
·  
Through a partnership with the Australian Psychological Society, Wiley will publish three flagship journals – Australian Journal of Psychology, Australian Psychologist and Clinical Psychologist.
·  
An agreement was signed with Chemical Industry Press (Beijing, China) to publish a co-branded Wiley-CIP series imprint. The collaboration will focus on a series of English-language advanced textbooks and reference books for a global readership of post-graduates, researchers and practitioners in engineering, materials science and chemistry, with the potential to expand into other areas.
·  
An agreement was signed with Scrivener Publishing, an engineering book publisher, to co-publish and distribute their books globally. The program will publish 15-20 books per year. The target market includes researchers in the technical and applied sciences.
 
Acquisitions/Divestments
·  
Acquired Microcirculation , the journal of The Microcirculatory Society. The haematology/vascular medicine publication is in its sixteenth year.
·  
Acquired the Israel Journal of Chemistry from Laser Pages Publishing Ltd.  Launched in 1951 as the Bulletin of the Research Council of Israel, Section A , it was re-launched in 1963 under its current name.
·  
Sold two journals to Maney Publishing: Cochlear Implants International and Deafness & Education International .
·  
Wiley acquired the publishing rights to Topley & Wilson’s Microbiology and Microbial Infections from Hodder Education. Now in its 10 th edition (having been first published in 1929), the 8-volume reference work is prominent in the fields of microbiology and infectious disease.  Wiley will offer it to customers for the first time online in fiscal year 2010.
 
Journal Impact Factors
In July 2009, Wiley announced that 338 of its journals received top 10 rankings in their respective categories in the Thomson ISI® 2008 Journal Citation Report (JCR), a leading evaluator of journal influence and impact.  Journals are ranked using a metric known as an “Impact Factor,” which reflects the frequency that peer-reviewed journals are cited by researchers.  Other highlights include:
 
·  
Wiley is at or near the top of its peers as measured by journal influence and impact.  A total of 949 out of 1,450 Wiley journals were ranked in the JCR, which is up from 926 in the previous report.  Wiley publications achieved thirty #1 rankings within the 227 categories.  The Company’s journals received the highest total Impact Factors of any publisher in 37 categories.
·  
Eight out of the thirty newly-listed Wiley journals are Asia-Pacific publications.  Sixty-three Asia-Pacific journals are currently represented in the JCR, evidence of Wiley’s expanding publishing program in this region.
·  
In chemistry and physical sciences, Angewandte Chemie, a journal of the German Chemical Society, increased its Impact Factor, strengthening its position as the leading chemistry journal that features primary research and review articles.   Medicinal Research Reviews is ranked #1 in its category.  Other #1 ranked journals in the physical sciences include Mass Spectrometry Reviews for the 10th consecutive year; Advanced Synthesis and Catalysis for its 6th year; and Communications on Pure and Applied Mathematics.
 
 
24

 
 
·  
In technology and engineering , International Journal of Circuit Theory and Applications is the top circuit theory journal. International Journal for Numerical Methods in Engineering is #1 in numerical engineering.
·  
In medical sciences, the journal CA–A Cancer Journal for Clinicians, published on behalf of The American Cancer Society, was awarded the highest Impact Factor among all medical journals.  In dentistry, Periodontology 2000 is ranked #1 for the second year and Journal of Clinical Periodontology has risen to be ranked #2 (from #5 in 2007).   Addiction's Impact Factor increased again and remains #1 in substance abuse in the social science index. Addiction Biology has taken the #1 spot in substance abuse in the science index.  In nursing, Birth continues to rank first.
·  
In life sciences, Aging Cell increased its Impact Factor and is ranked #1 in geriatrics and gerontology.  For the 5 th consecutive year, Ecology Letters increased its Impact Factor and remains the highest ranking primary research journal in ecology. Developmental Dynamics remains the #1 journal in anatomy and morphology.
·  
In social sciences and humanities , Wiley published #1 ranked journals in nine categories, including Addiction, Birth: Issues in Perinatal Care, Child Development, Criminology, Journal of Finance, Journal of Communication, Transactions of the Institute of British Geographers and Perspectives on Sexual & Reproductive Health .
 
Professional/Trade (P/T):
   
       
% change
Dollars in thousands
    2010
   2009
  % change
w/o FX
Revenue
$429,988
$403,113
7%
6%
Direct Contribution
$100,196
$89,678
12%
11%
Contribution Margin
23.3%
    22.2%
   

Global P/T revenue for fiscal year 2010 increased 7% to $430.0 million, or 6% excluding the favorable impact of foreign exchange. The revenue growth was driven by higher consumer, business and technology sales and new titles acquired through the Meredith and GMAC agreements. The new agreements contributed approximately $14.4 million to current period results.  North America exhibited the most growth, followed by EMEA.

Direct contribution to profit for fiscal year 2010 increased 12% to $100.2 million, or 11% excluding the favorable impact of foreign exchange. The improvement reflected higher sales volumes and advertising and marketing cost savings, partially offset by higher performance-based incentive compensation. Direct contribution margin improved 110 basis points to 23.3%, or 90 basis points excluding the favorable impact of foreign exchange.
 
Revenue by Category
·  
Business advanced 5%, led by social media and quick-to-market books.
·  
Consumer grew 16%, led by cooking (Meredith, Food Network TV, Weight Watchers) and the GMAC agreement.
·  
Technology was up 4%. Growth was attributed to Sybex certification and virtualization books, and the release of Windows 7.
·  
Psychology grew 15% for the year.
·  
Architecture was down 6% for the year.
·  
Education grew 6% for the year.
 
 
25

 
 
Online Initiatives/eBooks
·  
Fiscal year 2010 ebook revenue increased 93% to approximately $7 million.
·  
Approximately 11,000 eBooks are now available on Kindle.
·  
Frommer’s Unlimited launched Frommer’s destination guides on Canada.com; unveiled destination guides on the UK meta search engine Travelsupermarket; created custom leisure and business events for a high-profile British Airways ad campaign microsite; launched an innovative trip planning tool with Eurostar; and integrated multilingual events content and weather charts into an Air France desktop widget.
·  
eBook agreements were signed with Barnes and Noble (Nook), EBooks.com, Ingram Digital and Scrollmotion (Apple’s preferred eBook vendor).  Existing agreements include Amazon (Kindle), Sony (eReader) and Mobipocket.
·  
P/T launched a CliffsNotes literature note application for the iPhone and iPod Touch, branded CliffsNotes-to-Go , which was produced on a fast-track schedule to coincide with a major Apple promotion.  Five popular classics ( The Adventures of Huckleberry Finn , Macbeth , The Scarlet Letter , To Kill a Mockingbird , and Romeo and Juliet ) are available in the iTunes App Store.  The apps contain the full content of the books plus audio summaries, interactive character maps, and a user defined “CramPlan” that allows students to access the most important components of the text based on the amount of time they have to study.
·  
Through an alli ance with L ib reDigital, Wiley now has the capability to sell ebooks in bulk, en abling volume sal es in e-only or print plus electronic combinations based on a variety of access models.
 
Digital Advertising/Webs ites
·  
Cliffsnotes.com advertising r ev enue in f iscal year 2010 gr ew by 28% over prior ye ar.
·  
Du mmies.com report ed an all-time record monthly traffic count of 4 million users in March.

 
New Alliances
·  
Wiley was named the exclusive global publisher of BLOOMBERG® and BLOOMBERG BUSINESSWEEK® branded books to be marketed as “BLOOMBERG PRESS®, a Wiley imprint.”  Wiley intends to publish the content in print, e-book and digital formats.
·  
Wiley has been named an official licensee by The London Organizing Committee of the Olympic Games and Paralympics Games. We will publish 12 books in non-fiction categories including illustrated reference, photographic and architecture and design books, including the official commemorative book.
·  
Publishing agreement signed with   Facebook.com to produce “Official” branded Facebook instruction guides, The Definitive Facebook Guides.   The series will be launched in fiscal year 2011.
·  
Wiley-Pfeiffer (HR development and management) signed an agreement with Korean Management Association to deliver products in Korea.
·  
Agreement signed with the Construction Specifications Institute (CSI) to become the publisher of the CSI Professional Practice Guides.  These guides align with CSI’s certification program for Architecture, Engineering and Construction industry professionals.
·  
The Great Place to Work® Institute   and Wiley will collaborate on a training package and two books. The Institute has been developing the annual “FORTUNE 100 Best Companies to Work For” list for twenty years and is known around the world for its research-based models and accessible best practices.
·  
The Meredith ( Better Homes and Gardens , Food Network TV , etc.) backlist boosted cookbook sales. There were 25 new Meredith books in the lifestyles, pets and education categories published in fiscal year 2010.
·  
Chatelaine, Canada’s #1 women’s magazine, will publish a major cookbook and personal finance guide in partnership with Wiley.
 
 
26

 
 
Notable New Books
Business
·  
Patrick Lencioni, Getting Naked: A Business Fable about Shedding the Three Fears that Sabotage Client Loyalty
·  
Chris Brogan, Trust Agents
·  
Erik Qualman, Social Economics
·  
Jon Gordon, Training Camp
·  
Bill George, Seven lessons for Leading In A Crisis
·  
Brian Halligan , Inbound Marketing
Finance
·  
Harry Markopolis, No One Would Listen
·  
Peter Schiff, LoyaltyCrash Proof 2.0
·  
John Bogle , Common Sense of Mutual Funds, 10 th Anniversary Edition
·  
Ben Stein, Little Book of Bulletproof Investing
·  
Christine Richard, Confidence Game
·  
David Faber, And Then The Roof Crashed In
Psychology
·  
Irving Weiner, Handbook of Social Psychology, Fifth Edition
·  
The Corsini Encyclopedia of Psychology, Fourth Edition
·  
Bret A. Moore, The Veterans and Active Duty Military Psychotherapy Treatment Planner
·  
Sue , Counseling the Culturally Diverse, Theory and Practice, Fifth Edition
·  
Dattilo, Therascribe Family Treatment Planner, Second Edition
Consumer
·  
Doug Lemov, Teach Like A Champion
·  
Bob Sehlinger, The Unofficial Guide to Walt Disney World: The Color Companion
·  
John Brady, Hero of the Pacific
·  
Fred Kaplan, 1959, The Year Everything Changed
·  
Brian Leaf, Defining Twilight
·  
Ellie Kreiger, So Easy
·  
Sandra Lee, Weeknight Wonders
·  
Rose Levy Beranbaum, Rose’s Heavenly Cakes
Architecture
·  
Architectural Graphic Standards for Residential Construction
·  
Stein and Reynolds, Mechanical and Electrical Equipment for Buildings , Tenth Edition
·  
Edward Allen, Forms and Forces
·  
Frank Ching, Building Codes Illustrated, Third Edition
Technology
·  
Andy Rathbone, Windows 7 For Dummies
·  
Paul Thurott, Windows 7 Secrets For Dummies
·  
Dan Gookin, Laptops For Dummies
·  
Peter Weverka, Office 2010 All-In-One For Dummies
·  
Scott Lowe, Mastering VMware VSphere4
·  
Daniel Hedengren , Smashing WordPress: Beyond The Blog

Higher Education (HE):
   
     
 
% change
Dollars in thousands
2010
2009
% change
w/o FX
Revenue
$282,391
$239,093
18%
15%
Direct Contribution
$86,212
$66,619
29%
25%
Contribution Margin
30.5%
27.9%
   

Global HE revenue for fiscal year 2010 increased 18% to $282.4 million, or 15% excluding the favorable impact of foreign exchange.  Double-digit growth was experienced in all regions and in nearly every subject category.  The revenue growth includes approximately $3.4 million from books previously reported in STMS and $1.2 million from books previously reported in P/T.  Excluding the effect of these transfers and favorable foreign exchange, HE revenue increased 13%.
 
 
27

 
 
Direct contribution to profit for fiscal year 2010 increased 29% to $86.2 million, or 25% excluding the favorable impact of foreign exchange.  The improvement was driven by the top-line growth and improved margin due to increased sales of digital products, partially offset by higher costs to support business growth and higher performance-based compensation. Direct contribution margin improved 270 basis points to 30.5%, or 230 basis points excluding the favorable impact of foreign exchange.
 
Revenue by Region
·  
Americas grew 16% to $239.0 million.
·  
EMEA revenue increased 13% to $23.5 million.
·  
Asia-Pacific revenue advanced 27% to $60.7 million, or 13% on a currency neutral basis.
 
Revenue by Subject
·  
Business and Accounting exceeded prior year by 21%, driven mainly by a strong accounting frontlist.
·  
Engineering and Computer Science exceeded prior year by 8%. Top textbooks driving the growth include Munson: Fluid Mechanics 6e, Turban: Information Management 7e and Callister: Materials Science 8e .
·  
Mathematics and Statistics surpassed prior year by 27%. Driving the growth over prior year were Hughes Hallett: Calculus 5e , Anton: Calculus 9e , Boyce: Elementary Differential Equations 9e and Young: College Algebra 2e .
·  
Sciences surpassed prior year by 9%. Growth is attributed to Cutnell: Physics 8e , Jenkins: Anatomy and Physiology 2e and Tortora: Introduction to the Human Body 8e .
·  
Social Sciences exceeded prior year by 20%. The textbooks driving the growth include Huffman: Psychology 9e , deBlij: Concepts Geography 14e , Kring: Abnormal Psychology 11e and deBlij: Human Geography 9e .
·  
MOAC revenue exceeded prior year by 29%. The operating systems and server books continue to drive results.
 
WileyPLUS
·  
Global revenue for the full year grew 42% to 11% of global HE sales.
·  
Digital-only sales grew 55% to $10 million, accounting for 36% of WileyPLUS sales.  Digital-only is defined as WileyPLUS standalone (not packaged with a print textbook).
 
New Alliances
·  
Wiley is partnering with Reaction Explorer to bring new capabilities to the online organic chemistry market. Reaction Explorer uses expert system technology to predict the results of arbitrary organic chemistry reactions. By accessing Reaction Explorer through WileyPLUS , students will be able to achieve a higher level of understanding of the intricacies of organic chemistry reactions, syntheses and mechanisms.
·  
National Geographic Society (NGS):  Pilot program signed for custom initiative that will allow customers to choose from over 100 additional pieces of NGS magazine articles and some maps. Customers can combine them with Wiley’s Geosciences books to create a more customized and engaging learning solution for instructors and students.
·  
In May 2009, Wiley announced that it was expanding its alliance with Amazon to offer select Wiley textbooks for sale through the Kindle DX.  A pilot program began in the first quarter.

 
 
28

 

RFID Project
·  
Many of Wiley’s textbooks will now contain embedded Radio Frequency Identification (RFID) tags that will:
·  
Increase bookstore sell-through by reducing the supply of reimported, pirated, hurt and comp copies;
·  
Enhance business intelligence to enforce returns policy such as no-return agreements and returns attempted after our stated returns period;
·  
Improve customer experience by reducing shipping errors. The presence of RFID hardware and systems in Wiley’s distribution centers will enable us to validate the contents of shipments as they are fulfilled, thereby reducing shipping errors and the costs associated with correcting them.
 
Other Developments
·  
Institutional sales, particularly for-profit schools, continued to gain traction.
·  
In India, eight new contracts were signed and ten new books were published as part of the indigenous publishing and adaptation program.
 
Shared Services and Administrative Costs
 
Shared services and administrative costs for fiscal year 2010 increased 4% to $349.1 million including and excluding the effect of foreign exchange. The increase was driven by higher accrued performance-based incentive compensation and higher contractor, software licensing and maintenance costs and depreciation due to increased technology investments including Wiley Online Library. The cost increases were partially offset by lower distribution costs and reduced spending following the completion of Blackwell integration. Technology investments are focused on next generation publishing platforms in HE and STMS and the related content technology, hosting and support.
 
Fiscal Year 2009 Summary Results
 
Revenue for fiscal year 2009 decreased 4% to $1,611.4 million.  Excluding the unfavorable impact of foreign exchange revenue increased 3%.  Growth in STMS journals, including an acquisition accounting adjustment that reduced fiscal year 2008 STMS revenue by approximately $16.7 million, and growth in Higher Education were partially offset by a decline in P/T revenue due to weak market conditions.

Gross profit margin in fiscal year 2009 of 68.0% was 0.2% lower than the prior year as lower P/T sales volume and higher inventory obsolescence and royalty advance provisions were partially offset by favorable product mix and lower production costs in Higher Education.  Operating and administrative expenses for fiscal year 2009 of $839.6 million were 4% lower than the prior year, or increased 1% excluding the favorable impact of foreign exchange. Lower accrued incentive compensation expense and marketing and advertising cost containment programs were more than offset by annual merit increases; higher editorial and distribution costs to support new Higher Education and STMS titles; and higher occupancy, facilities and depreciation costs related to business expansion.

Operating income for fiscal year 2009 decreased 3% to $218.5 million, or improved 11% excluding the unfavorable impact of foreign exchange. The improvement excluding foreign exchange was mainly due to revenue growth, including the acquisition accounting adjustment in fiscal year 2008.  Interest expense decreased $18.3 million to $48.4 million. Lower interest rates contributed approximately $10.8 million towards the improvement, while lower average outstanding debt contributed approximately $7.5 million. Interest income and other increased $0.3 million to $6.2 million principally due to a $4.6 million ($0.08 per diluted share) non-recurring insurance receipt received in fiscal year 2009, partially offset by higher interest income in the prior year. Losses on foreign currency transactions for fiscal year 2009 and 2008 were $11.8 million and $2.9 million, respectively.  The increase in foreign currency transaction losses was mainly due to the strengthening of the U.S. dollar against the British pound sterling on intercompany payables and U.S. dollar third party debt outstanding in the U.K.
 
 
29

 
 
The effective tax rates for fiscal years 2009 and 2008 were 22.0% and 8.7%, respectively. During fiscal year 2008, the Company recorded an $18.7 million tax benefit associated with new tax legislation enacted in the United Kingdom (UK) and Germany that reduced the corporate income tax rates from approximately 30% to 28% and 39% to 29%, respectively.  The benefits recognized by the Company reflect the adjustments required to restate all applicable deferred tax balances at the new income tax rates.  The new tax rates were effective in Germany as of May 1, 2007 and in the UK as of April 1, 2008.  The effective tax rate for fiscal year 2009 was 22.0% compared to 20.2% for fiscal year 2008, excluding the deferred tax benefits described above. The increase was mainly due to lower foreign tax benefits.

Earnings per diluted share and net income for fiscal year 2009 were $2.15 and $128.3 million, respectively.  Reported earnings per diluted share and net income for fiscal year 2008 were $2.49 and $147.5 million, respectively. Adjusted to exclude the non-cash deferred tax benefits described above, earnings per diluted share and net income for fiscal year 2008 were $2.17 and $128.9 million, respectively.  See Non-GAAP Financial Measures described below. Excluding the deferred tax benefits and the effect of foreign exchange transaction and translation losses of approximately $0.50 per share, earnings per share increased 22% to $2.15 per share.

Non-GAAP Financial Measures:  The Company’s management internally evaluates its operating performance excluding unusual and/or nonrecurring events. The Company believes excluding such events provides a more effective and comparable measure of current and future performance. We also believe that excluding the effects of the following tax benefits provides a more balances view of the underlying dynamics of our business.
 
Deferred Tax Benefit on Changes in Statutory Tax Rates
 
The Company recorded an $18.7 million tax benefit  ($15.6 million for Blackwell) associated with new tax legislation enacted in the United Kingdom (U.K.) and Germany that reduced the corporate income tax rates from approximately 30% to 28% and 39% to 29%, respectively.  The benefits recognized by the Company reflect the adjustments required to restate all applicable deferred tax balances at the new income tax rates. These benefits have been adjusted below due to their infrequent non-recurring nature.
 
Since adjusted net income and adjusted earnings per share are not measures calculated in accordance with US GAAP, they should not be considered as a substitute for other US GAAP measures, including net income and earnings per share as indicators of operating performance. Accordingly, adjusted net income and adjusted earnings per diluted share are reconciled below to net income and earnings per share on a US GAAP basis, for fiscal years 2009 and 2008.

 
 
30

 

 
Reconciliation of Non-GAAP Financial Disclosure
 
 
   For the Years
     Ended April 30,
Net Income (in thousands)
          2009
2008
     
As Reported
$128,258
$147,536
     
Deferred Tax Benefit on Changes in Statutory Rates
-
(18,663)
     
Adjusted
$128,258
$128,873
 
 
   For the Years
    Ended April 30,
Earnings per Diluted Share
          2009
2008
     
As Reported
$2.15
$2.49
     
Deferred Tax Benefit on Changes in Statutory Rates
-
(0.31)
     
Adjusted
$2.15
$2.17

 
Fiscal Year 2009 Segment Results

Scientific, Technical, Medical and Scholarly (STMS):
   
       
% change
Dollars in thousands
 2009
 2008
% change
w/o FX
Revenue
$969,184
$975,797
(1%)
9%
Direct Contribution
$399,156
$384,170
4%
14%
Contribution Margin
   41.2%
    39.4%
   

Global STMS revenue for fiscal year 2009 of $969.2 million declined 1% from prior year mainly due to unfavorable foreign exchange. Excluding the unfavorable impact of foreign exchange revenue increased 9%.  Increased revenue from journal subscription renewals, new business, price increases, global rights and STMS books was partially offset by lower sales of backfiles, reprints and custom publishing.  Also contributing to the increase in journal subscriptions was a $16.7 million acquisition accounting adjustment related to Blackwell that reduced revenue in fiscal year 2008. This adjustment contributed 2% to revenue growth excluding foreign exchange.

Direct contribution to profit for fiscal year 2009 grew 4% from prior year to $399.2 million, or 14% excluding the unfavorable effect of foreign exchange. Direct contribution margin improved 180 basis points to 41.2%, or 41.1% excluding the unfavorable impact of foreign exchange, mainly due to the prior year acquisition accounting adjustment, a $2.0 million bad debt recovery and cost containment efforts, partially offset by higher performance compensation and other employment costs and editorial costs due to the addition of more society journals.  Margins on professional society journals are lower than margins earned on Company owned journals.
 
STMS Journals
Journal revenue grew 8% excluding unfavorable foreign exchange and the fiscal year 2008 acquisition accounting adjustment related to Blackwell. All regions exhibited journal sales growth, excluding unfavorable foreign exchange. The performance is mainly attributed to renewals, new business, price increases and the acquisition accounting adjustment in fiscal year 2008. Subscription and pay-per-view revenue was up year-over-year, while backfile revenue fell due to the economic climate, particularly in the US.
 
 
31

 
 
Society Journal Activity
·  
32 New signings
·  
87 Renewed/extended contracts
·  
9 Contracts not renewed
 
Key New Agreements
·  
A new journal launch for 2010 – the Journal of Research Synthesis Methods in association with the Society for Research Synthesis Methodology
·  
Family and Consumer Science Research on behalf of the American Association of Family and Consumer Sciences
·  
Design Management Review and Design Management Journal with the Design Management Institute
·  
The Institute of Development Studies at the University of Sussex, one of Europe’s leading research institutions. The journal, IDS Bulletin , was previously self-published.
·  
The Economic Society of Australia for Economic Papers .
·  
Asian Journal of Endoscopic Surgery.
 
Key Journal Renewals
·  
Economic Journal and Econometrics Journal (Royal Economic Society)
·  
Journal of Accounting Research (Institute of Professional Accounting at the University of Chicago Booth School of Business)
·  
Cancer Science (Japanese Cancer Association)
·  
ANZ Journal of Surgery (Royal Australasian College of Surgeons)
·  
International Journal of Urology (Japanese Urological Association)
·  
Journal of Neuroendocrinology (European Neuroendocrine Association, the British Society for Neuroendocrinology and the International Neuroendocrine Federation)
·  
Therapeutic Aphaeresis and Dialysis (International Society for Aphaeresis, The Japanese Society for Aphaeresis and The Japanese Society for Dialysis Therapy )
·  
Journal of Philosophy of Education (Philosophy of Education Society of Great Britain)

Journal Licenses
Journal licenses, which represent approximately 60% of fiscal year 2009 journal subscription revenue, provide academic, government and corporate customers with online access to multiple journals. During fiscal year 2009, agreements were signed or renewed with universities, library consortia and government agencies in the US, Norway, Japan, China, Brazil, Canada, Greece, Chile, Denmark and India.

STMS Books and References
Book sales and other related income, which account for approximately 17% of fiscal year 2009 STMS revenue, were up 5% excluding unfavorable foreign exchange. The total number of books published increased slightly.  Online book sales rose approximately 20% to $10 million. During the fiscal year, Wiley acquired the Arnold statistics book program from Hodder Education. The acquisition, which includes over 50 titles, complements areas of strength in Wiley’s statistics program, while providing growth opportunities.

Wiley InterScience
Wiley achieved an important milestone in the early part of fiscal year 2009 by migrating online journal content, customers and access licenses from Blackwell’s Synergy platform to Wiley InterScience . The migration included approximately 29,000 customers, over two million licenses and nearly two million journal articles.

 
 
32

 
 
Professional/Trade (P/T):
 
       
% change
Dollars in thousands
2009
2008
% change
w/o FX
Revenue
$403,113
$457,286
(12%)
(9%)
Direct Contribution
$89,678
$130,502
(31%)
(27%)
Contribution Margin
22.2%
28.5%
   

Global P/T revenue for fiscal year 2009 decreased 12% to $403.1 million, or 9% excluding the unfavorable impact of foreign exchange. The decline in revenue was due to a weak retail environment particularly in the U.S., partially offset by modest growth in the European and Canadian markets.  Also affecting the comparison to last year was the termination of a publishing agreement in the culinary/hospitality publishing program.

Direct contribution to profit decreased 31% to $89.7 million, or 27% excluding the unfavorable impact of foreign exchange. Direct contribution margin declined 630 basis points to 22.2%, or 560 basis points excluding the unfavorable impact of foreign exchange. The decline reflects lower sales volume, higher inventory obsolescence and royalty advance provisions and a $2.0 million bad debt recovery in the prior year, partially offset by cost containment efforts in advertising, sales and marketing and lower accrued incentive compensation.

Notable Alliances
·  
GMAC/Official Guide to the GMAT:   Wiley became the official publisher of the Graduate Management Admission Test® (GMAT®) study guides in October 2008.  In March, the 12 th edition of the top-selling Official Guide for GMAT Review was released worldwide.  It will be followed by The Official Guide for GMAT Verbal Review and The Official Guide for GMAT Quantitative .
·  
Meredith:   In March 2009, as part of its multi-year agreement, Wiley began publishing Better Homes and Garden book titles and other brands such as Family Circle , as well as Food Network TV , Sandra Lee, Rocco DiSpirito and Tyler Florence.
·  
Kindle (Amazon):   Currently, Wiley has over 9,000 P/T books available on the Kindle 2.
·  
General Mills: Wiley and General Mills signed an agreement to renew their publishing partnership.  Under the agreement, Wiley will continue to publish the flagship Betty Crocker “Big Red” cookbook and other cookbooks under the Betty Crocker , Pillsbury and other General Mills brands.
·  
Vancouver Olympic Organizing Committee:   Wiley Canada entered into an agreement with VANOC, becoming the official publication partner of the 2010 Winter Olympic and Paralympics Games in Vancouver/Whistler. In close cooperation with VANOC, Wiley will produce commemorative books, games reports, and custom publications.

Online Initiatives
·  
For the fiscal year, Frommers.com maintained its top position in website traffic by posting 137 million page views and nearly 29 million visits. The results were lower than last year due to the economy.
·  
Launched in November 2008, the new Dummies.com generated a total of 29 million page views by fiscal year-end, a 23% increase over prior year. Eleven million unique visitors represented a 21% increase.  Users are spending 17% more time on content pages. The site now includes 25 topic areas with 250+ pieces of content in each, 950 fully illustrated step-by-step articles, 6,610 articles, and 265 videos.
·  
CliffsNotes.com recorded year-on-year increases of 5% in page views and 21% in unique visitors.
 
 
33

 
 
Notable New Titles
Business:
·  
Lee Bolman: Reframing Organizations , Fourth Edition
·  
Jim Kouzes and Barry Posner: Leadership Challenge , Fourth Edition
·  
GAAP 2009
·  
CPA Exam Set, Thirty-fifth edition, Volumes 1 and 2
·  
Mary Kay Ash: Mary Kay Way
·  
Patrick Lencioni: Three Big Questions for  A Frantic Family
Finance:
·  
JK Lasser, Year In Taxes 2009
·  
Fischer: Ten Road to Riches
·  
John Bogle: Enough
·  
Peter Schiff: Little Book of Bull Moves in Bear Markets
·  
Martin Weiss: Depression Survival Guide
·  
Addison Wiggin: I.O.U.S.A.: One Nation. Under Stress. In Debt
Psychology:
·  
Lenore Skenazy: Free Range Kids: Giving Our Children the Freedom We had without Going Nuts with W orry
·  
Michael Gurian: The Purpose of Boys: Helping Our Sons Find Meaning, Significance and Direction in Their Lives
·  
Gary Groth-Marnat: Handbook of Psychological Assessment , Fifth Edition
·  
Richard Lerner: Handbook of Adolescent Psychology , Third Edition
Consumer:
·  
Weight Watchers in 20 Minutes
·  
Mark Bittman: How to Cook Everything, Second Edition
·  
Bob Sehlinger: Unofficial Guide to Walt Disney World 2009
·  
GMAC: The Official Guide to the GMAT , Twelfth Edition
·  
Jack Cafferty: Now Or Never: Getting Down To Business of Saving Our American Dream
·  
Alan Rubin: Diabetes for Dummies
·  
Paul McFedries: iPhone 3G Portable Genius
Architecture:
·  
Edward Allen: Fundamentals of Building Construction , Fifth Edition
·  
Wiley CPE (Continuing Professional Education, a web-based online continuing education system).

Higher Education (HE):
   
     
 
% change
Dollars in thousands
2009
2008
% change
w/o FX
Revenue
$239,093
$240,651
(1%)
3%
Direct Contribution
$66,619
$74,387
(10%)
(5%)
Contribution Margin
27.9%
30.9%
   

Global HE revenue for fiscal year 2009 decreased 1% from the prior year period, but increased 3% excluding the unfavorable impact of foreign exchange. Excluding foreign exchange, revenue growth occurred in every region and in nearly every subject category.  Contributing to these results were a strong frontlist; approximately $6.6 million of revenue from recently acquired titles; solid growth from the Microsoft publishing agreement; and the continued success of WileyPLUS .

Direct contribution to profit decreased 10% to $66.6 million, or 5% excluding the unfavorable impact of foreign exchange. Direct contribution margin declined 300 basis points to 27.9%, or 240 basis points excluding the unfavorable impact of foreign exchange. The decline reflects prior year cost containment efforts which significantly curtailed expenditures in fiscal year 2008, higher accrued incentive compensation expense and increased marketing, advertising and content development costs to support the large frontlist.
 
 
34

 
 
WileyPLUS
·  
Now accounts for 9% of global HE revenue
·  
Global full year billings increased 38%
·  
Digital-only sales grew 70%
·  
Validation/usage rates increased
·  
WileyPLUS sales outside the US represent 15% of the total
 
Notable Alliances
·  
Microsoft Official Academic Course (MOAC) revenue was up 16% over prior year.
·  
Wiley is partnering with American Hospitality Training Institute, an online provider of hospitality training for students outside the US interested in working for US hotels and resorts. Twenty-one classes utilizing content from Barrows/ Introduction to Management in the Hospitality Industry 9e will begin in June, 2009.
·  
Wiley and Learning House agreed to create highly integrative online courses based on Wiley textbooks.  The courses will be bundled with the book.  We received approval for a licensing agreement for two pilot courses in world regional geography and Spanish 1. Learning House is an online education solutions partner helping small colleges and universities offer and manage their online degree programs.
·  
Wiley expanded its alliance with Amazon to offer select Wiley textbooks for sale through the Kindle DX.   Books are set to go live on the Kindle Store in the summer of 2009.
 
Acquisitions
·  
In August 2008, Wiley acquired business and modern language textbooks from Cengage Learning and mathematics and statistics textbooks from Key College Publishing.
·  
These acquisitions contributed approximately $6.6 million of revenue in fiscal year 2009, exceeding expectations.
 
Custom Publishing
·  
Wiley Custom Select was successfully launched in the fourth quarter.   Wiley Custom Select is a custom textbook system that allows instructors to "build" customized higher education course materials that fit their pedagogical needs, enabling users to easily find the content, personalize the material and format, and submit the order.  In fiscal year 2009, custom sales increased approximately 25%.

Shared Service and Administrative Costs
 
Shared services and administrative costs for fiscal year 2009 decreased 7% to $337.0 million, or 2% excluding the favorable impact of foreign exchange. The improvement reflects lower accrued incentive compensation expense and lower integration costs, partially offset by planned salary merit increases, higher distribution costs due to increased journal shipping and handling and higher occupancy, facilities and depreciation costs related to business expansion.
 
Liquidity and Capital Resources
 
The Company’s cash and cash equivalents balance was $153.5 million at the end of fiscal year 2010, compared with $102.8 million a year earlier. Cash provided by operating activities in fiscal year 2010 increased $77.5 million to $418.8 million due primarily to higher earnings and non-cash charges and provisions, and lower working capital, partially offset by higher pension contributions.  Pension contributions in fiscal year 2010 were $48.1 million, of which $31.0 million were discretionary, compared to $21.0 million in the prior year.
 
 
35

 
 
The improvement in working capital was principally due to higher accrued incentive compensation, lower inventories due to improved sales and inventory management, and higher unearned deferred revenue, partially offset by higher accounts receivable due to increased book sales, and lower accounts payable due to timing of payments. The improvement in Deferred Revenue reflects journal subscription and WileyPLUS growth  and the timing of cash collections on journal subscriptions resulting from the resolution of prior year billing delays of approximately $37 million, which shifted cash collection from fiscal year 2009 to fiscal year 2010.
 
Cash used for investing activities for fiscal year 2010 was approximately $209.9 million compared to $201.6 million in fiscal year 2009. The Company invested $6.4 million in the acquisition of publishing businesses, assets and rights compared to $24.0 million in the prior year.  Cash used for property, equipment and technology and product development increased $25.8 million in fiscal year 2010 versus the prior year with product development spending increasing approximately $23.7 million primarily due to the timing of author advance payments.
 
Cash used in financing activities was $156.4 million in fiscal year 2010, as compared to $89.1 million in fiscal year 2009. In fiscal 2010, cash was used primarily to pay dividends to shareholders, and repay debt. The Company did not repurchase any shares in fiscal 2010 while during fiscal year 2009, the Company repurchased one million shares at an average price of $34.89. The Company increased its quarterly dividend to shareholders by 7.7% to $0.14 per share in fiscal year 2010 from $0.13 per share in the prior year. Proceeds from stock option exercises increased $21.0 million to $32.6 million in fiscal 2010.
 
The aggregate notional amount of interest rate swap agreements associated with the Term Loan and Revolving Credit Facility were $300 million as of April 30, 2010.  It is management's intention that the notional amount of the interest rate swap be less than the Term Loan and Revolving Credit Facility outstanding during the life of the derivative.

The Company’s operating cash flow is affected by the seasonality and timing of receipts from its STMS journal subscriptions and its Higher Education business. Cash receipts for calendar year STMS subscription journals occur primarily from November through February.  Reference is made to the Credit Risk section, which follows, for a description of the impact on the Company as it relates to independent journal agents’ financial position and liquidity. Sales primarily in the U.S. higher education market tend to be concentrated in June through August, and again in November through January. Due to this seasonality, the Company normally requires increased funds for working capital from May through September.

Global capital and credit markets have recently experienced increased volatility. As of April 30, 2010, we had approximately $649.0 million of debt outstanding and approximately $572.0 million of unused borrowing capacity under the Revolving Credit Facility which is described in Note 12. We believe that our operating cash flow, together with our revolving credit facilities and other available debt financing, will be adequate to meet our operating, investing and financing needs in the foreseeable future, although there can be no assurance that continued or increased volatility in the global capital and credit markets will not impair our ability to access these markets on terms commercially acceptable to us or at all.

The Company has adequate cash and cash equivalents available, as well as short-term lines of credit to finance its short-term seasonal working capital requirements. The Company does not have any off-balance-sheet debt.

Working capital at April 30, 2010 was negative $188.7 million. Working capital is negative as a result of including, in current liabilities, unearned deferred revenue related to subscriptions for which cash has been collected in advance. This deferred revenue will be recognized into income as the products are shipped or made available online to the customers over the term of the subscription. Current liabilities as of April 30, 2010 include $275.7 million of such deferred subscription revenue for which cash was collected in advance.
 
 
36

 
 
Projected product development and property, equipment and technology capital spending for fiscal year 2011 is forecast to be approximately $145 million and $60 million, respectively, primarily to enhance system functionality and drive future business growth.

Contractual Obligations and Commercial Commitments
 
A summary of contractual obligations and commercial commitments, excluding interest charges on debt, and unrecognized tax benefits further described in Note 10, as of April 30, 2010 is as follows:

   
Payments Due by Period
 
   
Within
2-3
4-5
   After 5
 
Total
Year 1
Years
Years
Years
Total Debt
$649.0
$90.0
$559.0
$-
$-
           
Non-Cancelable Leases
238.6
34.0
59.1
54.8
90.7
           
Minimum Royalty Obligations
204.4
42.2
70.1
52.7
39.4
           
Other Commitments
6.8
4.6
2.1
0.1
-
           
Total
$1,098.8
$170.8
$690.3
$107.6
$130.1

Market Risk
 
The Company is exposed to market risk primarily related to interest rates, foreign exchange, and credit risk. It is the Company’s policy to monitor these exposures and to use derivative financial investments and/or insurance contracts from time to time to reduce fluctuations in earnings and cash flows when it is deemed appropriate to do so. The Company does not use derivative financial instruments for trading or speculative purposes.
 
Interest Rates:
 
The Company had $649.0 million of variable rate loans outstanding at April 30, 2010, which approximated fair value. On February 16, 2007, the Company entered into an interest rate swap agreement, designated as a cash flow hedge as defined under the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 815, “Derivatives and Hedging” (“ASC 815”).  The hedge locked-in a portion of the variable interest due on a portion of the Term Loan. Under the terms of the interest rate swap, the Company pays a fixed rate of 5.076% and receives a variable rate of interest based on three month LIBOR (as defined) from the counter party which is reset every three months for a four-year period ending February 8, 2011. The notional amount of the rate swap was initially $660 million which will decline through February 8, 2011, based on the expected amortization of the Term Loan.  As of April 30, 2010, the notional amount of the rate swap was $200.0 million.
 
On October 19, 2007, the Company entered into an additional interest rate swap agreement designed by the Company as a cash flow hedge that locked-in a portion of the variable interest due on the Revolving Credit Facility. Under the terms of this interest rate swap, the Company pays a fixed rate of 4.60% and receives a variable rate of interest based on three month LIBOR (as defined) from the counterparty which is reset every three months for a three-year period ending August 8, 2010. The notional amount of the rate swap is $100.0 million.
 
 
37

 
 
It is management’s intention that the notional amount of interest rate swaps be less than the Term Loan and the Revolving Credit Facility outstanding during the life of the derivatives. During fiscal year 2010, the Company recognized a loss on its hedge contracts of approximately $20.4 million which is reflected in interest expense.  At April 30, 2010, the aggregate fair value of the interest rate swaps was a net loss of $11.5 million which is included in Other Accrued Liabilities in the Consolidated Statements of Financial Position.  On an annual basis, a hypothetical one percent change in interest rates for the $349.0 million of unhedged variable rate debt as of April 30, 2010 would affect net income and cash flow by approximately $2.2 million.
 
Foreign Exchange Rates:

Fluctuations in the currencies of countries where the Company operates outside the U.S. may have a significant impact on financial results. The Company is primarily exposed to movements in British pound sterling, euros, Canadian and Australian dollars, and certain Asian currencies. The Statements of Financial Position of non-U.S. business units are translated into U.S. dollars using period-end exchange rates for assets and liabilities and weighted-average exchange rates for revenues and expenses.  Fiscal year 2010 revenue was recognized in the following currencies: approximately 55% U.S dollar; 28% British pound sterling; 8% Euro and 9% other currencies.

Adjustments resulting from translating assets and liabilities are reported as a separate component of Accumulated Other Comprehensive Income (Loss) within Shareholders’ Equity under the caption Foreign Currency Translation Adjustment.  The Company also has significant investments in non-U.S. businesses that are exposed to foreign currency risk.  During fiscal year 2010, the Company recorded approximately $60.3 million of currency translation gains in other comprehensive income primarily as a result of the weakening of the U.S. dollar relative to the British pound sterling.  
 
Effective November 1, 2008, the Company changed its functional currency reporting basis for the non-Blackwell portion of the Company’s European STMS journal business from U.S. Dollar to local currency. As part of the integration of Blackwell and Wiley fulfillment systems and licensing practices, in the third quarter of fiscal year 2009 the Company began pricing journal revenue based on local currency in Europe.  Prior to the integration, journal revenue was principally priced and reported in U.S. Dollars. This change primarily impacted business denominated in Euros and Sterling.

Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains or losses in the Consolidated Statements of Income as incurred. Under certain circumstances, the Company may enter into derivative financial instruments in the form of foreign currency forward contracts to hedge against specific transactions, including intercompany purchases and loans. The Company does not use derivative financial instruments for trading or speculative purposes.

During fiscal year 2010, the Company entered into forward exchange contracts to manage the Company’s exposure on certain foreign currency denominated assets and liabilities.  Foreign currency denominated assets and liabilities are remeasured at spot rates in effect on the balance sheet date, with the effects of changes in spot rates reported in Foreign Exchange Gains (Losses) on the Consolidated Statements of Income.  The Company did not designate these forward exchange contracts as hedges under current accounting standards as the benefits of doing so were not material due to the short-term nature of the contracts.  Therefore, the forward exchange contracts are marked to market through Foreign Exchange Gains (Losses) on the Consolidated Statements of Income, and carried at their fair value on the Consolidated Statements of Financial Position.  Accordingly, fair value changes in the forward exchange contracts substantially mitigated the changes in the value of the remeasured foreign currency denominated assets and liabilities attributable to changes in foreign currency exchange rates. The fair value of open forward exchange contracts were measured on a recurring basis using Level 2 inputs.  In fiscal year 2010, the losses recognized on the forward contracts were $2.0 million, and were substantially offset by the foreign exchange gains recognized on the economically hedged foreign currency denominated assets and liabilities.  As of April 30, 2010, there were no open contracts outstanding. The Company did not enter into any forward exchange contracts during fiscal year 2009.
 
 
38

 
 
Customer Credit Risk:
 
In the journal publishing business, subscriptions are primarily sourced through journal subscription agents who, acting as agents for library customers, facilitate ordering by consolidating the subscription orders/billings of each subscriber with various publishers. Cash is generally collected in advance from subscribers by the subscription agents and is remitted to the journal publisher, including the Company, generally prior to the commencement of the subscriptions. Although at fiscal year-end the Company had minimal credit risk exposure to these agents, future calendar-year subscription receipts from these agents are highly dependent on their financial condition and liquidity. Subscription agents account for approximately 24% of total consolidated revenue and no one agent accounts for more than 10% of total consolidated revenue.
 
The Company’s book business is not dependent upon a single customer; however, the industry is concentrated in national, regional, and online bookstore chains. Although no one book customer accounts for more than 8% of total consolidated revenue, the top 10 book customers account for approximately 20% of total consolidated revenue and approximately 45% of accounts receivable at April 30, 2010.

Critical Accounting Policies and Estimates
 
The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Management continually evaluates the basis for its estimates. Actual results could differ from those estimates, which could affect the reported results.
 
Financial Reporting Release No. 60, released by the Securities and Exchange Commission, requires all companies to discuss critical accounting policies or methods used in the preparation of financial statements.  Note 2 of the “Notes to Consolidated Financial Statements” includes a summary of the significant accounting policies and methods used in preparation of our Consolidated Financial Statements. Set forth below is a discussion of the Company’s more critical accounting policies and methods.
 
Revenue Recognition: The Company recognizes revenue when the following criteria are met: persuasive evidence that an arrangement exists; delivery has occurred or services have been rendered; the price to the customer is fixed or determinable; and collectability is reasonably assured.  If all of the above criteria have been met, revenue is principally recognized upon shipment of products or when services have been rendered.  Subscription revenue is generally collected in advance.  The prepayment is deferred and recognized as earned when the related issue is shipped or made available online over the term of the subscription.  When a product is sold with multiple deliverables, the Company accounts for each deliverable within the arrangement as a separate unit of accounting due to the fact that each deliverable is also sold on a stand-alone basis.  The total consideration of a multiple-element arrangement is allocated to each unit of accounting using the relative fair value method based on the estimated selling prices of each deliverable within the arrangement. Collectability is evaluated based on the amount involved, the credit history of the customer, and the status of the customer’s account with the Company.  Revenue is reported net of any amounts billed to customers for taxes which are remitted to government authorities.
 
 
39

 
 
Allowance for Doubtful Accounts: The estimated allowance for doubtful accounts is based on a review of the aging of the accounts receivable balances, historical write-off experience, credit evaluations of customers and current market conditions. A change in the evaluation of a customer’s credit could affect the estimated allowance. The allowance for doubtful accounts is shown as a reduction of accounts receivable in the Consolidated Statements of Financial Position and amounted to $6.9 million and $5.7 million as of April 30, 2010 and 2009, respectively.
 
Sales Return Reserve:   The estimated allowance for sales returns is based on a review of the historical return patterns, as well as current market trends in the businesses in which we operate. Sales return reserves, net of estimated inventory and royalty costs, are reported as a reduction of accounts receivable in the Consolidated Statements of Financial Position and amounted to $55.3 million and $55.2 million as of April 30, 2010 and 2009, respectively.  A one percent change in the estimated sales return rate could affect net income by approximately $4.0 million.  A change in the pattern or trends in returns could affect the estimated allowance.
 
Reserve for Inventory Obsolescence: Inventories are carried at the lower of cost or market. A reserve for inventory obsolescence is estimated based on a review of damaged, obsolete, or otherwise unsalable inventory. The review encompasses historical unit sales trends by title; current market conditions, including estimates of customer demand compared to the number of units currently on hand; and publication revision cycles. A change in sales trends could affect the estimated reserve. The inventory obsolescence reserve is reported as a reduction of the inventory balance in the Consolidated Statements of Financial Position and amounted to $39.7 million and $36.3 million as of April 30, 2010 and 2009, respectively.
 
Allocation of Acquisition Purchase Price to Assets Acquired and Liabilities Assumed: In connection with acquisitions, the Company allocates the cost of the acquisition to the assets acquired and the liabilities assumed based on estimates of the fair value of such items including goodwill and other intangible assets. Such estimates include expected cash flows to be generated by those assets and the expected useful lives based on historical experience, current market trends, and synergies to be achieved from the acquisition and expected tax basis of assets acquired. For significant acquisitions, the Company uses independent appraisers to assist in the determination of such estimates.
 
Goodwill and Intangible Assets:   Goodwill is the excess of the purchase price paid over the fair value of the net assets of the business acquired. Other intangible assets principally consist of branded trademarks, acquired publication rights, customer relationships and non-compete agreements. Goodwill and indefinite-lived intangible assets are not amortized but are reviewed annually for impairment or more frequently if events or circumstances indicate that the asset might be impaired. The fair values of the Company’s reporting units are substantially in excess of their carrying values. Other finite-lived intangible assets continue to be amortized over their useful lives. Acquired publication rights with definitive lives are amortized on a straight-line basis over periods ranging from 5 to 40 years. Non-compete agreements are amortized over the terms of the individual agreement.
 
Impairment of Long-Lived Assets: Depreciable and amortizable assets are only evaluated for impairment upon a significant change in the operating or macroeconomic environment.  In these circumstances, if an evaluation of the current forecasts of undiscounted cash flows indicates impairment, the asset is written down to its estimated fair value based on the discounted future cash flows.
 
Share-Based Compensation: The Company recognizes share-based compensation expense based on the fair value of the share-based awards on the grant date, reduced by an estimate of future forfeited awards.  As such, share-based compensation expense is only recognized for those awards that are expected to ultimately vest. The fair value of share-based awards is recognized in net income on a straight-line basis over the requisite service period.  The grant date fair value for stock options is estimated using the Black-Scholes option-pricing model. The determination of the assumptions used in the Black-Scholes model requires the Company to make significant judgments and estimates, which include the expected life of an option, the expected volatility of the Company’s Common Stock over the estimated life of the option, a risk-free interest rate and the expected dividend yield. Judgment is also required in estimating the amount of share-based awards that may be forfeited. Share-based compensation expense associated with performance-based stock awards is determined based upon actual results compared to targets established three years in advance. The cumulative effect on current and prior periods of a change in the estimated number of performance share awards, or estimated forfeiture rate is recognized as an adjustment to earnings in the period of the revision.  If actual results differ significantly from estimates, the Company’s share-based compensation expense and results of operations could be impacted.
 
 
40

 
 
Retirement Plans: The Company provides defined benefit pension plans for the majority of its employees worldwide.  The accounting for benefit plans is highly dependent on assumptions concerning the outcome of future events and circumstances, including compensation increases, long-term return rates on pension plan assets, healthcare cost trends, discount rates and other factors. In determining such assumptions, the Company consults with outside actuaries and other advisors. The discount rates for the U.S. and Canadian pension plans are based on the derivation of a single-equivalent discount rate using a standard spot rate curve and the timing of expected payments as of the balance sheet date. The spot rate curve is based upon a portfolio of Moody’s-rated Aa3 (or higher) corporate bonds.  The discount rates for other non-U.S. plans are based on similar published indices with durations comparable to that of each plan’s liabilities. The expected long-term rates of return on pension plan assets are estimated using market benchmarks for equities, real estate and bonds applied to each plan’s target asset allocation and are estimated by asset class including an anticipated inflation rate. The expected long-term rates are then compared to the historic investment performance of the plan assets as well as future expectations and estimated through consultation with investment advisors and actuaries. Salary growth and healthcare cost trend assumptions are based on the Company’s historical experience and future outlook. While the Company believes that the assumptions used in these calculations are reasonable, differences in actual experience or changes in assumptions could materially affect the expense and liabilities related to the defined benefit pension plans of the Company.
 
Recently Issued Accounting Standards: In September 2006, the Financial Accounting Standards Board (“FASB”) issued guidance which is included Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 provides a single authoritative definition of fair value and provides enhanced guidance for measuring the fair value of assets and liabilities and requires additional disclosures related to the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings.  In February 2008, the FASB agreed to a one-year delay of the fair value measurement requirement for certain nonfinancial assets and liabilities. The Company adopted ASC 820 as of May 1, 2008 for assets and liabilities not subject to the deferral and as of May 1, 2009 for those nonfinancial assets and liabilities subject to the deferral.  The adoption did not have a significant impact on the Company’s consolidated financial statements or disclosures.
 
In December 2007, the FASB issued guidance which is included in ASC 805 “Business Combinations” (“ASC 805”) and is effective for acquisitions made on or after May 1, 2009.  ASC 805 expands the scope of acquisition accounting to all transactions under which control of a business is obtained.  Principally, ASC 805 requires that contingent consideration be recorded at fair value on the acquisition date and that certain transaction and restructuring costs be expensed. The Company adopted ASC 805 as of May 1, 2009 and is now accounting for all acquisitions made after the effective date under the standard.
 
In April 2008, the FASB issued guidance which is included in ASC 350 “Intangibles – Goodwill and Other” (“ASC 350”). The guidance in ASC 350 amends the factors that must be considered in developing renewal or extension assumptions used to determine the useful life over which to amortize the cost of a recognized intangible asset under ASC 350. The guidance requires an entity to consider its own experience with the renewal or extension of the terms of a contractual arrangement, consistent with its expected use of the asset.  The guidance also requires several incremental disclosures for renewable intangible assets.  Application of this standard will not significantly impact the process previously used by the Company to determine the useful life of intangible assets.  The Company adopted the guidance as of May 1, 2009 and is applying the guidance to intangible assets acquired after the effective date.
 
 
41

 
 
In August 2009, the FASB issued Accounting Standards Update (“ASU”) ASU 2009-05, “Fair Value Measurements and Disclosures   (Topic 820): Measuring Liabilities at Fair Value ("ASU 2009-05").  ASU 2009-05 provides clarification to entities that measure liabilities at fair value under circumstances where a quoted price in an active market is not available.  The Company adopted ASU 2009-05 as of November 1, 2009.  The adoption did not have a significant impact on the Company’s consolidated financial statements.
 
In October 2009, the FASB issued ASU 2009-13 “Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements” (“ASU 2009-13”). ASU 2009-13 addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products and services separately rather than as a combined unit.  Specifically, this guidance amends the existing criteria for separating consideration received in multiple-deliverable arrangements, eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method.  The guidance also establishes a hierarchy for determining the selling price of a deliverable, which is based on vendor-specific objective evidence; third-party evidence; or management estimates. Expanded disclosures related to the Company’s multiple-deliverable revenue arrangements will also be required.  The new guidance is effective for revenue arrangements entered into or materially modified on and after May 1, 2011.  The Company does not expect the application of this new standard to have a significant impact on its consolidated financial statements.
 
There have been no other new accounting standards issued that have had, or are expected to have a material impact on the Company’s consolidated financial statements.

“Safe Harbor” Statement Under the
Private Securities Litigation Reform Act of 1995
 
This report contains certain forward-looking statements concerning the Company’s operations, performance, and financial condition. Reliance should not be placed on forward-looking statements, as actual results may differ materially from those in any forward-looking statements.  Any such forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond the control of the Company, and are subject to change based on many important factors. Such factors include, but are not limited to (i) the level of investment in new technologies and products; (ii) subscriber renewal rates for the Company’s journals; (iii) the financial stability and liquidity of journal subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and financial stability of key online retailers; (vi) the seasonal nature of the Company’s educational business and the impact of the used-book market; (vii) worldwide economic and political conditions; and (viii) the Company’s ability to protect its copyrights and other intellectual property worldwide (ix) other factors detailed from time to time in the Company’s filings with the Securities and Exchange Commission.  The Company undertakes no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances.

 
 
42

 
 
Results By Quarter (Unaudited)

Dollars in millions, except per share data
 
   
2010
     
2009
   
                 
Revenue
               
First Quarter
$
388.4
   
$
401.7
   
Second Quarter
 
448.0
     
431.9
   
Third Quarter
 
427.1
     
374.4
   
Fourth Quarter
 
435.6
     
403.4
   
Fiscal Year
$
1,699.1
   
$
1,611.4
   
                 
Operating Income
               
First Quarter
$
 55.7
   
$
 44.3
   
Second Quarter (a)
 
75.3
     
 70.2
   
Third Quarter (a)
 
68.3
     
 63.3
   
Fourth Quarter (b)
 
43.3
     
 40.7
   
Fiscal Year
$
242.6
   
$
     218.5
   
                 
Net Income
               
First Quarter
$
  26.9
   
$
  30.2
   
Second Quarter (a)
 
46.3
     
  40.1
   
Third Quarter (a)
 
42.4
     
  33.4
   
Fourth Quarter (b)
 
27.9
     
  24.6
   
Fiscal Year
$
143.5
   
$
128.3
   
                 
   
2010
 
2009
Income Per Share
 
Diluted
 
Basic
 
Diluted
 
Basic
First Quarter
$
0.45
$
0.46
$
    0.50
$
    0.52
Second Quarter (a)
 
    0.78
 
0.79
 
    0.67
 
    0.68
Third Quarter (a)
 
0.71
 
    0.72
 
    0.57
 
    0.58
Fourth Quarter (b)
 
    0.46
 
0.47
 
    0.42
 
    0.42
Fiscal Year
$
   2.41
$
2.45
$
    2.15
$
    2.20


(a)  
In the second and third quarters of fiscal year 2010, the Company recognized intangible asset impairment and restructuring charges principally related to GIT Verlag, a Business-to-Business German-language controlled circulation magazine business acquired in 2002. The second quarter charge was $11.5 million ($8.2 million after taxes) or $0.14 per diluted share. The third quarter charge was $2.8 million ($2.0 million after taxes) or $0.03 per diluted share.

(b)  
In the fourth quarter of fiscal year 2010, the Company recognized restructuring charges principally related to offshoring and outsourcing certain marketing and content management activities to Singapore. The fourth quarter charge was $0.8 million ($0.5 million after taxes) or $0.01 per diluted share.

 
 
43

 
 
Quarterly Share Prices, Dividends, and Related Stockholder Matters and Issuer Purchases of Equity Securities
 
The Company’s Class A and Class B shares are listed on the New York Stock Exchange under the symbols JWa and JWb, respectively.  Dividends per share and the market price range by fiscal quarter for the past two fiscal years were as follows:
 
 
Class A Common Stock
Class B Common Stock
   
Market Price
 
Market Price
 
Dividends
High
Low
Dividends
High
Low
2010
           
First Quarter
 $0.14
$35.04
$30.84
$0.14
$35.00
$31.00
Second Quarter
0.14
35.90
29.77
0.14
35.76
29.50
Third Quarter
  0.14
43.17
35.35
0.14
43.30
35.17
Fourth Quarter
0.14
43.95
39.73
0.14
43.74
39.97
2009
           
First Quarter
 $0.13
$49.76
$43.39
$0.13
$49.52
$43.53
Second Quarter
  0.13
48.88
  27.75
    0.13
49.11
28.02
Third Quarter
  0.13
37.60
26.21
    0.13
37.58
26.05
Fourth Quarter
  0.13
36.72
27.55
    0.13
36.63
27.50
 
As of April 30, 2010, the approximate number of holders of the Company’s Class A and Class B Common Stock were 1,181 and 102 respectively, based on the holders of record.
 
The Company did not repurchase any common stock during the fourth quarter of fiscal year 2010.
 
The Company’s credit agreement contains certain restrictive covenants related to the payment of dividends and share repurchases. Under the most restrictive covenant, approximately $106.0 million was available for such restricted payments as of April 30, 2010.  Subject to the foregoing, the Board of Directors considers quarterly the payment of cash dividends based upon its review of earnings, the financial position of the Company, and other relevant factors.

 
 
44

 

 
Selected Financial Data

 
For the Years Ended April 30,
Dollars in millions (except per share data)
       2010
2009
2008
2007
2006
Revenue
$1,699.1
$1,611.4
$1,673.7
$1,234.6
$1,043.9
Operating Income (a)
242.6
218.5
225.2
161.5
152.9
Net Income (a,b,c)
143.5
128.3
147.5
99.6
110.3
Working Capital (d)
(188.7)
(157.4)
(243.6)
(199.7)
(35.8)
Total Assets
2,316.2
2,223.7
2,576.2
2,553.1
1,026.0
Long-Term Debt
559.0
754.9
797.3
977.7
160.5
Shareholders’ Equity
722.4
513.5
689.1
529.5
401.8
Per Share Data
         
Income Per Share (a,b,c)
         
Diluted
        $2.41
        $2.15
        $2.49
$1.71
      $1.85
Basic
        $2.45
        $2.20
        $2.55
       $1.75
      $1.90
Cash Dividends
         
Class A Common
        $0.56
        $0.52
        $0.44
       $0.40
      $0.36
Class B Common
        $0.56
        $0.52
        $0.44
       $0.40
     $0.36

 
NOTE:    The Company acquired Blackwell Publishing (Holdings) Ltd.  (“Blackwell”) on February 2, 2007.

(a)  
In fiscal year 2010, the Company recognized intangible asset impairment and restructuring charges principally related to GIT Verlag, a Business-to-Business German-language controlled circulation magazine business acquired in 2002.  The fiscal year 2010 charges were $15.1 million ($10.6 million after taxes) and impacted diluted earnings per share by $0.17.

(b)  
Tax benefits included in fiscal year results are as follows:

·  
Fiscal year 2008 includes a $18.7 million tax benefit, or $0.32 per diluted share, associated with new tax legislation enacted in the United Kingdom and Germany that reduced the corporate income tax rates from 30% to 28% and from 39% to 29%, respectively.  The benefits recognized by the Company reflect the adjustments required to record all U.K. and Germany-related deferred tax balances at the new corporate income tax rates.

·  
Fiscal year 2007 includes a $5.5 million tax benefit, or $0.09 per diluted share. This benefit coincides with the resolution and settlements of certain tax matters with authorities in the U.S. and abroad.

·  
Fiscal year 2006 includes a tax benefit of $6.8 million, or $0.11 per diluted share, related to the favorable resolution of certain matters with tax authorities.

·  
In the fourth quarter of fiscal year 2005 , the Company elected to repatriate approximately $94 million of dividends from its European subsidiaries under the American Jobs Creation Act of 2004. The law provided for a favorable one-time tax rate on dividends from foreign subsidiaries. The tax accrued on the dividend in the fourth quarter of fiscal year 2005 was approximately $7.5 million, or $0.12 per diluted share.  Pursuant to guidance issued by the Internal Revenue Service in May 2005, the Company recorded a tax benefit in the first quarter of fiscal year 2006 reversing the accrued tax recorded in the previous year.  Neither the first quarter fiscal year 2006 tax benefit nor the corresponding fourth quarter fiscal year 2005 tax accrual had a cash impact on the Company.
 
         (c)
Effective May 1, 2006, the Company adopted the guidance included in ASC 718, “Compensation – Stock Compensation (“ASC 718”) which required that companies recognize share-based compensation to employees in the Statement of Income based on the fair value of the share-based awards.  The adoption of ASC 718 resulted in the recognition of an incremental share-based compensation expense of $11.3 million ($7.0 million after taxes) or $0.12 per diluted share for the full year ended April 30, 2007.

         (d)
Working capital is reduced or negative as a result of including in current liabilities the deferred revenue related to prepaid journal subscriptions for which the cash has been received.  The deferred revenue will be recognized into income as the journals are shipped or made available online to the customers over the term of the subscription.

 
 
45

 

Financial Statements and Supplementary Data

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

To our Shareholders
John Wiley and Sons, Inc.:
 
The management of John Wiley and Sons, Inc. and subsidiaries is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).
 
Under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under the framework in Internal Control – Integrated Framework issued by COSO , our management concluded that our internal control over financial reporting was effective as of April 30, 2010.
 
Changes in Internal Control over Financial Reporting: There were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during fiscal year 2010.
 
The effectiveness of our internal control over financial reporting as of April 30, 2010 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included herein.
 
The Company’s Corporate Governance Principles, Committee Charters, Business Conduct and Ethics Policy and the Code of Ethics for Senior Financial Officers are published on our web site at www.wiley.com under the “About Wiley—Investor Relations—Corporate Governance” captions.  Copies are also available free of charge to shareholders on request to the Corporate Secretary, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774.
 

   
William J. Pesce
 
President and Chief Executive Officer
 
   
   
Ellis E. Cousens
 
Executive Vice President and
 
Chief Financial and Operations Officer
 
   
   
Edward J. Melando
 
Vice President, Controller and
 
Chief Accounting Officer
 
   
June 23, 2010
 
 
 
 
46

 

 
 Report of Independent Registered Public Accounting Firm
 
The Board of Directors and Stockholders
John Wiley & Sons, Inc.:
 
We have audited the accompanying consolidated statements of financial position of John Wiley & Sons, Inc. (the “Company”) and subsidiaries as of April 30, 2010 and 2009, and the related consolidated statements of income, shareholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended April 30, 2010. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule (as listed in the index to Item 8).  These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of John Wiley & Sons, Inc. and subsidiaries as of April 30, 2010 and 2009, and the results of their operations and their cash flows for each of the years in the three-year period ended April 30, 2010, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
 
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), John Wiley & Sons, Inc.’s internal control over financial reporting as of April 30, 2010, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)”), and our report dated June 23, 2010   expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
 

 
(signed) KPMG LLP
 
New York, New York
 
June 23, 2010
 

 
 
47

 

 
Report of Independent Registered Public Accounting Firm
 
The Board of Directors and Stockholders
John Wiley & Sons, Inc.:
 
We have audited John Wiley & Sons, Inc.’s internal control over financial reporting as of April 30, 2010, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). John Wiley & Sons, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
 
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
In our opinion, John Wiley & Sons, Inc. maintained, in all material respects, effective internal control over financial reporting as of April 30, 2010, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
 
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of financial position of John Wiley & Sons, Inc. and subsidiaries as of April 30, 2010 and 2009, and the related consolidated statements of operations, shareholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended April 30, 2010, and our report dated June 23, 2010 expressed an unqualified opinion on those consolidated financial statements.
 
(signed) KPMG LLP
 
New York, New York
 
June 23, 2010
 
 
48

 

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 
John Wiley & Sons, Inc., and Subsidiaries
 
April 30
 
Dollars in thousands
 
         2010
   
         2009
 
Assets:
           
Current Assets
           
Cash and cash equivalents
  $ 153,513     $ 102,828  
Accounts receivable
    186,535       178,550  
Inventories
    97,857       111,267  
Prepaid and other
    47,809       46,924  
Total Current Assets
    485,714       439,569  
                 
Product Development Assets
    107,755       89,662  
Property, Equipment and Technology
    152,684       141,196  
Intangible Assets
    911,550       919,375  
Goodwill
    615,479       589,993  
Deferred Income Tax Benefits
    6,736       14,065  
Other Assets
    36,284       29,848  
Total Assets
  $ 2,316,202     $ 2,223,708  
                 
Liabilities and Shareholders’ Equity:
               
Current Liabilities
               
Accounts and royalties payable
  $ 158,870     $ 160,275  
Deferred revenue
    275,653       246,584  
Accrued employment compensation and benefits
    81,507       56,976  
Accrued income taxes
    2,516       4,281  
Accrued pension liability
    2,245       2,483  
Other accrued liabilities
    63,581       58,868  
Current portion of long-term debt
    90,000       67,500  
Total Current Liabilities
    674,372       596,967  
                 
Long-Term Debt
    559,000       754,900  
Accrued Pension Liability
    119,280       90,621  
Other Long-Term Liabilities
    73,445       91,292  
Deferred Income Tax Liabilities
    167,669       176,412  
Shareholders’ Equity
               
Preferred Stock, $1 par value: Authorized - 2 million, Issued - zero
    -       -  
Class A Common Stock, $1 par value: Authorized - 180 million,
               
Issued – 69,705,591 and 69,643,571
    69,706       69,644  
Class B Common Stock, $1 par value:  Authorized - 72 million,
               
Issued – 13,484,671 and 13,546,691
    13,485       13,547  
Additional paid-in capital
    210,848       164,592  
Retained earnings
    1,003,099       892,542  
Accumulated other comprehensive income (loss):
               
Foreign currency translation adjustment
    (142,731 )     (203,023 )
Unamortized pension and retiree medical
    (80,953 )     (41,978 )
Unrealized gain (loss) on interest rate swap
    (3,962 )     (13,397 )
      1,069,492       881,927  
Less Treasury Shares At Cost (Class A – 19,270,308 and 20,907,317;
               
Class B – 3,902,576 and 3,902,576)
    (347,056 )     (368,411 )
Total Shareholders’ Equity
    722,436       513,516  
Total Liabilities and Shareholders’ Equity
  $ 2,316,202     $ 2,223,708  
   
The accompanying notes are an integral part of the consolidated financial statements.
 

 
 
49

 


CONSOLIDATED STATEMENTS OF INCOME
 
                   
John Wiley & Sons, Inc., and Subsidiaries
 
For the years ended April 30
 
Dollars in thousands, except per share data
 
           2010
   
     2009
   
 2008
 
                   
Revenue
  $ 1,699,062     $ 1,611,390     $ 1,673,734  
                         
Costs and Expenses
                       
Cost of sales
    534,001       516,420       532,908  
Operating and administrative expenses
    872,193       839,648       876,635  
Impairment and restructuring charges
    15,118       -       -  
Amortization of intangibles
    35,158       36,844       38,980  
Total Costs and Expenses
    1,456,470       1,392,912       1,448,523  
                         
Operating Income
    242,592       218,478       225,211  
                         
Interest expense
    (32,334 )     (48,424 )     (66,738 )
Foreign exchange losses
    (10,883 )     (11,759 )     (2,863 )
Interest income and other, net
    834       6,180       5,918  
                         
Income Before Taxes
    200,209       164,475       161,528  
Provision for Income Taxes
    56,666       36,217       13,992  
                         
Net Income
  $ 143,543     $ 128,258     $ 147,536  
                         
Income Per Share
                       
Diluted
  $ 2.41     $ 2.15     $ 2.49  
Basic
    2.45       2.20       2.55  
                         
Cash Dividends Per Share
                       
Class A Common
  $ 0.56     $ 0.52     $ 0.44  
Class B Common
    0.56       0.52       0.44  
                         
Average Shares
                       
Diluted
    59,679       59,610       59,323  
Basic
    58,498       58,419       57,921  
   
The accompanying notes are an integral part of the consolidated financial statements.
 


 
 
50

 


CONSOLIDATED STATEMENTS OF CASH FLOWS
 
   
John Wiley & Sons, Inc., and Subsidiaries
 
For the years ended April 30
 
Dollars in thousands
 
            2010
   
           2009
   
              2008
 
                   
Operating Activities
                 
Net Income
  $ 143,543     $ 128,258     $ 147,536  
Noncash Items
                       
Amortization of intangibles
    35,158       36,844       38,980  
Amortization of composition costs
    47,440       43,767       43,613  
Depreciation of property, equipment and technology
    40,281       35,134       33,330  
Impairment and restructuring charges (net of tax)
    10,631       -       -  
Stock-based compensation
    24,842       17,042       28,041  
Excess tax benefits from stock-based compensation
    (7,636 )     (5,350 )     (11,223 )
Non-cash tax benefits
    -       -       (18,663 )
Reserves for returns, doubtful accounts, and obsolescence
    18,916       13,355       6,419  
Deferred income taxes
    9,481       17,141       10,784  
Foreign exchange transaction losses
    10,883       11,759       2,863  
Pension expense
    20,319       18,324       22,894  
Earned royalty advances and other
    81,828       76,175       58,100  
Changes in Operating Assets and Liabilities
                       
Source/(Use), excluding acquisitions
                       
Accounts receivable
    (9,004 )     17,625       (20,007 )
Inventories
    13,960       (6,696 )     (10,038 )
Accounts and royalties payable
    (15,585 )     8,070       4,421  
Deferred revenue
    21,626       (41,132 )     10,277  
Net taxes payable/receivable
    10,887       4,994       9,745  
Other accrued liabilities
    15,908       (14,416 )     (13,701 )
Pension contributions
    (48,124 )     (21,020 )     (59,360 )
Other
    (6,565 )     1,381       (3,876 )
Cash Provided by Operating Activities
    418,789       341,255       280,135  
Investing Activities
                       
Additions to product development assets
    (155,367 )     (131,666 )     (113,069 )
Additions to property, equipment and technology
    (48,110 )     (46,009 )     (50,315 )
Acquisition of other publishing businesses, assets and rights
    (6,430 )     (23,960 )     (6,802 )
Cash Used for Investing Activities
    (209,907 )     (201,635 )     (170,186 )
Financing Activities
                       
Repayment of long-term debt
    (951,010 )     (618,512 )     (1,049,360 )
Borrowings of long-term debt
    777,610       598,594       891,476  
Purchase of treasury stock
    -       (35,110 )     (3,679 )
Change in book overdrafts
    9,707       (20,522 )     36,253  
Cash dividends
    (32,986 )     (30,478 )     (25,613 )
Excess tax benefits from stock-based compensation
    7,636       5,350       11,223  
Proceeds from exercise of stock options and other
    32,625       11,623       15,190  
Cash Used for Financing Activities
    (156,418 )     (89,055 )     (124,510 )
Effects of Exchange Rate Changes on Cash
    (1,779 )     (7,048 )     2,379  
Cash and Cash Equivalents
                       
Increase/(Decrease) for year
    50,685       43,517       (12,182 )
Balance at beginning of year
    102,828       59,311       71,493  
Balance at end of year
  $ 153,513     $ 102,828     $ 59,311  
Cash Paid During the Year for
                       
Interest
  $ 33,186     $ 50,108     $ 69,071  
Income taxes, net
  $ 33,358     $ 15,942     $ 24,679  
  The accompanying notes are an integral part of the consolidated financial statements.                        

 
51

 

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME
               
 
Common
Stock
Class A
Common
Stock
Class B
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
Accumulated
Other Comp-
rehensive
Income
 (Loss)
 
 
Total
Share-
holder’s
Equity
 
John Wiley & Sons, Inc., and Subsidiaries
Dollars in thousands
               
Balance at April 30, 2007
$69,388
$13,803
$100,013
$673,254
$(351,907)
$24,957
$529,508
               
Shares Issued Under Employee Benefit Plans
   
(2,665)
 
3,590
 
925
Purchase of Treasury Shares
       
(3,679)
 
(3,679)
Exercise of Stock Options, including taxes
   
15,334
 
9,790
 
25,124
Stock-based compensation expense
   
28,041
     
28,041
Class A Common Stock Dividends
     
(21,263)
   
(21,263)
Class B Common Stock Dividends
     
(4,350)
   
(4,350)
Other
254
(254)
         
Adoption of accounting standards for uncertain tax positions
     
(415)
   
(415)
Comprehensive Income:
             
Net income
     
147,536
   
147,536
Foreign currency translation loss
         
(3,932)
(3,932)
Unamortized pension and retiree medical, net of a $1,848 tax provision
         
3,652
3,652
Change in unrecognized loss of interest rate swap, net of a $7,248 tax benefit
         
(12,029)
(12,029)
Total Comprehensive Income
           
135,227
               
Balance at April 30, 2008
$69,642
$13,549
$140,723
$794,762
$(342,206)
$12,648
$689,118
               
Shares Issued Under Employee Benefit Plans
   
(3,325)
 
3,209
 
(116)
Purchase of Treasury Shares
       
(35,110)
 
(35,110)
Exercise of Stock Options, including taxes
   
10,152
 
5,696
 
15,848
Stock-based compensation expense
   
17,042
     
17,042
Class A Common Stock Dividends
     
(25,463)
   
(25,463)
Class B Common Stock Dividends
     
(5,015)
   
(5,015)
Other
2
(2)
         
Comprehensive (Loss):
             
Net income
     
128,258
   
128,258
Foreign currency translation loss
         
(256,314)
(256,314)
Unamortized pension and retiree medical, net of a $5,553 tax benefit
         
(15,165)
(15,165)
Change in unrecognized loss of interest rate swap, net of a $261 tax provision
         
433
433
Total Comprehensive (Loss):
           
(142,788)
               
Balance at April 30, 2009
$69,644
$13,547
$164,592
$892,542
$(368,411)
$(258,398)
$513,516
               
Shares Issued Under Employee Benefit Plans
   
(4,008)
 
5,166
 
1,158
Exercise of Stock Options, including taxes
   
22,892
 
16,189
 
39,081
Stock-based compensation expense
   
24,842
     
24,842
Class A Common Stock Dividends
     
(27,607)
   
(27,607)
Class B Common Stock Dividends
     
(5,379)
   
(5,379)
Other
62
(62)
2,530
     
2,530
Comprehensive (Loss):
             
Net income
     
143,543
   
143,543
Foreign currency translation gain
         
60,292
60,292
Unamortized pension and retiree medical, net of a $18,657 tax benefit
         
(38,975)
(38,975)
Change in unrecognized loss of interest rate swap, net of a $5,685 tax provision
         
9,435
9,435
Total Comprehensive Income:
           
174,295
               
Balance at April 30, 2010
$69,706
$13,485
$210,848
$1,003,099
$(347,056)
$(227,646)
$722,436
 
The accompanying notes are an integral part of the consolidated financial statements.
 
 
 
52

 

Notes to Consolidated Financial Statements
 
Note 1 – Description of Business
 
The Company, founded in 1807, was incorporated in the state of New York on January 15, 1904. As used herein the term “Company” means John Wiley & Sons, Inc., and its subsidiaries and affiliated companies, unless the context indicates otherwise.
 
The Company is a global publisher of print and electronic products, providing content and digital solutions to customers worldwide. Core businesses include scientific, technical, medical and scholarly journals, encyclopedias, books, online products and services; professional and consumer books, subscription products, certification and training materials, online applications and websites; and educational materials in all media, including integrated online teaching and learning resources, for undergraduate, graduate and advanced placement students, educators and lifelong learners worldwide as well as secondary school students in Australia. The Company takes full advantage of its content from all three core businesses in developing and cross-marketing products to its diverse customer base of professionals, consumers, researchers, students, and educators. The use of technology enables the Company to make its content more accessible to its customers around the world. The Company maintains publishing, marketing, and distribution centers in the United States, Canada, Europe, Asia, and Australia.
 
Note 2 - Summary of Significant Accounting Policies
 
Principles of Consolidation: The consolidated financial statements include the accounts of the Company. Investments in entities in which the Company has at least a 20%, but less than a majority interest, are accounted for using the equity method of accounting. Investments in entities in which the Company has less than a 20% ownership and in which it does not exercise significant influence are accounted for using the cost method of accounting. All intercompany accounts and transactions have been eliminated in consolidation.
 
Use of Estimates: The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.
 
Book Overdrafts: Under the Company’s cash management system, a book overdraft balance exists for the Company’s primary disbursement accounts. This overdraft represents uncleared checks in excess of cash balances in individual bank accounts. The Company’s funds are transferred from other existing bank account balances or from lines of credit as needed to fund checks presented for payment.  As of April 30, 2010 and April 30, 2009, book overdrafts of $41.2 million and $31.5 million, respectively, were included in Accounts and Royalties payable.
 
Revenue Recognition: The Company recognizes revenue when the following criteria are met: persuasive evidence that an arrangement exists; delivery has occurred or services have been rendered; the price to the customer is fixed or determinable; and collectability is reasonably assured.  If all of the above criteria have been met, revenue is principally recognized upon shipment of products or when services have been rendered.  Subscription revenue is generally collected in advance. The prepayment is deferred and recognized as earned when the related issue is shipped or made available online over the term of the subscription. When a product is sold with multiple deliverables, the Company accounts for each deliverable within the arrangement as a separate unit of accounting due to the fact that each deliverable is also sold on a stand-alone basis.  The total consideration of a multiple-element arrangement is allocated to each unit of accounting using the relative fair value method based on the estimated selling prices of each deliverable within the arrangement.  Collectability is evaluated based on the amount involved, the credit history of the customer, and the status of the customer’s account with the Company.  Revenue is reported net of any amounts billed to customers for taxes which are remitted to government authorities.
 
 
53

 
 
Cash Equivalents: Cash equivalents consist of highly liquid investments with an original maturity of three months or less and are stated at cost plus accrued interest, which approximates market value.
 
Allowance for Doubtful Accounts: The estimated allowance for doubtful accounts is based on a review of the aging of the accounts receivable balances, historical write-off experience, credit evaluations of customers and current market conditions. A change in the evaluation of a customer’s credit could affect the estimated allowance. The allowance for doubtful accounts is shown as a reduction of accounts receivable in the Consolidated Statements of Financial Position and amounted to $6.9 million and $5.7 million as of April 30, 2010 and 2009, respectively.
 
Sales Return Reserves: The process which the Company uses to determine its sales returns and the related reserve provision charged against revenue is based on applying an estimated return rate to current year sales.  This rate is based upon an analysis of actual historical return experience in the various markets and geographic regions in which the Company does business. The Company collects, maintains and analyzes significant amounts of sales returns data for large volumes of homogeneous transactions.  This allows the Company to make reasonable estimates of the amount of future returns.  All available data is utilized to identify the returns by market and as to which fiscal year the sales returns apply.  This enables management to track the returns in detail and identify and react to trends occurring in the marketplace, with the objective of being able to make the most informed judgments possible in setting reserve rates.  Sales return reserves, net of estimated inventory and royalty costs, are reported as a reduction of accounts receivable in the Consolidated Statements of Financial Position and amounted to $55.3 million and $55.2 million as of April 30, 2010 and 2009, respectively.
 
Reserve for Inventory Obsolescence : A reserve for inventory obsolescence is estimated based on a review of damaged, obsolete, or otherwise unsalable inventory. The review encompasses historical unit sales trends by title; current market conditions, including estimates of customer demand compared to the number of units currently on hand; and publication revision cycles. The inventory obsolescence reserve is reported as a reduction of the inventory balance in the Consolidated Statements of Financial Position and amounted to $39.7 million and $36.3 million as of April 30, 2010 and 2009, respectively.
 
Allocation of Acquisition Purchase Price to Assets Acquired and Liabilities Assumed : In connection with acquisitions, the Company allocates the cost of the acquisition to the assets acquired and the liabilities assumed based on estimates of the fair value of such items, including goodwill and other intangible assets. Such estimates include discounted estimated cash flows to be generated by those assets and the expected useful lives based on historical experience, current market trends, and synergies to be achieved from the acquisition and expected tax basis of assets acquired. For major acquisitions, the Company may use an independent appraiser to assist in the determination of such estimates.
 
Inventories: Inventories are carried at the lower of cost or market. U.S. book inventories aggregating $63.1 million and $73.6 million at April 30, 2010 and 2009, respectively, are valued using the last-in, first-out (LIFO) method.  All other inventories are valued using the first-in, first-out (FIFO) method.
 
Product Development Assets:   Product development assets consist of composition costs and royalty advances to authors. Costs associated with developing any publication are expensed until the product is determined to be commercially viable. Composition costs represent the costs incurred to bring an edited commercial manuscript to publication, which include typesetting, proofreading, design and illustration costs. Composition costs are capitalized and are generally amortized on a double-declining basis over their estimated useful lives, ranging from 1 to 3 years. Royalty advances to authors are capitalized and, upon publication, are recovered as royalties earned by the authors based on sales of the published works.  Royalty advances are reviewed for recoverability and a reserve for loss is maintained, if appropriate.
 
 
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Advertising Expense:   Advertising costs are expensed as incurred. The Company incurred $26.0 million, $28.6 million and $34.1 million in advertising costs in fiscal years 2010, 2009 and 2008, respectively.
 
Property, Equipment and Technology: Property, equipment and technology is recorded at cost. Major renewals and improvements are capitalized, while maintenance and repairs are expensed as incurred.
 
Costs incurred for computer software developed or obtained for internal use are capitalized during the application development stage and expensed as incurred during the preliminary project and post-implementation stages.  Costs incurred during the application development stage include costs of materials and services, and payroll and payroll-related costs for employees who are directly associated with the software project. Such costs are amortized over the expected useful life of the related software generally 3 to 6 years.  Maintenance, training, and upgrade costs that do not result in additional functionality are expensed as incurred.
 
Property, equipment and technology is depreciated using the straight-line method based upon the following estimated useful lives: Buildings Leases and Leasehold Improvements – the lessor of the estimated useful life of the asset up to 40 years or the duration of the lease; Furniture and Fixtures - 3 to 10 years; Computer Hardware and Software - 3 to 6 years.
 
Goodwill and Intangible Assets: Goodwill is the excess of the purchase price paid over the fair value of the net assets of the business acquired. Intangible assets principally consist of brands, trademarks, acquired publication rights, customer relationships and non-compete agreements.  Goodwill and indefinite-lived intangible assets are not amortized but are reviewed annually for impairment, or more frequently if events or changes in circumstances indicate the asset might be impaired. The Company evaluates the recoverability of indefinite-lived intangible assets by comparing the fair value of the intangible asset to its carrying value.
 
To evaluate the recoverability of goodwill, the Company uses a two-step impairment test approach at the reporting unit level. In the first step, the estimated fair value of the entire reporting unit is compared to its carrying value including goodwill.  If the fair value of the reporting unit is less than the carrying value, a second step is performed to determine the charge for goodwill impairment. In the second step, the Company determines an implied fair value of the reporting unit’s goodwill by determining the fair value of the individual assets and liabilities (including any previous unrecognized intangible assets) of the reporting unit other than goodwill. The resulting implied fair value of the goodwill is compared to the carrying amount and an impairment charge is recognized for the difference.
 
Finite-lived intangible assets are amortized over their estimated useful lives. The most significant factors in determining the estimated life of these intangibles is the history and longevity of the brands, trademarks or titles acquired, combined with the strength of cash flows. Acquired publishing rights that have an indefinite life are typically characterized by intellectual property with a long and well-established revenue stream resulting from strong and well-established imprint/brand recognition in the market.
 
Acquired publication rights, trademarks, customer relationships and brands with finite lives are amortized on a straight-line basis over periods ranging from 5 to 40 years. Non-compete agreements are amortized over the terms of the individual agreement, generally up to 3 years.
 
 
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Impairment of Long-Lived Assets including finite intangible assets: Depreciable and amortizable assets are only evaluated for impairment upon a significant change in the operating or macroeconomic environment.  In these circumstances, if an evaluation of the current forecasts of  undiscounted cash flows indicates impairment, the asset is written down to its estimated fair value based on the discounted future cash flows.
 
Derivative Financial Instruments: The Company, from time to time, enters into forward exchange and interest rate swap contracts as a hedge against foreign currency asset and liability commitments, changes in interest rates and anticipated transaction exposures, including intercompany purchases.  The Company accounts for its derivative instruments in accordance with ASC 815, “Derivatives and Hedging” (“ASC 815”).  Accordingly, all derivatives are recognized as assets or liabilities and measured at fair value.  Derivatives that are not determined to be effective hedges are adjusted to fair value with a corresponding effect on earnings.  The Company does not use financial instruments for trading or speculative purposes.
 
Foreign Currency Gains/Losses: The Company maintains operations in many non-U.S. locations.  Assets and liabilities are translated into U.S. dollars using end of period exchange rates and revenues and expense are translated into U.S. dollars using weighted average rates. Foreign currency translation adjustments are accumulated and reported as a separate component of Accumulated Other Comprehensive Loss within Shareholders’ Equity. The Company’s significant investments in non-U.S. businesses are exposed to foreign currency risk. During fiscal year 2010, the Company recorded $60.3 million of foreign currency translation gains primarily due to the weakening of the U.S. dollar relative to the British pound sterling.  Foreign currency transaction gains or losses are recognized in the Consolidated Statements of Income as incurred.
 
Share-Based Compensation: The Company recognizes share-based compensation expenses based on the fair value of the share-based awards on the grant date, reduced by an estimate for future forfeited awards.  As such, share-based compensation expense is only recognized for those awards that are expected to ultimately vest. The fair value of share-based awards is recognized in net income on a straight-line basis over the requisite service period. Share-based compensation expense associated with performance-based stock awards is determined based upon actual results compared to targets established three years in advance. The cumulative effect on current and prior periods of a change in the estimated number of performance share awards, or estimated forfeiture rate is recognized as an adjustment to earnings in the period of the revision.
 
Recently Issued Accounting Standards:   In June 2009, the FASB issued the ASC which has become the single source of accounting principles generally accepted in the United States (“GAAP”) recognized by the FASB in the preparation of financial statements.  The ASC does not supersede the rules or regulations of the Securities and Exchange Commission (“SEC”), therefore, the rules and interpretive releases of the SEC continue to be additional sources of GAAP for the Company.  The Company adopted the ASC as of August 1, 2009 and has replaced all FASB references with ASC references. The ASC does not change GAAP and did not have an effect on the Company’s consolidated financial statements.
 
In September 2006, the FASB issued guidance which is included in ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”). ASC 820 provides a single authoritative definition of fair value and provides enhanced guidance for measuring the fair value of assets and liabilities and requires additional disclosures related to the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. In February 2008, the FASB agreed to a one-year delay of the fair value measurement requirement for certain nonfinancial assets and liabilities. The Company adopted ASC 820 as of May 1, 2008 for assets and liabilities not subject to the deferral and as of May 1, 2009 for those nonfinancial assets and liabilities subject to the deferral. The adoption did not have a significant impact on the Company’s consolidated financial statements or disclosures.
 
 
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In December 2007, the FASB issued guidance which is included in ASC 805 “Business Combinations” (“ASC 805”) and is effective for acquisitions made on or after May 1, 2009.  ASC 805 expands the scope of acquisition accounting to all transactions under which control of a business is obtained.  Principally, ASC 805 requires that contingent consideration be recorded at fair value on the acquisition date and that certain transaction and restructuring costs be expensed. The Company adopted ASC 805 as of May 1, 2009 and is now accounting for all acquisitions made after the effective date under the standard.
 
In March 2008, the FASB issued guidance which is included in ASC 815 “Derivatives and Hedging” (“ASC 815”). The guidance amends and expands the disclosure requirements of ASC 815, to provide an enhanced understanding of the use of derivative instruments, how they are accounted for under ASC 815, and their effect on financial position, financial performance and cash flows. The Company adopted the disclosure guidance in the first quarter of fiscal year 2010.
 
In April 2008, the FASB issued guidance which is included in ASC 350 “Intangibles – Goodwill and Other” (“ASC 350”). The guidance in ASC 350 amends the factors that must be considered in developing renewal or extension assumptions used to determine the useful life over which to amortize the cost of a recognized intangible asset under ASC 350. The guidance requires an entity to consider its own experience with the renewal or extension of the terms of a contractual arrangement, consistent with its expected use of the asset.  The guidance also requires several incremental disclosures for renewable intangible assets.  Application of this standard will not significantly impact the process previously used by the Company to determine the useful life of intangible assets. The Company adopted the guidance as of May 1, 2009 and is applying the guidance to intangible assets acquired after the effective date.
 
In December 2008, the FASB issued guidance which is included in ASC 715 “Compensation – Retirement Benefits” to require additional disclosures about assets held in an employer’s defined benefit pension and other postretirement plans. The new disclosures are to provide an understanding of how investment allocations decisions are made, the major categories of plan assets, the inputs and valuation techniques used to measure the fair value of plan assets, the effect of fair value measurements using significant unobservable inputs on changes in plan assets for the period, and significant concentrations of risk within plan assets.  The Company adopted the disclosure guidance as of April 30, 2010.
 
In May 2009, the FASB issued guidance which is included in ASC 855 “Subsequent Events” (“ASC 855”).  ASC 855 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. Although the standard is based on the same principles as those that previously existed for subsequent events, it included a new required disclosure of the date through which an entity has evaluated subsequent events. The Company adopted the guidance in the first quarter of fiscal year 2010 and the adoption did not have a significant impact on the Company’s consolidated financial statements.  We have evaluated subsequent events through the date that the financial statements are issued.
 
In August 2009, the FASB issued Accounting Standards Update (“ASU”) 2009-05, “Fair Value Measurements and Disclosures   (Topic 820): Measuring Liabilities at Fair Value ("ASU 2009-05").  ASU 2009-05 provides clarification to entities that measure liabilities at fair value under circumstances where a quoted price in an active market is not available.  The Company adopted ASU 2009-05 as of November 1, 2009.  The adoption did not have a significant impact on the Company’s consolidated financial statements.
 
 
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In October 2009, the FASB issued ASU 2009-13 “Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements” (“ASU 2009-13”). ASU 2009-13 addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products and services separately rather than as a combined unit.  Specifically, this guidance amends the existing criteria for separating consideration received in multiple-deliverable arrangements, eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method.  The guidance also establishes a hierarchy for determining the selling price of a deliverable, which is based on vendor-specific objective evidence; third-party evidence; or management estimates.  Expanded disclosures related to the Company’s multiple-deliverable revenue arrangements will also be required.  The new guidance is effective for revenue arrangements entered into or materially modified on and after May 1, 2011.  The Company does not expect the application of this new standard to have a significant impact on its consolidated financial statements.
 
In January 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”).  ASU 2010-06 provides amendments to ASC 820 by requiring new disclosures for transfers in and out of Levels 1 and 2 of the fair value measurement hierarchy, and expands disclosures related to activity in Level 3 fair value measurements.  ASU 2010-06 also clarifies existing disclosures on the level of detail required for assets and liabilities measured at fair value from their respective line items on the statement of financial position, and the valuation techniques and inputs used in fair value measurements that fall within Level 2 or Level 3 of the fair value hierarchy.  ASU 2010-06 is effective for the Company as of May 1, 2010.  Since the revised guidance only requires additional disclosures about the Company’s fair value measurements, its adoption will not affect the Company’s financial position or results of operations.
 
There have been no other new accounting standards issued that have had, or are expected to have a material impact on the Company’s consolidated financial statements.
 
Note 3 – Reconciliation of Weighted Average Shares Outstanding
 
A reconciliation of the shares used in the computation of net income per share for the years ended April 30 follows (in thousands):
 
 
2010
2009
2008
Weighted Average Shares Outstanding
58,897
     58,665
       58,193
Less:  Unearned Restricted Shares
(399)
      (246)
        (272)
Shares Used for Basic Income Per Share
58,498
58,419
     57,921
Dilutive Effect of Stock Options and Other Stock Awards
1,181
     1,191
       1,402
Shares Used for Diluted Income Per Share
59,679
   59,610
     59,323

For the years ended April 30, 2010, 2009, and 2008, options to purchase Class A Common Stock of 1,714,089, 2,210,837 and 1,591,593 respectively, have been excluded from the shares used for diluted income per share as their inclusion would have been antidilutive. In addition, for the years ended April 30, 2010, 2009 and 2008, unearned restricted shares of 14,128, 24,250 and 19,000 have been excluded as their inclusion would have been antidilutive.

Note 4 – Significant Acquisitions
 
Fiscal Year 2009:
 
On June 12, 2008, the Company acquired the publishing rights to a list of business and modern language textbooks and learning materials. The cost of acquisition was principally allocated to acquired publication rights of the Higher Education business and is being amortized over a 20-year period.
 
 
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Fiscal Year 2008:
 
The Company entered into a contract with Microsoft to develop, publish, and deliver Microsoft Official Academic Curriculum (MOAC) textbooks and e-learning tools to the higher education markets. The Company recorded amounts due under the Microsoft agreement which were primarily allocated to acquired publication rights and are being amortized over the life of the contract.

Note 5 – Inventories
 
Inventories at April 30 were as follows (in thousands):

 
2010
2009
Finished Goods
$86,355
$97,013
Work-in-Process
7,566
9,507
Paper, Cloth, and Other
7,434
9,002
 
101,355
115,522
LIFO Reserve
(3,498)
   (4,255)
Total Inventories
$97,857
$111,267
 
Note 6 – Product Development Assets
 
Product development assets consisted of the following at April 30 (in thousands):

 
2010
2009
Composition Costs
$52,274
$46,686
Royalty Advances
55,481
42,976
Total
$107,755
$89,662

Composition costs are net of accumulated amortization of $130.0 million and $107.6 million as of April 30, 2010 and 2009, respectively.
 
Note 7 - Property, Equipment and Technology

Property, equipment and technology consisted of the following at April 30 (in thousands):

 
2010
2009
Land and Land Improvements
   $4,038
   $3,860
Buildings and Leasehold Improvements
88,440
83,618
Furniture, Fixtures and Warehouse Equipment
70,434
67,095
Computer Hardware and Capitalized Software
296,750
259,999
 
459,662
414,572
Accumulated Depreciation
(306,978)
 (273,376)
Total
$152,684
 $141,196
 
The net book value of capitalized software costs was $61.9 million and $45.7 million as of April 30, 2010 and 2009, respectively. Depreciation expense recognized in 2010, 2009, and 2008 for capitalized software costs was approximately $18.4 million, $14.5 million, and $11.9 million, respectively.

 
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Note 8 - Goodwill and Intangible Assets

The following table summarizes the activity in goodwill by segment (in thousands):

 
  As of April
  30, 2009
Foreign Translation
As of April
 30, 2010
STMS
$432,418
24,573
$456,991
P/T
 157,575
     913
158,488
Total
$589,993
25,486
$615,479

Intangible assets as of April 30, 2010 and 2009 were as follows (in thousands):

   
                          2010
 
                           2009
   
 
  Cost
Accumulated
Amortization
 
 
   Cost
Accumulated Amortization
Intangible Assets with Determinable Lives
           
Acquired Publishing Rights
 
   $762,727
$(184,587)
 
   $723,702
$(153,917)
Brands & Trademarks
 
       16,094
(5,776)
 
       16,034
(4,613)
Covenants not to Compete
 
2,290
(2,036)
 
         2,240
(1,571)
Customer Relationships
 
61,923
(10,597)
 
        60,481
       (7,585)
   
843,034
(202,996)
 
802,457
(167,686)
Intangible Assets with Indefinite Lives
           
Acquired Publishing Rights
 
101,891
-
 
120,771
-
Brands & Trademarks
 
169,621
-
 
163,833
-
   
$1,114,546
$(202,996)
 
$1,087,061
$(167,686)

The change in intangible assets at April 30, 2010 compared to April 30, 2009 is primarily due to foreign exchange translation, amortization expense and the impairment of GIT Verlag as discussed in Note 9.
 
Based on the current amount of intangible assets subject to amortization and assuming current exchange rates, the estimated amortization expense for each of the succeeding 5 fiscal years are as follows:  2011 - $35.7 million; 2012 - $34.7 million; 2013 - $32.5 million; 2014 - $31.4 million; and 2015 - $31.2 million.
 
Note 9 - Impairment and Restructuring Charges
 
In fiscal year 2010, the Company recognized intangible asset impairment and restructuring charges of $15.1 million, which impacted diluted earnings per share by $0.17. These changes are reflected in the Impairment and Restructuring Charges line item in the Consolidated Statements of Income and are described in more detail below.
 
Impairment Charges
GIT Verlag, a business-to-business German-language controlled circulation magazine business, was acquired by the Company in 2002. As part of a strategic review of certain non-core businesses within the STMS reporting segment, the Company considered alternatives for GIT Verlag during fiscal year 2010 due to the economic outlook for the print advertising business in German language publishing. As a result of the review, the Company performed an impairment test on the intangible assets related to GIT Verlag which resulted in an $11.5 million pre-tax impairment charge in fiscal year 2010. This impairment charge reduced the carrying value of the acquired publication rights of GIT Verlag, which was classified as an indefinite-lived intangible asset, to its fair value of $7.7 million.  Concurrent with the strategic review and impairment, the Company has classified the remaining acquired publication rights as a finite-lived intangible asset which is being amortized over a 10 year period. The Company also identified a similar decline in the economic outlook for three smaller business-to-business controlled circulation advertising magazines. An impairment test on the intangible assets associated with those magazines resulted in an additional $0.9 million pre-tax impairment charge in fiscal year 2010 that reduced the intangible assets carrying values of these magazines to their fair value of $0.5 million.
 
 
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The fair values of the intangible assets mentioned in the preceding paragraphs were determined using the income approach with a discounted cash flow technique. This technique relies upon Level 3 inputs (unobservable), which reflect use of the best available internal information, and also represents assumptions the Company believes other market participants would utilize in performing this valuation. These inputs primarily include the discount rate, estimated future financial performance, and an assumed residual value for the business. Determining these inputs requires the Company’s management to make a number of judgments about assumptions and estimates that are highly subjective.  The Company determined the discount rate based on an estimate of a reasonable risk-adjusted return an investor would expect to realize on an investment in this business.  Estimates of future financial performance include future sales growth rates based on the Company’s knowledge of the business and operating cost inflation rates.
 
Restructuring Charges
After considering a number of strategic alternatives for the GIT Verlag business, the Company implemented a restructuring plan in fiscal year 2010 which will reduce certain staff levels and the number of magazines published. As a result, the Company recorded a pre-tax restructuring charge of approximately $1.6 million within the STMS reporting segment in fiscal year 2010 for GIT Verlag severance costs.
 
The Company recorded severance costs of $1.1 million related to offshoring and outsourcing certain central marketing and content management activities to Singapore and other countries in Asia. The charges related to offshoring are expected to be fully recovered within 18 months from implementation as a result of lower operating expenses.
 
As of April 30, 2010, accrued severance of approximately $2.5 million is reflected in the Other Accrued Liabilities line item in the Consolidated Statements of Financial Position. The balance reflects $2.7 million in pre-tax restructuring charges described above, partially offset by severance payments of $0.1 million and foreign currency translation adjustments of $0.1 million. Payments to be made under the restructuring plans are expected to be completed by January 31, 2011.
 
 
 
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Note 10 - Income Taxes
 
The provision for income taxes for the years ending April 30 were as follows (in thousands):

 
2010
2009
2008
Current Provision
     
US – Federal
 $19,976
 $7,795
 $9,397
International
 25,460
 10,006
 10,088
State and Local
1,749
  1,275
  2,386
Total Current Provision
$47,185
    $19,076
    $21,871
Deferred Provision (Benefit)
     
US – Federal
  $5,536
  $7,520
  $5,183
International
  3,286
  8,619
  (13,414)
State and Local
  659
  1,002
       352
Total Deferred Provision
 $9,481
 $17,141
  $(7,879)
Total Provision
$56,666
$36,217
$13,992

International and United States pretax income for the year ended April 30 was as follows (in thousands):

 
2010
2009
2008
International
  $133,088
$107,013
$122,369
United States
67,121
   57,462
    39,159
Total
 $200,209
$164,475
$161,528

The Company’s effective income tax rate as a percentage of pretax income differed from the U.S. federal statutory rate as shown below:

 
2010
2009
2008
U.S. Federal Statutory Rate
35.0%
35.0%
35.0%
State Income Taxes, Net of U.S. Federal Tax Benefit
0.8
0.9
1.2
Benefit from Lower Taxes Non-US Jurisdictions
(8.9)
(11.2)
(14.2)
Deferred Tax Benefit From Statutory Tax Rate  Change
-
-
(11.6)
Other, including Interest on Tax Reserves
1.4
(2.7)
(1.7)
Effective Income Tax Rate
28.3%
22.0%
8.7%
 
Deferred Tax Benefit from Statutory Tax Rate Change:   In fiscal year 2008 the Company recognized tax benefits in the amount of $18.7 million associated with new tax laws enacted in the United Kingdom and Germany that reduced the corporate income tax rate from 30% to 28% and from 39% to 29%, respectively.  The benefit recognized by the Company reflected the adjustment to record the U.K. and Germany related deferred tax balances at the new tax rates.
 
Other, including Interest on Tax Reserves: In fiscal years 2009 and 2008 the Company reported tax benefits of $3.3 million and $3.9 million, respectively, related to the favorable resolution of certain federal, state and foreign tax matters.
 
 
 
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Accounting for Uncertainty in Income Taxes:
 
On May 1, 2007, the Company adopted the provisions that are included in ASC 740, “Income Taxes” (“ASC 740”), which prescribe a recognition threshold and measurement attributes for financial statement recognition of income taxes.
 
Upon adoption, the Company recognized a $0.4 million increase to reserves for income taxes, with a corresponding decrease of $0.4 million in retained earnings.  As of April 30, 2010 and April 30, 2009, the total amount of unrecognized tax benefits were $37.6 million and $30.4 million, respectively, of which $6.8 million and $5.4 million represented reserves for interest and penalties that were recorded as additional tax expense in accordance with the Company’s accounting policy.  The net interest and penalties charged to tax expense in fiscal year 2010 and 2009 were $1.4 million and $0.7 million, respectively.  As of April 30, 2010 and April 30, 2009, the total amount of unrecognized tax benefits that, if recognized, would reduce the Company’s income taxes was approximately $34.5 million and $27.8 million, respectively. The Company does not expect any significant change to the unrecognized tax benefits within the next year.
 
The Company files income tax returns in the U.S. and various states and non-U.S. tax jurisdictions.  The Company’s major taxing jurisdictions include the United States, the United Kingdom and Germany.  Other than the Company’s German subsidiaries, the Company is no longer subject to income tax examinations by tax jurisdictions for years prior to its 2005 fiscal year.  With respect to Germany, all years including fiscal year 2003 forward remain subject to an income tax examination.  All U.S. federal tax years prior to fiscal year 2004 have been audited by the Internal Revenue Service and closed.  The statute of limitations in the U.S. for fiscal year 2004 and fiscal 2005 expired during January 2008 and January 2009 respectively. The Company is currently under an audit examination in Germany for years 2003 through 2007 and in the United States for the years 2006 through 2009.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended April 30 were as follows (in thousands):

 
2010
2009
Balance at the Beginning of Year
$30,368
$32,432
Additions for Current Year Tax Positions
1,476
944
Additions for Prior Year Tax Positions
5,961
1,550
Reductions of Prior Year Tax Positions
(310)
(3,319)
Cumulative Translation Adjustment
403
(678)
Reductions for Lapse of Statute of Limitations
(286)
(561)
Balance at the End of Year
  $37,612
  $30,368

 
 
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Deferred taxes result from temporary differences in the recognition of revenue and expense for tax and financial reporting purposes.  It is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets. The significant components of deferred tax assets and liabilities at April 30 were as follows (in thousands):

 
2010
2009
Net Operating Loss
$6,355
$2,750
Reserve for Sales Returns and Doubtful Accounts
9,054
9,551
Inventory
(5,151)
(6,140)
Accrued Expenses
8,066
7,572
Accrued Employee Compensation
29,982
27,288
Retirement and Post-Employment Benefits
37,512
24,412
Intangible and Fixed Assets
(248,993)
(230,928)
Net Deferred Tax (Liabilities) Assets
$(163,175)
$(165,495)

The Company intends to continue to reinvest earnings outside the U.S. for the foreseeable future and, therefore, has not recognized U.S. tax expense on non-U.S. earnings.  At April 30, 2010, the undistributed earnings of international subsidiaries approximated $282 million. The related tax cost, if the earnings were remitted, cannot be reasonably determined.
 
Note 11 - Debt and Available Credit Facilities

Debt and available credit facilities consisted of the following as of April 30, 2010 and 2009 (in thousands):

 
2010
2009
Revolving Credit Facility – Due 2012
$114,000
$219,400
Term Loan – Due 2011 - 2013
535,000
603,000
Total Debt
649,000
822,400
Less: Current Portion
(90,000)
(67,500)
Total Long-Term Debt
$559,000
$754,900

In connection with the Blackwell acquisition, the Company entered into a new Credit Agreement with Bank of America and Royal Bank of Scotland as Co-Lead Arrangers in the aggregate amount of $1.35 billion. The financing was comprised of a six-year Term Loan (Term Loan) in the amount of $675 million and a $675 million five-year revolving credit facility (Revolver) which can be drawn in multiple currencies. The agreement provides financing to complete the acquisition, refinance the existing revolving debt of the Company, as well as meet future seasonal operating cash requirements. The Company has the option of borrowing at the following floating interest rates: (i) at the rate as announced from time to time by Bank of America as its prime rate or (ii) at a rate based on the London Bank Interbank Offered Rate (LIBOR) plus an applicable margin ranging from .37% to 1.05% for the Revolver and .45% to 1.25% for the Term Loan depending on the Company’s consolidated leverage ratio, as defined.  In addition, the Company will pay a facility fee ranging from .08% to .20% on the Revolver depending on the Company’s consolidated leverage ratio, as defined.  The total of the applicable margin and facility fee at both April 30, 2010 and 2009 were .50% and .63%, respectively. The Term loan has quarterly mandatory principle payments ranging from zero to $33.8 million.  For the fiscal years ending April 30, 2010 and 2009, these payments were $68.0 million and $45.0 million, respectively.  The final amount due at maturity in 2013 is $231.3 million.  The Company has the option to request an increase of up to $250 million in the size of the Revolver in minimum amounts of $50 million.  The Term Loan matures on February 2, 2013 and the Revolver will terminate on February 2, 2012.
 
 
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The credit agreements contain certain restrictive covenants related to Leverage Ratio, Fixed Charge coverage ratio, property, equipment and technology expenditures, and restricted payments, including a limitation for dividends paid and share repurchases.  Under the most restrictive covenant, approximately $106 million was available for such restricted payments as of April 30, 2010.
 
The Company and its subsidiaries have other short-term lines of credit aggregating $11 million at various interest rates.  No borrowings under the credit lines were outstanding at April 30, 2010 or 2009.
 
The Company’s total available lines of credit as of April 30, 2010 were approximately $1.2 billion, of which approximately $572 million was unused.  The weighted average interest rates on long term debt outstanding during fiscal years 2010 and 2009 were 3.70% and 5.02%, respectively.  As of April 30, 2010 and 2009, the weighted average interest rates for the long-term debt were 3.13% and 4.11% respectively.  Based on estimates of interest rates currently available to the Company for loans with similar terms and maturities, the fair value of amounts outstanding under the Credit Agreement approximate the carrying value.
 
Total debt maturing in each of the next three years are:  2011 – $90.0 million; 2012 – $226.5 million; 2013 – $332.5 million.
 
Note 12 – Derivative Instruments and Hedging Activities
 
The Company, from time to time, enters into forward exchange and interest rate swap contracts as a hedge against foreign currency asset and liability commitments, changes in interest rates and anticipated transaction exposures, including intercompany purchases. All derivatives are recognized as assets or liabilities and measured at fair value.  Derivatives that are not determined to be effective hedges are adjusted to fair value with a corresponding effect on earnings.  The Company does not use financial instruments for trading or speculative purposes.

The Company had approximately $649.0 million of variable rate loans outstanding at April 30, 2010, which approximated fair value.  The Company maintains two interest rate swap agreements that are designated as cash flow hedges as defined under ASC 815 “Derivatives and Hedging” (“ASC 815”).  As of April 30, 2010, these swap agreements have been evaluated as being fully effective.  As a result, there is no impact on the Company’s Consolidated Statements of Income for changes in the fair value of the interest rate swap.  Under ASC 815, fully effective derivative instruments that are designated as cash flow hedges have changes in their fair value recorded initially within Accumulated Other Comprehensive Income on the Consolidated Statements of Financial Position.  As interest expense is recognized based on the variable rate loan agreements, the corresponding deferred gain or loss on the interest rate swaps is reclassified from Accumulated Other Comprehensive Income to Interest Expense in the Consolidated Statements of Income.

On February 16, 2007 the Company entered into an interest rate swap agreement which fixed variable interest due on a portion of its term loan (“Term Loan”). Under the terms of the agreement, the Company pays a fixed rate of 5.076% and receives a variable rate of interest based on three month LIBOR (as defined) from the counter party which is reset every three months for a four-year period ending February 8, 2011.  The notional amount of the rate swap was initially $660 million, which will decline through February 8, 2011, based on the expected amortization of the Term Loan.  As of April 30, 2010 and 2009, the notional amount was $200 million and $400 million, respectively.   On October 19, 2007 the Company entered into an additional interest rate swap agreement which fixed a portion of the variable interest due on its revolving credit facility (“Revolving Credit Facility”).  Under the terms of this interest rate swap, the Company pays a fixed rate of 4.60% and receives a variable rate of interest based on three month LIBOR (as defined) from the counterparty which is reset every three months for a three-year period ending August 8, 2010.  As of April 30, 2010 and 2009, the notional amount of the rate swap was $100 million.  It is management’s intention that the notional amount of interest rate swaps be less than the Term Loan and the Revolving Credit Facility outstanding during the life of the derivatives.

 
65

 
 
The Company records the fair value of its interest rate swaps on a recurring basis using Level 2 inputs of quoted prices for similar assets or liabilities in active markets.  The fair value of the interest rate swaps as of April 30, 2010 and 2009 was a net deferred loss of $11.5 million and $28.2 million, respectively. As of April 30, 2010, the deferred loss was recorded in Other Accrued Liabilities on the Consolidated Statements of Financial Position. As of April 30, 2009, the deferred loss was fully recorded within Other Long-Term Liabilities based on the maturity dates of the contracts. Losses that have been reclassified from Accumulated Other Comprehensive Income into Interest Expense for fiscal years 2010, 2009 and 2008 were $20.4 million, $17.4 and $2.2 million, respectively.  Based on the amount in Accumulated Other Comprehensive Income at April 30, 2010, approximately $4.0 million, net of tax, of unrecognized loss would be reclassified into net income in the next twelve months.

During fiscal year 2010, the Company entered into certain forward exchange contracts to manage the Company’s exposure on certain foreign currency denominated intercompany loans.  Foreign currency denominated assets and liabilities are remeasured at spot rates in effect on the balance sheet date, with the effects of changes in spot rates reported in Foreign Exchange Gains (Losses) on the Consolidated Statements of Income.  The Company did not designate its forward exchange contracts as hedges under current accounting standards as the benefits of doing so were not material due to the short-term nature of the contracts.  Therefore, the forward exchange contracts were marked to market through Foreign Exchange Gains (Losses) on the Consolidated Statements of Income, and were carried at their fair value on the Consolidated Statements of Financial Position.  Accordingly, fair value changes in the forward exchange contracts substantially mitigated the changes in the value of the remeasured foreign currency denominated intercompany loans attributable to changes in foreign currency exchange rates. The Company measured the forward exchange contracts on a recurring basis using Level 2 inputs.  The losses recognized on the forward contracts in fiscal year 2010 were $2.0 million, and were substantially offset by the foreign exchange gains recognized on the economically hedged foreign currency denominated assets and liabilities.  As of April 30, 2010, the Company had settled its forward exchange contracts and had no remaining open forward contracts.  The Company did not enter into any forward exchange contracts during fiscal year 2009.

Note 13 - Commitments and Contingencies
 
The following schedule shows the composition of rent expense for operating leases (in thousands):

 
2010
2009
2008
Minimum Rental
$37,261
$37,561
$36,002
Less: Sublease Rentals
(1,709)
(1,828)
(1,624)
Total
$35,552
$35,733
$34,378

Future minimum payments under operating leases were $238.6 million at April 30, 2010. Annual minimum payments under these leases for fiscal years 2011 through 2015 are approximately $34.0 million, $31.2 million, $27.9 million, $27.5 million, and $27.3 million, respectively.  Rent expense associated with operating leases that include scheduled rent increases and tenant incentives, such as rent holidays, are recorded on a straight-line basis over the term of the lease.
 
 
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The Company is involved in routine litigation in the ordinary course of its business. In the opinion of management, the ultimate resolution of all pending litigation will not have a material effect upon the financial condition or results of operations of the Company.
 
Note 14 - Retirement Plans
 
The Company and its principal subsidiaries have contributory and noncontributory retirement plans that cover substantially all employees. The plans generally provide for employee retirement between the ages of 60 and 65, and benefits based on length of service and compensation, as defined.
 
The Company recognizes the overfunded or underfunded status of defined benefit postretirement plans, measured as the difference between the fair value of plan assets and the projected benefit obligation, in the Consolidated Statements of Financial Position.  The change in the funded status of the plan is recognized within Accumulated Other Comprehensive Income.  Plan assets and obligations are measured as of the Company’s balance sheet date.
 
The amounts in Accumulated Other Comprehensive Income that are expected to be recognized as components of net periodic benefit cost during the next fiscal year are as follows (in thousands):

 
Funded
Unfunded
Total
Actuarial Loss
$5,863
$1,065
$6,928
Prior Service Cost
348
353
701
Total
$6,211
$1,418
$7,629
 
The Company has agreements with certain officers and senior management that provide for the payment of supplemental retirement benefits during each of the 10 years after the termination of employment. Under certain circumstances, including a change of control as defined, the payment of such amounts could be accelerated on a present value basis.
 
Net pension expense detailed below includes approximately $8.2 million, $7.4 million and $13.2 million for plans outside of the United States for fiscal years 2010, 2009 and 2008, respectively.  The components of net pension expense for the defined benefit plans were as follows (in thousands):

 
2010
2009
2008
Service Cost
$11,095
$13,835
$19,639
Interest Cost
24,055
22,715
22,030
Expected Return on Plan Assets
(19,468)
(21,470)
(22,443)
Net Amortization of Prior Service Cost and Transition Asset
861
589
608
Recognized Net Actuarial Loss
3,776
2,654
3,060
Net Pension Expense
$20,319
$18,323
$22,894
 
 
 
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The weighted-average assumptions used to determine net pension expense for the years ended April 30 were as follows:

 
2010
2009
2008
Discount Rate
7.1%
6.3%
5.7%
Rate of Compensation Increase
4.2%
4.3%
4.6%
Expected Return on Plan Assets
7.4%
7.4%
7.6%
 
The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the retirement plans with accumulated benefit obligations in excess of plan assets were $205.6 million, $190.9 million, and $119.3 million, respectively, as of April 30, 2010, and $153.8 million, $144.5 million and $70.5 million, respectively, as of April 30, 2009.

 
 
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The following table sets forth the changes in and the status of the plans’ assets and benefit obligations.  The unfunded plans relate primarily to a non-U.S. subsidiary, which is governed by local statutory requirements, and the domestic supplemental retirement plans for certain officers and senior management personnel.

 
Dollars in thousands
 
                             2010
 
                           2009
CHANGE IN PLAN ASSETS
        Funded
   Unfunded
        Funded
     Unfunded
Fair Value of Plan Assets, Beginning of Year
$229,931
$             -
$321,713
$             -
Actual Return on Plan Assets
65,233
-
(45,032)
-
Employer Contributions
45,852
2,304
18,788
2,229
Employees’ Contributions
2,118
-
2,157
-
Benefits Paid
(8,042)
(2,304)
(8,899)
(2,229)
Foreign Currency Rate Changes
7,605
-
(58,796)
-
Fair Value, End of Year
$342,697
$             -
$229,931
$             -
CHANGE IN PROJECTED BENEFIT OBLIGATION
       
Benefit Obligation, Beginning of Year
$(270,727)
$(51,920)
$(339,526)
$(57,521)
Service Cost
(9,635)
(1,460)
(11,942)
(1,893)
Interest Cost
(20,350)
(3,705)
(19,358)
(3,357)
Employee Contributions
(2,118)
-
(2,157)
-
Actuarial Gain (Loss)
(95,982)
(10,166)
32,439
4,590
Benefits Paid
8,042
2,304
8,899
2,229
Foreign Currency Rate Changes
(7,298)
(263)
60,972
4,032
Amendments and Other
-
(905)
(54)
-
Benefit Obligation, End of Year
$(398,068)
$(66,115)
$(270,727)
$(51,920)
Funded Status
$(55,371)
$(66,115)
$(40,796)
$(51,920)
 Amounts Recognized in the Statement of Financial Position:
       
 Deferred Pension Asset
$39
$             -
$388
 $             -
 Current Pension Liability
-
(2,245)
-
(2,483)
 Noncurrent Pension Liability
(55,410)
(63,870)
(41,184)
(49,437)
 
 Net Amount Recognized in Statement of Financial Position
$(55,371)
$(66,115)
$(40,796)
$(51,920)
AMOUNTS RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE INCOME CONSIST OF (before tax)
       
 Net Actuarial Loss
$(106,094)
$(10,601)
$(59,178)
$(785)
 Prior Service Cost
(1,409)
(1,720)
(1,849)
(1,164)
 Total Accumulated Other Comprehensive Loss
$(107,503)
$(12,321)
$(61,027)
$(1,949)
(Decrease)/Increase in Accumulated other Comprehensive  Income
$(46,476)
$(10,372)
$(26,314)
$5,596
WEIGHTED AVERAGE ASSUMPTIONS USED IN DETERMINING ASSETS AND LIABILITIES
       
Discount Rate
5.8%
5.4%
7.2%
6.9%
Rate of Compensation Increase
4.6%
4.0%
4.2%
4.0%
Accumulated Benefit Obligations
$(348,028)
$(56,611)
$(244,929)
$(45,495)
 
 
 
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Basis for determining discount rate:
 
The discount rates for the United States and Canadian pension plans were based on the derivation of a single-equivalent discount rate using a standard spot rate curve and the timing of expected benefit payments as of April 30, 2010.  The spot rate curve used is based upon a portfolio of Moody’s-rated Aa 3 (or higher) corporate bonds.  The discount rates for the other international plans were based on similar published indices with durations comparable to that of each plan’s liabilities.
 
Basis for determining the expected asset return:
 
The expected long-term rates of return were estimated using market benchmarks for equities, real estate, and bonds applied to each plan’s target asset allocation and are estimated by asset class including an anticipated inflation rate. The expected long-term rates are then compared to the historic investment performance of the plan assets as well as future expectations and estimated through consultation with investment advisors and actuaries.
 
Pension plan assets/investments:
 
The investment guidelines for the defined benefit pension plans are established based upon an evaluation of market conditions, plan liabilities, cash requirements for benefit payments, and tolerance for risk.  Investment guidelines include the use of actively and passively managed securities. The investment objective is to ensure that funds are available to meet the plan’s benefit obligations when they are due. The investment strategy is to invest in high quality and diversified equity and debt securities to achieve our long-term expectation.  The plans’ risk management practices provide guidance to the investment managers, including guidelines for asset concentration, credit rating and liquidity.  Asset allocation favors a balanced portfolio, with a target allocation of approximately 51% equity securities, 43% fixed income securities and cash, and 6% real estate. Due to volatility in the market, the target allocation is not always desirable and asset allocations will fluctuate between acceptable ranges of plus or minus 5%. The Company regularly reviews the investment allocations and periodically rebalances investments to the target allocations. As of April 30, 2010, the Company adopted the new accounting guidance on employer’s disclosures about postretirement benefit plan assets which requires that we categorize pension assets into three levels based upon the assumptions (inputs) used to price the assets. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment.  The three levels are defined as follows:
 
·  
Level 1:  Unadjusted quoted prices in active markets for identical assets.
·  
Level 2:  Observable inputs other than those included in Level 1.  For example, quoted prices for similar assets in active markets or quoted prices for identical assets in inactive markets.
·  
Level 3:  Unobservable inputs reflecting assumptions about the inputs used in pricing the asset.


 
 
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The Company held no level 3 assets during the year. The following table sets forth by level within the fair value hierarchy, pension plan assets at their fair value as of April 30, 2010 (in thousands):

 
(Level 1)
Quoted Prices in Active Markets for Identical Assets
(Level 2)
   Significant Observable Inputs
    Total
U.S. Plan Assets
     
Equity Securities:
     
U.S. Commingled Funds
$           -
$47,938
$47,938
Non-U.S. Commingled Funds
-
20,095
20,095
Fixed Income Securities:
     
Fixed Income Commingled Funds
-
46,846
46,846
Other:
     
Real Estate
-
4,422
4,422
Total U.S. Plan Assets
 $          -
$119,301
$119,301
       
Non-U.S. Plan Assets
     
Equity Securities:
     
U.S. Equities
$13,278
$10,863
$24,141
Non-U.S. Equities
15,022
60,336
75,358
International Equities
2,351
-
2,351
Fixed Income Securities:
     
Government /Sovereign Securities
13,292
1,439
14,731
Fixed Income Funds
17,736
67,693
85,429
Other:
     
Real Estate/Other
2,719
10,368
13,087
Cash and Cash Equivalents
8,151
148
8,299
Total Non-U.S. Plan Assets
$72,549
$150,847
$223,396
Total Plan Assets
$72,549
$270,148
$342,697
 
Expected employer contributions to the defined benefit pension plans in fiscal year 2011 will be approximately $14.6 million, including $8.6 million of minimum amounts required for the Company’s non-U.S. plans. From time to time, the Company may elect to make voluntary contributions to its defined benefit plans to improve their funded status.
 
Benefit payments from all plans are expected to approximate $11.7 million in fiscal year 2011, $12.7 million in fiscal year 2012, $13.9 million in fiscal year 2013, $15.4 million in fiscal year 2014, $17.7 million in fiscal year 2015, and $117.6 million for fiscal years 2016 through 2020.
 
The Company provides contributory life insurance and health care benefits, subject to certain dollar limitations for substantially all of its eligible retired U.S. employees. The cost of such benefits is expensed over the years the employee renders service and is not funded in advance. The accumulated post-retirement benefit obligation recognized in the Consolidated Statements of Financial Position as of April 30, 2010 and 2009 was $4.0 million and $2.8 million, respectively.  Annual expenses for these plans for fiscal years 2010, 2009 and 2008 were $0.5 million, $0.4 million and $0.3 million, respectively.
 
 
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The Company has defined contribution savings plans. The Company contribution is based on employee contributions and the level of Company match. The expense for these plans amounted to approximately $8.4 million, $7.3 million, and $6.3 million in fiscal years 2010, 2009, and 2008, respectively.
 
Note 15 – Share-Based Compensation
 
All equity compensation plans have been approved by security holders. At the meeting of shareholders held in September 2009, shareholders approved the 2009 Key Employee Stock Plan (“the Plan”). Under the Plan, qualified employees are eligible to receive awards that may include stock options, performance-based stock awards, and restricted stock awards.  Under the Plan, a maximum number of 8,000,000 shares of Company Class A stock may be issued. As of April 30, 2010, there were approximately 7,915,000 securities remaining available for future issuance under the Plan. The Company issues treasury shares to fund stock options and performance-based and restricted stock awards.
 
Stock Option Activity:
 
Under the terms of the Company’s stock option plan, the exercise price of stock options granted may not be less than 100% of the fair market value of the stock at the date of grant.  Options are exercisable over a maximum period of 10 years from the date of grant and generally vest 50% on the fourth and fifth anniversary date after the award is granted.  Under certain circumstances relating to a change of control, as defined, the right to exercise options outstanding could be accelerated.
 
The following table provides the estimated weighted average fair value, under the Black-Scholes option-pricing model, for each option granted during the periods and the significant weighted average assumptions used in their determination.  The expected life represents an estimate of the period of time stock options are outstanding based on the historical exercise behavior of the employees. The risk-free interest rate is based on the corresponding U.S. Treasury yield curve in effect at the time of the grant. The expected volatility is based on the historical volatility of the Company’s Common Stock Price over the estimated life of the option while, the dividend yield is based on the expected dividend payments to be made by the Company.

 
  For the Twelve Months
Ending April 30,
 
     2010
 
          2009
 
     2008
Per Share Fair Value of Options Granted
$11.32
 
$15.30
 
$18.42
           
Weighted Average assumptions:
         
Expected Life of Options (years)
7.8
 
7.7
 
7.7
Risk-Free Interest Rate
3.3%
 
3.8%
 
5.1%
Expected Volatility
29.9%
 
25.2%
 
27.3%
Expected Dividend Yield
1.6%
 
1.1%
 
0.9%
Fair Value of Common Stock on Grant Date
$35.04
 
$47.55
 
$48.46

 
 
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A summary of the activity and status of the Company’s stock option plans follows:

 
 
2010
 
 
2009
 
 
2008
Stock Options
Options
(in 000’s)
 
Weighted Average Exercise Price
 
Weighted Average Remaining Term
(in years)
 
Average Intrinsic Value
(in millions)
 
 
 
 
 
 
Options
(in 000’s)
Weighted Average Exercise Price
 
 
Options
(in 000’s)
 
Weighted Average Exercise Price
Outstanding at Beginning of Year
5,722
$34.05
     
5,730
$31.27
 
6,216
$27.37
Granted
695
$35.04
     
631
$47.55
 
627
$48.46
Exercised
(1,407)
$25.74
     
(622)
$22.02
 
(1,001)
$17.89
Expired or Forfeited
(23)
$40.37
     
(17)
$34.66
 
(112)
$30.45
Outstanding at End of Year
4,987
$36.51
5.9
$35.9
 
5,722
$34.05
 
5,730
$31.27
Exercisable at End of Year
2,513
$31.47
4.1
$27.1
 
2,937
$27.38
 
2,657
$24.40
Vested and Expected to Vest in the Future at April 30, 2010
4,802
$36.61
5.9
$34.2
         
 

The intrinsic value is the difference between the Company’s common stock price and the option exercise price. The total intrinsic value of options exercised during fiscal years 2010, 2009 and 2008 was $22.9 million, $11.8 million and $25.3 million, respectively.  The total fair value of stock options vested during fiscal year 2010 was $11.6 million.
 
As of April 30, 2010, there was $8.0 million of unrecognized share-based compensation expense related to stock options, which is expected to be recognized over a period up to 5 years, or 1.9 years on a weighted average basis.
 
The following table summarizes information about stock options outstanding and exercisable at April 30, 2010:

 
Options Outstanding
 
Options Exercisable
 
 
Range of
Exercise Prices
 
Number of Options
(in 000’s)
 
Weighted Average Remaining Term (in years)
 
Weighted Average Exercise Price
 
 
Number of Options
(in 000’s)
 
Weighted Average Exercise Price
$18.30 to $20.54
20
1.4
$19.58
 
20
$19.58
$21.44 to $23.40
96
1.3
$23.17
 
96
$23.17
$23.56 to $25.32
717
2.8
$25.16
 
  717
$25.16
$31.89 to $38.78
2,908
6.1
$34.93
 
1,680
$34.77
$47.55 to $48.46
       1,246
7.7
$48.00
 
-
-
Total/Average
4,987
5.9
$36.51
 
   2,513
$31.47

Performance-Based and Other Restricted Stock Activity:
 
Under the terms of the Company’s long-term incentive plans, upon the achievement of certain three-year financial performance-based targets, awards are payable in restricted shares of the Company’s Class A Common Stock. During each three-year period, the Company adjusts compensation expense based upon its best estimate of expected performance. The restricted performance shares vest 50% on the first and second anniversary date after the award is earned.
 
 
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The Company may also grant individual restricted shares awards of the Company’s Class A Common Stock to key employees in connection with their employment.  The restricted shares generally vest 50% at the end of the fourth and fifth years following the date of the grant.
 
Under certain circumstances relating to a change of control or termination, as defined, the restrictions would lapse and shares would vest earlier. Activity for performance-based and other restricted stock awards during fiscal years 2010, 2009 and 2008 was as follows (shares in thousands):

 
2010
 
  2009
2008
 
Restricted Shares
Weighted Average Grant Date Value
 
Restricted Shares
Restricted Shares
 
Nonvested Shares at Beginning of Year
 
682
 
$37.81
 
 
1,096
 
          814
Granted
363
$35.04
 
   308
          307
Change in shares due to performance
191
$48.31
 
  (459)
          211
Vested and Issued
(292)
$35.00
 
  (228)
         (224)
Forfeited
(18)
$41.08
 
    (35)
           (12)
Nonvested Shares at End of Year
926
$39.71
 
682
1,096

As of April 30, 2010, there was $14.9 million of unrecognized share-based compensation cost related to restricted stock awards, which is expected to be recognized over a period up to 5 years, or 3.1 years on a weighted average basis. Compensation expense for restricted stock awards is measured using the closing market price of the Company’s Class A Common Stock at the date of grant.  The total grant date value of shares vested during fiscal years 2010, 2009 and 2008 was $10.2 million, $7.8 million and $6.4 million, respectively.
 
Director Stock Awards:
 
Under the terms of the Company’s Director Stock Plan (the “Director Plan”), each non-employee director receives an annual award of Class A Common Stock equal in value to 100% of the annual director fee, based on the stock price on the date of grant. The granted shares may not be sold or transferred during the time the non-employee director remains a director.  There were 14,130, 8,616 and 7,680 shares awarded under the Director Plan for fiscal years 2010, 2009 and 2008, respectively.
 
Note 16 - Capital Stock and Changes in Capital Accounts
 
Each share of the Company’s Class B Common Stock is convertible into one share of Class A Common Stock. The holders of Class A stock are entitled to elect 30% of the entire Board of Directors and the holders of Class B stock are entitled to elect the remainder.  On all other matters, each share of Class A stock is entitled to one tenth of one vote and each share of Class B stock is entitled to one vote.
 
Under the Company’s current stock repurchase program, up to four million shares of its Class A Common Stock may be purchased from time to time in the open market and through privately negotiated transactions.  The Company did not repurchase any shares during fiscal year 2010.  As of April 30, 2010, the Company has authorization from its Board of Directors to purchase up to approximately 798,630 additional shares.

 
 
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Note 17 - Segment Information
 
The Company is a global publisher of print and electronic products, providing content and digital solutions to customers worldwide. The Company maintains publishing, marketing and distribution centers principally in Asia, Australia, Canada, Germany, the United Kingdom and the United States. Below is a description of the Company’s three operating segments.
 
Scientific, Technical, Medical and Scholarly includes the publishing of titles for the scientific, technical, medical and scholarly communities worldwide including academic, corporate, government and public libraries; researchers; scientists; clinicians; engineers and technologists; scholarly and professional societies; and students and professors. Products include journals, books, major reference works, databases and laboratory manuals. Publishing areas include the physical sciences, health sciences, social science and humanities and life sciences.  Products are sold and distributed globally, online and in print through multiple channels, including research libraries, library consortia, independent subscription agents, direct sales to professional society members, bookstores, online booksellers and other customers. Publishing centers include Australia, Germany, Singapore, the United Kingdom and the United States.
 
Professional/Trade includes the publishing of books, subscription products and information services in all media. Subject areas include business, technology, architecture, cooking, psychology, education, travel, health, religion, consumer reference, pets and general interest. Products are developed for worldwide distribution through multiple channels, including major chains and online booksellers, independent bookstores, libraries, colleges and universities, warehouse clubs, corporations, direct marketing and websites. Professional/Trade customers are professionals, consumers and students worldwide. Publishing centers include Asia, Australia, Canada, Germany, the United Kingdom and the United States.
 
Higher Education includes the publishing of educational materials in all media, for two and four-year colleges and universities, for-profit career colleges, advanced placement classes and secondary schools in Australia. Higher Education products focus on courses in business and accounting, sciences, engineering, computer science, mathematics, statistics, geography, hospitality and the culinary arts, education, psychology and modern languages. Customers include undergraduate, graduate and advanced placement students, educators and lifelong learners worldwide and secondary school students in Australia. Products are sold and delivered online and in print, principally through college bookstores, online booksellers and websites. The Company maintains centers in Asia, Australia, Canada, India, the United Kingdom and the United States.
 
Shared Services - The Company reports separate financial data for shared service functions, which are centrally managed for the benefit of the three global businesses, including Distribution, Technology Services, Finance and Other Administration support.

 
 
75

 


 
Segment information is as follows (in thousands) :
 
 
 For the years ended April 30,
 
                 2010
              2009
                2008
Revenue
     
Scientific, Technical, Medical and Scholarly
$986,683
$969,184
$975,797
Professional/Trade
429,988
403,113
457,286
Higher Education
282,391
239,093
240,651
Total
$1,699,062
$1,611,390
$1,673,734
       
Direct Contribution to Profit
     
Scientific, Technical, Medical and Scholarly
$405,241
$399,156
$384,170
Professional/Trade
100,196
89,678
130,502
Higher Education
86,212
66,619
74,387
Total
$591,649
$555,453
$589,059
       
Shared Services and Administration Costs
     
Distribution
$(110,858)
$(112,961)
$(116,147)
Technology Services
(103,154)
(93,413)
(95,412)
Finance
(47,294)
(45,937)
(49,684)
Other Administration
(87,751)
(84,664)
(102,605)
Total
$(349,057)
$(336,975)
$(363,848)
       
Operating Income
$242,592
$218,478
$225,211
Foreign Exchange Losses
(10,883)
(11,759)
(2,863)
Interest Expense & Other, net
(31,500)
 (42,244)
 (60,820)
Income Before Taxes
$200,209
$164,475
$161,528
       
Total Assets
     
Scientific, Technical, Medical and Scholarly
$1,417,276
$1,380,991
$1,715,292
Professional/Trade
474,428
462,482
506,838
Higher Education
157,816
165,839
160,292
Corporate/Shared Services
266,682
214,396
193,793
Total
$2,316,202
$2,223,708
$2,576,215
       
Expenditures for Other Long Lived Assets
     
Scientific, Technical, Medical and Scholarly
 $97,329
 $95,417
$83,464
Professional/Trade
50,733
55,433
 50,638
Higher Education
19,455
36,287
20,117
Corporate/Shared Services
42,390
14,498
15,967
Total
$209,907
$201,635
$170,186
       
Depreciation and Amortization
     
Scientific, Technical, Medical and Scholarly
$52,215
$51,045
$52,101
Professional/Trade
32,191
31,703
32,322
Higher Education
25,125
 21,926
 20,924
Corporate/Shared Services
13,348
11,071
10,576
Total
$122,879
$115,745
$115,923
 
 
 
 
76

 

 
Export sales from the United States to unaffiliated customers amounted to approximately $140.5 million, $142.3 million, and $95.2 million in fiscal years 2010, 2009, and 2008, respectively. The pretax income for consolidated operations outside the United States was approximately $133.1 million, $107.0 million, and $122.4 million in 2010, 2009, and 2008, respectively.

Revenue from external customers based on the location of the customer and long-lived assets by geographic area were as follows (in thousands):

 
 
Revenue
 
 
Long-Lived Assets
 
 
  2010
 
 
     2009
 
 
    2008
 
 
  2010
 
 
              2009
 
 
    2008
United States
  $865,519
 
  $812,416
 
  $856,438
 
 $734,512
 
 $731,535
 
   $702,722
United Kingdom
120,953
 
    126,190
 
    131,642
 
889,921
 
845,681
 
  1,203,700
Germany
91,954
 
88,336
 
      91,130
 
132,783
 
140,507
 
     149,403
Asia
234,585
 
220,107
 
    209,436
 
3,454
 
3,309
 
         2,789
Australia
79,194
 
      65,084
 
      76,530
 
57,447
 
44,618
 
       48,411
Canada
      70,566
 
      67,189
 
      68,609
 
5,635
 
4,424
 
         5,073
Other Countries
236,291
 
    232,068
 
    239,949
 
-
 
-
 
                -
Total
$1,699,062
 
$1,611,390
 
$1,673,734
 
$1,823,752
 
$1,770,074
 
$2,112,098
 
Note 18 – Interest Income and Other, Net

Included in Interest Income and Other for fiscal year 2009 is a $4.6 million ($0.08 per diluted share) non-recurring insurance receipt.

Note 19 – Functional Currency Change

Effective November 1, 2008, the Company changed its functional currency reporting basis for the non-Blackwell portion of the Company’s European STMS journal business from U.S. Dollar to local functional currency. As part of the integration of Blackwell and Wiley fulfillment systems and licensing practices, in the third quarter the Company began pricing journal revenue based on local currency in Europe.  Prior to the integration, journal revenue was principally priced and reported in U.S. Dollars. This change primarily impacted business denominated in Euros and Sterling.


 
 
77

 


Schedule II
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED APRIL 30, 2010, 2009, AND 2008

(Dollars in thousands)

     
Additions/ (Deductions)
       
 
 
Description
Balance at Beginning of Period
 
Charged to
Cost &
Expenses
 
Deductions From Reserves (2)
 
Balance at End of Period
Year Ended April 30, 2010
             
Allowance for Sales Returns (1)
$55,207
 
$102,395
 
$102,291
 
$55,311
Allowance for Doubtful Accounts
$5,655
 
$3,177
 
$1,973
 
$6,859
      Allowance for Inventory Obsolescence
$36,329
 
$28,699
 
$25,354
 
$39,674
Year Ended April 30, 2009
             
Allowance for Sales Returns (1)
$55,483
 
$93,738
 
$94,014
 
$55,207
Allowance for Doubtful Accounts
$8,025
 
$2,019
 
$4,389
 
$5,655
      Allowance for Inventory Obsolescence
$35,420
 
$28,405
 
$27,496
 
$36,329
Year Ended April 30, 2008
             
Allowance for Sales Returns (1)
$56,148
 
$93,909
 
$94,574
 
$55,483
Allowance for Doubtful Accounts
$11,206
 
$(638)
 
$2,543
 
$8,025
Allowance for Inventory Obsolescence
$32,244
 
$22,156
 
$18,980
 
$35,420
 
 
(1)
Allowance for sales returns represents anticipated returns net of inventory and royalty costs. The provision is reported as a reduction of gross sales to arrive at revenue and the reserve balance is reported as a reduction of accounts receivable.
 
 
(2)
Deductions from reserves include foreign exchange translation adjustments and accounts written off, less recoveries.


 
 
78

 


Item 9.     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None

Item 9A.    Controls and Procedures
 
Disclosure Controls and Procedures:   As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as such term is defined in Rule 13a-15(e) of the Exchange Act.  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective in alerting them on a timely basis to information required to be included in our submissions and filings with the SEC.
 
Management’s Report on Internal Control over Financial Reporting: Our Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule   13a-15(f) of the Exchange Act.  Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on that evaluation, our management concluded that our internal control over financial reporting is effective as of April 30, 2010.
 
KPMG LLP, an independent registered public accounting firm, has audited the consolidated financial statements included in this Annual Report on Form 10-K and, as part of their audit, has issued their report, included herein, on the effectiveness of our internal control over financial reporting.
 
Changes in Internal Control over Financial Reporting: There were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during fiscal year 2010.
 
Item 9B.   Other Information
 
Information on the Audit Committee Charter is contained in the Company’s Proxy Statement for the 2010 Annual Meeting of Shareholders under the caption “Certain Information Concerning the Board” and is incorporated herein by reference.
 
Information with respect to the Company’s corporate governance principles is contained in the Proxy Statement for the 2010 Annual Meeting of Shareholders under the caption “Corporate Governance Principles” and is incorporated herein by reference.
 
Following the acquisition of Sun Microsystems, Inc. by Oracle, One of the Company’s Board of Directors, Kim Jones, exercised her change of control provision and is no longer employed by Oracle. Pursuant the Company’s Corporate Governance Principles, Ms. Jones tendered her resignation as a director. On June 17, 2010, the Board of Directors accepted Ms. Jones’ resignation. 

 
 
79

 

 
PART III

Item 10.      Directors and Executive Officers of the Registrant
 
The name, age and background of each of the directors nominated for election are contained under the caption “Election of Directors” in the Proxy Statement for our 2010 Annual Meeting of Shareholders and are incorporated herein by reference.
 
Information on the beneficial ownership reporting for the directors and executive officers is contained under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in the Proxy Statement for the 2010 Annual Meeting of Shareholders and is incorporated herein by reference.
 
Information on the audit committee financial experts is contained in the Proxy Statement for the 2010 Annual Meeting of Shareholders under the caption “Report of the Audit Committee” and is incorporated herein by reference.
 
Executive Officers
 
Set forth below as of April 30, 2010 are the names and ages of all executive officers of the Company, the period during which they have been officers, and the offices presently held by each of them.

 
Name and Age
 
 
Officer Since
 
 
Present Office
         
Peter Booth Wiley
67
 
2002
 
Chairman of the Board since September 2002 and a Director since 1984.
         
William J. Pesce
59
 
1989
 
President and Chief Executive Officer and a Director since 1998.
         
Ellis E. Cousens
58
 
2001
 
Executive Vice President and Chief Financial and Operations Officer since 2001.
         
Stephen A. Kippur
63
 
1986
 
Executive Vice President; and President, Professional and Trade Publishing since 1998.
         
William Arlington
61
 
1990
 
Senior Vice President, Human Resources since 1996.
         
Bonnie E. Lieberman
62
 
1990
 
Senior Vice President, Higher Education since 1996.
         
Gary M. Rinck
58
 
2004
 
Senior Vice President, General Counsel since 2004.
         
Stephen M. Smith
55
 
1995
 
Executive Vice President and Chief Operating Officer since 2009.
         
Eric A. Swanson
62
 
1989
 
Senior Vice President, Wiley-Blackwell since 2007 (previously Senior Vice President, Scientific Technical and Medical since 1996).
         
Deborah E. Wiley
64
 
1982
 
Senior Vice President, Corporate Communications since 1996.
         
Vincent Marzano
47
 
2006
 
Vice President, Treasurer since 2006.
         
Edward J. Melando
54
 
2002
 
Vice President, Corporate Controller and Chief Accounting Officer since 2002.
         
Michael Preston
42
 
2009
 
Corporate Secretary since 2009.
 
 
Each of the other officers listed above will serve until the next organizational meetings of the Board of Directors of the Company and until each of the respective successors are duly elected and qualified.  Deborah E. Wiley is the sister of Peter Booth Wiley. There is no other family relationship among any of the aforementioned individuals.
 
 
80

 
 
Item 11.   Executive Compensation
 
Information on compensation of the directors and executive officers is contained in the Proxy Statement for the 2010 Annual Meeting of Shareholders under the captions “Directors’ Compensation” and “Executive Compensation,” respectively, and is incorporated herein by reference.
 
Item 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 
Information required by this item is contained in the Company’s Proxy Statement for the 2010 Annual Meeting of Shareholders under the caption “Beneficial Ownership of Directors and Management” and is incorporated herein by reference.
 
Item 13.   Certain Relationships and Related Transactions
 
None.
 
Item 14.   Principal Accountant Fees and Services
 
Information required by this item is contained in the Company’s Proxy Statement for the 2010 Annual Meeting of Shareholders under the caption “Report of the Audit Committee” and is incorporated herein by reference.
 
 
 
81

 


PART IV

Item 15.    Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)
Financial Statements and Schedules
 
Financial Statements and Schedules are listed in the attached index on page 10 and are filed as part of this Report.
(b)
Reports on Form 8-K
 
Earnings release on the third quarter fiscal 2010 results issued on Form 8-K dated March 11, 2010, which included certain condensed financial statements of the Company.
 
Earnings release on the fiscal year 2010 results issued on Form 8-K dated June 17, 2010, which included certain condensed financial statements of the Company.
(c)
Exhibits
2.1
Agreement and Plan of Merger dated as of August 12, 2001, among the Company, HMI Acquisition Corp. and Hungry Minds, Inc. (incorporated by reference to the Company’s Report on Form 8-K dated as of August 12, 2001).
2.2
Scheme of Arrangement dated as of November 21, 2006, among the Company, Wiley Europe Investment Holdings Limited and Blackwell Publishing (Holdings) Limited (incorporated by reference to the Company’s Report on Form 8-K dated as of November 21, 2006).
3.1
Restated Certificate of Incorporation (incorporated by reference to the Company’s Report on Form 10-K for the year ended April 30, 1992).
3.2
Certificate of Amendment of the Certificate of Incorporation dated October 13, 1995 (incorporated by reference to the Company’s Report on Form 10-K for the year ended April 30, 1997).
3.3
Certificate of Amendment of the Certificate of Incorporation dated as of September 1998 (incorporated by reference to the Company’s Report on Form 10-Q for the quarterly period ended October 31, 1998).
3.4
Certificate of Amendment of the Certificate of Incorporation dated as of September 1999 (incorporated by reference to the Company’s Report on Form 10-Q for the quarterly period ended October 31, 1999).
3.5
By-Laws as Amended and Restated dated as of September 2007 (incorporated by reference to the Company’s Report on Form 10-K for the year ended April 30, 2008).
10.2
Credit Agreement dated as of February 2, 2007, among the Company and Bank of America, N.A., as Administrative Agent and Swing Line Lender and the Other Lenders Party Hereto (incorporated by reference to the Company’s Report on Form 8-K dated as of February 8, 2007).
10.3
Agreement of the Lease dated as of June 7, 2006 between One Wiley Drive, LLC, an independent third party, as landlord and John Wiley and Sons, Inc., as Tenant (incorporated by reference to the Company’s Report on Form 10-K for the year ended April 30, 2006).
10.4
Agreement of Lease dated as of August 4, 2000, between, Block A South Waterfront Development L.L.C., as Landlord, and the Company, as Tenant (incorporated by reference to the Company’s Report on Form 10-Q for the quarterly period ended July 31, 2000).
10.5
Summary of Lease Agreement dated as of March 4, 2005, between, Investa Properties Limited L.L.C. as Landlord, and the Company, as Tenant (incorporated by reference to the Company’s Report on Form 10-K for the year ended April 30, 2005).
10.6
2009 Director Stock Plan (incorporated by reference to the Company’s second quarter fiscal year 2010 report on Form 10-Q as exhibit 10.3).
10.7
2009 Executive Annual Incentive Plan (incorporated by reference to the Company’s second quarter fiscal year 2010 report on Form 10-Q as exhibit 10.2).
10.8
2009 Key Employee Stock Plan (incorporated by reference to the Company’s second quarter fiscal year 2010 report on Form 10-Q as exhibit 10.1).
10.9
Supplemental Executive Retirement Plan as Amended and Restated effective as of January 1, 2009
10.10
Supplemental Benefit Plan Amended and Restated as of January 1, 2009
10.11
Deferred Compensation Plan as Amended and Restated effective as of January 1, 2008
10.12
Deferred Compensation Plan for Directors’ 2005 & After Compensation (incorporated by reference to the report on Form 8-K, filed December 21, 2005).
10.13
Form of the Fiscal Year 2011 Qualified Executive Long Term Incentive Plan
10.14
Form of the Fiscal Year 2011 Qualified Executive Annual Incentive Plan
10.15
Form of the Fiscal Year 2011 Executive Annual Strategic Milestones Incentive Plan
10.16
Form of the Fiscal Year 2010 Qualified Executive Long Term Incentive Plan (incorporated by reference to the Company’s Report on Form 10-K for the year ended April 30, 2009).
10.17
Form of the Fiscal Year 2010 Qualified Executive Annual Incentive Plan (incorporated by reference to the Company’s Report on Form 10-K for the year ended April 30, 2009).
10.18
Form of the Fiscal Year 2010 Executive Annual Strategic Milestones Incentive Plan (incorporated by reference to the Company’s Report on Form 10-K for the year ended April 30, 2009).
10.19
Form of the Fiscal Year 2009 Qualified Executive Long Term Incentive Plan (incorporated by reference to the Company’s Report on Form 10-K for the fiscal year ended April 30, 2008).
10.20
Form of the Fiscal Year 2009 Qualified Executive Annual Incentive Plan (incorporated by reference to the Company’s Report on Form 10-K for the fiscal year ended April 30, 2008).
10.21
Form of the Fiscal Year 2009 Executive Annual Strategic Milestones Incentive Plan (incorporated by reference to the Company’s Report on Form 10-K for the fiscal year ended April 30, 2008).
10.22
Senior Executive Employment Agreement to Arbitrate dated as of April 29, 2003 (incorporated by reference to the Company’s Report on Form 10-K for the year ended April 30, 2003).
10.23
Schedule of individual officers party to Senior Executive Employment Agreement to Arbitrate dated as of April 29, 2003 (incorporated by reference to the Company’s second quarter fiscal year 2010 report on Form 10-Q).
10.24
Senior Executive Non-competition and Non-Disclosure Agreement dated as of April 29, 2003 (incorporated by reference to the Company’s Report on Form 10-K for the year ended April 30, 2003).
10.25
Schedule of individual officers party to Senior Executive Non-Competition and Non-Disclosure Agreement dated as of April 29, 2003 (incorporated by reference to the Company’s second quarter fiscal year 2010 report on Form 10-Q).
10.26
Senior executive Employment Agreement dated as of December 1, 2008, between William J. Pesce and the Company (incorporated by reference to the Company’s third quarter fiscal year 2009 report on Form 10-Q).
10.27
Senior executive Employment Agreement dated as of March 1, 2003, between Stephen A. Kippur and the Company (incorporated by reference to the Company’s Report on Form 10-K for the year ended April 30, 2003).
10.28
Senior executive Employment Agreement dated as of December 1, 2008, between Ellis E. Cousens and the Company (incorporated by reference to the Company’s third quarter fiscal year 2009 report on Form 10-Q).
10.29
Senior executive Employment Agreement letter dated as of November 18, 2009, between Stephen M. Smith and the Company (incorporated by reference to the Company’s second quarter fiscal year 2010 report on Form 10-Q).
10.30
Senior executive Employment Agreement letter dated as of March 1, 2003, between Bonnie E. Lieberman and the Company (incorporated by reference to the Company’s Report on Form 10-K for the year ended April 30, 2008).
21*
List of Subsidiaries of the Company
23*
Consent of KPMG LLP
31.1*
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.2*
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


*            Filed herewith
 
 
 
82

 


SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



   
JOHN WILEY & SONS, INC.
 
   
(Company)
 
       
       
 
By:
   
   
William J. Pesce
 
   
President and Chief Executive Officer
 
       
       
 
By:
   
   
Ellis E. Cousens
 
   
Executive Vice President and
 
   
Chief Financial and Operations Officer
 
       
       
 
By:
   
   
Edward J. Melando
 
   
Vice President, Controller and
 
   
Chief Accounting Officer
 
       
   
Dated:  June 23, 2010
 
       

 
 
83

 


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons constituting directors of the Company on June 23, 2010.



 
/s/           Warren J. Baker
 
/s/           William J. Pesce
 
Warren J. Baker
 
William J. Pesce
       
 
/s/           Richard M. Hochhauser
 
/s/           William B. Plummer
 
Richard M. Hochhauser
 
William B. Plummer
       
 
/s/           Mathew S. Kissner
 
/s/           Kalpana Raina
 
            Mathew S. Kissner
 
Kalpana Raina
       
 
/s/           Raymond McDaniel, Jr.
 
/s/           Bradford Wiley II
 
Raymond McDaniel, Jr.
 
Bradford Wiley II
       
 
/s/           Eduardo R. Menascé
 
/s/           Peter Booth Wiley
 
Eduardo R. Menascé
 
Peter Booth Wiley
       
       
       

 
 
 
84

 
 


 
Exhibit 10.9


John Wiley & Sons, Inc.

Supplemental Executive Retirement Plan


As Amended and Restated
Effective as of January 1, 2009


 
 

 

JOHN WILEY & SONS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

RECITALS


The Board of Directors of John Wiley & Sons, Inc. (the “Corporation”) in 1983 adopted a Supplemental Executive Retirement Program, (the “Plan”).  The principal purpose of the Plan is to ensure the payment of a competitive level of retirement income and death benefits in order to attract, retain and motivate selected executives of the Corporation and its affiliated companies.  The Plan was amended from time to time, and renamed in 1989, the “1989 Supplemental Executive Retirement Plan”.  At a meeting on March 9, 2005, the Board of Directors amended the Plan by freezing participation under the provisions of the 1989 Supplemental Executive Retirement Plan (the “1989 SERP”) and establishing effective as of April 1, 2005, a new Supplemental Executive Retirement Program entitled the 2005 Supplemental Executive Retirement Plan (the “2005 SERP”) for newly eligible executives and certain eligible executives employed by John Wiley & Sons, Inc. on March 31, 2005 who wish to waive their right to any benefits payable under the provisions of the current Plan in consideration of accruing a benefit for all service with John Wiley & Sons, Inc. under the provisions of the 2005 SERP.

Thus, effective as of April 1, 2005, the John Wiley & Sons, Inc. Supplemental Executive Retirement Plan was amended to consist of two parts; Part A - containing the provisions of the 1989 Supplemental Executive Retirement Plan and Part B - containing the provisions of the 2005 Supplemental Executive Retirement Plan.  An individual may not participate in both Part A and Part B of the Plan.

The Plan is hereby amended and restated effective as of January 1, 2009, to comply with the provisions of Section 409A of the Internal Revenue Code (“Code”) as enacted by the American Jobs Creation Act of 2004, and the regulations promulgated thereunder.


 
 

 

PART A

JOHN WILEY & SONS, INC.
1989 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(AS AMENDED AND RESTATED –January 1, 2009)
 
PREAMBLE

This Part A of the Plan (the “1989 SERP”) sets forth the provisions of the 1989 Supplemental Executive Retirement Plan as applicable to participants who were employed by the Company on or after January 1, 2005 and who commence payment of their 1989 SERP benefit on or after January 1, 2009.  The benefits accrued and vested under the provisions of the 1989 SERP by a Participant who terminated employment with the Company and all Affiliates prior to January 1, 2005 shall be subject to the provisions of the 1989 Supplemental Executive Retirement Plan as in effect on October 3, 2004 without regard to any plan amendments after October 3, 2004, which would constitute a material modification under Code Section 409A.  In addition, with respect to a Participant who was employed by the Company on January 1, 2005, the portion of his benefit payable under the provisions of this restated 1989 SERP equal to his Grandfathered 1989 SERP Benefit as defined herein shall be subject to the provisions of 1989 Supplemental Executive Retirement Plan as in effect on October 3, 2004 without regard to any plan amendments after October 3, 2004 which would constitute a material modification for Code Section 409A purposes, unless otherwise provided in Appendix A of the 1989 SERP.


 
 

 
 
SECTION 1 - DEFINITIONS

1.1
Accrued Benefit ” means the greater of (a) the Primary Benefit the Participant would have received if the 1989 SERP had not been terminated, suspended or amended, if such is the case, and the Participant had continued to participate until age 65 multiplied by a fraction the numerator of which is the number of months the Participant participated in the 1989 SERP (including participation in the 1983 Plan) and the denominator of which is the number of months the Participant would have participated until he had attained age 65 if 1989 SERP had not been terminated, suspended or amended, if such is the case, and he had continued to participate until age 65 or (b) the Participant’s Additional Benefit multiplied by a fraction, the numerator of which is the number of months the Participant participated in the 1989 SERP (including participation in the 1983 Plan) and the denominator of which is the number of months the Participant would have participated in the 1989 SERP if he had participated until he attained age 65.

1.2
Additional Benefit ” means an annual benefit in the amount of the excess, if any, of (a) an amount equal to the Participant’s Applicable Percentage times the Participant’s Average Highest Compensation over (b) the sum of the Participant’s Wiley Basic Plan Benefit, as applicable, and the Participant’s Other Retirement Income. The Additional Benefit shall not be reduced as a result of any cost of living or other increase in the Participant’s Wiley Basic Plan Benefit which is effective after commencement of benefit payments to the Participant or his Beneficiary under the Wiley Basic Plan. Notwithstanding the foregoing provisions of this Section 1.2, if the Participant is terminated for “Cause” as defined in Section 6.4, whether before or after a “Change of Control” as defined in Section 6.2, the Additional Benefit shall be deemed to be zero.

1.2.1
409A Additional Benefit ” means the portion, if any, of a Participant’s Additional Benefit in excess of the amount of the Participant’s Grandfathered Income Benefit.

1.3
Affiliate ” shall mean any company which is a member of a controlled group of corporations (as defined in Section 414(b) of the Code) which also includes as a member the Corporation; any trade or business under common control (as defined in Section 414(c) of the Code) with the Corporation; any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in Section 414(m) of the Code) which includes the Corporation; and any other entity required to be aggregated with the Corporation pursuant to regulations under Section 414(o) of the Code.

 
 

 
 
1.4
Annual Salary Rate ” means the Participant's base salary rate in effect on the earlier of the date of the Participant's Separation from Service, death or Disability.

1.5
Applicable Percentage ”, with respect to each Participant, means the percentage of Average Highest Compensation to be used in determining the Participant's Additional Benefit. The Applicable Percentage with respect to each present Participant is set forth in Schedule A and may be increased by resolution of the Committee.  In no event shall the Applicable Percentage exceed 65%.

1.6
Average Highest Compensation ” means a Participant's average annual Compensation during the final 36 months of his employment with the Company or an Affiliate immediately preceding the earlier of his Separation from Service, Death or Disability or, if higher, the three consecutive calendar years in which his average Compensation was highest (or if he is employed for less than 36 months, the average annual Compensation during the period of his employment immediately preceding the earlier of his Separation from Service, Death or Disability). For purposes of this definition the term “Compensation” means “Compensation” as defined in the Wiley Basic Plan, except that 100% instead of 50% of any bonuses, incentive pay and overtime pay shall be included and “Compensation” shall not be limited by the provisions of Section 401(a)(17) of the Internal Revenue Code. Notwithstanding the foregoing provisions of this Section 1.6, Compensation for purposes of the 1989 SERP shall not include any amounts paid pursuant to an incentive plan which relates to a period of more than 12 months or any amounts paid pursuant to any plan, arrangement or agreement which expressly excludes such amounts for purposes of the 1989 SERP.
 
 
 

 
 
1.7
Beneficiary ” means the person or persons designated by the Participant to receive the Pre-Retirement Survivor Benefit under the 1989 SERP in the event of the Participant's death prior to retirement and the person or persons designated to receive any other benefit payable under the provisions of the 1989 SERP in the event of the Participant’s death. If the Participant has not designated a contingent Beneficiary any Beneficiary may in turn designate a Beneficiary to receive any remaining payments that may be due under the provisions of the 1989 SERP in the event of the first Beneficiary's death. In the event there is no effective designation of a Beneficiary then payment shall be made to the estate of the Participant or, if benefits have actually been paid to a Beneficiary, then to the estate of such Beneficiary.  A Participant may, from time to time, revoke or change his Beneficiary designation without the consent of any prior Beneficiary by filing a new designation with the Committee.  The last such designation received by the Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Participant’s death or the Participant’s Benefit Commencement Date, if earlier, and in no event shall it be effective as of a date prior to such receipt.

1.8
Benefit Commencement Date ” means the first day of the first period for which an amount is due as an annuity or any other form.

1.9
Board ” means the Board of Directors of the Corporation.

1.10
Code ” means the Internal Revenue Code of 1986, as amended from time to time.

1.11
Committee ” means the Compensation Committee of the Board.

1.12
Company ” means the Corporation with respect to its employees, or with respect to any Participant who is employed by an Affiliate, such Affiliate.

1.13
Corporation ” means the John Wiley & Sons, Inc., a New York corporation, and any successor thereto.
 
 
 

 
 
1.14
Disabled ” shall have the meaning set forth in Section 5.1(c).

1.15
Grandfathered Income Benefit means, with respect to a Participant who (i) terminated employment with the Company and all Affiliates prior to January 1, 2005, or (ii) was employed by the Company on April 1, 2005 and who as of that date was (1) a member of the Board of Directors or (2) a 5% owner of the Corporation (as defined in Code Section 416), or (iii) was within two years of attaining age 65, the portion of his benefit that was accrued and vested before January 1, 2005, determined under  provisions of the 1989 SERP without regard to any amendments to the 1989 SERP after October 3, 2004 which would constitute a material modification for Code Section 409A purposes, and the provisions of Code Section 409A, the regulations promulgated thereunder and other applicable guidance based on actuarial equivalent assumptions chosen by the Committee in accordance with Code Section 409A.

1.16
Other Retirement Income ” means annual income (determined as of the earlier of a Participant’s Separation from Service, Death, or Disability) payable to a Participant from the following sources:

(a)  
the nonqualified unfunded supplemental plan of the Company adopted by the Board which pays pension benefits which supplement the benefits payable under the Wiley Basic Plan.

(b)  
any other contract, agreement or other arrangement with the Company or an Affiliate (excluding the Wiley Basic Plan, the John Wiley & Sons, Inc. Employees’ Savings Plan and the Deferred Compensation Plan of John Wiley & Sons, Inc.) to the extent it provides retirement or pension benefits.

Where an election is available which would decrease the amount of the annual income payable from such sources (as described in clause (a) and (b) of this Section 1.16), such election shall be disregarded for purposes of this definition.  In addition any reduction or adjustment for form of payment or the timing of payment in the amount of the annual income payable from such sources is disregarded in calculating a Participant’s Other Retirement Income, unless otherwise provided herein.

 
 

 
 
1.17
Participant ” means an executive employee of the Corporation or an Affiliate listed on Schedule A hereto or a former executive employee who is a Participant in the 1989 SERP pursuant to Section 2(b).

1.18
Plan ” means the John Wiley & Sons, Inc. Supplemental Executive Retirement Plan, as amended from time to time, which shall consist of Part A –the 1989 SERP and Part B –the 2005 SERP.  The “2005 SERP” means the 2005 Supplemental Executive Retirement Plan as set forth in Part B of the Plan.

1.19
Primary Benefit ” means an annual benefit determined as follows:
(a)  
The Annual Salary Rate shall be multiplied by 2.5.

(b)  
The result in clause (a) shall be reduced by $50,000.

(c)  
The remainder in clause (b) shall be divided by 5 and the result is the Primary Benefit.

1.19.1
409A Primary Benefit ” means the portion, if any, of the Participant’s Primary Benefit that exceeds the annual amount of his Grandfathered 409A 1989 SERP Benefit.

1.20
Retirement ” means Separation of Service for reasons other than death after reaching age 55 and completing 5 Years of Service.

1.21
Separation from Service ” means a “Separation from Service” as such term is defined in the Income Tax Regulations under Section 409A of the Code as modified by the rules described below:
 
 
 

 
 
(a)  
An employee who is absent from work due to military leave, sick leave, or other bona fide leave of absence pursuant to Company policies shall incur a Separation from Service on the first date immediately following the later of (i) the six-month anniversary of the commencement of the leave (twelve month anniversary for a disability leave of absence) or (ii) the expiration of the employee’s right, if any, to reemployment under statute or contract or pursuant to Company policies.  For this purpose, a “disability leave of absence” is an absence due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 6 months, where such impairment causes the employee to be unable to perform the duties of his job or a substantially similar job;

(b)  
For purposes of determining whether another organization is an Affiliate of the Company, common ownership of at least 50% shall be determinative;

(c)  
The Corporation specifically reserves the right to determine whether a sale or other disposition of substantial assets to an unrelated party constitutes a Separation from Service with respect to the executive providing services to the seller immediately prior to the transaction and providing services to the buyer after the transaction.  Such determination shall be made in accordance with the requirements of Code Section 409A.

Whether a Separation from Service has occurred shall be determined by the Committee in accordance with Code Section 409A, the regulations promulgated thereunder and other applicable guidance thereto, as modified by the rules described above.  The terms or phrases “terminates employment,” “termination of employment,” “employment is terminated,” or any other similar terminology shall have the same meaning as a “Separation from Service.”

1.22
Specified Employee ” means a “specified employee” as such term is defined in the Income Tax Regulations under Section 409A as modified by the rules set forth below:

 
 

 
 
(a)  
For purposes of determining whether a Participant is a Specified Employee, the compensation of the Participant shall be determined in accordance with the definition of compensation provided under Treas. Reg. Section 1.415(c) 2(d)(3) (wages within the meaning of Code section 340(a) for purposes of income tax withholding at the source, plus amounts excludible from gross income under Section 125(a), 132(f)(4), 402(e)(3), 402(h)(1)(B), 402(k) or 457(b), without regard to rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed).

(b)  
The “Specified Employee Identification Date” means December 31, unless the Committee has elected a different date through action that is legally binding with respect to all nonqualified deferred compensation plans maintained by the Company or any Affiliate.

(c)  
The “Specified Employee Effective Date” means the first day of the fourth month following the Specified Employee Identification Date or such earlier date as is selected by the Committee.

1.23
1989 SERP ” means this Part A of the Plan, as amended from time to time.

1.24
Wiley Basic Plan ” means the Employees’ Retirement Plan of John Wiley & Sons, Inc., as the same may be hereafter amended from time to time.

1.25
Wiley Basic Plan Benefit ” means the annual Normal Retirement Benefit (determined as of the earlier of a Participant’s Separation from Service, Death or Disability) payable under the Wiley Basic Plan to a Participant, regardless of any elections with regard to the payment of the benefit made by the Participant or his beneficiary under the Basic Plan.
 
 
 

 
 
1.26
Years of Service ” means a Participant's Years of Service (as defined in the Wiley Basic Plan) for purposes of Section 3.01 of such plan. However, in the case of an acquired company, the Participant's service with that company prior to the date of acquisition will not be counted unless such service is recognized for purposes of participation in the Wiley Basic Plan.

1.27
The masculine gender, where appearing herein, will be deemed to include the feminine gender, and the singular may include the plural, unless the context clearly indicates to the contrary.

 
 

 
 
SECTION 2 - ELIGIBILITY AND PARTICIPATION

2.1
(a)
Each executive of the Company listed on Schedule A shall be a Participant in the 1989 SERP.
 

 
(b)
Any other individual who was a Participant in the 1989 SERP on December 31, 2004 and who terminated employment with the Corporation and all Affiliates on or prior to that date shall be a Participant.

 
(c)
Notwithstanding any plan provision to the contrary, an executive of the Company who is accruing benefits (or currently has an accrued benefit) under the 2005 SERP is not eligible to participate in the 1989 SERP.

2.2
Participation under the Plan shall terminate on the date the Participant incurs a Separation from Service with the Company and all Affiliates or ceases to accrue Years of Service under the provisions of Section 1.26 if earlier, unless at that time the Participant is entitled to a benefit under Section 3 or 5.
 
 
 

 
 
SECTION 3 - BENEFITS

3.1
Post Retirement Income Benefit
(a)  
Subject to the provisions of Section 4 and 8, there shall be paid to each Participant who incurs a Separation from Service on or after the date he attains age 65 (or completes five Years of Service, whichever occurs later), a Post Retirement Income Benefit commencing as of the first of the month coincident with or next following the date of his Retirement, which date shall be his Benefit Commencement Date.  Such Post Retirement Income Benefit shall be equal to ten annual payments of the Participant’s Primary Benefit or Additional Benefit whichever is greater, distributed to such Participant in accordance with the provisions of Section 3.5.

(b)  
The Committee may, in its sole discretion, increase the benefit payable to a Participant who retires more than one year after attaining age 65 (or after five Years of Service, if later) in order to compensate the Participant in whole or in part for the delay in payment.

(c)  
Except as otherwise provided in Section 3.6, the first payment of a Participant’s Post Retirement Income Benefit in excess of his Grandfathered Income Benefit shall be made within 60 days of the Participant’s date of Retirement.

3.2
Early Retirement
(a)  
Subject to the provisions of Section 4 and 8, if the Participant incurs a Separation from Service on or after attaining age 55 and completing at least five Years of Service but prior to attaining age 65, then he shall be entitled to an Early Retirement Income Benefit commencing, except as otherwise provided in paragraph (c) below or in Appendix A, as of the first day of the month following his Retirement, which date shall be his Benefit Commencement Date.  Such Early Retirement Benefit shall be equal to ten annual payments of the Participant’s Primary Benefit or the Participant’s Additional Benefit, whichever is greater, reduced by 1/12 of 4 percent of itself for each month by which such payment (or portion thereof) commences prior to the end of the month in which the Participant attains age 65, provided, however, that such reduction shall not apply if the Participant has attained age 62 and completed 20 or more Years of Service on the date of his Retirement, and distributed in accordance with provisions of Section 3.5.

 
 

 
 
(b)  
Except as otherwise provided in Section 3.6 the first payment to a Participant’s Early Retirement Income in excess of his Grandfathered Income Benefit shall be made within 60 days of the date of such Participant’s Retirement or such later date as elected by the Participant.

(c)  
Such Participant may elect in accordance with the provisions of Section 409A of the Code, the regulations thereunder and any other applicable guidance (including the transition rules) and the procedures established by the Committee to have the payment of the portion of his Early Retirement Benefit in excess of his Grandfathered Benefit commence on a later date but not later than the month following the month in which he attains age 65.  If such election is made after December 31, 2008, it shall be subject to the following rules:

 
(i)
the election will not become effective until 12 months after the date the election is made, and

 
(ii)
the payment of such Benefit shall be delayed at least five years from the date such payment would otherwise have been made absent this election (disregarding any delay under the provisions of Section 3.6).

3.3
Pre-Retirement Survivor Benefit
 
(a)
There shall be paid to the Beneficiary of each Participant who dies prior to age 65 (or prior to having five Years of Service, if later) and prior to incurring a Separation from Service, a Pre-Retirement Survivor Benefit commencing the month following the month in which the Participant’s death occurs.  Such benefit shall consist of ten annual payments where each payment is equal to one-half of the Participant's Primary Benefit or the Participant's Additional Benefit, whichever is greater.  For purpose of determining the amount of such Survivor Benefit, the Participant's Additional Benefit shall be computed by substituting the annual amount payable to the Participant's surviving spouse or Beneficiary under the Wiley Basic Plan or under any plan, contract, agreement or, arrangement referred to in Section 1.16 hereof assuming payments thereunder commence as of the first day of the month following the month in which the Participant’s death occurs in place of the Participant's Wiley Basic Plan Benefit and Other Retirement Income as defined in Section 1 of the 1989 SERP.

 
 

 
 
 
(b)
(i)
If a Participant’s Pre-Retirement Survivor Benefit is determined on the basis of his Primary Benefit, his Survivor Benefit attributable to his 409A Primary Benefit shall be paid annually for ten years.

 
(ii)
If a Participant’s Pre-Retirement Survivor Benefit is determined on the basis of his Additional Benefit, the Pre-Retirement Survivor Benefit attributable to his 409A Additional Benefit shall be paid annually for ten years, unless the Participant elects in writing in accordance with the procedures established by the Committee, to convert that portion of the Pre-Retirement Survivor Benefit into an actuarially equivalent annuity payable for the life of his named Beneficiary.  Such actuarially equivalence shall be determined as set forth in Section 3.5(b).  To be effective, such election must be completed by December 31, 2008.

3.4
Termination of Employment
 
(a)
Subject to the provisions of Sections 4 and 8, in the event a Participant incurs a Separation from Service prior to age 65 other than on account of death or Disability and he does not qualify for early retirement as provided in Section 3.2 hereof, then the Participant shall be entitled to a Termination Benefit commencing, except as otherwise provided below or in Appendix A, as of the first of the month following the Participant’s attainment of age 55 or date of Separation from Service, if later, which date shall be his Benefit Commencement Date unless he makes an election to delay payments as provided in paragraph (c) below.  Such Termination Benefit shall consist of ten annual payments of the Participant’s Accrued Benefits, reduced by 1/12 of 4 percent of itself for each month by which such payment (or portion thereof) commences before the end of the month in which the Participant attains age 65.

 
 

 
 
 
(b)
Except as otherwise proved in Section 3.6, the first payment of a Participant’s Termination Benefit in excess of his Grandfathered Income Benefit shall be made within 60 days of the Participant’s Benefit Commencement Date.

 
(c)
Such Participant may elect in accordance with the provisions of Section 409A of the Code, the regulations thereunder and any other applicable guidance (including the transition rules) and the procedures established by the Committee, to have the payment of the portion of his Termination Benefit in excess of his Grandfathered Benefit commence on a later date but not later than the month following the month in which he attains age 65.  If such election is made after December 31, 2008, it shall be subject to the following rules:

 
(i)
the election will not become effective until 12 months after the date the election is made, and

 
(ii)
the payment of such Benefit shall be delayed at least five years from the date such payment would otherwise have been made (disregarding any delay under the provisions of Section 3.6).

3.5
Form of Payment
(a)  
If a Participant’s benefit due under the provisions of Section 3.1, 3.2 or 3.4 is determined on the basis of his Primary Benefit, the portion of such Primary Benefit equal to his 409A Primary Benefit shall be paid annually for ten years.  In the event the Participant dies on or after his Separation from Service and before receiving all ten annual payments, the remaining payments shall be paid to his Beneficiary.

(b)  
(i)
If the Participant’s benefit due under the provisions of Section 3.1, 3.2 or 3.4 is determined on the basis of his Additional Benefit, the portion of such Participant’s Benefit due under the provisions of Section 3.1, 3.2 or 3.4 equal to his 409A Additional Benefit shall be paid annually for ten years, unless the Participant elects in writing to convert all or a portion of such 409A Additional Benefit into an annuity of equivalent actuarial value, described in paragraph (c) of this Section.  To be effective, such election must be completed and filed with the Company no later than December 31, 2008.
 
 
(ii)
If any portion of such Participant’s Benefit is to be paid in ten annual installments and the Participant dies on or after his Separation from Service and before receiving all ten annual payments the remaining payments shall be paid to his Beneficiary.

 
(iii)
For purposes of this Section 3.5(b), equivalent actuarial value shall be determined on the basis of the IRS Mortality Table and the IRS Interest Rate.  The “IRS Mortality Table” shall mean the mortality table prescribed by the Secretary of Treasury under Section 417(e)(3)(A)(ii)(I) of the Code as in effect on December 31, 2007.  The “IRS Interest Rate” is the annual rate of interest on 30 year Treasury Securities as published by the Commissioner of Internal Revenue in the calendar month preceding the month in which the Participant’s Separation from Service occurs.

 
(c)
Notwithstanding the foregoing, and subject to paragraph (e) below, if a Participant has on file a valid election to receive any portion of his 409A Additional Benefit due under the provisions of Section 3.1, 3.2 or 3.4 (or if applicable, Section 5) as an annuity, such Participant may elect any time prior to his applicable Benefit Commencement Date to convert the portion of said benefit to be paid in an annuity into an optional annuity benefit of Equivalent Actuarial value as provided in one of the options set forth below:

 
 

 
 
 
Option 1:
“Life Annuity”.  A modified benefit payable monthly for the life of the Participant.

 
Option 2:
“Contingent Annuity”.  A modified benefit payable monthly during the Participant’s life and after his death payable at the rate of 50%, 75% or 100% (as elected by the Participant) of the rate of his modified amount during the life of, and to the Beneficiary named by him on his Benefit Commencement Date.

 
Option 3:
“Pop Up Option”.  A modified benefit payable under Option 2, provided that in the event the Beneficiary named by the Participant at the time he elected the form of payment predeceases the Participant, the annual benefit payable to the Participant after the Beneficiary’s death shall equal the Benefit that would have been payable pursuant to Option 1.

 
Option 4:
“Certain & Life Option”.  A modified benefit payable monthly for the life of the Participant, however if the Participant dies within the 10, 11, 12, 13, 14 or 15 year period (as elected by the Participant) commencing on the Participant’s Benefit Commencement Date payments in that reduced amount will be payable until the 10, 11, 12, 13, 14, or 15th anniversary of his Benefit Commencement Date.

 
(d)
Such Equivalent Actuarial value shall be defined as set forth in Item I of Appendix A of the Wiley Basic Plan.

 
(e)
Notwithstanding the foregoing, subject to the provisions of Section 409A of the Code if applicable, a Participant’s election to receive any portion of his 409A Additional Benefit payable under Section 3.1, 3.2, or 3.4, (or if applicable, Section 5) in an optional form as described in paragraph (c) above shall be effective as of the Participant’s Benefit Commencement Date, provided that the Participant makes and submits to the Committee his election of such optional form prior to his Benefit Commencement Date.  A Participant who fails to elect an optional form of annuity payment in a timely manner shall receive the portion of his benefit payable under Section 3.1, 3.2, 3.4, or Section 5 to be distributed in the form of an annuity, in the form of a 14 Year Certain & Life annuity.

 
 

 
 
3.6
Timing of Payment for “Specified Employees”.  Notwithstanding any provision of the 1989 SERP to the contrary if a Participant is classified as a “Specified Employee” on his date of Separation from Service, the actual payment of the portion of his benefit due under the provisions of Section 3.1, 3.2, 3.4 or Section 4, which is in excess of his Grandfathered Income Benefit on account of such Participant’s Separation from Service with the Company and all Affiliates (for reasons other than death or Disability) shall not commence prior to the first day of the seventh month following the Participant’s Separation from Service.  For avoidance of doubt, the provisions of this Section 3.6 do not apply to the portion of a Participant’s Benefit equal to his Grandfathered Income Benefit or any benefit payable to or on behalf of the Participant pursuant to the provisions of Section 3.3 or Section 5.  Any payment to the Participant which he would have otherwise received under Section 3.1, 3.2, or 3.4, or Section 4, during the six-month period immediately following such Participant’s Separation from Service shall be accumulated, with interest, compounded on a monthly basis, at the Applicable Interest Rate, and paid within 60 days of the first day of the seventh month following the Participant’s Separation from Service.  For purposes of this Section 3.6 the Applicable Interest Rate is the one year U.S. Treasury rate (constant maturities) as published on the last business day of the calendar month preceding the date the Participant’s Separation from Service occurs.
 
 
 

 
 
SECTION 4 - CHANGE OF CONTROL

4.1
In the event there is a Change of Control as hereinafter defined and, within two years following such Change of Control (a) the Participant’s employment is terminated by the Company except for “Cause”, or (b) the Participant incurs a “Separation from Service” for “Good Reason” as those terms are hereinafter defined, then notwithstanding any other provisions (other than Section 3.6) of the 1989 SERP to the contrary and in lieu of any other benefit in excess of his Grandfathered Income Benefit to which the Participant may be entitled under the 1989 SERP, the Participant shall be entitled to a lump sum payment, payable subject to the provisions of Section 3.6, within 60 days after such Separation from Service equal to the then present value of the Post Retirement Income Benefit in excess of his Grandfathered Income Benefit to which the Participant would have been entitled on the date of such Separation from Service and, in the case of a Participant who has not yet reached age 65, unreduced for commencement prior to the end of the month in which he attains age 65.  In determining the Post Retirement Income Benefit for purposes of the preceding sentence, the Wiley Basic Plan Benefit shall be deemed to be the annual benefit to which the Participant will be or is entitled at age 55 or the date of such Separation from Service, whichever is later. The present value of such payments shall be determined by multiplying such Post Retirement Income Benefit, as determined pursuant to this Section 6.1, by the "Present Value Factor” as hereinafter defined.

4.2
Change of Control ” shall mean an event which shall occur if there is: (i) a change in the ownership of the Corporation; (ii) a change in the effective control of the Corporation; or (iii) a change in the ownership of a substantial portion of the assets of the Corporation.
 
For purposes of this Section, a change in the ownership occurs on the date on which any one person, or more than one person acting as a group (as defined in Treasury regulations 1.409A-2(i)(5)(v)(B)), acquires ownership of stock that, together with stock held by such person or group constitutes more than 50% of the total fair market value or total voting power of the stock of the Corporation.
 
 
 

 
 
A change in the effective control occurs on the date on which either (i) a person, or more than one person acting as a group (as defined in Treasury regulations 1.409A-2(i)(5)(v)(B)), acquires ownership of stock possessing 30% or more of the total voting power of the stock of the Corporation, taking into account all such stock acquired during the 12-month period ending on the date of the most recent acquisition, or (ii) a majority of the members of the Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of such Board of Directors prior to the date of the appointment or election, but only if no other corporation is a majority shareholder.
 
A change in the ownership of a substantial portion of assets occurs on the date on which any one person, or more than one person acting as a group (as defined in Treasury regulations 1.409A-2(i)(5)(v)(B)), other than a person or group of persons that is related to the Corporation, acquires assets that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Corporation immediately prior to such acquisition or acquisitions, taking into account all such assets acquired during the 12-month period ending on the date of the most recent acquisition.
 
The determination as to the occurrence of a Change of Control shall be based on objective facts and in accordance with the requirements of Code Section 409A and the regulations promulgated thereunder.

4.3
Cause
 
Termination of a Participant's employment by the Company for "Cause" shall mean Separation from Service upon (a) the willful and continued failure by the Participant substantially to perform his duties with the Company to the best of his ability (other than any such failure resulting from his incapacity due to physical or mental illness), after a demand for such performance is delivered to the Participant by the Chairman of the Board or President of the Corporation which specifically identifies the manner in which such executive believes that the Participant has not substantially performed his duties to the best of his ability, or (b) the willful engaging by the Participant in illegal misconduct materially and demonstrably injurious to the Company. For purposes of this Section, no act, or failure to act, on the Participant's part shall be considered "willful" unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that his action or omission was lawful and in the best interest of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be lawful and done, or omitted to be done, by the Participant in good faith and in the best interest of the Company. Notwithstanding the foregoing, the Participant shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Participant a Notice of Termination containing or attached thereto a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to the Participant and an opportunity for the Participant, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Participant was guilty of conduct set forth above in clauses (a) and (b) in this section and specifying the particulars thereof in detail.

 
 

 
 
4.4            Good Reason
"Good Reason" for a Participant to terminate his employment shall mean:
 
(a)
An adverse change in the Participant's status or position(s) as an executive of the Company as in effect immediately prior to the Change of Control, including, without limitation, any adverse change in his status or position as a result of a material diminution in his duties or responsibilities or a material change in his business location or the assignment to him of any duties or responsibilities which are inconsistent with such status or position, or any removal of the Participant from or any failure to reappoint or reelect him to any office or position previously held;

 
(b)
A reduction by the Company in Participant's base salary as in effect immediately prior to the Change of Control or in the number of vacation days to which Participant is then entitled under the Company's normal vacation policy as in effect immediately prior to the Change of Control;

 
(c)
The taking of any action by the Company (including the elimination of a plan without providing substitutes therefore or the reduction of Participant's awards thereunder) that would substantially diminish the aggregate projected value of the Participant's awards under the Company's incentive, bonus, stock option or restricted stock plans in which the Participant was participating at the time of a Change of Control of the Company;

 
(d)
The taking of any action by the Company that would substantially diminish the aggregate value of the benefits provided the Participant under the Company's medical, health, accident, disability, life insurance, thrift or retirement plans in which the Participant was participating at the time of a Change of Control of the Company; or

 
(e)
Substantial and continuing harassment of the Participant by other Company personnel, including but not limited to verbal abuse, insulting or demeaning verbal and written communications, and orders or directions which are clearly inappropriate to Participant's executive status, provided the Participant gives the Company written notice of such harassment in reasonable detail and the Company fails to promptly take corrective action to stop such harassment.

4.5
The “Present Value Factor” is the factor which when applied to a payment, would represent the equivalent actuarial value to receive such amount annually for life when computed on the basis of the IRS Mortality Table and the IRS Interest Rate.  The “IRS Mortality Table” shall mean the mortality table prescribed by the Secretary of Treasury under Section 417(e)(3)(A)(ii)(I) of the Code as in effect on December 31, 2007.  The “IRS Interest Rate” is the annual rate of interest on 30 year Treasury Securities as published by the Commissioner of Internal Revenue in the calendar month preceding the month in which the Participant’s Separation from Service occurs.

 
 

 
 
4.6
Notice of Termination
 
Any termination by the Company pursuant to Section 4.3 above or by the Participant pursuant to Section 4.4 above shall be communicated by written Notice of Termination to the Participant or the Company, as the case may be. For purposes of the 1989 SERP, a "Notice of Termination" shall mean a notice specifying the termination provision in the 1989 SERP relied upon and setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant's employment under the provision so specified.
 
4.7
In the event the amount which a Participant is entitled to receive pursuant to Section 4.1 is not paid in full to the Participant within 60 days after his Separation from Service then the Participant shall also be entitled to recover from the Company reasonable legal expenses and disbursements incurred in establishing his right to and collecting such amount.

4.8
The provisions of this Section 4 shall not apply to any Participant who would be deemed an individual described in Section 422A(b)(6) of the Code, as presently in effect (relating to an individual who, directly and by attribution, is deemed to own more than 10% of the voting power of a corporation).

 
 

 
 
SECTION 5 - DISABILITY

 
 
5.1
(a)
In the event a Participant who is actively employed by the Company or an Affiliate become Disabled, as that term is hereinafter defined, prior to the month in which he attains age 65 (or completes 5 years of service, if later) (his “Normal Retirement Date”), or his Separation from Service, if earlier, then notwithstanding any other provision of the 1989 SERP to the contrary and in lieu of any other benefit to which the Participant may be entitled under the 1989 SERP, the Participant shall be entitled to a lump sum payment, payable within 60 days after the Committee’s determination regarding such Disability is finalized, equal to the then present value of the Post Retirement Income Benefit determined under Section 3.1 on the basis of the Participant’s Average Highest Compensation and Years of Service as of his Disability Date (as that term is herein defined), unreduced for commencement prior to the Participant’s Normal Retirement Date.  The present value of such payments shall be determined by multiplying such Post Retirement Income Benefit, as determined pursuant to this Section 5.1 by the Present Value Factor as defined below.  Notwithstanding the foregoing a Participant may elect in accordance with procedures established by the Committee to receive such Disability Benefit in excess of his Grandfathered Income Benefit in the form of an annuity as described in Section 3.6(c).  To be effective, such election must be completed and submitted to the Company no later than December 31, 2008.

 
(b)
The “Present Value Factor” solely for purposes of this Section 5.1 is the factor which when applied to a payment, would represent the equivalent actuarial value to receive such amount annually for life when computed on the basis of the IRS Mortality Table and the IRS Interest Rate.  The “IRS Mortality Table” shall mean the mortality table prescribed by the Secretary of Treasury under Section 417(e)(3)(A)(ii)(I) of the Code as in effect on December 31, 2007.  The “IRS Interest Rate” is the annual rate of interest rate on 30 year Treasury Securities as published by the Commissioner of Internal Revenue in the calendar month preceding the month in which the Participant’s Disability Date occurs.

 
 

 
 
 
(c)
For purposes of this Section 5, a Participant is considered Disabled if such Participant incurs any medically determined physical or mental impairments that meet the requirements set forth under Treasury Regs. Section 1.409A-3(i)(4)(i) or (ii), or any subsequent guidance thereto. The Participant’s Disability Date shall be the date determined by the Committee on a basis uniformly applicable to all persons similarly situated.


 
 

 
 
SECTION 6 - COMMITTEE
 

6.1
The Committee shall have the exclusive responsibility and complete discretionary authority to interpret the 1989 SERP, to adopt, amend, and rescind rules and regulations for the administration of the 1989 SERP, and generally to operate, manage and administer the 1989 SERP and to make all determinations in connection with the 1989 SERP as may be necessary or advisable. All such actions of the Committee shall be conclusive and binding upon all Participants and Beneficiaries. The Committee may employ and rely on such legal counsel, actuaries, accountants and agents as it may deem advisable to assist in the administration of the Plan

6.2
To the extent permitted by law, all agents and representatives of the Committee shall be indemnified by the Company and held harmless against any claims and the expenses of defending against such claims, resulting from any action or conduct relating to the administration of the Plan, except claims arising from gross negligence, willful neglect or willful misconduct.


 
 

 
 
SECTION 7 - TERMINATION; AMENDMENT

7.1
The Plan may not be terminated or suspended or modified or amended in any manner which adversely affects any Participant at any time after a Change of Control (as defined in Section 6.2) shall have occurred.  Subject to the foregoing provisions of this Section 5.1, the Board may, in its sole discretion, terminate, suspend or amend the Plan at any time or from time to time, in whole or in part. However, no termination, suspension or amendment of the Plan may adversely affect a Participant's accrued benefit under the Plan, or adversely affect a retired Participant's right or the right of a Beneficiary to receive or to continue to receive a benefit in accordance with the Plan as in effect on the date immediately preceding the date of such termination, suspension or amendment.  In the event of such suspension or termination, the Company shall continue to maintain the Plan until all benefits under the Plan are distributed in accordance with the Participant’s elections, where applicable the provisions of Section 409A of the Code, the regulations promulgated thereunder and other applicable guidance.

7.2
Nothing contained herein will confer upon any Participant the right to be retained in the service of the Company or any Affiliate, nor will it interfere with the right of the Company or any Affiliate to discharge or otherwise deal with Participants without regard to the existence of the Plan.

7.3
The Corporation has funded its obligations under the Plan by purchasing certain insurance policies on the lives of the Participants but it shall have no obligation to do so in the future or to continue any such policies in effect.  No Participant or Beneficiary shall have any interest whatsoever in any such policies, which shall be the sole property of the Corporation.  Participants and their Beneficiaries shall look solely to the general credit of the Corporation for payment of benefits under the Plan.  The Corporation reserves the right to establish one or more trusts to provide alternative sources of benefit payments under the  Plan.  The existence of any such trust or trusts shall not relieve the Corporation of any liability to make benefit payments under the Plan, but to the extent any benefit payments are made from any such trust, such payment shall be in satisfaction of and shall reduce the Corporation's liabilities under this Plan.


 
 

 
 
SECTION 8 - NON-COMPETITION/NONSOLICITATION

8.1
Notwithstanding any other provision of the 1989 SERP except for the provisions of Section 8.2, to the contrary, no payments or further payments will be made under the 1989 SERP with respect to the portion of his 1989 SERP benefit in excess of his Grandfathered Income Benefit to a Participant or to his Beneficiary if (a) the Participant, directly or indirectly, during the 24-month period after his Separation from Service, is employed by, renders services to or participates in the management, operation or control of, or serves as advisor or consultant to any business enterprise which is engaged in any type of business activity conducted by the Company or any of its subsidiaries at the time of such termination of employment and which enterprise is in direct and substantial competition with the Company or any such subsidiary or (b) during the period of Participant’s employment at the Company and its Affiliates and for twelve months following his Separation from Service, the Participant does not, either on his own behalf or on behalf of any other person or entity, directly or indirectly, (i) solicit any person or entity that is a customer of the Company or its Affiliates, or has been a customer of the Company or its Affiliates during the prior twelve (12) months, to purchase any products or services the Wiley Companies provides to the customer, or (ii) interfere with any of the Company or its Affiliates business relationships.

8.2
The provisions of Section 8 shall not apply (a) following a Change of Control as defined in Section 4.2, or (b) if the Participant's employment is terminated by the Company without Cause as defined in Section 4.3 or by the Participant for Good Reason as defined in Section 4.4.



 
 

 
 
SECTION 9 - MISCELLANEOUS

9.1
Nonalienation
 
To the maximum extent permitted by law, no benefit under the 1989 SERP shall be assignable or subject in any manner to alienation, sale, transfer, claims of creditors, pledge, bankruptcy, attachment or encumbrances ofany kind.

9.2
Funding
 
No special or separate fund shall be established, and no segregation of assets shall be made, to assure the payments thereunder.  No Participant hereunder shall have any right, title, or interest whatsoever in any specific assets of the Corporation.  Nothing contained in the Plan and no action taken pursuant to its provisions shall create or be construed to create a trust of any kind or a fiduciary relationship between the Corporation and a Participant or any other person.  To the extent that any person acquires a right to receive payments under the 1989 SERP, such right shall be no greater than the right of any unsecured creditor of the Corporation.

9.3
Facility of Payment
 
In the event that the Committee shall find that a Participant or Beneficiary is incompetent to care for his affairs or is a minor, the Committee may direct that any benefit payment due him, unless claim shall have been made therefore by a duly appointed legal representative, be paid on his behalf to his spouse, a child, a parent or other relative, and any such payment so made shall thereby be a complete discharge of the liability of the Corporation and the 1989 SERP for that payment.

9.4
Withholding of Taxes
 
The Company shall have the right to deduct from each payment to be made under the 1989 SERP any required withholding taxes.

9.5
Expenses
 
All administrative expenses of the 1989 SERP and all benefits under the 1989 SERP shall be paid from the general assets of the Corporation.

 
 
 

 
 
9.6
Mergers/Transfers
 
This 1989 SERP shall be binding upon and inure to the benefit of the Corporation and its successors and assignees and the Participant, his designees and his estate.  Nothing in the 1989 SERP shall preclude the Corporation from consolidating or merging into or with, or transferring all or substantially all of its assets to, another corporation which assumes the 1989 SERP and all obligations of the Corporation hereunder.  Upon such a consolidation, merger or transfer of assets and assumption, the terms “Corporation” and “Company” shall refer to such other corporation and the 1989 SERP shall continue in full force and effect.

9.7
Claims Procedure
 
The Committee shall provide adequate notice in writing to any Participant, former Participant or Beneficiary whose claim for a withdrawal or payment under the 1989 SERP has been denied, setting forth the specific reasons for such denial.  A reasonable opportunity shall be afforded to any such Participant, former Participant or Beneficiary for a full and fair review by the Committee of a decision denying the claim.  The Committee’s decision on any such review shall be final and binding on the Participant, former Participant or Beneficiary and all other interested persons.

9.8
Acceleration of or Delay in Payments
 
The Committee, in its sole and absolute discretion, may elect to accelerate the time or form of payment of a benefit owed to the Participant hereunder, provided such acceleration is permitted under Treas. Reg. Section 1.409A-3(j)(4).  The Committee may also, in its sole and absolute discretion, delay the time for payment of a benefit owed to the Participant hereunder, to the extent permitted under Treas. Reg. Section 1.409A-2(b)(7).

9.9
Indemnification
 
The Company, the members of the Committee, and the officers, employees and agents of the Company shall, unless prohibited by any applicable law, be indemnified against any and all liabilities arising by reason of any act or failure to act in relation to the Plan including, without limitation, expenses reasonably incurred in the defense of any claim relating to the Plan, amounts paid in any compromise or settlement relating to the Plan and any civil penalty or excise tax imposed by any applicable statue, if

 
 

 
 
(a)  
the act or failure to act shall have occurred
 
(i)
in the course of the person’s service as an officer, employee or agent of the Company or as a member of the Committee, or as the Plan Administrator, or

 
(ii)
in connection with a service provided with or without charge to the Plan or to the Participants or Beneficiaries of the Plan, if such service was requested by the Committee or the Plan Administrator; and

(b)  
the act or failure to act is in good faith and in, or not opposed to, the best interests of the Company. 

This determination shall be made by the Company and, if such determination is made in good faith and not arbitrarily or capriciously, shall be conclusive.

The foregoing indemnification shall be from the assets of the Company.  However, the Company’s obligation hereunder shall be offset to the extent of any otherwise applicable insurance coverage under a policy maintained by the Company or any other person, or other source of indemnification.

9.10          Compliance
It is   the intent of the Company that the Plan complies with the provisions of Section 409A of the Code, any regulations and other guidance promulgated with respect thereto and the provisions of the Plan shall be interpreted to be consistent therewith.

9.11
Construction
(a)  
The Plan is intended to constitute an unfunded deferred compensation arrangement for a select group of management or highly compensated employees and therefore exempt from the requirements or Sections 201, 301 and 401 of ERISA.  All rights hereunder shall be governed by and construed in accordance with the laws of the State of New York

 
 

 
 
(b)  
The captions preceding the sections and articles hereof have been inserted solely as a matter of convenience and in no way define or limit the scope or intent of any provisions of the Plan.


APPENDIX A
 
PROVISIONS APPLICABLE TO A PARTICIPANT’S
GRANDFATHERED   INCOME BENEFIT

This Appendix A constitutes an integral part of the Plan and is applicable with respect to the Grandfathered Deferred Account of those individuals who were Participants in the Plan on December 31, 2004.   The portion of a Participant’s Benefit determined under the provisions of Articles 3, 4 or 5 of the 1989 SERP equal to his Grandfathered Income Benefit is subject to provisions of the Plan as set forth on October 3, 2004 without regard to any Plan amendments after October 3, 2004 which would constitute a material modification for Code Section 409A purposes, except as otherwise provided in this Appendix A. Section references in this Appendix A correspond to appropriate Sections of the said Plan as set forth on October 3, 2004.

SECTION 3 - BENEFITS

For purposes of Section 3 the terms/phrases “Termination of Employment,” “terminates employment,” “employment is terminated,” or other similar language shall mean with respect to a Participant the compete cessation of providing service to the Company and all Affiliates as an employee.

 
 

 
 
Section 3.2
Early Retirement .  Notwithstanding any provision to the contrary, the portion of a Participant’s Early Retirement Benefit equal to his Grandfathered Income Benefit shall commence as of the first month following the month the date the Participant attains age 65, provided, however, such Participant may elect, in accordance with procedures established by the Committee, to have payment commence on a date prior to age 65.  Such election must be filed with the Company prior to the end of the calendar year preceding the year payments are scheduled to begin and no later than six months preceding the date payments are schedule to begin after said election.

Section 3.3
Pre-Retirement Survivor Benefit.    The portion of a Participant’s Pre-Retirement Survivor Benefit attributable to his Grandfathered Income Benefit shall be paid in annual installments.

Section 3.4
Termination of Employment.   Notwithstanding any provisions to the contrary, the portion of a Participant’s Termination Benefit equal to his Grandfathered Income Benefit shall commence as of the first month following the month the Participant attains age 65, provided, however, such Participant may elect, in accordance with procedures established by the Company, to have payment of his Grandfathered Income Benefit commence on a date prior to age 65.  Such election must be made and filed in accordance with the provisions of Section 3.2 of the Appendix.

Section 3.5
Form of Payment.   The portion of a Participant’s benefit due under the provisions of Section 3.1, 3.2 or 3.4 equal to his Grandfathered Income Benefit shall be paid in ten annual installments.

Section 4
With respect to a Participant’s Grandfathered Income Benefit as defined in Section 1.15 of the foregoing provisions of this 1989 SERP, for purposes of this Section, effective on or after January 1, 2009, Change of Control as defined in Section 4.2 shall mean the later of a Change of Control event as defined under the provisions of the 1989 SERP as in effect on October 3, 2004 or a Change of Control event as defined in Section 4.2 of the foregoing provisions of the 1989 SERP.

 
 

 
 
Section 5.
For purposes of this Section, effective on or after January 1, 2009, the term Disabled or Disability shall have the meaning set forth in Section 5.1(c) of 1989 SERP.

 
 

 
 
SCHEDULE A
Name
Applicable Percentage
Status as of January 1, 2009
Arlington, William
Clifford, Peter
Collins, Kenneth
Conter, Thomas
Cousens, Ellis
Ellis, Jeanne (1)
Johnson, Richard
King, Timothy
Kippur, Stephen
Lesure, Alan
Lieberman, Bonnie
Mauer, Jerald
McCabe, Kevin
McCullough, Richard
Nagan, Douglas
Pesce, William
Rinck, Gary
Rudick, Richard
Seminoff, Carole (2)
Swanson, Eric
Wilder, Robert
Wiley, Deborah
Wiley, Peter
Wiley, W. Bradford II
Youngstein, Morton
 
 
 
(1)   Jeanne Ellis is the spouse of Charles Ellis, who passed away on 05/04/2008.
 
(2)   Carole Seminoff is the spouse of Serje Seminoff, who passed away on 04/13/2008.
50%
50%
N/A
50%
55%
65%
N/A
50%
55%
N/A
50%
55%
55%
50%
55%
65%
50%
55%
N/A
50%
55%
50%
50%
50%
N/A
Active
In Receipt
In Receipt
In Receipt
Active
In Receipt
Deferred
In Receipt
Active
In Receipt
Active
In Receipt
In Receipt
Deferred
In Receipt
Active
Active
In Receipt
In Receipt
Active
Deferred
Active
Active
In Receipt
In Receipt
 
 
     

 
 

 

PART B

JOHN WILEY & SONS, INC.
2005 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
 
PREAMBLE

This Part B of the SERP sets forth the provisions of the 2005 Supplemental Executive Retirement Plan as established effective as of April 1, 2005, for newly eligible executives and certain eligible executives employed by John Wiley & Sons, Inc. on March 31, 2005 who wish to waive their right to any benefits payable under the provisions of the Part A of the SERP in consideration of accruing a benefit for all service with John Wiley & Sons, Inc. under the provisions of the 2005 SERP.  Effective as of January 1, 2009, Part B of the SERP was amended and restated to comply with the final regulations of Section 409A of the Internal Revenue Code.
 
 
 

 
 
SECTION 1 - DEFINITIONS
1.1
Affiliate ” shall mean any company which is a member of a controlled group of corporations (as defined in Section 414(b) of the Code) which also includes as a member the Corporation; any trade or business under common control (as defined in Section 414(c) of the Code) with the Corporation; any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in Section 414(m) of the Code) which includes the Corporation; and any other entity required to be aggregated with the Corporation pursuant to regulations under Section 414(o) of the Code.

1.2
Average Highest Compensation ” means a Participant's average annual Compensation during the final 36 months of his employment with the Company or an Affiliate immediately preceding the earlier of his Separation from Service, Death or Disability or, if higher, the three consecutive calendar years in which his average Compensation was highest (or if he is employed for less than 36 months, the average annual Compensation during the period of his employment immediately preceding the earlier of his Separation from Service, Death or Disability).  For purposes of this definition the term “Compensation” means “Compensation” as defined in the Wiley Basic Plan, except that 100% instead of 50% of any bonuses, incentive pay and overtime pay shall be included for all years and “Compensation” shall not be limited by the provisions of Section 401(a)(17) of the Code.  Notwithstanding the foregoing provisions of this Section 1.2, Compensation for purposes of the 2005 SERP shall not include any amounts paid pursuant to an incentive plan which relates to a period of more than 12 months or any amounts paid pursuant to any plan, arrangement or agreement which expressly excludes such amounts for purposes of the 2005 SERP.

1.3
Beneficiary ” means the person or persons designated by the Participant to receive the Pre-Retirement Survivor Benefit in the event of the Participant’s death prior to his Benefit Commencement Date or the person or persons designated to receive such other benefits payable under the provisions of the 2005 SERP in the event of the Participant's death.  In the event there is no effective designation of a Beneficiary in effect on the Participant’s death, then payments under Section 3.3 shall be made to the Participant’s spouse or, however, if no spouse survives, payments under Section 3.3(a) shall not be made and payments under Section 3.3(b) shall be made to the following persons, if living, his issue in equal shares per stripes, if none, then his Beneficiary named under the Corporation’s life insurance policy.  If the Participant has not designated a contingent Beneficiary prior to his death, any Beneficiary may in turn designate a Beneficiary to receive any remaining payments that may be due under the provisions of the 2005 SERP in the event of the first Beneficiary's death.  A Participant may, from time to time, revoke or change his Beneficiary designation without the consent of any prior Beneficiary by filing a new designation with the Committee.  The last such designation received by the Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Participant’s death or the Participant’s Benefit Commencement Date, if earlier, and in no event shall it be effective as of a date prior to such receipt.

 
 

 
 
1.4
Benefit Commencement Date ” means, unless the Plan specifically provides otherwise, the first day of the first period for which an amount is due as an annuity or any other form.

1.5
Board ” means the Board of Directors of the Corporation.

1.6
Code ” means the Internal Revenue Code of 1986, as amended from time to time.

1.7
Committee ” means the Compensation Committee of the Board.

1.8
Company ” means the Corporation, or with respect to any Participant who is employed by an Affiliate, such Affiliate.

1.9
Corporation ” means John Wiley & Sons, Inc., a New York corporation and any successor thereto.

1.10
Disabled ” shall have the meaning set forth in Section 5.1(c).

1.11
Effective Date ” means April 1, 2005.

 
 

 
 
1.12
Normal Retirement Age ” means the date the Participant attains age 65 or completes at least five Years of Service, if later.

1.13
Normal Retirement Date ” means the first day of the calendar month coinciding with or next following the Participant’s Normal Retirement Age.

1.14
Other Retirement Income ” means annual income (determined as of the earlier of a Participant’s Separation from Service, death or Disability) payable to a Participant from the following sources:

 
(a)
the nonqualified unfunded supplemental plan of the Company adopted by the Board which pays pension benefits which supplement the benefits payable under the Wiley Basic Plan, and

 
(b)
any other contract, agreement or other arrangement with the Company or an Affiliate (excluding the Wiley Basic Plan, the John Wiley & Sons, Inc. Employees’ Savings Plan and the Deferred Compensation Plan of John Wiley & Sons, Inc.) to the extent it provides retirement or pension benefits, and

 
(c)
to the extent determined by the Committee, the portion of the annual amount of pension, if any, which is or would be payable to the Participant from another employer sponsored plan, attributable to service under that Plan, which is recognized by the Committee as Years of Benefit Service for that Participant for purposes of Section 3.1, and adjusted if necessary as provided in Section 1.23.

Where an election is available which would decrease the amount of the annual income payable from the sources described in clauses (a), (b) and (c) above, such election shall be disregarded for purposes of this definition, except as otherwise provided therein.  In addition any reduction or adjustment for the timing of payment in the amount of the annual income payable from such other sources shall be disregarded in calculation a Participant’s Other Retirement Income, unless otherwise provided herein.

 
 

 
 
If a benefit described in this Section 1.14 is payable in a form other than a single life annuity commencing on the Participant’s Normal Retirement Date or the first day of the month coincident with or next following his date of termination, if later, such benefit shall be converted to a single life annuity on such date of Equivalent Actuarial value (as defined in Item 1 of Appendix A of the Wiley Basic Plan).

1.15
Participant ” means an executive employee of the Corporation or an Affiliate listed on Schedule A hereto who becomes a Participant in the 2005 SERP pursuant to Section 2.

1.16
Plan ” means the John Wiley & Sons, Inc Supplemental Executive Retirement Plan, as amended from time to time, which shall consist of Part A - the 1989 SERP and Part B - the 2005 SERP.  The “1989 SERP” means the 1989 Supplemental Executive Retirement Plan as set forth in Part A of the Plan.

1.17
Separation from Service ” means a “Separation from Service” as such term is defined in the Income Tax Regulations under Section 409A of the Code as modified by the rules described below:

(d)  
An employee who is absent from work due to military leave, sick leave, or other bona fide leave of absence pursuant to Company policies shall incur a Separation from Service on the first date immediately following the later of (i) the six-month anniversary of the commencement of the leave (twelve month anniversary for a disability leave of absence) or (ii) the expiration of the employee’s right, if any, to reemployment under statute or contract or pursuant to Company policies.  For this purpose, a “disability leave of absence” is an absence due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 6 months, where such impairment causes the employee to be unable to perform the duties of his job or a substantially similar job;

(e)  
For purposes of determining whether another organization is an Affiliate of the Company, common ownership of at least 50% shall be determinative;

 
 

 
 
(f)  
The Corporation specifically reserves the right to determine whether a sale or other disposition of substantial assets to an unrelated party constitutes a Separation from Service with respect to the Executive providing services to the seller immediately prior to the transaction and providing services to the buyer after the transaction.  Such determination shall be made in accordance with the requirements of Code Section 409A.

 
Whether a Separation from Service has occurred shall be determined by the Committee in accordance with Code Section 409A, the regulations promulgated thereunder and applicable guidance thereto, as modified by the rules described above.  The terms or phrases “terminates employment,” “employment terminated,” or any other similar terminology shall have the same meaning as a “Separation from Service.”

1.18
Specified Employee ” means a “specified employee” as such term is defined in the Income Tax Regulations under Section 409A as modified by the rules set forth below:

(d)  
For purposes of determining whether a Participant is a Specified Employee, the compensation of the Participant shall be determined in accordance with the definition of compensation provided under Treas. Reg. Section 1.415(c) 2(d)(3) (wages within the meaning of Code section 340(a) for purposes of income tax withholding at the source, plus amounts excludible from gross income under Section 125(a), 132(f)(4), 402(e)(3), 402(h)(1)(B), 402(k) or 457(b), without regard to rules that limit the remuneration included in wages based on the nature or location of the employment or the services performed).

(e)  
The “Specified Employee Identification Date” means December 31, unless the Committee has elected a different date though action that is legally binding with respect to all nonqualified deferred compensation plans maintained by the Company and all Affiliates.

(f)  
The “Specified Employee Effective Date” means the first day of the fourth month following the Specified Employee Identification Date or such earlier date as is selected by the Committee.

 
 

 
 
1.19
2005 SERP ” means this Part B of the Plan, as amended from time to time.

1.20
Wiley Basic Plan ” means the Employees’ Retirement Plan of John Wiley & Sons, Inc., as the same may be hereafter amended from time to time.

1.21
Wiley Basic Plan Benefit " means the annual pension determined as of the earlier of a Participant’s Separation from Service, death or Disability which would be payable pursuant to the provisions of the Wiley Basic Plan to a Participant, regardless of any elections with regard to the form of payment of the benefit made by the Participant or his beneficiary under the Wiley Basic Plan, assuming such pension commenced on the later of the Participant’s Normal Retirement Date or the first day of the month coincident with or next following his date of Separation from Service.

1.22
Years of Benefit Service ” means a Participant's Benefit Service as defined in the Wiley Basic Plan under Section 3.02 of such Plan. However, in the case of an acquired company, the Participant's service with that company prior to the date of acquisition will not be counted unless such service is recognized for purposes of (i) Benefit Service under the Wiley Basic Plan or (ii) benefit accruals under any other nonqualified supplemental plan maintained by the Company. In addition to the foregoing, a Participant may, subject to the approval of the Committee, be granted additional Years of Service for purpose of determining the amount of benefits under the 2005 SERP.

1.23
“Years of Service” means a Participant's Years of Service (as defined in the Wiley Basic Plan) for purposes of Section 3.01 of such plan. However, in the case of an acquired company, the Participant's service with that company prior to the date of acquisition will not be counted unless such service is recognized for purposes of participation in the Wiley Basic Plan.

1.24
The masculine gender, where appearing herein, will be deemed to include the feminine gender, and the singular may include the plural, unless the context clearly indicates to the contrary.


 
 

 
 
SECTION 2 - ELIGIBILITY AND PARTICIPATION
2.1
(a)
Each executive of the Company or an Affiliate who was an active participant in the 1989 SERP on March 31, 2005 and who as of April 1, 2005 is not (i) a member of the Board or (ii) a 5% owner of the Company (as defined in Code Section 416) or (iii) within two years of attaining age 65, shall become a Participant under the 2005 SERP as of the Effective Date subject to the Participant executing a waiver agreement in such form and within the time period as the Committee may direct with respect to any benefit such executive may had accrued under the 1989 SERP.
 

 
(b)
Any other executive of the Company or an Affiliate designated by the Committee as a Participant shall become a Participant under the 2005 SERP as of the effective date of such designation, subject to the Participant executing a letter of agreement in such form as the Committee may direct.

 
(c)
Notwithstanding any Plan provision to the contrary, an executive of the Company or an Affiliate who is accruing benefits (or currently has an accrued benefit) under the 1989 SERP is not eligible to participate in the 2005 SERP.

 
2.2
Participation under the Plan shall terminate on the date the Participant incurs a Separation from Service from the Company and all Affiliates or ceases to accrue Years of Service under the provisions of Section 1.23, if earlier, unless at that time the Participant is entitled to a benefit under Section 3 or 5.
 

 
 

 
 
SECTION 3 - BENEFITS
3.1
Post Retirement Income Benefit .
 
(a)
Subject to the provisions of Section 4 and 8, there shall be paid to each Participant who incurs a Separation from Service on or after the date he attains age 65 (or completes five Years of Service, whichever occurs later), in the form of a life annuity for the life of a Participant, a Post Retirement Income Benefit commencing as of the Participant’s Normal Retirement Date or the first day of the month coincident with or next following his Retirement, if later, which date shall be his Benefit Commencement Date.  The annual amount of such Post Retirement Benefit Income shall be equal to:

 
(i)
two percent of the Participant’s Average Highest Compensation multiplied by the number of his Years of Benefit Service as of his date of Retirement up to 20 years,
plus
 
(ii) one percent to the Participant’s Average Highest Compensation multiplied by the number of his Years of Benefit Service as of his date of Retirement in excess of 20 years up to a maximum of 35 years;
minus
 
(iii) the sum of the Participant’s Wiley Basic Plan Benefit as applicable, and the Participant’s Other Retirement Income.

 
(b)
Notwithstanding foregoing, the amount of the Participant’s Post Retirement Income Benefit payable for the Participant’s life under this Section 3.1 shall never be less than the greater of the Additional Benefit or Primary Benefit the Participant would have received under the provisions of the 1989 SERP as in effect on December 31, 2004 determined as if the Participant had terminated employment on December 31, 2004 and commenced payment as of his Normal Retirement Date, or date of Retirement, if later, converted to a single life annuity of equivalent actuarial value.  For purpose of this Section 3.1(b), equivalent actuarial value shall be determined on the basis of the IRS Mortality Table and the IRS Interest Rate.  The “IRS Mortality Table” shall mean the mortality table prescribed by the Secretary of Treasury under Section 417(e)(3)(A)(ii)(I) of the Code as in effect on December 31, 2007.  The “IRS Interest Rate” is the annual rate of interest on 30 year Treasury Securities as published by the Commissioner of Internal Revenue in the calendar month preceding the month in which the Participant’s Separation from Service occurs.

 
 

 
 
 
(c)
Subject to the provisions of Section 3.6, the first payment under this Section 3.1 shall be made within 60 days of the Participant’s Normal Retirement Date or the first day of the month coincident with or next following his date of Retirement, if later.

3.2
Early Retirement
 
(a)
Subject to the provisions of Section 4 and 8, a Participant who incurs a Separation from Service prior to age 65 but on or after attaining age 55 and completing at least five Years of Service shall be entitled to receive an Early Retirement Income Benefit commencing as of the first day of the month following his Retirement.  Such Early Retirement Income Benefit shall be equal to (i) the amount determined under Section 3.1(a)(i) and (ii) on the basis of his Average Highest Compensation and Years of Service as of his date of Retirement reduced by 1/12 of 4 percent of itself for each month by which payment commences before the Participant’s Normal Retirement Date, provided however that such reduction shall not apply if the Participant has attained 62 years of age and completed twenty Years of Service as of his date of Retirement, minus (ii) the sum of the Participant’s Wiley Basic Plan Benefit, as applicable, and the Participant’s Other Retirement Income.  For this purpose, the Participant's Wiley Basic Plan Benefit and the Participant’s Other Retirement Income shall be computed by substituting the annual amount that would be payable to the Participant commencing as of the first day of the month coincident with or next following the date of his Retirement in the form of a single life annuity under the Wiley Basic Plan or under any plan, contract, agreement or, arrangement referred to in Section 1.14 hereof in place of the Participant's Wiley Basic Plan Benefit and Other Retirement Income as defined in Section 1 of the 2005 SERP.

 
 

 
 
 
(b)
Notwithstanding the foregoing, the amount of the Participant’s Early Retirement Income Benefit payable for the Participant’s life under this Section 3.2 shall never be less than the greater of the Additional Benefit or Primary Benefit the Participant would have received under the provisions of the 1989 SERP as in effect on December 31, 2004 determined as if the Participant had terminated employment on December 31, 2004 and commenced payment as of the first day of the month coincident with or next following the Participant’s date of Retirement, converted to single life annuity on such date of equivalent actuarial value (as defined in Section 3.1(b) of the 2005 SERP).

 
(c)
Such Participant may elect in accordance with the provisions of Section 409A of the Code, regulations thereunder including any transitional rules and other applicable guidance and the procedures established by the Committee to have his Early Retirement Income Benefit commence on a later date but not later than his Normal Retirement Date.  If such election is made after December 31, 2008, it shall be subject to the following rules:
 
(i)
the election will not become effective until 12 months after the date the election is made, and
 
(ii)
the payment of such Benefit shall be delayed at least five years from the date such payment would otherwise have been made absent this election (disregarding any delay under the provision of Section 3.6).

 
(d)
Subject to Section 3.6, the first payment under this Section 3.2 shall be made within 60 days of the Participant’s date of Retirement, or such later date as elected by the Participant.

 
 

 
 
3.3            Pre-Retirement Survivor Benefit
 
(a)
If a Participant dies prior to his Benefit Commencement Date, a Pre-Retirement Survivor Benefit shall be paid to his surviving spouse (or “domestic partner”) as hereinafter provided.  The annual amount of such Pre-Retirement Survivor Benefit shall be equal to 50% of the amount determined under Section 3.1 as of the Participant’s date of death or date of Separation from Service with the Company and all Affiliates, if earlier, and shall be paid for the life of the spouse (or “domestic partner”) commencing as of the first day of the month following the month in which the Participant’s death occurs.

 
(b)
Notwithstanding the foregoing, if a Participant who was an active participant in the 1989 SERP on December 31, 2004 dies prior to his Benefit Commencement Date and as of his date of death has no surviving spouse (or “domestic partner”), there shall be paid to the named Beneficiary of such Participant at the time of his death, a Pre-Retirement Survivor Benefit equal to the present value of one-half of the Participant's Additional Benefit or Primary Benefit, whichever is greater, that would have been payable under the provisions of the 1989 SERP had the Participant remained an active participant in the 1989 SERP through his date of death or the date he ceases to accrue Years of Service under the 2005 SERP, if earlier, paid in ten annual installments.  For this purpose, the Participant's Additional Benefit under the 1989 SERP shall be computed by substituting the annual amount payable to the Participant's beneficiary under the Wiley Basic Plan or under any plan, contract, agreement or, arrangement referred to in Section 1.14 hereof in place of the Participant's Wiley Basic Plan Benefit and Other Retirement Income assuming payments thereunder commence as of the first day of the month following the month in which the Participant’s death occurs.  Such Benefit shall be converted to a single life annuity of equivalent actuarial value (as defined in Section 3.1(b) of the 2005 SERP) and paid for the life of his named Beneficiary.

 
(c)
For purposes of this Section 3.3, the term “domestic partner” shall have the same meaning as such term has under the Wiley Basic Plan.

 
 

 
 
3.4
Termination of Employment
 
(a)
Subject to the provisions of Sections 4 and 8, in the event a Participant incurs a Separation from Service prior to his Normal Retirement Age other than on account of death or disability and such Participant does not qualify for Early Retirement as provided in Section 3.2 hereof, then the Participant shall be entitled to a Termination Benefit, commencing on the first day of the month following the Participant’s attainment of age 55 or date of Separation from Service, if later.  Such Termination Benefit shall be equal to the amount determined under Section 3.1 on the basis of his Average Highest Compensation and Years of Service as of the date of his Separation from Service reduced by 1/12 of 4 percent of itself for each month by which payment commences before the Participant’s Normal Retirement Date.

 
(b)
A Participant may elect in accordance with the provisions of Section 409A of the Code, the regulations thereunder (including any transitional rules) and any other applicable guidance and the procedures established by the Committee, to have his Termination Benefit payments commence at a later date but not later than his Normal Retirement Date.  If such election is made after December 31, 2008, it shall be subject to the following rules:

 
(i)
the election will not become effective until 12 months after the date the election is made, and

 
(ii)
the payment of such Benefit shall be delayed at least five years from the date such payment would otherwise have been made absent this election (disregarding any delay under the provision of Section 3.6).

 
(c)
Subject to the provisions of the first payment under this Section 3.4 shall begin within 60 days of the date the Participant’s attains age 55, or such later date as elected by the Participant.

 
 

 
 
3.5
Form of Payment
 
(a)
Unless a Participant has made a valid election under paragraph (b) below of an optional form of payment, benefits payable to a Participant under Section 3.1, 3.2 or 3.4 shall be paid in the form of a single life annuity for the life of the Participant.

 
(b)
Subject to paragraph (d) below, a Participant may elect to convert the benefit otherwise payable to him under the provisions of this Section 3 into an optional benefit of equivalent actuarial value as provided in one of the options set forth below:

 
Option 1.
“Contingent Annuity”.  A modified benefit payable monthly during the Participant’s life and after his death payable at 50%, 75% or 100% (as elected by the Participant) the rate of his modified benefit during the life of, and to, the Beneficiary named by him on his Benefit Commencement Date.

 
Option 2.
“Pop-Up-Option”.  A modified benefit payable under Option 1, provided that in the event the Beneficiary named by the Participant at the time he elected the form of payment predeceases the Participant, the annual benefit payable to the Participant after the Beneficiary’s death shall equal the Benefit that would have been payable pursuant to Section 3.5(a).

 
Option 3.
“Certain & Life Option”.  A modified benefit payable monthly for the life of the Participant, however if the Participant dies within the 10, 11, 12, 13, 14, or 15 year period (as elected by the Participant) commencing on the Participant’s Benefit Commencement Date payments in that reduced amount will be payable until the 10, 11, 12, 13, 14, or 15 th anniversary of his Benefit Commencement Date.

 
(c)
Such equivalent actuarial value shall be defined as set forth in Item I of Appendix A of the Wiley Basic Plan.

 
 

 
 
 
(d)
Notwithstanding the foregoing, subject to the provisions of Section 409A of the Code, a Participant’s election to receive his benefit payable under Section 3.1, 3.2 or 3.4 (or if applicable, Section 5) in an optional form as described in paragraph (b) above shall be effective as of the Participant’s Benefit Commencement Date, provided that the Participant makes and submits to the Committee his election of such optional form prior to his Benefit Commencement Date.  A Participant who fails to elect an optional form of benefit payment in a timely manner shall receive his benefit in accordance with paragraph (a) of this Section 3.5.

3.6            Timing of Payment for “Specified Employees”
 
Notwithstanding any provision of the 2005 SERP to the contrary, the actual payment of a benefit due under the provisions of Section 3.1, 3.2 or 3.4 or Section 4 of this 2005 SERP to a Participant who is classified as a “Specified Employee” on his date of Separation from Service shall not commence prior to the first day of the seventh month following the Participant’s Separation from Service.  Any payment to the Participant which he would have otherwise received under Section 3.1, 3.2, or 3.4, or Section 4, during the six-month period immediately following such Participant’s Separation from Service shall be accumulated, with interest, compounded on a monthly basis, at the Applicable Interest Rate and paid within 60 days of the first day of the seventh month following the Participant’s Separation from Service.  The “Applicable Interest Rate” for purposes of this Section 3.6 is one year U.S. Treasury rate (constant maturities) as in effect on the last business day of the calendar month preceding the date of the Participant’s Separation from Service occurs.


 
 

 
 
SECTION 4 - CHANGE OF CONTROL

4.1
In the event there is a Change of Control as hereinafter defined and, within two years following such Change of Control (a) the Participant’s employment is terminated by the Company except for “Cause”, or (b) the Participant incurs a Separation from Service for “Good Reason” as those terms are hereinafter defined, then notwithstanding any other provisions (other than Section 3.6) of the 2005 SERP to the contrary and in lieu of any other benefit to which the Participant may be entitled under the 2005 SERP, the Participant shall be entitled, to a lump sum payment, payable, subject to the provisions of Section 3.6, within 60 days after such Separation from Service equal to the then present value of the Post Retirement Income to which the Participant would have been entitled on the date of such Separation from Service and, in the case of a Participant who has not yet reached his Normal Retirement Age, unreduced for commencement prior to the Participant’s Normal Retirement Date.  In determining the Post Retirement Income Benefit for purposes of the preceding sentence, the Wiley Basic Plan Benefit shall be deemed to be the annual benefit to which the Participant will be or is entitled at age 55 or the date of such Separation from Service, whichever is later. The present value of such payments shall be determined by multiplying such Post Retirement Income Benefit, as determined pursuant to this Section 6.1, by the "Present Value Factor” as hereinafter defined.

4.2
Change of Control ” shall mean an event which shall occur if there is: (i) a change in the ownership of the Corporation; (ii) a change in the effective control of the Corporation; or (iii) a change in the ownership of a substantial portion of the assets of the Corporation.
 
For purposes of this Section, a change in the ownership occurs on the date on which any one person, or more than one person acting as a group (as defined in Treasury regulations 1.409A-2(i)(5)(v)(B)), acquires ownership of stock that, together with stock held by such person or group constitutes more than 50% of the total fair market value or total voting power of the stock of the Corporation.
 
 

 
 
A change in the effective control occurs on the date on which either (i) a person, or more than one person acting as a group (as defined in Treasury regulations 1.409A-2(i)(5)(v)(B)), acquires ownership of stock possessing 30% or more of the total voting power of the stock of the Corporation, taking into account all such stock acquired during the 12-month period ending on the date of the most recent acquisition, or (ii) a majority of the members of the Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of such Board of Directors prior to the date of the appointment or election, but only if no other corporation is a majority shareholder.

A change in the ownership of a substantial portion of assets occurs on the date on which any one person, or more than one person acting as a group (as defined in Treasury regulations 1.409A-2(i)(5)(v)(B)), other than a person or group of persons that is related to the Corporation, acquires assets that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Corporation immediately prior to such acquisition or acquisitions, taking into account all such assets acquired during the 12-month period ending on the date of the most recent acquisition.

The determination as to the occurrence of a Change in Control shall be based on objective facts and in accordance with the requirements of Code Section 409A and the regulations promulgated thereunder.

 
 

 
 
4.3
Cause
 
Termination of a Participant's employment by the Company for "Cause" shall mean Separation from Service upon (a) the willful and continued failure by the Participant substantially to perform his duties with the Company to the best of his ability (other than any such failure resulting from his incapacity due to physical or mental illness), after a demand for such performance is delivered to the Participant by the Chairman of the Board or President of the Company which specifically identifies the manner in which such executive believes that the Participant has not substantially performed his duties to the best of his ability, or (b) the willful engaging by the Participant in illegal misconduct materially and demonstrably injurious to the Company. For purposes of this Section, no act, or failure to act, on the Participant's part shall be considered "willful" unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that his action or omission was lawful and in the best interest of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be lawful and done, or omitted to be done, by the Participant in good faith and in the best interest of the Company. Notwithstanding the foregoing, the Participant shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Participant a Notice of Termination containing or attached thereto a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to the Participant and an opportunity for the Participant, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Participant was guilty of conduct set forth above in clauses (a) and (b) in this section and specifying the particulars thereof in detail.

4.4
Good Reason
 
"Good Reason" for a Participant to incur a Separation from Service shall mean:
 
(a)
an adverse change in the Participant's status or position(s) as an executive of the Company as in effect immediately prior to the Change of Control, including, without limitation, any adverse change in his status or position as a result of a material diminution in his duties or responsibilities or a material change in his business location or the assignment to him of any duties or responsibilities which are inconsistent with such status or position, or any removal of the Participant from or any failure to reappoint or reelect him to any office or position previously held;

 
(b)
a reduction by the Company in Participant's base salary as in effect immediately prior to the Change of Control or in the number of vacation days to which Participant is then entitled under the Company's normal vacation policy as in effect immediately prior to the Change of Control;

 
 

 
 
 
(c)
the taking of any action by the Company (including the elimination of a plan without providing substitutes therefore or the reduction of Participant's awards thereunder) that would substantially diminish the aggregate projected value of the Participant's awards under the Company's incentive, bonus, stock option or restricted stock plans in which the Participant was participating at the time of a Change of Control of the Company;

 
(d)
the taking of any action by the Company that would substantially diminish the aggregate value of the benefits provided the Participant under the Company's medical, health, accident, disability, life insurance, thrift or retirement plans in which the Participant was participating at the time of a Change of Control of the Company; or

 
(e)
substantial and continuing harassment of the Participant by other Company personnel, including but not limited to verbal abuse, insulting or demeaning verbal and written communications, and orders or directions which are clearly inappropriate to Participant's executive status, provided the Participant gives the Company written notice of such harassment in reasonable detail and the Company fails to promptly take corrective action to stop such harassment.

4.5
The “Present Value Factor” is the factor which when applied to an annual payment, would represent the equivalent actuarial value to receive such amount annually for life when computed on the basis of the IRS Mortality Table and the IRS Interest Rate.  The “IRS Mortality Table” shall mean the mortality table prescribed by the Secretary of Treasury under Section 417(e)(3)(A)(ii)(I) of the Code as in effect on December 31, 2007.  The “IRS Interest Rate” is the annual rate of interest on 30 year Treasury Securities as published by the Commissioner of Internal Revenue in the calendar month preceding the month in which the Participant’s Separation from Service occurs.

 
 

 
 
4.6
Notice of Termination
 
Any termination by the Company pursuant to Section 4.3 above or by the Participant pursuant to Section 4.4 above shall be communicated by written Notice of Termination to the Participant or the Company, as the case may be. For purposes of the 2005 SERP, a "Notice of Termination" shall mean a notice specifying the termination provision in the 2005 SERP relied upon and setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant's employment under the provision so specified except as otherwise provided in Section 3.6.

4.7
In the event the amount which a Participant is entitled to receive pursuant to Section 4.1 is not paid in full to the Participant within 60 days after his Separation from Service, or, if later, in accordance with the provisions set forth in Section 3.6, then the Participant shall also be entitled to recover from the Company reasonable legal expenses and disbursements incurred in establishing his right to and collecting such amount.

4.8
The provisions of this Section 4 shall not apply to any Participant who would be deemed an individual described in Section 422A(b)(6) of the Code, as presently in effect (relating to an individual who, directly and by attribution, is deemed to own more than 10% of the voting power of a corporation).


 
 

 
 
SECTION 5 - DISABILITY
 
5.1
(a)
In the event a Participant who is actively employed by the Company or an Affiliate becomes Disabled, as that term is hereinafter defined, prior to his Normal Retirement Date, then notwithstanding any other provision of the 2005 SERP to the contrary and in lieu of any other benefit to which the Participant may be entitled under the 2005 SERP, the Participant shall be entitled to a lump sum payment, payable within 60 days after the Committee’s determination regarding such disability is finalized, equal to the then present value of the Post Retirement Income Benefit determined under Section 3.1 on the basis of the Participant’s Average Highest Compensation and Years of Service as of his Disability Date (as that term is herein defined), unreduced for commencement prior to the Participant’s Normal Retirement Date.  The present value of such payments shall be determined by multiplying such Post Retirement Income Benefit, as determined pursuant to this Section 5.1 by the Present Value Factor as defined below.  Notwithstanding the foregoing a Participant may elect in accordance with procedures established by the Committee to receive all or any portion of such Disability in the form of an annuity as described in Section 3.6(a).  To be effective such election must be completed and submitted to the Company no later than December 31, 2008, of if later within 30 days of the date such Participant first becomes eligible for the SERP or any other nonqualified plan maintained by the Company or an Affiliate that is required to be aggregated with the SERP under the provisions of Section 409A of the Code.

 
(b)
The “Present Value Factor” solely for purposes of this Section 7.1 is the factor which when applied to an annual payment, would represent the equivalent actuarial value to receive such amount annually for life when computed on the basis of the IRS Mortality Table and the IRS Interest Rate.  The “IRS Mortality Table” shall mean the mortality table prescribed by the Secretary of Treasury under Section 417(e)(3)(A)(ii)(I) of the Code as in effect on December 31, 2007.  The “IRS Interest Rate” is the annual rate of interest on 30 year Treasury Securities published by the Commissioner of Internal Revenue in the calendar month preceding the month in which the Participant’s Disability Date occurs.

 
 

 
 
 
 
 
(c)
For purposes of this Section 5, a Participant is considered Disabled if such Participant meets the requirements of Treasury Regs Section 1.409a-3(i)(4) and any subsequent guidance thereto.  The Participant’s Disability Date shall be the date determined by the Committee on a basis uniformly applicable to all persons similarly situated.


 
 

 
 
SECTION 6 - COMMITTEE

6.1
The Committee shall have the exclusive responsibility and complete discretionary authority to interpret the 2005 SERP, to adopt, amend, and rescind rules and regulations for the administration of the 2005 SERP, and generally to operate, manage and administer the 2005 SERP and to make all determinations in connection with the 2005 SERP as may be necessary or advisable. All such actions of the Committee shall be conclusive and binding upon all Participants and Beneficiaries. The Committee may employ and rely on such legal counsel, actuaries, accountants and agents as it may deem advisable to assist in the administration of the Plan

6.2
To the extent permitted by law, all agents and representatives of the Committee shall be indemnified by the Company and held harmless against any claims and the expenses of defending against such claims, resulting from any action or conduct relating to the administration of the Plan, except claims arising from gross negligence, willful neglect or willful misconduct.


 
 

 
 
SECTION 7 - TERMINATION; AMENDMENT

7.1
The Plan may not be terminated or suspended or modified or amended in any manner which adversely affects any Participant at any time after a Change of Control (as defined in Section 4.2) shall have occurred.  Subject to the foregoing provisions of this Section 5.1, the Board may, in its sole discretion, terminate, suspend or amend the Plan at any time or from time to time, in whole or in part. However, no termination, suspension or amendment of the Plan may adversely affect a Participant's accrued benefit under the Plan, or adversely affect a retired Participant's right or the right of a Beneficiary to receive or to continue to receive a benefit in accordance with the Plan as in effect on the date immediately preceding the date of such termination, suspension or amendment.  In the event of such suspension or termination, the Company shall continue to maintain the Plan until all benefits under the Plan are distributed in accordance with the Participant’s elections and the provisions of Section 409A of the Code, the regulations promulgated thereunder and other applicable guidance.

7.2
Nothing contained herein will confer upon any Participant the right to be retained in the service of the Company or any Affiliate, nor will it interfere with the right of the Company or any Affiliate to discharge or otherwise deal with Participants without regard to the existence of the Plan.

7.3
The Company may fund its obligations under the Plan by purchasing certain insurance policies on the lives of the Participants.  In the event the Company does fund its obligation under the Plan it shall have no obligation to continue to do so in the future or to continue any such policies in effect. No Participant or Beneficiary shall have any interest whatsoever in any such policies, which shall be the sole property of the Company.  Participants and their Beneficiaries shall look solely to the general credit of the Company for payment of benefits under the Plan.  The Company reserves the right to establish one or more trusts to provide alternative sources of benefit payments under the Plan.  The existence of any such trust or trusts shall not relieve the Company of any liability to make benefit payments under the Plan, but to the extent any benefit payments are made from any such trust, such payment shall be in satisfaction of and shall reduce the Company's liabilities under this Plan.

 
 

 
 
SECTION 8 - NON-COMPETITION/NONSOLICITATION

8.1
Notwithstanding any other provision of the 2005 SERP except for the provisions of Section 8.2, to the contrary, no payments or further payments will be made under the 2005 SERP to a Participant or to his Beneficiary if, (a) the Participant, directly or indirectly, during the 24-month period after his Separation from Service, is employed by, renders services to or participates in the management, operation or control of, or serves as advisor or consultant to any business enterprise which is engaged in any type of business activity conducted by the Company or any of its subsidiaries at the time of such termination of employment and which enterprise is in direct and substantial competition with the Company or any such subsidiary, or (b) during the period of Participant’s employment at the Company and its Affiliates and for twelve months following his Separation from Service, the Participant does not, either on his own behalf or on behalf of any other person or entity, directly or indirectly, (i) solicit any person or entity that is a customer of the Company or its Affiliates, or has been a customer of the Company or its Affiliates during the prior twelve (12) months, to purchase any products or services the Wiley Companies provides to the customer, or (ii) interfere with any of the Company or its Affiliates business relationships.

8.2
The provisions of Section 8 shall not apply (a) following a Change of Control as defined in Section 6.2, or (b) if the Participant's employment is terminated by the Company without Cause as defined in Section 6.4 or by the Participant for Good Reason as defined in Section 6.5.


 
 

 
 
SECTION 9 - MISCELLANEOUS
9.1
Nonalienation
 
To the maximum extent permitted by law, no benefit under the 2005 SERP shall be assignable or subject in any manner to alienation, sale, transfer, claims of creditors, pledge, bankruptcy, attachment or encumbrances of any kind.

9.2
Funding
 
No special or separate fund shall be established, and no segregation of assets shall be made, to assure the payments thereunder.  No Participant hereunder shall have any right, title, or interest whatsoever in any specific assets of the Company.  Nothing contained in the Plan and no action taken pursuant to its provisions shall create or be construed to create a trust of any kind or a fiduciary relationship between the Company and a Participant or any other person.  To the extent that any person acquires a right to receive payments under the 2005 SERP, such right shall be no greater than the right of any unsecured creditor of the Company.

9.3
Facility of Payment
 
In the event that the Committee shall find that a Participant or Beneficiary is incompetent to care for his affairs or is a minor, the Committee may direct that any benefit payment due him, unless claim shall have been made therefore by a duly appointed legal representative, be paid on his behalf to his spouse, a child, a parent or other relative, and any such payment so made shall thereby be a complete discharge of the liability of the Company and the 2005 SERP for that payment.

9.4
Withholding of Taxes
 
The Company shall have the right to deduct from each payment to be made under the 2005 SERP any required withholding taxes.

9.5
Expenses. All administrative expenses of the 2005 SERP and all benefits under the 2005 SERP shall be paid from the general assets of the Company.

 
 

 
 
9.6
Mergers/Transfers
 
This 2005 SERP shall be binding upon and inure to the benefit of the Company and its successors and assignees and the Participant, his designees and his estate.  Nothing in the 2005 SERP shall preclude the Company from consolidating or merging into or with, or transferring all or substantially all of its assets to, another corporation which assumes the 2005 SERP and all obligations of the Company hereunder.  Upon such a consolidation, merger or transfer of assets and assumption, the term “Company” shall refer to such other corporation and the 2005 SERP shall continue in full force and effect.

9.7
Claims Procedure
 
The Committee shall provide adequate notice in writing to any Participant, former Participant or Beneficiary whose claim for a withdrawal or payment under the 2005 SERP has been denied, setting forth the specific reasons for such denial.  A reasonable opportunity shall be afforded to any such Participant, former Participant or Beneficiary for a full and fair review by the Committee of a decision denying the claim.  The Committee’s decision on any such review shall be final and binding on the Participant, former Participant or Beneficiary and all other interested persons.

9.8
Acceleration of or Delay in Payments
 
The Committee, in its sole and absolute discretion, may elect to accelerate the time or form of payment of a benefit owed to the Participant hereunder, provided such acceleration is permitted under Treas. Reg. Section 1.409A-3(j)(4).  The Committee may also, in its sole and absolute discretion, delay the time for payment of a benefit owed to the Participant hereunder, to the extent permitted under Treas. Reg. Section 1.409A-2(b)(7).

9.9
Indemnification
 
The Company, the members of the Committee, and the officers, employees and agents of the Company shall, unless prohibited by any applicable law, be indemnified against any and all liabilities arising by reason of any act or failure to act in relation to the Plan including, without limitation, expenses reasonably incurred in the defense of any claim relating to the Plan, amounts paid in any compromise or settlement relating to the Plan and any civil penalty or excise tax imposed by any applicable statue, if
 
 
 

 
 
(c)  
the act or failure to act shall have occurred
 
(i)
in the course of the person’s service as an officer, employee or agent of the Company or as a member of the Committee, or as the Plan Administrator, or
 
(ii)
in connection with a service provided with or without charge to the Plan or to the Participants or Beneficiaries of the Plan, if such service was requested by the Committee or the Plan Administrator; and

(d)  
the act or failure to act is in good faith and in, or not opposed to, the best interests of the Company. 

This determination shall be made by the Company and, if such determination is made in good faith and not arbitrarily or capriciously, shall be conclusive.

The foregoing indemnification shall be from the assets of the Company.  However, the Company’s obligation hereunder shall be offset to the extent of any otherwise applicable insurance coverage under a policy maintained by the Company or any other person, or other source of indemnification.

9.10         Compliance
 
It is   the intent of the Company that the Plan complies with the provisions of Section 409A of the Code, any regulations and other guidance promulgated with respect thereto and the provisions of the Plan shall be interpreted to be consistent therewith.

9.11
Construction
 
(a)
The Plan is intended to constitute an unfunded deferred compensation arrangement for a select group of management or highly compensated employees and therefore exempt from the requirements or Sections 201, 301 and 401 or ERISA.  All rights hereunder shall be governed by and construed in accordance with the laws of the State of New York.

 
(b)
The captions preceding the sections and articles hereof have been inserted solely as a matter of convenience and in no way define or limit the scope or intent of any provisions of the Plan.


 
 

 

 


 
 
Exhibit 10.10

John Wiley & Sons, Inc.

Supplemental Benefit Plan


Amended and Restated as of
January 1, 2009



 
 
 

 

JOHN WILEY & SONS, INC.

SUPPLEMENTAL BENEFIT PLAN


TABLE OF CONTENTS

   
PAGE
SECTION 1 -
PURPOSES
1
SECTION 2 -
DEFINITIONS
2
SECTION 3 -
PARTICIPATS
4
SECTION 4 -
AMOUNT OF SUPPLIMENTAL BENEFIT
5
SECTION 5 -
PAYMENT
6
SECTION 6 -
CHANGE OF CONTROL
12
SECTION 7 -
NONASSIGNABILITY
13
SECTION 8 -
RIGHT TO DISCHARGE
13
SECTION 9 -
FUNDING AND GENERAL PROVISIONS
14
SECTION 10 -
SIGNATURE AND VERIFICATION
18
 
 

 
 

 


JOHN WILEY & SONS, INC. SUPPLEMENTAL BENEFIT PLAN

AMENDED AND RESTATED AS OF
January 1, 2009


The John Wiley & Sons, Inc. Supplemental Plan (the “Supplemental Plan”) is hereby amended and restated effective as of January 1, 2009 to comply with the provisions of Section 409A of the Code as enacted by the American Jobs Creation Act of 2004, and the regulations promulgated thereunder.  This document sets forth the provisions of the Supplemental Plan as applicable to participants who commence payment of their supplemental benefits on or after January 1, 2009.  The benefits accrued and vested under the provisions of the Supplemental Plan by a Participant who terminated employment with the Company and all its Affiliated Companies (as such term is defined in the Retirement Plan) prior to January 1, 2005 shall be subject to the provisions of the Supplemental Plan as in effect on October 3, 2004.  In addition, with respect to certain Participants who were employed by the Company on January 1, 2005, the portion of their benefits payable under this restated Supplemental Plan equal to their Grandfathered Supplemental Benefit (as defined herein) shall be subject to the provisions of the Supplemental Plan without regard to any amendments after October 3, 2004 which would constitute a material modification for Code Section 409A purposes.

 
 

 

SECTION 1 – PURPOSE

The purpose of the John Wiley & Sons, Inc. Supplemental Benefit Plan (the “Supplemental Plan”) is to provide supplemental benefits to certain Participants in the John Wiley & Sons, Inc. Employees’ Retirement Plan (the “Retirement Plan”) whose benefits under the Retirement Plan are limited by the provisions of Section 4.08 of the Retirement Plan and Section 415(b) of the Internal Revenue Code of 1986, as amended (the “Code”) and/or Section 1.12 of the Retirement Plan and Section 401(a)(17) of the Code. Supplemental benefits are provided hereunder as additional deferred compensation for services rendered by the Participant to John Wiley & Sons, Inc. (the “Corporation”).  Capitalized terms used in this Supplemental Plan which are not otherwise defined have the same meaning as under the Retirement Plan.


 
1

 

SECTION 2 – DEFINITIONS

2.1
“Benefit Commencement Date” shall mean “Benefit Commencement Date” as such term is defined in the SERP.

2.2
“Change of Control” shall mean “Change of Control” as defined in the SERP.

2.3
“Disability Supplemental Benefit” shall mean the Participant’s benefit calculated under provisions of Section 4.2.

2.4
“Disabled” shall mean “Disabled” as such term is defined in the SERP.

2.5
“Grandfathered Supplemental Benefit” shall mean with respect to a Participant who (i) terminated employment with the Company (as defined in the Retirement Plan) and all Affiliated Companies prior to January 1, 2005, or (ii) was employed by the Company on April 1, 2005 and who as of that date was a participant in the SERP and was (1) a member of the Board of Directors or (2) a 5% owner of the Corporation (as defined in Code Section 416), or (iii) was within two years of attaining age 65, the portion of his Supplemental Benefit that was accrued and vested before January 1, 2005, determined under provisions of the Supplemental Plan without regard to any amendments after October 3, 2004 which would constitute a material modification under Code Section 409A purposes, and the provision of Code Section 409A, the regulations promulgated thereunder and other applicable guidance and procedures based on actuarial equivalent assumptions chosen by the Benefits Administration Board in accordance with Code Section 409A.

2.6
“Separation from Service” shall mean “Separation from Service” as such term is defined in the SERP.
 
 
2

 
 
2.7
“SERP” shall mean the John Wiley & Sons, Inc. Supplemental Executive Retirement Plan, as amended from time to time.  “1989 SERP” shall mean Part A of the SERP and “2005 SERP” shall mean Part B of the SERP.

2.8
“Specified Employee” shall mean “Specified Employee” as such term is defined under the SERP.

2.9
“409A Supplemental Disability Benefit” shall mean the portion, if any, of a Participant’s benefit calculated under the provision of Section 4.2 hereof that exceeds the amount of his Grandfathered Supplemental Benefit.

2.10
“409A Supplemental Benefit” shall mean the portion, if any, of a Participant’s benefit calculated under the provisions of Section 4.1 hereof that exceeds the amount of his Grandfathered Supplemental Benefit.

2.11
“Supplemental Benefit” shall mean the Participant’s benefit calculated under the provisions of Section 4.1 hereof.


 
3

 

SECTION 3 – PARTICIPANTS

All members of the Retirement Plan shall become Participants of this Supplemental Plan whenever their compensation or benefits under the Retirement Plan, as from time to time in effect, exceed the limitations on eligible compensation and benefits permitted by Section 401(a)(17) and 415 of the Code.  Participation under the Supplemental Plan shall terminate on the date the Participant incurs a Separation from Service with the Company and all Affiliated Companies, unless at the time the Participant is entitled to a Supplemental Benefit under Section 4.


 
4

 

SECTION 4 – AMOUNT OF SUPPLEMENTAL BENEFIT

4.1
Each eligible Participant shall receive a Supplemental Benefit equal to the excess, if any, of (a) the benefit which would be payable to the Participant or, in the event of the Participant’s death while in the employ of the Company or an Affiliated Company payable to his Beneficiary, under the Retirement Plan, if the benefit determined as of the Participant’s Separation from Service was computed without regard to either the limitation of Section 4.08 of the Retirement Plan (relating to the limitation on benefits required by Section 415 of the Code) or the limitation in Section 1.12 of the Supplemental Plan (relating to the limitation on the amount of Compensation required by Section 401(a)(17) of the Code), and without regard to any comparable limitations which may hereafter be imposed by law, over (b) the amount of the benefit which would have been payable under the Retirement Plan to the Participant (or his Beneficiary) for his lifetime, assuming such benefit commences on the date set forth in Section 5.1(a).

4.2
Notwithstanding the foregoing, if a Participant who is currently employed by the Company or an Affiliated Company becomes Disabled prior to his Normal Retirement Date, or date of Separation from Service, if earlier, then notwithstanding any provisions of this Supplemental Plan to the contrary, he shall be entitled to a Disability Supplemental Benefit for his lifetime equal to the benefit determined under the provisions of Section 4.1 as of the Participant’s Disability Date (as such term is defined in Section 5.1(b) of the 1989 SERP or of the 2005 SERP, whichever is applicable), assuming such benefit commences on the first day of the month following the later of (i) his Disability Date or (ii) the Participant’s attainment of age 65 (age 55, if he has completed ten or more Years of Service on his Disability Date).


 
5

 

SECTION 5 – PAYMENT

5.1
Timing of Payment
 
 
(a)
Subject to the provisions of this Section 5.1 and Section 5.4 below, payment of a Participant’s 409A Supplemental Benefit will commence on the first day of the month following the later of (i) the Participant’s attainment of age 65 (age 55, if he has completed ten or more Years of Service on his Separation from Service) or (ii) his Separation from Service.

 
(b)
Notwithstanding the foregoing if a Participant has made an effective election under (i) Section 3.2(c) or 3.4(c) of the 1989 SERP to delay the payment of his 1989 SERP 409A Additional Benefit, or (ii) Section 3.2(d) or 3.4(d) of the 2005 SERP to delay the payment of his 2005 SERP Income Benefit, whichever is applicable, such Participant’s 409A Supplemental Benefit shall commence, in accordance with such election, at the same time as such Participant’s 1989 SERP 409A Additional Benefit or 2005 SERP Income Benefit, whichever is applicable, commences.

 
(c)
Notwithstanding the foregoing, a Participant’s 409A Supplemental Benefit payable pursuant to the provisions of Section 4.2 shall commence as of the first day of the month following the Participant’s Disability Date.

 
(d)
Upon the death of a Participant prior to his Benefit Commencement Date, the portion of a survivor benefit payable to the Participant’s Designated Beneficiary attributable to a Participant’s 409A Survivor Benefit shall commence as of the first day of the month following the date the Participant would have attained age 55 or his date of death, if later.
 
 
(e)
Notwithstanding any other provision of the Supplemental Plan to the contrary, if the present value of the Participant's benefits under the Supplemental Plan payable to a participant under Section 4.1 is equal to or less than the applicable dollar amount under Section 402(g)(1)(B) of the Code, such benefit shall be paid to the Participant or, if applicable, to the Participant’s beneficiary or beneficiaries in one lump sum within 90 days following the Participant’s Separation from Service. For purposes of this clause (e), present value shall be determined on the basis of the IRS Mortality Table (as defined in the Retirement Plan) and the IRS Interest Rate (as defined in the Retirement Plan) published in the calendar month preceding the date of the Participant’s Separation from Service.
 
 
6

 


5.2
Form of Payment
 
 
(a)
Except as otherwise provided in Section 5.3, unless a Participant has made an effective election under paragraph (b) below of an optional form of payment, the 409A Supplemental Benefits payable to a Participant under Section 4.1 shall be paid in the form of a single life annuity for the life of the Participant.

 
(b)
Subject to paragraph (d) below, a Participant may elect to convert the portion of the benefit otherwise payable to him under the provisions of this Section 5, which is to be paid in the form of a life annuity, into an optional benefit of Equivalent Actuarial value as provided in one of the options set forth below:

 
Option 1.
“Contingent Annuity”.  A modified benefit payable monthly during the Participant’s life and after his death payable at 50%, 75% or 100% (as elected by the Participant) of the rate of his modified benefit during the life of, and to, the Beneficiary named by him on his Benefit Commencement Date.

 
Option 2.
“Pop-Up-Option”.  A modified benefit payable under Option 1, provided that in the event the Beneficiary named by the Participant at the time he elected the form of payment predeceases the Participant, the annual benefit payable to the Participant after the Beneficiary’s death shall equal the Benefit that would have been payable pursuant to Section 5.2(a).

 
7

 
 
 
Option 3.
“Certain & Life Option”.  A modified benefit payable monthly for the life of the Participant; however if the Participant dies within the 10, 11, 12, 13, 14, or 15 year period (as elected by the Participant) commencing on the Participant’s Benefit Commencement Date’ payments in that reduced amount will be payable until the 10, 11, 12, 13, 14, or 15 th anniversary of his Benefit Commencement Date.

 
(c)
Such Equivalent Actuarial value shall be defined as set forth in Item I of Appendix A of the Retirement Plan.

 
(d)
Notwithstanding the foregoing, subject to the provisions of Section 409A of the Code, a Participant’s election to receive the portion of his Supplemental Benefit payable under Section 4.1 in the form of a life annuity in an optional form as described in paragraph (b) above shall be effective as of the Benefit Commencement Date applicable to that portion of the Participant’s benefit, provided that the Participant makes and submits to the Committee his election of such optional form prior to his Benefit Commencement Date.  A Participant who fails to elect an optional form of benefit payment in a timely manner shall receive his benefit in accordance with paragraph (a) of this Section 5.2.

 
(e)
Notwithstanding the foregoing and except as otherwise provided in Section 5.3, a Participant’s 409A Supplemental Disability Benefit determined under Section 4.2 shall be paid in a single lump sum payment equal to the then equivalent actuarial value of the 409A Supplemental Disability Benefit.  For purposes of this clause (e), equivalent actuarial value shall be determined on the basis of the IRS Mortality Table (as defined in the Retirement Plan) and the IRS Interest Rate (as defined in the Retirement Plan) as published in the calendar month preceding the Participant’s Disability Date.

5.3
Special Provision Applicable to Certain Members of the SERP
 
 
8

 
 
 
(a)
Notwithstanding any Supplemental Plan provision to the contrary, payment of the 409A Supplemental Benefit payable to a Participant who is a member of the 1989 SERP on January 1, 2009, shall be paid in the same form as the Participant’s 409A Additional Benefit, if any, (as defined in the 1989 SERP) is paid pursuant to the provisions of Section 3.5(b)(i) of the 1989 SERP.  The 409A Supplemental Benefit paid under this Section shall be of Equivalent Actuarial value to the Participant’s 409A Supplemental Benefit payable over his lifetime as determined under Section 4.1.  For purposes of this Section 5.3(a) Equivalent Actuarial value shall be determined on the same basis as provided in Section 6.3.  In the event any portion of such Participant’s 409A Supplemental Benefit is to be paid in the form of a life annuity, such Participant may elect in accordance with the provision of Sections 5.2(b) and 5.2(d) to convert such amount into an optional annuity form of payment.

 
(b)
(i)
Notwithstanding any provision of the Supplemental Plan to the contrary, if a Participant who is entitled to a benefit under Section 5.1 of the 2005 SERP has made an election under Section 5.1(a) of the 2005 SERP to receive such benefit in the form of a life annuity, the Participant’s 409A Supplemental Disability Benefit payable pursuant to Section 4.2 shall be paid in the form of a life annuity, unless the Participant has made a valid optional annuity form of payment election under Section 5.2 hereof.

 
(ii)
Notwithstanding any provision of the Supplemental Plan to the contrary, with respect to a Participant who is a member of the 1989 SERP as of January 1, 2005, any 409A Supplemental Disability Benefit payable pursuant to the provisions of Section 4.2 to such Participant shall be paid in the same form as such Participant’s 409A Additional Benefit, if any, is paid to such Participant pursuant to Section 5.1 of the 1989 SERP.  The benefit payable pursuant to this clause (ii) shall be of Actuarial Equivalent value (as defined in Section 6.3) to the 409A Supplemental Disability Benefit payable for the Participant’s life as determined under Section 4.2

 
9

 
 
 
(c)
Notwithstanding any Supplemental Plan provision to the contrary, the survivor benefit payable hereunder to a Participant’s Designated Beneficiary due to the death of the Participant prior to his Separation from Service, shall be paid in the same form as any Pre-Retirement Survivor Benefit attributable to such Participant’s 409A Additional Benefit (as defined in the 1989 SERP) is paid under the SERP.  The survivor benefit payable under this paragraph (c) shall be of Actuarial Equivalent value (as defined in Section 6.3) to the survivor benefit attributable to the Participant’s 409A Supplemental Benefit that would have been payable for the life of the Designated Beneficiary.

5.4           Timing of Payment for “Specified Employees”
 
 
Notwithstanding any provision of the Supplemental Plan to the contrary, if a Participant is classified as a “Specified Employee” on his date of Separation from Service, the actual payment of the portion of his 409A Supplemental Benefit due under the provisions of Section 4, on account of such Participant’s Separation from Service with the Company and all Affiliated Companies (for reasons other than death or his becoming Disabled) shall not commence prior to the first day of the seventh month following the Participant’s Separation from Service.  For avoidance of doubt, the provisions of this Section 5.4 do not apply to the portion of a Participant’s Benefit equal to his Grandfathered Supplemental Benefit or any benefit payable to or on behalf of the Participant pursuant to the death of the Participant or to the provisions of Section 4.2.  Any payment to the Participant which he would have otherwise received under Section 4.1, during the six-month period immediately following such Participant’s Separation from Service shall be accumulated, with interest, compounded on a monthly basis, at the Applicable Interest Rate and paid within 60 days of the first day of the seventh month following the Participant’s Separation from Service.  For purposes of this Section 5.4 the Applicable Interest Rate is one year U.S. Treasury rate (constant maturities) as published on the last business day of the calendar month preceding the date of the Participant’s Separation from Service occurs.

 
10

 
 
5.5
Grandfathered Supplemental Benefits
 
 
Notwithstanding any provision of the Supplemental Plan to the contrary, a Participant’s Grandfathered Supplemental Benefit (or survivor benefit attributable to such Grandfathered Supplemental Benefit) shall commence, and the form of payment of such benefit shall be determined, in accordance with the provisions of the Supplemental Plan as in effect on October 3, 2004, without regard to any amendments after such date which would constitute a material modification for purposes of Section 409A of the Code.


 
11

 

SECTION 6 – CHANGE OF CONTROL

6.1
Notwithstanding the foregoing, upon the occurrence of a Change of Control (as such term is defined in Section 4.2 of the 2005 SERP), all former Participants or Beneficiaries of former Participants then receiving or then entitled to receive a 409A Supplemental Benefit or 409A Supplemental Disability Benefit under Section 4 of the Supplemental Plan shall automatically receive, in a single lump sum payment, the actuarial equivalent value of the remaining 409A Supplemental Benefit or 409A Supplemental Disability Benefit  payments due to such former Participant or Beneficiary as of the date the Change of Control occurs. If such former Participant (or Beneficiary) dies after the Change of Control occurs but before receiving such single lump sum payment, the single lump sum payment shall be made to the Participant’s Designated Beneficiary, otherwise to his estate.

6.2
Notwithstanding any Plan provision to the contrary, upon a Participant’s Separation from Service for any reason within two years following the date a Change of Control occurs, such Participant shall automatically receive, in a single lump sum payment, the actuarial equivalent value of his Supplemental Benefit accrued under Section 4 of the Supplemental Plan as of his date of Separation from Service.  If such Participant dies after his Separation from Service within two years of a Change of Control but before receiving such single lump sum payment, such single lump sum payment shall be made to his Designated Beneficiary, otherwise to his estate.

6.3
The amount of a single lump sum payment made pursuant to the provisions of this Section 6 shall be calculated in the same manner and on the same actuarial equivalent basis utilized to calculate a lump sum payment under Option 6 as set forth in Section 5.02 of the Retirement Plan.  The lump sum payment shall be based on the age of the former Participant or Beneficiary on the date the Change of Control occurs or the date of the Participant’s Separation from Service with the Company and all Affiliated Companies, if later.  The calculation of the lump sum payment hereunder represents a complete settlement of all benefits accrued on the Participant’s (or former Participant’s) behalf under the Supplemental Plan.
 
 
12

 
 
6.4
Notwithstanding the foregoing, Section 3(b) of the Supplemental Plan as in effect on October 3, 2004 shall be applicable to a Participant’s Grandfathered Supplemental Benefit, except that the definition of the term “Change of Control” (as defined therein) shall be revised to be the later of a “Change of Control” (as such term is defined in Section 4.2 of the 2005 SERP or a “Change of Control” as defined in Section 3(b) of the Supplemental Plan as in effect on October 3, 2004 without regard to any amendments after such date which would constitute a material modification for purposes of Section 409A of the Code.

SECTION 7 – NONASSIGNABILITY

Neither the Participant nor his designated beneficiaries shall have any right to transfer, assign, encumber or otherwise dispose of, directly or indirectly, voluntarily or involuntarily, any of their respective rights to receive any of the payments provided for herein and all such rights are non-assignable and non-transferable.


SECTION 8 – RIGHT TO DISCHARGE

Nothing in this Plan shall be deemed to interfere with or restrict the rights of the Corporation to discharge the Participant at any time without regard to the effect which such discharge might have on the Participant's benefits hereunder.

 
 
13

 

SECTION 9 – FUNDING AND GENERAL PROVISIONS

9.1
Funding
The Corporation may, but shall not be obligated to, fund its obligations hereunder with insurance, by establishing a trust or a reserve fund or otherwise.  In the event the Corporation elects to fund its obligations hereunder, neither the Participant nor his designated beneficiaries shall have an interest in any such insurance, reserve fund, trust or other arrangement.

9.2
No special or separate fund shall be established, and no segregation of assets shall be made, to assure the payments thereunder.  No Participant hereunder shall have any right, title, or interest whatsoever in any specific assets of the Corporation.  Nothing contained in the Supplemental Plan and no action taken pursuant to its provisions shall create or be construed to create a trust of any kind or a fiduciary relationship between the Corporation and a Participant or any other person.  To the extent that any person acquires a right to receive payments under the Supplemental Plan, such right shall be no greater than the right of any general unsecured creditor of the Corporation.

9.3
Facility of Payment
 
In the event that the Benefit Administrative Board shall find that a Participant or Beneficiary is incompetent to care for his affairs or is a minor, the Benefit Administrative Board may direct that any benefit payment due him, unless claim shall have been made therefore by a duly appointed legal representative, be paid on his behalf to his spouse, a child, a parent or other relative, and any such payment so made shall thereby be a complete discharge of the liability of the Corporation and the Supplemental Plan for that payment.

9.4
Acceleration of or Delay in Payments ,
 
The Benefit Administrative Board in its sole and absolute discretion, may elect to accelerate the time or form of payment of a benefit owed to the Participant hereunder, provided such acceleration is permitted under Treas. Reg. Section 1.409A-3(j)(4).  The Benefit Administrative Board may also, in its sole and absolute discretion, delay the time for payment of a benefit owed to the Participant hereunder, to the extent permitted under Treas. Reg. Section 1.409A-2(b)(7).

 
14

 
 
9 5
Designated Beneficiaries
To the extent that any benefit would be paid to a Beneficiary under the Retirement Plan, the corresponding supplemental benefit under the Supplemental Plan shall be paid to such Beneficiary, unless the Participant designated an alternative beneficiary by a designation in writing, signed by the Participant and delivered to the Benefits Administrative Board prior to the death of the Participant.  The Participant may, from time to time, revoke any such designation and make a new designation.

9.6
Administration
The Supplemental Plan shall be administered by the Corporation's Benefits Administration Board.  The Benefits Administration Board shall determine all questions involving the administration, interpretation, and application of the Supplemental Plan.  Any such determination shall be conclusive and binding on all persons, except as otherwise provided by law.

9.7
Withholding of Taxes
 
The Company shall have the right to deduct from each payment to be made under the Supplemental Plan any required withholding taxes.

9.8
Mergers/Transfers
 
This Supplemental Plan shall be binding upon and inure to the benefit of the Corporation and its successors and assignees and the Participant, his designees and his estate.  Nothing in the Supplemental Plan shall preclude the Corporation from consolidating or merging into or with, or transferring all or substantially all of its assets to, another corporation which assumes the Supplemental Plan and all obligations of the Corporation hereunder.  Upon such a consolidation, merger or transfer of assets and assumption, the terms “Corporation” and “Company” shall refer to such other corporation and the Supplemental Plan shall continue in full force and effect.

 
15

 
 
9.9
Amendment or Termination of Supplemental Plans
The Board of Directors of the Corporation may amend or terminate the Supplemental Plan at any time and from time to time, provided however that no such amendment or termination shall adversely affect the supplemental benefits which a Participant has accrued as of the date of such amendment or termination. Notwithstanding the foregoing, no modification or amendment shall be made to Section 6 after the occurrence of a Change of Control.  To the extent consistent with the rules relating to plan terminations and liquidations in Treasury Reg. Section 1.409A-3(i)(4)(ix) or otherwise consistent with Code Section 409A, the Corporation may provide that, without the prior written consent of Participants, the Participants’ 409A Supplemental Benefit shall be distributed in a lump sum upon termination of the Supplemental Plan.  Unless so distributed in accordance with the preceding sentence, in the event of a Plan termination, the 409A Supplemental Benefit shall continue to be paid in accordance with the foregoing provisions of the Supplemental Plan.

9.10
Compliance
It is   the intent of the Company that the Supplemental Plan complies with the provisions of Section 409A of the Code, any regulations and other guidance promulgated with respect thereto and the provisions of the Supplemental Plan shall be interpreted to be consistent therewith.

9.11
Construction
(a)  
The Supplemental Plan is intended to constitute an unfunded deferred compensation arrangement for a select group of management or highly compensated employees and therefore exempt from the requirements or Sections 201, 301 and 401 of ERISA.  All rights hereunder shall be governed by and construed in accordance with the laws of the State of New York

 
16

 
 
(b)  
The captions preceding the sections and articles hereof have been inserted solely as a matter of convenience and in no way define or limit the scope or intent of any provisions of the Supplemental Plan.

 
17

 

SECTION 10 – SIGNATURE AND VERIFICATION

IN WITNESS WHEREOF, John Wiley & Sons, Inc. has caused the Supplemental Plan to be executed this ______-______ day of _________________________, 2008



 


Attest:                                                                


 
18

 

 


 

Exhibit 10.11








DEFERRED COMPENSATION PLAN OF

JOHN WILEY & SONS, INC.




As amended and restated effective as of January 1, 2008



 
 

 
 
INTRODUCTION

This Deferred Compensation Plan of John Wiley & Sons, Inc. (the “Plan”) was established by the Board of Directors of John Wiley & Sons, Inc. effective as of March 1, 1995

The purpose of the Plan is to attract and retain key employees by providing each Participant with an opportunity to defer receipt of a portion of their salary, bonus, and other specified compensation.  The Plan is not intended to meet the qualification requirements of Code Section 401(a), but is intended to meet the requirements of Code Section 409A, and shall be operated and interpreted consistent with that intent.

The Plan constitutes an unsecured promise by the John Wiley & Sons, Inc. (the “Company”) to pay benefits in the future.  Participants in the Plan shall have the status of general unsecured creditors of the Company, as applicable.  The Company shall be solely responsible for payment of the benefits of its employees and their beneficiaries. The Plan is unfunded for Federal tax purposes and is intended to be an unfunded arrangement for eligible employees who are part of a select group of management or highly compensated employees of the Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.  Any amounts set aside to defray the liabilities assumed by the Company will remain the general assets of the Company and shall remain subject to the claims of the Company’s creditors until such amounts are distributed to the Participants.

The Plan is hereby amended and restated effective as of January 1, 2008 to comply with the provisions of Section 409A of the Internal Revenue Code and regulations promulgated thereunder and to reflect certain design and administrative changes desired by the Company. The Plan was further amended effective as January 1, 2009 to make additional designed and administrative changes.

The provisions of this Plan as herein amended shall apply to amounts deferred and/or vested on or after January 1, 2005.  Amounts deferred under the provisions of the Plan prior to January 1, 2005, which were vested as of December 31, 2004, shall be subject to the provisions of the Plan as in effect on October 3, 2004, unless otherwise provided in this restated Plan or in Appendix A of this restated Plan.


 
 

 
DEFERRED COMPENSATION PLAN OF
JOHN WILEY & SONS, INC.

TABLE OF CONTENTS


   
Page
ARTICLE 1.
DEFINITIONS.............................................................................................................................................................................................................................
1
ARTICLE 2.
PARTICIPATION......................................................................................................................................................................................................................
4
ARTICLE 3.
DEFERRALS...............................................................................................................................................................................................................................
5
ARTICLE 4.
COMPANY CONTRIBUTIONS..............................................................................................................................................................................................
8
ARTICLE 5.
MAINTENANCE OF ACCOUNTS..........................................................................................................................................................................................
9
ARTICLE 6.
PAYMENT OF BENEFITS........................................................................................................................................................................................................
11
ARTICLE 7.
AMENDMENT OR TERMINATION.......................................................................................................................................................................................
14
ARTICLE 8.
GENERAL PROVISIONS........................................................................................................................................................................................................
15
ARTICLE 9.
SIGNATURE AND VERIFICATION.......................................................................................................................................................................................
21
Appendix A
   



 
 

 
 
JOHN WILEY & SONS, INC.

ARTICLE 1.  DEFINITIONS


1.01
“Accounts” shall mean the Deferral Account, the Company Account, the Grandfathered Deferral Account and the Grandfathered Company Account maintained by the Company to record the payment obligations of the Company to a Participant as determined under the terms of the Plan.

1.02
“Administrative Committee” shall mean the person or persons appointed by the Board of Directors to administer the Plan as provided in Section 8.01.

1.03
“Affiliate” shall mean any company which is a member of a controlled group of corporations (as defined in Section 414(b) of the Code) which also includes as a member John Wiley & Sons, Inc.; any trade or business under common control (as defined in Section 414(c) of the Code) with John Wiley & Sons, Inc.; any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in Section 414(m) of the Code) which includes John Wiley & Sons, Inc.; and any other entity required to be aggregated with John Wiley & Sons, Inc. pursuant to regulations under Section 414(o) of the Code.

1.04
“Base Salary” shall mean the Participant’s annual base fixed compensation paid periodically during the calendar year, determined prior to any pre-tax contributions under a “qualified cash or deferred arrangement” (as defined under Section 401(k) of the Internal Revenue Code and its applicable regulations), under a “cafeteria plan” (as defined under Section 125 of said Code and its applicable regulations or pursuant to a qualified transportation fringe under Section 132(f) of the Code), but excluding any Bonus or other form of special pay.

1.05
“Beneficiary” shall mean the person or persons designated by an Eligible Executive pursuant to the provisions of Section 6.05 in a time and manner determined by the Administrative Committee to receive the amounts, if any, payable under the Plan upon the death of the Eligible Employee.

1.06
“Bonus” shall mean a cash Performance Bonus.

1.07
“Board of Directors” or “Board” shall mean the Board of Directors of John Wiley & Sons, Inc.

1.08
“Change of Control” shall mean “Change of Control” as such term is defined under the terms of the John Wiley & Sons Inc. Supplemental Executive Retirement Plan as amended and restated effective as January 1, 2009.

1.09
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

1.10
“Company” shall mean John Wiley & Sons, Inc., a New York corporation, and any successor thereto, with respect to its employees and such Affiliates authorized by the Board of Directors to participate in the Plan, with respect to their employees.

1.11
“Company Account” shall mean the bookkeeping account (or subaccount(s)) maintained for each Participant to record the amount of Company Contributions that are either (i) credited to a Participant in accordance with Article 4 on or after January 1, 2005 or (ii) which were credited prior to January 1, 2005 but become vested on or after January 1, 2005, adjusted pursuant to Article 5
 
 
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1.12
“Company Contributions” shall mean the amount of contributions credited on behalf of a Participant pursuant to Section 4.01.

1.13
“Compensation Committee” shall mean the Governance and Compensation Committee of the Board of Directors (formally known as the Executive Compensation and Development Committee).

1.14
“Deferral Account” shall mean the bookkeeping account (or subaccount(s)) maintained for each Participant to record the amount of Base Salary and/or Bonus deferred on his behalf in accordance with Article 3 on or after January 1, 2005, adjusted pursuant to Article 5.

1.15
“Deferral Agreement” shall mean the completed agreements, including any amendments, attachments and appendices thereto, in such form approved by the Plan Administrator, between an Eligible Executive and the Company, under which the Eligible Executive agrees to defer a portion of his Base Salary or Bonus under the Plan.

1.16
“Deferrals” shall mean the amount of deferrals credited to a Participant pursuant to Section 3.02.

1.17
“Effective Date” shall mean March 1, 1995.

1.18
“Eligible Executive” shall mean an employee of the Company who is a member of a “select group of management or highly compensated employees” and who is designated as eligible to participate in this Plan by the Compensation Committee.

1.19
Grandfathered Company Account ” shall mean the bookkeeping account (or subaccount(s)) maintained for a Participant to record the amount of Company Contributions credited to a Participant in accordance with Article 4 prior to January 1, 2005, which were vested as of December 31, 2004, adjusted pursuant to Article 5.

1.20
Grandfathered Deferral Account ” shall mean the bookkeeping account (or subaccount(s)) maintained for each Participant to record the amount of Base Salary and/or Bonus deferred in accordance with Article 3 prior to January 1, 2005, adjusted pursuant to Article 5.

1.21
“Participant” shall mean, except as otherwise provided in Article 2, each Eligible Executive who has executed a Deferral Agreement pursuant to the requirements of Section 2.01.

1.22
“Performance Bonus” shall mean the amount, if any, awarded to an employee of the Company under the Company’s performance bonus program, long-term bonus program or other bonus program approved by the Compensation Committee, including but not limited to the Executive Annual Incentive Plan and the Executive Long Term Incentive Plan; provided that such amounts qualifies as performance based compensation under Section 409A of the Code and the regulations promulgated thereunder.
 
 
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1.23
Performance Period ” shall mean the period of at lest 12 months over which an individual and/or company performance criteria is measured for purposes of a Company bonus program.

1.24
“Plan” shall mean the Deferred Compensation Plan of John Wiley & Sons, Inc. as set forth in this document, as it may be amended from time to time.  However, to the extent permitted or required under Code Section 409A, the term Plan may in the appropriate context also mean a portion of the Plan that is treated as a single plan under Treas. Reg. Section 1.409A-1(c), or the Plan or portion of the Plan and any other nonqualified deferred compensation plan or portion thereof that is treated as single plan under such section.

1.25
“Plan Administrator” shall mean the individual(s) appointed by the Administrative Committee with the responsibilities set forth in this Plan.

1.26
“Plan Year” shall mean the calendar year, except that the first Plan Year shall begin on the Effective Date.

1.27
Retirement ” shall mean a Separation from Service on or after a Participant has attained age 55.

1.28
Separation from Service ” shall mean a “Separation from Service” as such term is defined under the terms of the John Wily & Sons Supplemental Executive Retirement Plan as amended and restated effective as January 1, 2009.

1.29
Specified Employee ” shall mean “Specified Employee” as such term is defined under the terms of the John Wiley & Sons Inc. Supplemental Executive Retirement Plan as amended and restated effective as January 1, 2009.  

1.30
Unforeseeable Emergency shall mean a severe financial hardship to a Participant resulting from (a) an illness or accident of the Participant or the Participant’s spouse, beneficiary or dependent (as defined in Code Section 152, without regard to Section 152(b)(1), (b)(2) and (d)(1)(B)), (b) loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to the home not otherwise covered by insurance) or (c) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant; provided, however, that an Unforeseeable Emergency shall only exist to the extent the severe financial hardship would constitute an Unforeseeable Emergency under Code Section 409A, related regulations and other applicable guidance.

1.31
“Valuation Date” shall mean each business day on which the New York Stock Exchange is open for business, or such other day as the Plan Administrator may determine.

 
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ARTICLE 2.  PARTICIPATION
 
2.01           In General

 
(a)
An Eligible Executive shall become a Participant as of the earlier of (i) the date a Company Contribution is credited in accordance with Article 4 or (ii) the date such Eligible Executive first files a Deferral Agreement with the Plan Administrator; provided, however, such Deferral Agreement shall be effective for purposes of deferring Base Salary or Bonus only as provided in Article 3.

 
(b)
The Deferral Agreement shall be in writing and be properly completed upon a form approved by the Plan Administrator who shall be the sole judge of the proper completion thereof.  Such Deferral Agreement shall provide, subject to the limitation specified in Section 3.02(a), for the deferral of a portion of the Eligible Executive’s Base Salary and Bonus and shall include such other provisions as the Administrative Committee deems appropriate.

2.02           Termination of Participation

 
(a)
Participation shall cease upon termination of a Participant’s employment with the Company, unless the Participant is entitled to benefits under the Plan, in which event his participation shall terminate when those benefits are distributed to him.

 
(b)
Subject to the provisions of Section 3.01 a Participant shall only be eligible to have Deferrals or Company Contributions credited on his behalf in accordance with Article 3 or 4, for as long as he remains an Eligible Executive.

 
(c)
If a former Participant whose participation in the Plan ceased under Section 2.02(a) or 2.02(b) is reemployed or reinstated as an Eligible Executive, the former Participant may again become a Participant in accordance with the provisions of Section 2.01.

 
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ARTICLE 3.  DEFERRALS
 
3.01           Deferred Elections

 
(a)
(i)
Subject to the following provisions of this Section, prior to the close of an annual enrollment period established by the Administrative Committee in any Plan Year, an Eligible Executive may elect, subject to Section 3.02(a) below, to defer a portion of his Base Salary that is otherwise earned and payable in the next calendar year by filing a Deferral Agreement with the Plan Administrator.  If an employee becomes an Eligible Executive after January 1 in any Plan Year, he may not elect to defer Base Salary for that year. If an employee is first employed by the Company after the close of the annual enrollment period and becomes an Eligible Executive prior to the beginning of the next Plan Year, he may elect, subject to following provisions of this Section and Section 3.02(a) below, to defer a portion of his Base Salary that is otherwise earned and payable in the next calendar year by filing a Deferral Agreement with the Plan Administrator no later than the last business day of the Plan Year in which he became an Eligible Executive.

 
(ii)
Subject to the following provisions of this Section, prior to the close of an annual enrollment period established by the Administrative Committee, an Eligible Executive who was employed on the first day of a Performance Period and who remains continuously employed through the date his Deferral Agreement is submitted, may elect to defer a portion of his Bonus earned  with respect to that Performance Period but which is otherwise payable in the next calendar year; provided the Deferral Agreement is filed with Plan Administrator no later than six months before the end of the applicable Performance Period.

 
(b)
The Eligible Employee shall submit the Deferred Agreement in the manner specified by the Plan Administrator and a Deferral Agreement that is not timely filed shall be considered void and shall have no effect.  The Plan Administrator shall establish procedures that govern deferrals elections under the Plan, including the ability to make separate elections for Base Salary and Bonuses.  A Participant’s election to defer a portion of Base Salary for any Plan Year shall become irrevocable on the date established by the Administrative Committee but no later than the last day of the calendar year proceeding the calendar year the Base Salary is earned.  A Participant’s election to defer a portion of Bonus earned with respect to the Performance Period beginning in the Plan Year shall become irrevocable on the date established by the Plan Administrator, but no later than six months prior to the end of the applicable Performance Period. A Participant may revoke or change his election to defer a portion of Base Salary or Bonus at any time prior to the date the election becomes irrevocable.  Any such revocation or change shall be made in a form and manner determined by the Plan Administrator.
 
 
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(c)
A Participant’s Deferral Agreement shall apply only with respect to Base Salary earned in the Plan Year following the Plan Year in which the Deferral Agreement is filed with the Plan Administrator under Section 3.01(a).  A Participant’s Deferral Agreement shall only apply to a Bonus which is not readily ascertainable at the time the Deferral Agreement is filed with the Plan Administrator under Section 3.01(a). Any election to defer a Bonus which payable as a result of the Participant’s death or disability (as defined in Treasury regulations Section1.409A-1(e) or under a Change of Control prior to the end of the performance period will be void. An Eligible Executive must file, in accordance with the provisions of Section 3.01(a), a new Deferral Agreement for each Plan Year the Eligible Executive desires to defer a portion of Base Salary or Bonus.

 
(d)
If a Participant ceases to be an Eligible Executive after the date a Deferral Election becomes irrevocable but continues to be employed by the Company, he shall continue to be a Participant and his Deferral Agreement currently in effect shall remain in force for the remainder of the applicable Plan Year or Performance Period, but such Participant shall not be eligible to defer any portion of his Base Salary or Bonus earned in a subsequent Plan Year or Performance Period until such time as he shall once again become a Eligible Executive.

 
(e)
Notwithstanding anything in this Plan to the contrary, if an Eligible Executive

 
(i)
receives a withdrawal of deferred cash contributions on account of hardship from any plan which is maintained by the Company and which meets the requirements of Section 401(k) of the Internal Revenue Code (or any successor thereto) and

 
(ii)
is precluded from making contributions to such 401(k) plan for at least 6 months after receipt of the hardship withdrawal,

 
the Eligible Executive’s Deferral Agreements with respect to Base Salary or Bonus in effect at that time shall be cancelled.  Any Base Salary or Bonus payment which would have been deferred pursuant to that Deferral Agreement but for the application of this Section 3.01(e) shall be paid to the Eligible Executive as if he had not entered into the Deferral Agreement.

3.02           Amount of Deferral

 
(a)
An Eligible Executive may defer up to 25% of Base Salary and up to 100% of Bonus; provided the total amount of Bonus and Base Salary deferred in a calendar year beginning prior to January 1, 2009 shall not excess 25% of the sum of the Eligible Executive’s projected Base Salary for such calendar year and the Bonus received by the Eligible Executive in such calendar year.

 
(b)
At the direction of the Compensation Committee, the Administrative Committee may establish such other maximum or minimum limits on the amount of Base Salary or Bonus which may be deferred and/or the timing of such deferral.  Eligible Executives shall be given written notice of any such limits prior to the date they take effect.

3.03           Crediting to Deferral Account

 
The amount of Deferrals shall be credited to such Participant’s Deferral Account no later than the first business day of the first calendar month following the date the Base Salary or Bonus would have been paid to the Participant in the absence of a Deferral Agreement.

3.04           Vesting

 
Except as otherwise provided in Section 8.12, a Participant shall at all times be 100% vested in his Deferral Account.


 
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ARTICLE 4.  COMPANY CONTRIBUTIONS
 
4.01           Amount of Company Contributions

 
To the extent the Company is prevented from making Company Contributions under Section 3.03 of the John Wiley & Sons Inc. Employee’s Savings Plan on behalf of a Participant in any calendar year in which he is a Participant hereunder by reasons of the limitation imposed on contributions by Section 402(g)(1) of the Internal Revenue Code or the limitation on compensation imposed by Section 401(a)(17) of said Code, such excess Company Contributions will be credited under this Plan with respect to deferrals made regarding Base Salary pursuant to Section 3.01 of this Plan, to the extent the amount of such Deferrals when added to the amount of deferred cash contributions the Participant has made under the John Wiley & Sons Inc. Employees’ Savings Plan during such calendar year do not exceed the amount of deferred cash contributions the Participant would have made pursuant to his deferred cash contribution election in effect under the John Wiley & Sons Inc. Employees’ Savings Plan during such calendar year, without reference to the limitation imposed on contributions by Section 402(g)(1) of the Internal Revenue Code or the limitation imposed on compensation by Section 401(a)(17) of said Code.

4.02           Crediting to Company Account

The Company Contributions determined pursuant to Section 4.01 shall be credited to a Participant’s Company Account as soon as administratively practicable following the close of each calendar year.

4.03           Vesting

Except as otherwise provided in Section 8.12, a Participant shall vest in the Company Contributions made on his behalf under Section 4.01, adjusted pursuant to Article 5, at the same rate at which such contributions would have vested under the John Wiley & Sons, Inc. Employees’ Savings Plan had they been contributed thereunder.  In the event a Participant terminates employment prior to vesting in all or any part of the Company Contributions made on his behalf, such Company Account shall be forfeited to the Company to the Company and shall not be restored if the Participant is subsequently re-employed by the Company.


 
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ARTICLE 5.  MAINTENANCE OF ACCOUNTS

 
5.01           Adjustment of Account

 
(a)
As of each Valuation Date, each Deferral Account and each Company Account shall be credited or debited with the amount of earnings or losses with which such Accounts would have been credited or debited, assuming it had been invested in one or more investment funds, or earned the rate of return of one or more indices of investment performance, designated by the Administrative Committee and elected by the Participant pursuant to Section 5.02 for purposes of measuring the investment performance of his Accounts.

 
(b)
The Administrative Committee shall designate at least one investment fund or index of investment performance and may designate other investment funds or investment indices to be used to measure the investment performance of a Participant’s Accounts.  The designation of any such investment funds or indices shall not require the Company to invest or earmark their general assets in any specific manner.  The Administrative Committee may change the designation of investment funds or indices from time to time, in its sole discretion, and any such change shall not be deemed to be an amendment affecting Participants’ rights under Section 7.02.

5.02           Investment Fund or Performance Elections

 
In the event the Administrative Committee designates more than one investment fund or index of investment performance under Section 5.01, each Participant shall file an investment election with the Plan Administrator with respect to the investment of his Deferrals and Company Contributions within such time period and on such form as the Administrative Committee may prescribe.  The election shall designate the investment fund or funds or index or indices of investment performance which shall be used to measure the investment performance of the Participant’s Deferrals.  If the Participant fails to make an investment election, his Accounts shall be invested in an investment fund or index, as determined by the Administrative Committee.

5.03           Changing Investment Elections

 
(a)
A Participant may change his election in Section 5.02 used to measure the investment performance of his future Deferrals and Company Contributions, within such time periods and in such manner prescribed by the Administrative Committee.  The election shall be effective as soon as administratively practicable after the date on which notice is timely filed or at such other time as the Administrative Committee shall determine.

 
(b)
A Participant may change his election of the investment fund or funds or index or indices of investment performance used to measure the future investment performance of his existing Account balance, within such time periods and in such manner prescribed by the Administrative Committee.  The election shall be effective as soon as administratively practicable after the date on which the notice is filed or at such other time as the Administrative Committee shall determine.
 
 
 
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5.04           Individual Accounts

 
The Plan Administrator shall maintain, or cause to be maintained on its books, records showing the individual balance of each Participant’s Accounts.  At least once a year each Participant shall be furnished with a statement setting forth the value of his Accounts.

5.05           Valuation of Accounts

 
(a)
The Plan Administrator shall value or cause to be valued each Participant’s Accounts at least quarterly.  On each Valuation Date there shall be allocated to the Accounts of each Participant the appropriate amount determined in accordance with Section 5.01.

 
(b)
Whenever an event requires a determination of the value of Participant’s Accounts, the value shall be computed as of the Valuation Date coincident with, or immediately following, the date of the event.

 
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ARTICLE 6.  PAYMENT OF BENEFITS

6.01           Commencement of Payment

 
(a)
Subject to the limitations set forth in this Article 6, each time a Participant elects to defer Base Salary and/or Bonus, the Participant shall designate on the applicable Deferral Agreement that the distribution of such Deferrals, as adjusted pursuant to Article 5, shall commence, pursuant to Section 6.03, on or after the occurrence of the later of (i) or (ii):

 
(i)
the Participant’s Separation from Service with the Company and all Affiliates or

 
(ii)
a designated year not later than his attainment of age 70-1/2.

 
(b)
(i)
In the event a Participant elects to have such Deferrals commence as of a designated year pursuant to clause (ii) above, he may not elect a year that is less than five (5) years, subsequent to the date he executed the Deferral Agreement. Distribution of such Deferrals, adjusted pursuant to Article 5, shall be based on the value as of the last business day of such designated year and payment shall be made in the February following the last day of that designated year.

 
(ii)
Notwithstanding the foregoing, in the event such Participant’s Separation from Service occurs for reasons other than Retirement or death prior to such designated year, the distribution of a Participant’s Deferral Account shall commence, pursuant to Section 6.03, in the seventh month following the date of his Separation from Service occurs. The value of such distribution shall be determined as of the last Valuation Date in the month following the date payment is to be made.

 
(c)
Notwithstanding any Plan provision to the contrary if a Participant’s Separation from Service is due to his Retirement, the portion of his Account scheduled to be paid upon Separation from Service shall commence in the seventh month following the month in which the Participant’s Retirement occurs. The value of such distribution shall be determined as of the last Valuation Date in the month following the date payment is to be made.

 
(d)
Notwithstanding any Plan provision to the contrary, in the event of the Participant’s death, his entire vested Account balance shall be paid to his Beneficiary within 90 days of the end of the month in which the Participant’s death occurs. The value of such distribution shall be determined as of the last Valuation Date in the month following the date payment is to be made. A Beneficiary may not elect, directly or indirectly, when within such 90 day period payment under the paragraph (d) shall be made.

 
(e)
A Participant shall not change his designation of the event which entitles him to distribution of any portion of his Account.

 
(f)
Notwithstanding any Plan provision to the contrary, a distribution   due to Separation from Service, but not distributions due to death,   of a Participant who is a Specified Employee shall not commence earlier than the seventh month following the month in which such Participant’s Separation from Service occurs.

 
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6.02           Unforeseeable Emergency

 
Notwithstanding anything in the Plan or in a Deferral Agreement to the contrary, the Administrative Committee may, if it determines an Unforeseeable Emergency exists which cannot be satisfied from other sources, approve a request by the Participant for a withdrawal from his vested Account.  Such request shall be made in a time and manner determined by the Administrative Committee.  The payment made from a Participant's Deferral Account pursuant to the provisions of this Section 6.02 shall be limited to the amount reasonably necessary to satisfy the emergency need (which may include amounts necessary to pay any Federal, state, local or foreign income taxes or penalties reasonably anticipated to result from the distribution).  Determinations of amounts necessary to satisfy the emergency need must take into account any additional compensation that is available, other than additional compensation that, due to the Unforeseeable Emergency, is available under another nonqualified deferred compensation plan but that has not actually been paid.  This Section 6.02 is intended to comply with Code Section 409A, related regulations and any other applicable guidance and shall be interpreted accordingly so that distributions shall be permitted under this Section 6.02 only to the extent they comply with Code Section 409A and the regulations promulgated thereunder.

6.03           Method of Payment - Deferral Account

 
(a)
Except as otherwise provided in paragraphs (b), (c) and (d) below, upon a Participant’s Retirement, the payment of the portion of his Deferral Account designated to be paid upon Separation from Service pursuant to a Section 6.01(a)(i) shall be made in approximately equal annual installments for a period of fifteen years.  During such payment period, that portion of the Participant’s Deferral Account shall continue to be credited with earnings or losses as described in Section 5.01.  The first installment shall be made as set forth in Section 6.01(a) above.  Subsequent installments, if any, shall be paid in February of the year following the year in which the first installment is made.  The amount of each installment shall equal the balance in the applicable portion of the Participant’s Deferral Account as of each Valuation Date of determination divided by the number of remaining installments (including the installment being determined).

 
(b)
Notwithstanding the foregoing, if a Participant incurs a Separation from Service for reasons other than Retirement or death, the Participant’s Deferral Account shall be distributed to him, in one lump sum payment.

 
(c)
If a Participant dies before receiving payment of the entire balance of his Deferral Account, an amount equal to the unpaid portion thereof shall be payable in one lump sum to his Beneficiary.

 
(d)
Notwithstanding any Plan provisions to the contrary, the Plan Administrator, may in its sole discretion, elect to pay the value of the Participant’s Account (including the value of his Grandfathered Deferral Account and Grandfathered Company Account) upon a Separation from Service for any reason in a single lump sum payment if the balance of his Account does not then exceed the then applicable dollar amount under Code Section 402(g)(1)(B), provided such payment represents the completed liquidation of the Participant’s interest in the Plan.

 
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6.04           Method of Payment – Company Account

 
(a)
Upon Separation from Service with the Company and all Affiliates for reasons other than death, the amount credited to a Participant’s Company Account, to the extent vested under the terms of the Plan, shall be distributed to the Participant in one lump sum payment in the seventh month following the month in which such Participant’s Separation from Service occurs. The value of such distribution shall be determined as of the last Valuation Date in the month following the date payment is to be made.

 
(b)
In the event the Participant incurs a Separation from Service for reasons other than death prior to vesting in all or any part of the amount to the credit of his Company Account, such nonvested amount shall be forfeited.

 
(c)
Notwithstanding any Plan provision to the contrary, in the event of a Participant death while employed by the Company or an Affiliate, his Company Account shall be distributed to his Beneficiary in a single lump sum within 90 days of the end of the month in which his date of death occurs. A Beneficiary may not elect, directly or indirectly, when within such 90 day period payment under the paragraph (d) shall be made.

6.05           Designation of Beneficiary

 
Each Participant shall file with the Plan Administrator a written designation of one or more persons as the Beneficiary who shall be entitled to receive the amount, if any, payable under the Plan upon his death pursuant to Sections 6.03 and 6.04.  A Participant may, from time to time, revoke or change his Beneficiary designation without the consent of any prior Beneficiary by filing a new designation with the Plan Administrator.  The last such designation received by the Plan Administrator shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Plan Administrator prior to the Participant’s death, and in no event shall it be effective as of a date prior to such receipt.  If no such Beneficiary designation is in effect at the time of a Participant’s death, or if no designated Beneficiary survives the Participant, the Participant’s estate shall be deemed to have been designated his Beneficiary and shall receive the payment of the amount, if any, payable under the Plan upon his death.

6.06           Change of Control

In the event there is a Change of Control and a Participant incurs a Separation from Service for any reasons within two years of the date such Change of Control occurs, then notwithstanding any other provisions of the Plan to the contrary and in lieu of any other benefit to which the Participant may be entitled under the Plan, the Participant shall receive a lump sum payment, payable in the seventh month following the month in which such Participant’s Separation from Service occurs equal to the balance of his Deferred and Company Accounts as of the last Valuation Date in the month following the date payment is to be made.

 
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ARTICLE 7.  AMENDMENT OR TERMINATION


7.01           Right to Terminate

 
The Company may, by action of the Board of Directors, terminate this Plan and the related Deferral Agreements at any time. To the extent consistent with the rules relating to plan terminations and liquidations in Treasury Regulation Section 1.409A-3(j)(4)(ix) or otherwise consistent with Code Section 409A, the Company may provide that, without the prior written consent of Participants, all of the Participants’ Deferral and Company Accounts shall be distributed in a lump sum upon termination of the Plan.  Unless so distributed, in the event of a Plan termination, the Company shall continue to maintain the Deferral and Company Accounts until distributed pursuant to the terms of the Plan and Participants shall remain 100% vested in all amounts credited to their Accounts.  

7.02           Right to Amend

 
The Company may, by action of the Board of Directors, amend this Plan and the related Deferral Agreements at any time and for any reason.  If any amendment to this Plan or to the Deferral Agreements shall adversely affect the rights of a Participant with respect to the vested Account balances of any Participant accrued as of the date of any such amendment, such Participant must consent in writing to such amendment prior to its effective date.  Notwithstanding the foregoing, a change in any investment fund or index under Section 5.01 or the imposition of additional limits upon future deferral elections shall not be deemed to adversely affect any Participant’s rights.  Any action to amend the Plan by the Board of Directors shall be taken in such manner as may be permitted under the by-laws of the Company.  The Board of Directors of the Company may delegate to the Administrative Committee the authority to amend the Plan without the consent of the Board of Directors for the purpose of (i) conforming the Plan without the consent of the Board of Directors for the purpose of (i) conforming the Plan to the requirements of law, (ii) facilitating the administration of the Plan, (iii) clarifying provisions based on the Administrative Committee’s interpretation of the document and (iv) making such other amendments as the Board of Directors may authorize.

7.03           Uniform Action

 
Notwithstanding anything in this Plan to the contrary, any action to amend or terminate the Plan or the Deferral Agreements must be taken in a uniform and nondiscriminatory manner.

7.04           Compliance with Securities and Other Laws

 
Notwithstanding any Plan provision to the contrary, the Company may at any time impose such restrictions on the Plan and participation therein, including limiting the amount of any Bonus deferred or the timing thereof, as the Company may deem advisable from time to time in order to comply or preserve compliance with any applicable laws, including any applicable state and federal securities laws and exemptions from registration available thereunder.

 
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ARTICLE 8.  GENERAL PROVISIONS
 
8.01           Administration

 
(a)
The Plan shall be administered by the Administrative Committee.  The Administrative Committee shall have the exclusive responsibility and complete discretionary authority to control the operation, management and administration of the Plan, with all powers necessary to enable it properly to carry out such responsibilities, including, but not limited to, the power to interpret the Plan and any related documents, to establish procedures for making any elections called for under the Plan, to make factual determinations regarding any and all matters arising under the Plan, including, but not limited to, the right to determine eligibility for benefits, the right to construe the terms of the Plan, the right to remedy possible ambiguities, inequities, inconsistencies or omissions, and the right to resolve all interpretive, equitable or other questions arising under the Plan.

 
(b)
The Administrative Committee may delegate all or part of its administrative duties to one or more persons, whether or not such person or persons are members of the Administrative Committee or employees of the Company. The Administrative Committee (and, to the extent consistent with the scope of delegated administrative authority, the person or persons delegated authority hereunder) may engage agents and representatives, including recordkeepers and legal counsel, in connection with the administration of the Plan.  

 
(c)
Any dispute between a Participant or Beneficiary and the Plan Administrator shall be subject to resolution by determination of the Administrative Committee.

 
(d)
All acts and decisions of the Administrative Committee shall be final, conclusive and binding upon all Participants, former Participants, Beneficiaries, and employees of the Company.

 
(e)
It is the intent of the Company that the Plan complies with Code Section 409A, related regulations and other applicable guidance promulgated with respect thereto and the provisions of the Plan shall be interpreted to be consistent therewith.  Without limiting the foregoing, a Participant shall not be deemed to have experienced a Retirement until the Participant has had a "separation from service," as that term is used in Code Section 409A(a)(2)(A)(i) and defined in related regulations or other applicable guidance.

8.02           Unsecured Interest
Neither the Company nor the Administrative Committee in any way guarantees the performance of the investment funds or indices a Participant may designate under Article 5.  No special or separate fund shall be established, and no segregation of assets shall be made, to assure the payments hereunder.  No Participant hereunder shall have any right, title, or interest whatsoever in any specific assets of the Company.  Nothing contained in this Plan and no action taken pursuant to its provisions shall create or be construed to create a trust of any kind or a fiduciary relationship between the Company and a Participant or any other person.  To the extent that any person acquires a right to receive payments under this Plan, such right shall be no greater than the right of any unsecured creditor of the Company.

 
14

 
 
8.03           Funding

 
(a)
All amounts payable in accordance with this Plan shall constitute a general unsecured obligation of the Company.  Such amounts, as well as any administrative costs relating to the Plan, shall be paid out of the general assets of the Company, to the extent not paid by a grantor trust established pursuant to paragraph (b) below.

 
(b)
The Company may, for administrative reasons, establish a grantor trust for the benefit of Participants participating in the Plan.  The assets of said trust will be held separate and apart from other Company funds, and shall be used exclusively for the purposes set forth in the Plan and the applicable trust agreement, subject to the following conditions:

 
(i)
the creation of said trust shall not cause the Plan to be other than “unfunded” for purposes of Title I of ERISA;

 
(ii)
the Company shall be treated as “grantor” of said trust for purposes of Section 677 of the Internal Revenue Code of 1986, as amended (the “Code”); and

 
(iii)
said trust agreement shall provide that its assets may be used to satisfy claims of the Company’s general creditors, and the rights of such general creditors are enforceable by them under federal and state law.

8.04           No Contract of Employment

 
The existence of this Plan or of a Deferral Agreement does not constitute a contract for continued employment between an Eligible Executive or a Participant and the Company.  Except as otherwise limited by the terms of any valid employment contract or agreement entered into between the Company and an Eligible Executive or Participant, the Company reserves the right to modify an Eligible Executive’s or Participant’s remuneration and to terminate an Eligible Executive or a Participant for any reason and at any time, notwithstanding the existence of this Plan or of a Deferral Agreement.

8.05           Withholding Taxes

 
All payments under this Plan shall be net of an amount sufficient to satisfy any federal, state or local tax withholding requirements.

8.06           Nonalienation

 
Except insofar as may otherwise be required by law, no amount payable at any time under the Plan shall be subject in any manner to alienation by anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind nor in any manner be subject to the debts or liabilities of any person and any attempt to so alienate or subject any such amount, whether presently or thereafter payable, shall be void.  If any person shall attempt to, or shall, alienate, sell, transfer, assign, pledge, attach, charge or otherwise encumber any amount payable under the Plan, or any part thereof, or if by reason of his bankruptcy or other event happening at any such time such amount would be made subject to his debts or liabilities or would otherwise not be enjoyed by him, then the Administrative Committee, if it so elects, may direct that such amount be withheld and that the same or any part thereof be paid or applied to or for the benefit of such person, his spouse, children or other dependents, or any of them, in such manner and proportion as the Administrative Committee deems proper.

 
15

 
 
8.07           Claims Procedure

 
The Plan Administrator shall provide adequate notice in writing to any Participant, former Participant or Beneficiary whose claim for a withdrawal or payment under this Plan has been denied, setting forth the specific reasons for such denial.  A reasonable opportunity shall be afforded to any such Participant, former Participant or Beneficiary for a full and fair review by the Administrative Committee of a decision denying the claim.  The Administrative Committee’s decision on any such review shall be final and binding on the Participant, former Participant or Beneficiary and all other interested persons.

8.08           Competency

 
If the Administrative Committee shall find that any person to whom any amount is or was payable hereunder is unable to care for his affairs because of illness or accident, or had died, then the Administrative Committee, if it so elects, may direct that any payment due him or his estate (unless a prior claim therefore has been made by a duly appointed legal representative) or any part thereof be paid or applied for the benefit of such person to his spouse, children or other dependents, to an institution maintaining or having custody of such person, or to any other person deemed by the Plan Administrator to be a proper recipient on behalf of such person otherwise entitled to payment, in such manner and proportion as the Administrative Committee may deem proper.  Any such payment shall be in complete discharge of the liabilities of the Company and the Plan therefore.

8.09           Limitation of Liability

 
The Company, the members of the Compensation Committee and of the Administrative Committee, the Plan Administrator, and any officer, employee or agent of the Company shall not incur any liability individually or on behalf of any other individuals or on behalf of the Company for any act or failure to act, made in good faith in relation to this Plan.

8.10           Indemnification

 
The Company, the members of the Compensation Committee and of the Administrative Committee, the Plan Administrator, and the officers, employees and agents of the Company shall, unless prohibited by any applicable law, be indemnified against any and all liabilities arising by reason of any act or failure to act in relation to the Plan including, without limitation, expenses reasonably incurred in the defense of any claim relating to the Plan, amounts paid in any compromise or settlement relating to the Plan and any civil penalty or excise tax imposed by any applicable statue, if:

 
(a)
the act or failure to act shall have occurred

 
(i)
in the course of the person’s service as an officer, employee or agent of the Company or as a member of the Compensation Committee or of the Administrative Committee, or as the Plan Administrator, or

 
16

 
 
 
(ii)
in connection with a service provided with or without charge to the Plan or to the Participants or Beneficiaries of the Plan, if such service was requested by the Compensation Committee or the Administrative Committee or the Plan Administrator; and

 
(b)
the act or failure to act is in good faith and in, or not opposed to, the best interests of the Company.

 
This determination shall be made by the Company and, if such determination is made in good faith and not arbitrarily or capriciously, shall be conclusive.

 
The foregoing indemnification shall be from the assets of the Company.  However, the Company’s obligation hereunder shall be offset to the extent of any otherwise applicable insurance coverage under a policy maintained by the Company or any other person, or other source of indemnification.

8.11           Payment of Expenses

 
All administrative expenses of the Plan and all benefits under the Plan shall be paid from the general assets of the Company.

8.12           Forfeiture for Cause

 
In the event that a Participant shall at any time be convicted of a crime involving dishonesty or fraud on the part of such Participant in his relationship with the Company or an Affiliate, all benefits that would otherwise be payable to him under the Plan shall be forfeited.  The determination as to whether a Participant has been convicted of a crime involving dishonesty or fraud on the part of the Participant in his relationship with the Company or an Affiliate shall be made by the Administrative Committee in a fair and reasonable manner and the decision of the Administrative Committee with respect thereto shall be conclusive.

8.13           Mergers/Transfers

 
This Plan shall be binding upon and inure to the benefit of the Company and its successors and assignees and the Eligible Executive, his designees and his estate.  Nothing in this Plan shall preclude the Company from consolidating or merging into or with, or transferring all or substantially all of its assets to, another corporation which assumes this Plan and all obligations of the Company hereunder.  Upon such a consolidation, merger or transfer of assets and assumption, the term “Company” shall refer to such other corporation and this Plan shall continue in full force and effect.

8.14           Elections

 
All elections, designations, requests, notices, instructions, and other communications from an Eligible Executive or other person to the Plan Administrator required or permitted under the Plan shall be in such form as is prescribed from time to time by the Plan Administrator, shall be mailed by first-class mail or delivered to such location as shall be specified by the Plan Administrator, and shall be deemed to have been given and delivered only upon actual receipt thereof at such location.

 
17

 
 
8.15           Acceleration of or Delay in Payments

 
The Administrative Committee, in its sole and absolute discretion, may elect to accelerate the time or form of payment of a benefit owed to the Participant hereunder, provided such acceleration is permitted under Treas. Reg. Section 1.409A-3(j)(4).  The Administrative Committee may also, in its sole and absolute discretion, delay the time for payment of a benefit owed to the Participant hereunder, to the extent permitted under Treas. Reg. Section 1.409A-2(b)(7)..

8.16           Insurance Products

 
The Company may require each Eligible Executive to assist it in obtaining life insurance policies on the lives of each Eligible Executive, which policies would be owned by, and be payable to, the Company.  The Eligible Executive may be required to complete an application for life insurance, furnish underwriting information including medical examinations by a life insurance company-approved examiner, and authorize release of medical history to the life insurance company’s underwriter, as designated by the Company.  An Eligible Executive shall have no right or interest in such policies or the proceeds thereof.
 
8.17      Compliance

It is the intent of the Company that the Plan complies with the provisions of Section 409A of the Code, any regulations and other guidance promulgated with respect thereto and the provisions of the Plan shall be interpreted to be consistent therewith .

8.18          Construction

 
(a)
The Plan is intended to constitute an unfunded deferred compensation arrangement for a select group of management or highly compensated employees and therefore exempt from the requirements or Sections 201, 301 and 401 of ERISA.  All rights hereunder shall be governed by and construed in accordance with the laws of the State of New York.

 
(b)
The masculine pronoun shall mean the feminine wherever appropriate.
 
 
(c)
The captions preceding the sections and articles hereof have been inserted solely as a matter of convenience and in no way define or limit the scope or intent of any provisions of the Plan.

8.19           Discharge of Corporation's Obligation

 
The payment by the C ompany of the benefits due under each and every Deferral Agreement to the Participant or his Beneficiary shall discharge the Co mpany’s obligation under the Plan, and the Participant or Beneficiary shall have no further rights under this Plan or the Deferral Agreements upon receipt by the appropriate person of all such benefits.

8.20           Successors

 
The Plan shall be binding upon the successors and assigns of the Co mpany , whether such succession is by purchase, merger or otherwise.

 
18

 
 
 

 
ARTICLE 9.  SIGNATURE AND VERIFICATION

 
IN WITNESS WHEREOF , John Wiley & Sons, Inc. has caused this Plan to be executed this ____ day of _____________________________________, 2008.



 
_______________________________________



 
_______________________________________



Attest: _____________________________________


 
19

 
 
 
APPENDIX A
 
PROVISIONS APPLICABLE TO A PARTICIPANT’S GRANDFATHERED DEFERRAL ACOUNT AND GRANDFATHERED COMPANY ACCOUNT

This Appendix A constitutes an integral part of the Plan and is applicable with respect to the Grandfathered Deferred Account and the Grandfathered Company Account of those individuals who were Participants in the Plan on December 31, 2004.   The Grandfathered Deferral Account and Grandfathered Company Account are subject to all the terms and conditions of the Plan as set forth on October 3, 2004, except as otherwise provided by this Appendix A.  Section references in this Appendix A correspond to appropriate Sections of the Plan as set forth on October 3, 2004.

ARTICLE 1.  DEFINITIONS
1.08
“Change of Control” shall mean, effective on and after January 1, 2009, the later of a “Change of Control” as such term is defined under the terms of the John Wiley & Sons Inc. Supplemental Executive Retirement Plan as amended and restated effective as January 1, 2009 or a “Change of Control” as defined in Section 1.08 of the Plan as in effect on October 3, 2004 without regard to any amendments after such date which would constitute a material modification for purposes of Section 409A of the Code.
 
ARTICLE 5.  MAINTENANCE OF ACCOUNTS
 5.03
“Changing Investment Elections” The provisions of Section 5.03 as set forth in the foregoing provisions of the Plan as amended and restated effective as January 1, 2009 shall be applicable to a Participant’s Grandfathered Deferral and Grandfathered Company Account on and after January 1, 2009.

ARTICLE 6. PAYMENT OF BENEFITS
 
6.01
“Commencement of Payment”

 
(b)
(i)
In the event a Participant elects to have any Deferrals held in his Grandfathered Deferral Account commence as of a designated year pursuant to clause (ii) of Section 6.01(a), distribution of such Deferrals, adjusted pursuant to Article 5, shall be based on the value as of the last business day of such designated year and payment shall be made in the February following the last day of that designated year.

 
(ii)
Notwithstanding the foregoing, in the event such Participant’s Separation from Service occurs for reasons other than Retirement or death prior to such designated year, the value of such distribution shall be determined as of the last Valuation Date in the month following the date payment is to be made.
 
 
20

 

 
(c)
Notwithstanding any Plan provision to the contrary if a Participant’s Separation from Service is due to his Retirement, the value of the portion of his Grandfathered Deferral Account scheduled to be paid upon his Retirement shall be determined as of the last Valuation Date in the month following the date payment is to be made. Notwithstanding any Plan provision to the contrary, in the event of the Participant’s death, his entire vested Grandfathered Deferral Account balance and Grandfathered Company Account balance shall be paid to his Beneficiary within 90 days of the end of the month in which the Participant’s death occurs. The value of such distribution shall be determined as of the last Valuation Date in the month following the date payment is to be made.
 
 
21

 
 


 
Exhibit 10.13
 
JOHN WILEY & SONS, INC.
 
FY 2011 QUALIFIED EXECUTIVE LONG TERM INCENTIVE PLAN
 
PLAN DOCUMENT
 
CONFIDENTIAL
 
May 1, 2010
 
 
JOHN WILEY GRAPH

 
 
 

 
 
CONTENTS
 
 
Section
Subject
Page
I.
Definitions
2
II.
Plan Objectives
3
III.
Eligibility
3
IV.
Performance Targets and Measurement
4
V.
Performance Evaluation
4
VI.
Restricted Performance Shares Award Provisions
5
VII.
Stock Options
6
VIII.
Payouts
6
IX.
Administration and Other Matters
7

 
1

 

I. DEFINITIONS
 
Following are definitions for words and phrases used in this document.  Unless the context clearly indicates otherwise, these words and phrases are considered to be defined terms and appear in this document in italicized print:
 
award   The award made to a participant under this plan in connection with the attainment of specified performance levels for the plan period as specified in the participant’s award   summary.
 
business criteria   An indicator of financial performance, chosen from the business criteria listed in Section 7(b)(ii)(B) of the shareholder plan . The following business criteria are used in this plan:
 
cash flow   Net income, excluding unusual items not related to the period being measured, plus/minus any non-cash items included in net income and changes in operating assets and liabilities, minus normal investments in product development assets and property and equipment.
 
earnings per share   Earnings per share , excluding unusual items not related to the period being measured.  Actual results shall be increased by one cent for VCH tax basis step-up recovery.
 
business unit The Company , a business or subsidiary of the Company , or a global unit of the Company .
 
Company   John Wiley & Sons, Inc.
 
Executive Compensation and Development Committee (Committee) The committee of the Company’s Board of Directors responsible for the review and approval of executive compensation.  The Committee was previously known as the Compensation Committee.
 
financial goal   A targeted level of attainment of a given business criteria .
 
financial results   The published, audited financial results of the Company.
 
participant   A person selected to participate in the plan .
 
performance levels
 
threshold   The minimum acceptable level of achievement of a financial goal in order to earn a payout, expressed as a percentage of target e.g., 95% of target ).
 
target     Achievement of the assigned financial goal- 100%.
 
outstanding   superior achievement of a financial goal, earning the maximum payout , expressed as a   percentage of target (e.g., 115% of target ).
 
 
2

 
 
performance target   A participant's objective to achieve specific financial goals for assigned business criteria in the plan period , as approved by the Committee .  A performance target comprises all of the financial goals for the business criteria in a business unit.
 
plan    This FY 2011 Qualified Executive Long Term Incentive Plan.
 
plan-end adjusted restricted performance shares award    The number of restricted performance shares awarded to a participant at the end of the plan period after adjustments, if any, are made, as set forth in Sections V and VIII.
 
plan period    The three year period from May 1, 2010 to April 30, 2013, or a portion of this period, at the discretion of the Committee .
 
restricted performance share   A share of stock issued pursuant to this plan and the shareholder plan that is subject to forfeiture.  In the shareholder plan , such stock is referred to as “Performance-Based Stock.”
 
restricted period   The period during which the restricted performance shares shall be subject to forfeiture in whole or in part, as defined in the shareholder plan , in accordance with the terms of the award .
 
shareholder plan    The John Wiley & Sons, Inc.  2009 Key Employee Stock Plan.
 
stock    Class A Common Stock (par value $1 per share) of the Company .
 
target incentive   The targeted number of restricted performance shares that a participant is eligible to receive if 100% of his/her/her applicable performance targets are achieved and the participant remains employed by the Company through the vesting dates of April 30, 2014 and April 30, 2015, except as otherwise provided in Section VIII.
 
II. PLAN OBJECTIVES
 
The plan is intended to provide the officers and other key colleagues of the Company and of its subsidiaries, affiliates and certain joint venture companies, upon whose judgment, initiative and efforts the Company depends for its growth and for the profitable conduct of its business, with additional incentive to promote the success of the Company.
 
III. ELIGIBILITY
 
A participant is selected by the CEO and recommended for participation to the Committee , which has sole discretion for determining eligibility, from among those colleagues in key management positions deemed able to make the most significant contributions to the growth and profitability of the Company .  The President and CEO of the Company is a participant .
 
 
3

 
 
IV. PERFORMANCE TARGETS AND MEASUREMENT
 
The CEO recommends and the Committee adopts, in its sole discretion, performance targets and performance levels for each participant , not later than 90 days from the commencement of the plan period .  No performance target or performance level may be modified after 90 days from the commencement of the plan period .
 
A.  
Performance targets, comprising one or more financial goals, are defined for each business unit. Each financial goal is assigned a weight, such that the sum of the weights of all financial goals for a business unit equals 100%.
 
B.  
Each participant is assigned performance targets for one or more business units, based on the participant’s position, responsibilities, and his/her ability to affect the results of the assigned business unit . For each participant , each business unit is assigned a weight , such that the sum of the weights of all business units for a participant equals 100% . Collectively, all business unit performance targets constitute the participant’s plan period objectives.
 
C.  
Each financial goal is assigned performance levels (threshold, target and outstanding).
 
V. PERFORMANCE EVALUATION
 
A.  
Financial Results
 
1.  
At the end of the plan period, the financial results for each business unit are compared with that unit’s financial goals to determine the payout for each participant .
 
2.  
In determining the attainment of financial goals , the impact of  any of the events (a) through (i) listed in Section 7(b)(ii)(B) of the shareholder plan, if dilutive (causes a reduction in the financial result ) will be excluded from the financial results for any affected business unit.
 
3.  
Award Determination
 
a.  
Achievement of threshold performance of at least one financial goal of a performance target is necessary for a participant to receive a payout for that performance target .
 
b.  
The unweighted   payout factor for each financial goal is determined as follows:
 
1.  
For performance below the threshold level, the   payout factor is zero.
 
2.  
For performance at the threshold level, the payout factor is 25%.
 
3.  
For performance between the threshold and target levels, the payout factor is between 25% and 100%, determined on a pro-rata basis.
 
 
4

 
 
4.  
For performance at the target level, the payout factor is 100%.
 
5.  
For performance between the target and outstanding levels, the payout factor is between 100% and 200%, determined on a pro-rata basis.
 
6.  
For performance at or above the outstanding level, the payout factor is 200%.
 
c.  
A participant’s plan-end adjusted restricted performance shares award is determined as follows:
 
1.  
Each financial goal’s unweighted   payout factor determined above times the weighting of that financial goal equals the weighted   payout factor   for   that financial goal
 
2.  
The sum of the weighted   payout factor s for a business unit’s performance target equals the   payout factor for that performance target.
 
3.  
The participant’s target incentive
 
times
 
the business unit weight
 
times
 
the performance target payout factor
 
equals
 
the participant’s payout   for that business unit
 
4.  
The sum of the payouts for all the business units assigned to a participant equals the participant’s total plan-end adjusted restricted performance shares award .
 
d.  
The Committee may, in its sole discretion, reduce a participant ’s payout to any level it deems appropriate.
 
VI. RESTRICTED PERFORMANCE SHARES AWARD PROVISIONS
 
A.  
Restricted performance shares , equal to a participant ’s target incentive,  shall be determined at the beginning of the plan period.   In addition to the terms and conditions set forth in the shareholder plan, the restricted period for the plan-end adjusted restricted performance shares award shall be as follows: subject to continued employment except as otherwise set forth in the shareholder plan, the lapse of restrictions on one-half of the restricted performance shares awarded will occur on the first anniversary of the plan period end date (April 30, 2014), at which time the participant will receive a stock certificate in a number of shares equal to one-half of the restricted performance shares awarded with the restrictive legend deleted, and the lapse of restrictions on the remaining half will occur on the second anniversary of the plan period end date (April 30, 2015) at which time the participant will receive a new stock certificate in a number of shares equal to the remaining half with the restrictive legend deleted.
 
 
5

 
 
B.  
The plan-end adjusted restricted performances share award will be compared to the restricted performance shares targeted at the beginning of the plan period , and the appropriate amount of restricted performance shares will be awarded or forfeited, as required, to bring the restricted performance shares award to the number of shares designated as the plan-end adjusted restricted performance shares award .
 
VII. STOCK OPTIONS
 
The participant may be granted a stock option pursuant to the shareholder plan at the beginning of the plan period , representing another incentive vehicle by which the participant is able to share in the equity growth of the Company . The terms and conditions of the award of the stock option are contained in the shareholder plan and in the stock option award.
 
VIII. PAYOUTS
 
A.  
Normal Payout .   Plan-end adjusted restricted performances share awards will be made within 2-1/2 months after the end of the plan period.
 
B.  
Resignation or Termination with or without Cause .  Except as otherwise provided in this Section VIII or in a written agreement approved by the Committee , a participant who resigns, or whose employment is terminated by the Company , with or without cause before the award is vested, will forfeit the right to receive an award .
 
C.  
Death or Disability .  Solely to the extent provided by the Committee in the award summary or in a written agreement, in the event of a participant’s death or disability while in employment prior to the end of the plan period , the participant (or, in the event of death, his or her estate) will receive a prorated plan-end adjusted performance share award which shall be paid out in shares based upon actual performance upon the conclusion of the plan period, within 2-1/2 months after the end of the plan period. “Disability” for this purpose will be determined by the Committee under a definition permitted under Code Section 409A.
 
D.  
Retirement .  Except as otherwise provided in this Section VIII or in a written agreement approved by the Committee , in the event of a participant’s retirement at or after age 55 with at least 10 years of service prior to the end of the plan period , the participant will receive a prorated plan-end adjusted performance share award (as determined by the Committee ) which shall be paid out in shares based upon actual performance upon the conclusion of the plan period , within 2-1/2 months after the end of the plan period.
 
E.  
Change of Control .  In the event of a Change of Control, as that term is defined in the shareholder plan , during the plan period , all then outstanding “ target restricted performance share s shall immediately become fully vested.
 
F.  
Restricted Stock for Completed Plan Periods .  In the event of the participant’s death, Disability, retirement at or after age 55 with at least 10 years of service, or the occurrence of a Change of Control, as that term is defined in the shareholder plan , following the end of the plan period but prior to full vesting of the plan-end adjusted restricted performance share awards , such restricted performance shares shall immediately become fully vested.
 
 
6

 
 
G.  
Change in Position .  A participant who is hired or promoted into an eligible position during the plan period may receive a prorated plan-end adjusted restricted performances share award as determined by the Committee , in its sole discretion.
 
 
IX. ADMINISTRATION AND OTHER MATTERS
 
A.  
The plan will be administered by the Committee , which shall have authority in its sole discretion to interpret and administer this plan , including, without limitation, all questions regarding eligibility and status of any participant , and no participant shall have any right to receive a payout or payment of any kind whatsoever, except as determined by the Committee hereunder.
 
B.  
The Company will have no obligation to reserve or otherwise fund in advance any amount which may become payable under the plan .
 
C.  
This plan may not be modified or amended except with the approval of the Committee , in accordance with the provisions of the shareholder plan.
 
D.  
In the event of a conflict between the provisions of this plan and the provisions of the shareholder plan , the provisions of the shareholder plan shall apply.
 
E.  
No awards of any type under this plan shall be considered as compensation for purposes of defining compensation for retirement, savings or supplemental executive retirement plans, or any other benefit.
 
 
7

 
 


 
Exhibit 10.14





JOHN WILEY & SONS, INC.


FY 2011 QUALIFIED EXECUTIVE ANNUAL INCENTIVE PLAN


PLAN DOCUMENT





CONFIDENTIAL



 



MAY 1, 2010
 
 
JOHN WILEY GRAPH
 

 
 

 


CONTENTS

Section
Subject
Page
I.
Definitions
2
II.
Plan Objectives
3
III.
Eligibility
3
IV.
Performance Targets and Measurement
3
V.
Performance Evaluation
4
VI.
Payouts
5
VII.
Administration and Other Matters
5
 
 

 
1

 


 
I.
DEFINITIONS

 
Following are definitions for words and phrases used in this document.  Unless the context clearly indicates otherwise, these words and phrases are considered to be defined terms and appear in this document in italicized print:
 
base salary    A participant's base salary as of July 1, 2010, or the date of hire or promotion into the plan , if later, adjusted for any amount of time the participant may not be in the plan for reasons of hire, death, disability, retirement and/or termination.
 
business criteria   An indicator of financial performance, chosen from the business criteria listed in Section  4(b)(ii) of the shareholder plan . The following business criteria are used in this plan:
 
cash flow   Net income, excluding unusual items not related to the period being measured, plus/minus any non-cash items included in net income and changes in operating assets and liabilities, minus normal investments in product development assets and property and equipment.
 
EBITA (business) Operating income before amortization of intangibles.
 
earnings per share   Earnings per share, excluding unusual items not related to the period being measured. Actual results shall be increased by one cent for VCH tax basis step-up recovery.
 
Contribution to Profit   Operating income before support costs.
 
GPC EBITA business operating income before amortization of intangibles as adjusted for profit earned by other businesses on intercompany transactions.
 
revenue   (business) Gross annual revenue , net of actual returns.
 
revenue   (corporate)   Gross annual revenue , net of provision for returns.
 
business unit The Company , a business or subsidiary of the Company , or a global unit of the Company .
 
Company     John Wiley & Sons, Inc.
 
Executive Compensation and Development Committee (Committee) The committee of the Company's Board of Directors responsible for the review and approval of executive compensation.  The Committee was previously known as the Compensation Committee.
 
financial goal    A targeted level of attainment of a given business criteria .
 
financial results    The published, audited financial results of the Company and the business financial results derived therefrom.
 
participant    A person selected to participate in the plan .
 
payout     Actual gross dollar amount paid to a participant under the plan , if any, for achievement of assigned performance targets , as further discussed in this plan .
 
performance levels
threshold    The minimum acceptable level of achievement of a financial goal in order to earn a payout, expressed as a percentage of target ( e.g., 95% of target ).
 
target     Achievement of the assigned financial goal- 100%.
 
 
2

 
 
outstanding     Superior achievement of a financial goal, earning the maximum payout, expressed as a percentage of target (e.g., 105% of target).
 
Performance target   A participant's objective to achieve specific financial goals for assigned business criteria in the plan period , as approved by the Committee .  A performance target comprises all of the financial goals for the business criteria in a business unit.
 
plan     This FY 2011 Qualified Executive Annual Incentive Plan.
 
plan period      The twelve-month period from May 1, 2010 to April 30, 2011, or a portion of this period, at the discretion of the Committee.
 
shareholder plan   The Company ’s 2004 Executive Annual Incentive Plan.
 
target incentive amount    The amount that a participant is eligible to receive if he/she achieves 100% of his/her performance targets for a business unit. The sum of the target incentive amounts for all business units assigned to a participant is the total target incentive amount.
 
target incentive percent    The percent applied to the participant's total annual incentive opportunity to determine the target incentive amount for this plan . Generally, for the plan period 2011, the target incentive percent for this plan is 75%.
 
total annual incentive opportunity   The total target amount that   a participant is eligible to receive from all annual incentive plans, including this plan .
 

 
II.
PLAN OBJECTIVES

The plan is intended to provide the officers and other key colleagues of the Company and of its subsidiaries, affiliates and certain joint venture companies, upon whose judgement, initiative and efforts the Company depends for its growth and for the profitable conduct of its business, with additional incentive to promote the success of the Company.

 
III.
ELIGIBILITY

A participant is selected by the CEO and recommended for participation to the Committee , which has sole discretion for determining eligibility, from among those colleagues in key management positions deemed able to make the most significant contributions to the growth and profitability of the Company .  The President and CEO of the Company is a participant .

 
IV.
PERFORMANCE TARGETS AND MEASUREMENT

The CEO recommends and the Committee adopts, in its sole discretion, performance targets and performance levels for each participant, not later than 90 days from the commencement of the plan period .  No performance target or performance level may be modified after 90 days from the commencement of the plan period .

A.  
Performance targets, comprising one or more financial goals, are defined for each business unit .  Each financial goal is assigned a weight, such that the sum of the weights of all financial goals for a business unit equals 100%.

B.  
Each participant is assigned performance targets for one or more business units , based on the participant’s position, responsibilities, and his/her ability to affect the results of the assigned business unit . For each participant , each business unit is assigned a weight , such that the sum of the weights of all business units for a participant equals 100% . Collectively, all business unit performance targets constitute the participant’s plan period objectives.

 
3

 
 
C.  
Each financial goal is assigned performance levels ( threshold , target and outstanding ).

 
V.
PERFORMANCE EVALUATION

A.
Financial Results
1.  
At the end of the plan period, the financial results for each business unit are compared with that unit’s financial goals to determine the payout for each participant .
2.  
In determining the attainment of financial goal s,
a.  
the impact of foreign exchange gains or losses will be excluded from revenue , business EBITA and contribution to profit criteria.
b.  
the impact of any of the events (1) through (9) listed in Section 4(b)(ii) of the shareholder plan, if dilutive (causes a reduction in the financial result ), will be excluded from the financial results of any affected business unit.
3.  
Award Determination
a.  
Achievement of threshold performance of at least one financial goal of a performance target is necessary for a participant to receive a payout for that performance target .
b.  
The unweighted   payout factor for each financial goal is determined as follows:
1.  
For performance below the threshold level, the   payout factor is zero.
2.  
For performance at the threshold level, the payout factor is 25%.
3.  
For performance between the threshold and target levels, the payout factor is between 25% and 100%, determined on a pro-rata basis.
4.  
For performance at the target level, the   payout factor is 100%.
5.  
For performance between the target and outstanding levels, the   payout factor is between 100% and 200%, determined on a pro-rata basis.
6.  
For performance at or above the outstanding level, the payout factor is 200%.
c.  
A participant’s payout is determined as follows:
1.  
Each financial goal’s unweighted   payout factor determined above times the weighting of that financial goal equals the weighted   payout factor   for   that financial goal.
2.  
The sum of the weighted   payout factors   for a business unit ’s performance target equals the   payout factor for that performance target.
3. 
The                participant’s total annual incentive opportunity
  times
the participant’s target incentive percent
  times
the business unit weight
times
the performance target payout factor
 equals
the participant’s payout for that business unit
4.  
The sum of the payouts for all the business units assigned to a participant equals the participant’s total payout.
d.   
The Committee may, in its sole discretion, reduce a participant ’s payout to any level it deems appropriate.

 
4

 
 
 
VI.
PAYOUTS
 
A.  
Payouts will be made within 90 days after the end of the plan period.
 
 
B.  
In the event of a participant's death, disability, retirement or leave of absence prior to the end of the plan period , the payout , if any, will be determined by the Committee.

C.  
A participant who resigns, or whose employment is terminated by the Company , with or without cause, before the end of the plan period , will not receive a payout .  Exception to this provision shall be made with the approval of the Committee , in its sole discretion.

D.  
A participant who is hired or promoted into an eligible position during the plan period may receive a prorated payout as determined by the Committee , in its sole discretion.

 
VII.
ADMINISTRATION AND OTHER MATTERS

 
A.
The plan will be administered by the Committee , which shall have authority in its sole discretion to interpret and administer this plan , including, without limitation, all questions regarding eligibility and status of any participant , and no participant shall have any right to receive a payout or payment of any kind whatsoever, except as determined by the Committee hereunder.

 
B.  The Company will have no obligation to reserve or otherwise fund in advance any amount which may become payable under the plan .

 
C.  This plan may not be modified or amended except with the approval of the CC, in accordance with the provisions of the shareholder plan.

D.  
In the event of a conflict between the provisions of this plan and the provisions of the shareholder plan , the provisions of the shareholder plan shall apply.
 
 
5

 

 
 


Exhibit 10.15





JOHN  WILEY  &  SONS,  INC.


FY 2011  EXECUTIVE  ANNUAL  STRATEGIC  MILESTONES  INCENTIVE  PLAN


ADMINISTRATIVE  DOCUMENT







CONFIDENTIAL








MAY 1, 2010
 
 
 
 
JOHN WILEY GRAPH



 
 

 

CONTENTS



Section
Subject
Page
I.
Definitions
2
II.
Plan Objectives
3
III.
Eligibility
3
IV.
Performance Objectives and Measurement
3
V.
Performance Evaluation
3
VI.
Payouts
4
VII.
Administration and Other Matters
5

 
 
1

 

   I. DEFINITIONS

 
Following are definitions for words and phrases used in this document.  Unless the context clearly indicates otherwise, these words and phrases are considered to be defined terms and appear in this document in italicized print:
 
base salary    The participant's base salary as of July 1, 2010, or the date of hire or promotion into the plan , if later, adjusted for any increases or decreases during FY 2011, on a prorated basis, and adjusted for any amount of time the participant may not be in the plan for reasons of hire, death, disability, retirement and/or termination.
 
Company     John Wiley & Sons, Inc.
 
Executive Compensation and Development Committee (Committee) The committee of the Company's Board of Directors responsible for the review and approval of executive compensation.  The Committee was previously known as the Compensation Committee.
 
participant    A person selected to participate in the plan .
 
payout     Actual gross dollar amount paid to a participant under the plan , if any, for achievement of strategic milestones , as further discussed in this plan .
 
payout factor    Percentage of strategic milestones deemed achieved, applied to the target incentive amount , used to determine the payout for which a participant is eligible.
 
plan     The Company's Fiscal Year 2011 Executive Annual Strategic Milestones Incentive Plan described in this document and any written amendments to this document.
 
plan year    The twelve month period from May 1, 2010 to April 30, 2011, or a portion of this period, at the discretion of the Committee .
 
strategic milestone    A participant's objective to achieve specific results for FY 2011, including interim revised strategic milestones , if any, as approved and communicated in writing, as described in Sections IV and V below.   Strategic milestones are leading indicators of performance.
 
target incentive amount    The amount, if any, that a participant is eligible to receive if he/she achieves 100% of his/her strategic milestones .
 
target incentive percent    The percent applied to the participant's total annual incentive opportunity to determine the target incentive amount for this plan . Generally, for the plan year 2011, the target incentive percent for this plan is 25%.
 
total annual incentive opportunity   The total target amount a participant is eligible to receive from all annual incentive plans, including this plan .
 
summary evaluation levels
 
threshold    The minimum acceptable level of achievement of strategic milestones .  If threshold performance is achieved against all strategic milestones , a participant may earn 25% of the target incentive amount for which he/she is eligible.
 
target     Achievement in aggregate of target strategic milestones .  Each individual strategic milestone is set at a level that is both challenging and achievable.  If target performance is achieved against all strategic milestones , a participant may earn 100% of the target incentive amount for which he/she is eligible.
 
 
2

 
 
outstanding     Superior achievement of strategic milestones , both in quality and scope, with limited time and resources.  If outstanding performance is achieved against strategic milestones , the maximum amount a participant may earn is 200% of the target incentive amount for which he/she is eligible.
 

II. PLAN OBJECTIVES

The purpose of the FY 2011 Executive Annual Strategic Milestones Incentive Plan is to enable the Company to reinforce and sustain a culture devoted to excellent performance, reward significant contributions to the success of Wiley, and attract and retain highly qualified executives.

III. ELIGIBILITY

A participant is selected by the President and CEO and recommended for participation to the Committee, which has sole discretion for determining eligibility, from among those colleagues in key management positions deemed able to make the most significant contributions to the growth and profitability of the Company .  The President and CEO of the Company is a participant .

IV. PERFORMANCE OBJECTIVES AND MEASUREMENT

A.
Strategic milestones are non-financial individual objectives over which the participant has a large measure of control, which lead to, or are expected to lead to, improved performance for the Company in the future.   Strategic milestones are determined near the beginning of the plan year by the participant , and approved by CEO or the participant's manager, if the CEO is not the participant's manager.

B.
The strategic milestones for the President and CEO are reviewed and approved by the Committee.

C.
The strategic milestones for the President and CEO should be appropriately reflected in those of all other colleagues at all levels.  Each participant collaborates with his/her manager in setting strategic milestones .  The strategic milestones may be revised during the plan year , as appropriate.

D.
The determination of strategic milestones includes defining a target level of performance and the measure of such, and may include defining threshold and outstanding levels of performance and the measures of such.

V. PERFORMANCE EVALUATION


A.
Achievement of a participant's strategic milestones will be determined at the end of the plan year by comparing results achieved to previously set objectives.

B.
The President and CEO will recommend for each participant a summary evaluation level and a payout factor for achievement of all strategic milestones, by comparing results achieved to the previously set objectives.  In determining the payout factor , the overall performance on all strategic milestones will be considered.  The Committee will approve the payout factor for all participants .

 
3

 

 
Summary evaluation levels and related payout factors are as follows:


Summary Evaluation Payout factor range
< Threshold
0
   Threshold
25% - <35%
> Threshold
³ 35% - <50%
< Target
³ 50% - <90%
Target
³ 90% - £ 110%
> Target
> 110% - <150%
< Outstanding
³ 150% - <175%
   Outstanding
³ 175% - 200%


C.
Award Determination


STRATEGIC MILESTONES PAYOUT AMOUNT

total annual incentive opportunity X target incentive percent X payout factor

= Strategic Milestones Payout Eligibility


 
1.
Notwithstanding anything to the contrary, the maximum payout , if any, a participant may receive is 200% of the target incentive amount .

 
2.
The foregoing strategic milestones payout eligibility calculation is intended to set forth general guidelines on how awards are to be determined.  The purpose of this plan is to motivate the participant to perform in an outstanding manner.  The President and CEO has discretion under this plan to take into consideration the contribution of the participant , the participant's management of his/her organizational unit and other relevant factors, positive or negative, which impact the Company's , the participant's organizational unit(s), and the participant's performance overall in determining whether to recommend granting or denying an award, and the amount of the award, if any.  If the participant is the President and CEO, such discretion is exercised by the Committee .

VI. PAYOUTS

A.   
Payout s will be made within 90 days after the end of the plan year.

B.  
In the event of a participant's death, disability, retirement or leave of absence prior to the end of the plan year , the payout , if any, will be recommended by the President and CEO to the Committee which shall have sole authority for approval of the payout.

 
4

 


C.  
A participant who resigns, or whose employment is terminated by the Company , with or without cause, before the end of the plan year , will not receive a payout .  Exception to this provision shall be made with the approval of the Committee , in its sole discretion.

D.  
A participant who transfers between businesses of the company , will have his/her payout prorated to the nearest fiscal quarter for the time spent in each business, based on the achievement of strategic milestones established for the position in each business, and based upon a judgment of the participant's contribution to the achievement of goals in each position, including interim revisions, if appropriate.

E.  
A participant who is appointed to a position with a different target incentive percent will have his/her payout prorated to the nearest fiscal quarter for the time spent in each position, based on the achievement of   strategic milestones established for each position.

F.  
A participant who is hired or promoted into an eligible position during the plan year may receive a prorated payout as determined by the CEO, in his/her sole discretion, subject to the approval of the Committee .

VII. ADMINISTRATION AND OTHER MATTERS

A.
The plan is effective for the plan year .  It will terminate, subject to payout , if any, in accordance with and subject to the provisions of this plan.

B.  
This plan will be administered by the President and CEO, who will have authority to interpret and administer this plan , including, without limitation, all questions regarding eligibility and status of the participant , subject to the approval of the Committee .

C.
This plan may be withdrawn, amended or modified at any time, for any reason, in writing, by the Company.

D.
The determination of an award and payout under this plan , if any, is subject to the approval of the President and CEO and the Committee .  This plan does not confer upon any participant the right to receive any payout , or payment of any kind whatsoever.

E.
No participant shall have any vested rights under this plan .  This plan does not constitute a contract.

F.  
All deductions and other withholdings required by law shall be made to the participant's payout , if any.

 
 
5

 

 


 
Exhibit 21

SUBSIDIARIES OF JOHN WILEY & SONS, INC. (1)


 
Jurisdiction
 
In Which
 
Incorporated
   
John Wiley & Sons International Rights, Inc.
Delaware
JWS HQ, LLC
New Jersey
JWS DCM, LLC
New Jersey
Wiley-Liss, Inc.
Delaware
Wiley Publishing Services, Inc.
Delaware
Wiley Subscription Services, Inc.
Delaware
WWL Corp.
Delaware
John Wiley & Sons (Asia) Pte. Ltd.
Singapore
John Wiley & Sons Australia, Ltd.
Australia
John Wiley & Sons Canada Limited
Canada
John Wiley & Sons (HK) Limited
Hong Kong
Wiley HMI Holdings, Inc.
Delaware
Wiley Europe Investment Holdings, Ltd.
United Kingdom
Wiley U.K. (Unlimited Co.)
United Kingdom
Wiley Europe Ltd.
United Kingdom
John Wiley & Sons, Ltd.
United Kingdom
Wiley Heyden Ltd.
United Kingdom
Wiley Distribution Services Ltd.
United Kingdom
Blackwell Publishing (Holdings) Ltd.
United Kingdom
Blackwell Publishing Ltd.
United Kingdom
Wiley Services Singapore Pte. Limited
Singapore
Blackwell Science Ltd.
United Kingdom
Blackwell Science (Overseas Holdings)
United Kingdom
Munksgaard Als
Denmark
Blackwell – Verlag GmbH
Germany
Blackwell Pub.  Asia Put. Ltd.
Australia
Blackwell Science KK
Japan
Blackwell Science (HK) Ltd.
Hong Kong
HMI Investment, Inc
Delaware
Wiley Publishing Inc.
Delaware
Wiley India Private Ltd.
India
Wiley Publishing Australia Pty Ltd.
Australia
John Wiley & Sons GmbH
Germany
Wiley-VCH Verlag GmbH & Co. KGaA
Germany
GIT Verlag GmbH & Co. KG
Germany


(1)
The names of other subsidiaries that would not constitute a significant subsidiary in the aggregate have been omitted.
 
 
 

 
 
 



Exhibit 23


CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Board of Directors and Stockholders
John Wiley & Sons, Inc.:
 
 
We consent to the incorporation by reference in the Registration Statement No. 33-62605 of John Wiley & Sons, Inc. (the “Company”) of our reports dated June 23, 2010, with respect to the consolidated statements of financial position of John Wiley & Sons, Inc. as of April 30, 2010 and 2009, and the related consolidated statements of income, shareholders’ equity and comprehensive income, and cash flows, for each of the years in the three-year period ended April 30, 2010, and the related financial statement schedule, and the effectiveness of internal control over financial reporting as of April 30, 2010, which reports appear in the April 30, 2010 annual report on Form 10-K of John Wiley & Sons, Inc.

/s/  KPMG LLP

New York, New York
June 23, 2010

 
 
 

 
 
 



Exhibit 31.1

CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, William J. Pesce, President and Chief Executive Officer of John Wiley & Sons, Inc. (the “Company”), hereby certify that:

1.  
I have reviewed this annual report on Form 10-K of the Company;
2.  
Based on my knowledge, this annual report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.  
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4.  
The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
a.  
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.  
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.  
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
d.  
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
5.  
The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent function):
a.  
all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
b.  
any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.


By:
   
 
William J. Pesce
 
 
President and Chief Executive Officer
 
 
Dated:  June 23, 2010
 
 
 
 
 

 
 


 
Exhibit 31.2


CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ellis E. Cousens, Executive Vice President and Chief Financial and Operations Officer of John Wiley & Sons, Inc. (the “Company”), hereby certify that:

1.  
I have reviewed this annual report on Form 10-K of the Company;
2.  
Based on my knowledge, this annual report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.  
Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4.  
The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
a.  
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.  
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.  
Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
d.  
Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Company’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
5.  
The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent function):
a.  
all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
b.  
any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

By:
   
 
Ellis E. Cousens
 
 
Executive Vice President and
 
 
Chief Financial and Operations Officer
 
 
Dated: June 23, 2010
 

 
 

 
 
 


Exhibit 32.1
 
 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of John Wiley & Sons, Inc. (the “Company”) on Form 10-K for the year ended April 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William J. Pesce, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1)  
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)  
the information contained in the Report fairly presents, in all material respects, the financial condition and   results of operations of the Company.

By:
   
 
William J. Pesce
 
 
President and Chief Executive Officer
 
 
 
Dated: June 23, 2010
 
 

 
 
 

 






Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 
In connection with the Annual Report of John Wiley & Sons, Inc. (the “Company”) on Form 10-K for the year ended April 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ellis E. Cousens, Executive Vice President and Chief Financial and Operations Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
 
(1)  
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
(2)  
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 


By:
   
 
Ellis E. Cousens
 
 
Executive Vice President and
 
 
Chief Financial and Operations Officer
 
 
Dated:  June 23, 2010