NEW YORK
|
13-5593032
|
|
(State of 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
|
|
Registrant's telephone number, including area code
|
(201) 748-6000
|
|
NOT APPLICABLE
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
|
YES [ ] NO [X]
|
PART I
|
-
|
FINANCIAL INFORMATION
|
PAGE NO.
|
|
Item 1.
|
||||
3
|
||||
4
|
||||
5
|
||||
6
|
||||
7-17
|
||||
Item 2.
|
18-32
|
|||
Item 3.
|
33-35
|
|||
Item 4.
|
35
|
|||
PART II
|
-
|
OTHER INFORMATION
|
||
Item 1.
|
35
|
|||
Item 1a.
|
35
|
|||
Item 2.
|
36
|
|||
Item 6.
|
36
|
|||
37-41
|
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
|
||||||
(In thousands)
|
||||||
October 31,
|
April 30,
|
|||||
2017
|
2016
|
2017
|
||||
(Unaudited)
|
(Unaudited)
|
|||||
Assets:
|
||||||
Current Assets
|
||||||
Cash and cash equivalents
|
$
|
72,871
|
$
|
267,410
|
$
|
58,516
|
Accounts receivable, net
|
193,506
|
212,590
|
188,679
|
|||
Inventories, net
|
43,540
|
51,779
|
47,852
|
|||
Prepaid and other current assets
|
54,092
|
147,753
|
64,688
|
|||
Total Current Assets
|
364,009
|
679,532
|
359,735
|
|||
Product Development Assets
|
68,124
|
38,574
|
70,955
|
|||
Royalty Advances
|
12,500
|
10,353
|
28,320
|
|||
Technology, Property & Equipment, net
|
274,624
|
248,281
|
252,488
|
|||
Intangible Assets, net
|
828,524
|
822,962
|
828,099
|
|||
Goodwill
|
999,546
|
974,068
|
982,101
|
|||
Other Non-Current Assets
|
85,503
|
79,684
|
84,519
|
|||
Total Assets
|
$
|
2,632,830
|
$
|
2,853,454
|
$
|
2,606,217
|
Liabilities & Shareholders' Equity:
|
||||||
Current Liabilities
|
||||||
Accounts and royalties payable
|
150,888
|
158,985
|
139,206
|
|||
Deferred revenue
|
244,328
|
223,307
|
436,235
|
|||
Accrued employment costs
|
79,827
|
69,072
|
98,185
|
|||
Accrued income taxes
|
17,711
|
8,515
|
22,222
|
|||
Accrued pension liability
|
5,826
|
5,459
|
5,776
|
|||
Other accrued liabilities
|
83,615
|
77,484
|
86,232
|
|||
Total Current Liabilities
|
582,195
|
542,822
|
787,856
|
|||
Long-Term Debt
|
562,962
|
883,992
|
365,000
|
|||
Accrued Pension Liability
|
208,382
|
181,735
|
214,597
|
|||
Deferred Income Tax Liabilities
|
156,397
|
191,729
|
160,491
|
|||
Other Long-Term Liabilities
|
75,844
|
71,675
|
75,136
|
|||
Shareholders' Equity
|
||||||
Class A Common Stock, $1 par value: Authorized-180 million
|
||||||
Issued – 70,096,703 and 70,086,003 as of October 31, 2017 and April 30, 2017, respectively
|
70,097
|
69,798
|
70,086
|
|||
Class B Common Stock, $1 par value: Authorized-72 million
|
||||||
Issued – 13,084,967 and 13,095,667 as of October 31, 2017 and April 30, 2017, respectively
|
13,085
|
13,392
|
13,096
|
|||
Additional paid-in-capital
|
392,493
|
379,009
|
387,896
|
|||
Retained earnings
|
1,747,998
|
1,656,991
|
1,715,423
|
|||
Accumulated other comprehensive loss
|
(476,725)
|
(486,649)
|
(507,287)
|
|||
Treasury
stock (Class A – 22,398,073 and 22,096,970 as of October 31, 2017 and April 30, 2017, respectively;
|
||||||
Class B – 3,917,574 and 3,917,574 as of October 31, 2017 and April 30, 2017, respectively)
|
(699,898)
|
(651,040)
|
(676,077)
|
|||
Total Shareholders' Equity
|
1,047,050
|
981,501
|
1,003,137
|
|||
Total Liabilities & Shareholders' Equity
|
$
|
2,632,830
|
$
|
2,853,454
|
$
|
2,606,217
|
See accompanying notes to the unaudited condensed consolidated financial statements.
|
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
|
|||||||||
(In thousands except per share information)
|
|||||||||
Three Months
|
Six Months
|
||||||||
Ended
October
31,
|
Ended
October 3
1,
|
||||||||
2017
|
2016
|
2017
|
2016
|
||||||
Revenue
|
$
|
451,731
|
$
|
425,588
|
$
|
863,175
|
$
|
829,873
|
|
Costs and Expenses
|
|||||||||
Cost of sales
|
119,865
|
111,574
|
234,653
|
225,052
|
|||||
Operating and administrative expenses
|
239,318
|
247,270
|
483,126
|
482,497
|
|||||
Restructuring and related (credits) charges
|
(1,406)
|
6,847
|
24,323
|
5,927
|
|||||
Amortization of intangibles
|
11,183
|
12,253
|
23,802
|
24,826
|
|||||
Total Costs and Expenses
|
368,960
|
377,944
|
765,904
|
738,302
|
|||||
Operating Income
|
82,771
|
47,644
|
97,271
|
91,571
|
|||||
Interest Expense
|
(3,455)
|
(4,360)
|
(6,728)
|
(8,431)
|
|||||
Foreign Exchange Transaction Losses
|
(416)
|
(360)
|
(5,552)
|
(139)
|
|||||
Interest Income and Other
|
576
|
478
|
581
|
728
|
|||||
Income Before Taxes
|
79,476
|
43,402
|
85,572
|
83,729
|
|||||
Provision For Income Taxes
|
19,428
|
54,853
|
16,288
|
64,180
|
|||||
Net Income (Loss)
|
$
|
60,048
|
$
|
(11,451)
|
$
|
69,284
|
$
|
19,549
|
|
Earnings (Loss) Per Share
|
|||||||||
Diluted
|
$
|
1.04
|
$
|
(0.20)
|
$
|
1.20
|
$
|
0.34
|
|
Basic
|
$
|
1.06
|
$
|
(0.20)
|
$
|
1.22
|
$
|
0.34
|
|
Cash Dividends Per Share
|
|||||||||
Class A Common
|
$
|
0.32
|
$
|
0.31
|
$
|
0.64
|
$
|
0.62
|
|
Class B Common
|
$
|
0.32
|
$
|
0.31
|
$
|
0.64
|
$
|
0.62
|
|
Average Shares
|
|||||||||
Diluted
|
57,554
|
57,538
|
57,633
|
58,259
|
|||||
Basic
|
56,875
|
57,538
|
56,948
|
57,494
|
|||||
See accompanying notes to the unaudited condensed consolidated financial statements.
|
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
|
||||||||
(In thousands)
|
||||||||
Three Months
|
Six Months
|
|||||||
Ended
October 31,
|
Ended
October 31,
|
|||||||
2017
|
2016
|
2017
|
2016
|
|||||
Net Income (Loss)
|
$
|
60,048
|
$
|
(11,451)
|
$
|
69,284
|
$
|
19,549
|
Other Comprehensive Income (Loss):
|
||||||||
Foreign currency translation adjustment
|
5,636
|
(25,824)
|
33,041
|
(70,464)
|
||||
Unamortized retirement costs, net of tax
(benefit)
provision of $(131), $8,163, $(708) and $11,456, respectively
|
(579)
|
22,151
|
(2,526)
|
31,155
|
||||
Unrealized gain on interest rate swaps, net of tax provision of $249, $721, $28 and $212, respectively
|
407
|
1,176
|
46
|
346
|
||||
Total Other Comprehensive Income (Loss)
|
5,464
|
(2,497)
|
30,561
|
(38,963)
|
||||
Comprehensive Income (Loss)
|
$
|
65,512
|
$
|
(13,948)
|
$
|
99,845
|
$
|
(19,414)
|
See accompanying notes to the unaudited condensed consolidated financial statements.
|
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
|
||||
(In thousands)
|
||||
|
|
Six Months
|
||
|
Ended October 31,
|
|||
2017
|
2016
|
|||
Operating Activities
|
||||
Net income
|
$
|
69,284
|
$
|
19,549
|
Adjustments to reconcile net income to cash used for operating activities:
|
||||
Amortization of intangibles
|
|
23,802
|
24,826
|
|
Amortization of product development assets
|
|
20,246
|
18,701
|
|
Depreciation of technology, property and equipment
|
|
34,775
|
34,092
|
|
Restructuring charges
|
24,323
|
5,927
|
||
Restructuring payments
|
(20,739)
|
(10,770)
|
||
Deferred income tax benefit on UK rate change
|
-
|
(2,575)
|
||
Unfavorable tax settlement
|
-
|
47,531
|
||
One-time pension settlement
|
-
|
8,842
|
||
Stock-based compensation expense
|
2,536
|
4,907
|
||
Excess tax benefit from stock based compensation
|
-
|
(187)
|
||
Royalty advances
|
(46,860)
|
(46,070)
|
||
Earned royalty advances
|
62,993
|
64,321
|
||
Other non-cash charges
|
13,234
|
31,157
|
||
Change in deferred revenue
|
(200,970)
|
(199,419)
|
||
Net change in operating assets and liabilities
|
|
(28,981)
|
(86,926)
|
|
Cash Used for Operating Activities
|
|
(46,357)
|
(86,094)
|
|
Investing Activities
|
|
|||
Product development spending
|
|
(15,145)
|
(16,604)
|
|
Additions to technology, property and equipment
|
|
(56,252)
|
(52,728)
|
|
Acquisitions, net of cash acquired
|
(6,097)
|
(135,753)
|
||
Cash Used for Investing Activities
|
|
(77,494)
|
(205,085)
|
|
Financing Activities
|
|
|||
Repayments of long-term debt
|
(78,492)
|
(201,415)
|
||
Borrowings of long-term debt
|
275,081
|
480,400
|
||
Change in book overdrafts
|
(2,629)
|
(5,861)
|
||
Cash dividends
|
(36,699)
|
(35,883)
|
||
Purchase of treasury stock
|
(29,257)
|
(21,289)
|
||
Proceeds from exercise of stock options and other
|
7,347
|
15,703
|
||
Excess tax benefit from stock based compensation
|
-
|
187
|
||
Cash Provided by Financing Activities
|
135,351
|
231,842
|
||
Effects of Exchange Rate Changes on Cash and Cash Equivalents
|
2,855
|
(37,059)
|
||
Cash and Cash Equivalents
|
||||
Increase (Decrease) for the Period
|
|
14,355
|
(96,396)
|
|
Balance at Beginning of Period
|
|
58,516
|
363,806
|
|
Balance at End of Period
|
$
|
72,871
|
$
|
267,410
|
Cash Paid During the Period for:
|
||||
Interest
|
$
|
6,471
|
$
|
5,594
|
Income taxes, net of refunds
|
$
|
26,398
|
$
|
20,231
|
See the accompanying notes to the unaudited condensed consolidated financial statements.
|
1. |
Basis of Presentation
|
2. |
Recent Accounting Standards
|
·
|
Excess income tax benefits and deficiencies from stock-based compensation are now recognized as a discrete item within the Provision for Income Taxes in the Condensed Consolidated Statements of Income, rather than Additional Paid-In-Capital in the Condensed Consolidated Statements of Financial Position, and amounted to $0.2 million for the six months ended October 31, 2017.
|
·
|
Excess income tax benefits and deficiencies are no longer considered when applying the treasury stock method for computing diluted shares outstanding, which resulted in an increase in diluted shares outstanding of approximately 34,000 and 24,000 shares for the three and six months ended October 31, 2017.
|
·
|
Excess income tax benefits and deficiencies are now classified as an Operating Activity in the Condensed Consolidated Statements of Cash Flows. There were no excess tax benefits recorded in operating activities for the six months ended October 31, 2017, while $0.2 million were recorded in Financing Activities for the six months ended October 31, 2016.
|
·
|
The Company has elected to continue estimating expected forfeitures in determining stock compensation expense each period.
|
3. |
Stock-Based Compensation
|
Six Months
Ended October 31,
|
|||
2017
|
2016
|
||
Restricted Stock:
|
|||
Awards granted (in thousands)
|
405
|
509
|
|
Weighted average fair value of grant
|
$51.44
|
$50.56
|
|
Foreign
|
Unamortized
|
Interest
|
|||||
Currency
|
Retirement
|
Rate
|
|||||
Translation
|
Costs
|
Swaps
|
Total
|
||||
Balance at July 31, 2017
|
$(291,807)
|
$(192,449)
|
$2,066
|
$(482,190)
|
|||
Other comprehensive income (loss) before reclassifications
|
5,636
|
(1,673)
|
238
|
4,201
|
|||
Amounts reclassified from accumulated other comprehensive loss
|
-
|
1,094
|
169
|
1,263
|
|||
Total other comprehensive income (loss)
|
5,636
|
(579)
|
407
|
5,464
|
|||
Balance at October 31, 2017
|
$(286,171)
|
$(193,028)
|
$2,473
|
$(476,726)
|
|||
Balance at April 30, 2017
|
$(319,212)
|
$(190,502)
|
$2,427
|
$(507,287)
|
|||
Other comprehensive income (loss) before reclassifications
|
33,041
|
(4,690)
|
(194)
|
28,157
|
|||
Amounts reclassified from accumulated other comprehensive loss
|
-
|
2,164
|
240
|
2,404
|
|||
Total other comprehensive income (loss)
|
33,041
|
(2,526)
|
46
|
30,561
|
|||
Balance at October 31, 2017
|
$(286,171)
|
$(193,028)
|
$2,473
|
$(476,726)
|
Foreign
|
Unamortized
|
Interest
|
|||||
Currency
|
Retirement
|
Rate
|
|||||
Translation
|
Costs
|
Swaps
|
Total
|
||||
Balance at July 31, 2016
|
$(312,560)
|
$(170,401)
|
$(1,191)
|
$(484,152)
|
|||
Other comprehensive income (loss) before reclassifications
|
(25,824)
|
15,826
|
1,200
|
(8,798)
|
|||
Amounts reclassified from accumulated other comprehensive loss
|
-
|
6,325
|
(24)
|
6,301
|
|||
Total other comprehensive income (loss)
|
(25,824)
|
22,151
|
1,176
|
(2,497)
|
|||
Balance at October 31, 2016
|
$(338,384)
|
$(148,250)
|
$(15)
|
$(486,649)
|
|||
Balance at April 30, 2016
|
$(267,920)
|
$(179,405)
|
$(361)
|
$(447,686)
|
|||
Other comprehensive income (loss) before reclassifications
|
(70,464)
|
|
25,494
|
|
97
|
|
(44,873)
|
Amounts reclassified from accumulated other comprehensive loss
|
-
|
|
5,661
|
|
249
|
|
5,910
|
Total other comprehensive income (loss)
|
(70,464)
|
|
31,155
|
|
346
|
|
(38,963)
|
Balance at October 31, 2016
|
$(338,384)
|
|
$(148,250)
|
|
$(15)
|
|
$(486,649)
|
Three Months
Ended October 31,
|
Six Months
Ended October 31,
|
||||||
2017
|
2016
|
2017
|
2016
|
||||
Weighted average shares outstanding
|
57,013
|
57,759
|
57,100
|
57,717
|
|||
Less: Unearned restricted shares
|
(138)
|
(221)
|
(152)
|
(223)
|
|||
Shares used for basic earnings per share
|
56,875
|
57,538
|
56,948
|
57,494
|
|||
Dilutive effect of stock options and other stock awards
|
679
|
-
|
685
|
765
|
|||
Shares used for diluted earnings per share
|
57,554
|
57,538
|
57,633
|
58,259
|
Cumulative
|
|||||||||
Program
|
|||||||||
Three Months
|
Six Months
|
Charges
|
|||||||
Ended October 31,
|
Ended October 31,
|
to Date
|
|||||||
2017
|
2016
|
2017
|
2016
|
||||||
Charges (Credits) by Segment:
|
|||||||||
Research
|
$(388)
|
$229
|
$4,448
|
$160
|
$24,604
|
||||
Publishing
|
71
|
215
|
7,325
|
569
|
39,814
|
||||
Solutions
|
(625)
|
524
|
2,170
|
524
|
4,721
|
||||
Shared Services
|
(464)
|
5,879
|
10,380
|
4,674
|
93,128
|
||||
Total
|
$(1,406)
|
$6,847
|
$24,323
|
$5,927
|
$162,267
|
||||
Charges (Credits) by Activity:
|
|||||||||
Severance
|
$(1,455)
|
$4,322
|
$23,266
|
$4,579
|
$110,856
|
||||
Process Reengineering Consulting
|
-
|
-
|
1,521
|
7
|
20,335
|
||||
Other Activities
|
49
|
2,525
|
(464)
|
1,341
|
31,076
|
||||
Total
|
$(1,406)
|
$6,847
|
$24,323
|
$5,927
|
$162,267
|
Foreign
|
|||||
Translation &
|
|||||
April 30, 2017
|
Charges
|
Payments
|
Reclassifications
|
October 31, 2017
|
|
Severance
|
$10,082
|
$23,266
|
$(12,739)
|
$345
|
$20,954
|
Process Reengineering Consulting
|
-
|
1,521
|
(1,320)
|
-
|
201
|
Other Activities
|
12,708
|
(464)
|
(6,680)
|
(2,025)
|
3,539
|
Total
|
$22,790
|
$24,323
|
$(20,739)
|
$(1,680)
|
$24,694
|
9. |
Inventories
|
October 31,
|
April 30,
|
||||
2017
|
2016
|
2017
|
|||
Finished goods
|
$35,217
|
$42,063
|
$38,329
|
||
Work-in-process
|
3,427
|
5,055
|
7,078
|
||
Paper and other materials
|
517
|
3,557
|
650
|
||
$39,161
|
$50,675
|
$46,057
|
|||
Inventory value of estimated sales returns
|
7,461
|
6,028
|
4,727
|
||
LIFO reserve
|
(3,082)
|
(4,924)
|
(2,932)
|
||
Total inventories
|
$43,540
|
$51,779
|
$47,852
|
10. |
Goodwill and Intangible Assets
|
Foreign
|
|||
Translation
|
|||
April 30, 2017
|
Adjustment
|
October 31, 2017
|
|
Research
|
$437,928
|
$9,569
|
$447,497
|
Publishing
|
283,192
|
7,876
|
291,068
|
Solutions
|
260,981
|
-
|
260,981
|
Total
|
$982,101
|
$17,445
|
$999,546
|
Foreign
|
||||
Translation
|
||||
April 30, 2016
|
Acquisitions
|
Adjustment
|
October 31, 2016
|
|
Research
|
$406,395
|
$74,119
|
$(51,110)
|
$429,404
|
Publishing
|
284,217
|
-
|
(4,709)
|
279,508
|
Solutions
|
261,051
|
4,105
|
-
|
265,156
|
Total
|
$951,663
|
$78,224
|
$(55,819)
|
$974,068
|
October 31,
|
April 30,
|
||||
2017
|
2016
|
2017
|
|||
Intangible assets with indefinite lives:
|
|||||
Brands and trademarks
|
$133,180
|
$130,632
|
$135,061
|
||
Content and publishing rights
|
90,815
|
84,274
|
84,173
|
||
$223,995
|
$214,906
|
$219,234
|
|||
Net intangible assets with determinable lives:
|
|||||
Content and publishing rights
|
$420,508
|
$406,467
|
$421,597
|
||
Customer relationships
|
166,006
|
182,584
|
169,116
|
||
Brands and trademarks
|
17,246
|
17,522
|
17,195
|
||
Covenants not to compete
|
769
|
1,483
|
957
|
||
$604,529
|
$608,056
|
$608,865
|
|||
Total
|
$828,524
|
$822,962
|
$828,099
|
Three Months
|
Six Months
|
||||||
Ended October 31,
|
Ended October 31,
|
||||||
2017
|
2016
|
2017
|
2016
|
||||
Effective Tax Rate as Reported
|
24.4%
|
126.4%
|
19.0%
|
76.7%
|
|||
Impact of an unfavorable German court decision in 2016
|
-
|
(109.5)%
|
-
|
(56.8)%
|
|||
Effective Tax Rate excluding the impact of an unfavorable German court decision in 2016
|
24.4%
|
16.9%
|
19.0%
|
19.9%
|
|||
Impact of a reduction in the statutory rate in the U.K. in 2016 on deferred tax balances
|
-
|
6.0%
|
-
|
3.1%
|
|||
Effective Tax Rate excluding the impact of an unfavorable German court decision and U.K. tax rate change
|
24.4%
|
22.9%
|
19.0%
|
23.0%
|
Three Months
Ended October 31,
|
Six Months
Ended October 31,
|
||||||
2017
|
2016
|
2017
|
2016
|
||||
Service cost
|
$242
|
$251
|
$472
|
$503
|
|||
Interest cost
|
6,346
|
6,506
|
12,598
|
13,704
|
|||
Expected return on plan assets
|
(9,782)
|
(8,656)
|
(19,439)
|
(18,031)
|
|||
Net amortization of prior service cost
|
(23)
|
(24)
|
(48)
|
(49)
|
|||
Recognized net actuarial loss
|
1,534
|
1,270
|
3,035
|
2,632
|
|||
Pension plan actuarial loss
|
-
|
8,842
|
-
|
8,842
|
|||
Net pension expense (credit)
|
$(1,683)
|
$8,189
|
$(3,382)
|
$7,601
|
13. |
Derivative Instruments and Hedging Activities
|
14. |
Commitments and Contingencies
|
·
|
incremental revenue from the Atypon acquisition of $6 million;
|
·
|
Research journal revenue growth of $5 million, or 3%;
|
·
|
STM and Professional Publishing revenue growth of $2 million, or 4%; and
|
·
|
Education Services (OPM) revenue growth of $2 million, or 6%.
|
·
|
a one-time pension settlement in the prior year related to changes in the Company's retiree and long-term disability plans of $9 million; and
|
·
|
lower technology expenses in the current year resulting from a reduction in outsourcing costs and spending associated with technology infrastructure, as well as lower professional fees related to the Company's ERP implementation.
|
Cumulative
|
|||||
Program
|
|||||
Three Months
|
Charges
|
||||
Ended October 31,
|
to Date
|
||||
2017
|
2016
|
||||
Charges (Credits) by Segment:
|
|||||
Research
|
$(388)
|
$229
|
$24,604
|
||
Publishing
|
71
|
215
|
39,814
|
||
Solutions
|
(625)
|
524
|
4,721
|
||
Shared Services
|
(464)
|
5,879
|
93,128
|
||
Total
|
$(1,406)
|
$6,847
|
$162,267
|
||
Charges (Credits) by Activity:
|
|||||
Severance
|
$(1,455)
|
$4,322
|
$110,856
|
||
Process Reengineering Consulting
|
-
|
-
|
20,335
|
||
Other Activities
|
49
|
2,525
|
31,076
|
||
Total
|
$(1,406)
|
$6,847
|
$162,267
|
Three Months
|
|||
Ended October 31,
|
|||
2017
|
2016
|
||
Effective Tax Rate as Reported
|
24.4%
|
126.4%
|
|
Impact of an unfavorable German court decision in 2016
|
-
|
(109.5)%
|
|
Effective Tax Rate excluding the impact of an unfavorable German court decision in 2016
|
24.4%
|
16.9%
|
|
Impact
of a reduction in the statutory rate in the U.K. in 2016 on deferred tax balances
|
-
|
6.0%
|
|
Effective Tax Rate excluding the impact of an unfavorable German court decision and U.K. tax rate change
|
24.4%
|
22.9%
|
·
|
higher operating income;
|
·
|
lower interest expense; and
|
·
|
a lower effective income tax rate, primarily due to the impact of the unfavorable German court decision in the prior year.
|
Three Months
|
||||
Ended October 31,
|
||||
2017
|
2016
|
|||
Restructuring credits (charges)
|
$
|
0.02
|
$
|
(0.08)
|
Foreign exchange losses on intercompany transactions
|
(0.01)
|
(0.01)
|
||
Pension settlement
|
-
|
(0.10)
|
||
Unfavorable German court decision
|
-
|
(0.83)
|
||
U.K. tax rate change
|
-
|
0.04
|
||
$
|
0.01
|
$
|
(0.98)
|
Three Months
|
||||
Ended October 31,
|
% change
|
|||
RESEARCH:
|
2017
|
2016
|
% change
|
w/o FX (a)
|
Revenue:
|
||||
Journal Subscriptions
|
$170,163
|
$159,726
|
7%
|
0%
|
Open Access
|
9,350
|
7,423
|
26%
|
25%
|
Licensing, Reprints, Backfiles, and Other
|
41,329
|
36,367
|
14%
|
11%
|
Total Journal Revenue
|
$220,842
|
$203,516
|
9%
|
3%
|
Publishing Technology Services (Atypon)
|
8,028
|
2,478
|
||
Total Research Revenue
|
$228,870
|
$205,994
|
11%
|
5%
|
Cost of Sales
|
60,917
|
52,351
|
16%
|
10%
|
Gross Profit
|
$167,953
|
$153,643
|
9%
|
4%
|
Gross Profit Margin
|
73.4%
|
74.6%
|
||
Operating Expenses
|
(90,551)
|
(86,720)
|
4%
|
6%
|
Amortization of Intangibles
|
(5,851)
|
(6,402)
|
-9%
|
-7%
|
Restructuring Charges (See Note 7)
|
(388)
|
(229)
|
||
Contribution to Profit
|
$71,163
|
$60,292
|
18%
|
4%
|
Contribution Margin
|
31.1%
|
29.3%
|
·
|
incremental revenue from the recent acquisition of Atypon of $6 million;
|
·
|
Open Access growth driven by the strong performance of existing titles and new title launches; and
|
·
|
other journal revenue increases particularly in the licensing of intellectual content.
|
Three Months
|
||||
Ended October 31,
|
% change
|
|||
PUBLISHING:
|
2017
|
2016
|
% change
|
w/o FX (a)
|
Revenue:
|
||||
STM and Professional Publishing
|
$71,460
|
$68,130
|
5%
|
4%
|
Education Publishing
|
57,711
|
57,472
|
0%
|
-1%
|
Course Workflow (WileyPLUS)
|
16,310
|
19,840
|
-18%
|
-18%
|
Test Preparation and Certification
|
7,919
|
7,521
|
5%
|
5%
|
Licensing, Distribution, Advertising and Other
|
11,585
|
10,337
|
12%
|
11%
|
Total Publishing Revenue
|
$164,985
|
$163,300
|
1%
|
0%
|
Cost of Sales
|
49,956
|
49,343
|
1%
|
2%
|
Gross
Profit
|
$115,029
|
$113,957
|
1%
|
-1%
|
Gross Profit Margin
|
69.7%
|
69.8%
|
||
Operating Expenses
|
(70,774)
|
(74,840)
|
-5%
|
-5%
|
Amortization of Intangibles
|
(1,850)
|
(2,412)
|
-23%
|
-23%
|
Restructuring (Charges) Credits (see Note 7)
|
71
|
(215)
|
||
Contribution to Profit
|
$42,476
|
$36,490
|
16%
|
14%
|
Contribution
Margin
|
25.7%
|
22.3%
|
·
|
Higher print revenues from STM and Professional Publishing, due to increased demand; and
|
·
|
growth in Test Preparation and Certification revenues driven by proprietary sales of the Company's professional test certification products.
|
Three Months
|
||||
Ended October 31,
|
% change
|
|||
SOLUTIONS:
|
2017
|
2016
|
% change
|
w/o FX (a)
|
Revenue:
|
||||
Education Services (OPM)
|
$29,737
|
$28,007
|
6%
|
6%
|
Professional Assessment
|
15,821
|
16,146
|
-2%
|
-2%
|
Corporate Learning
|
12,318
|
12,141
|
1%
|
-4%
|
Total Solutions Revenue
|
$57,876
|
$56,294
|
3%
|
2%
|
Cost of Sales
|
8,992
|
9,880
|
-9%
|
-8%
|
Gross Profit
|
$48,884
|
$46,414
|
5%
|
4%
|
Gross Profit Margin
|
84.5%
|
82.4%
|
||
Operating Expenses
|
(37,468)
|
(37,092)
|
1%
|
2%
|
Amortization of Intangibles
|
(3,482)
|
(3,439)
|
1%
|
3%
|
Restructuring Charges (see Note 7)
|
(625)
|
(524)
|
||
Contribution to Profit
|
$7,309
|
$5,359
|
36%
|
14%
|
Contribution Margin
|
12.6%
|
9.5%
|
·
|
a one-time pension settlement charge in the prior year related to changes in the Company's retiree and long-term disability plans of $9 million; and
|
·
|
lower technology costs of approximately $2 million driven by reduced spending on the Company's ERP system and other reductions in depreciation
, outsourcing and systems development consulting costs.
|
·
|
incremental revenue from the Atypon acquisition of $14 million;
|
·
|
Research journal revenue growth of $9 million; and
|
·
|
higher Solutions
revenue of $5 million.
|
·
|
one-time benefits in the prior year related to changes in the Company's retiree and long-term disability plans of $4 million and a life insurance recovery of $2 million;
|
·
|
incremental costs associated with the Atypon acquisition of $9 million; and
|
·
|
an impairment charge in the current year related to one of the Company's Publishing brands as a result of a business review performed on the Publishing segment's products and services of $4 million.
|
·
|
a one-time pension settlement charge in the prior year related to changes in the Company's retiree and long-term disability plans of $9 million; and
|
·
|
lower technology costs related to the Company's ERP implementation and other reductions in technology, development and maintenance costs.
|
Cumulative
|
|||||
Program
|
|||||
Six Months
|
Charges
|
||||
Ended October 31,
|
to Date
|
||||
2017
|
2016
|
||||
Charges (Credits) by Segment:
|
|||||
Research
|
$4,448
|
$160
|
$24,604
|
||
Publishing
|
7,325
|
569
|
39,814
|
||
Solutions
|
2,170
|
524
|
4,721
|
||
Shared Services
|
10,380
|
4,674
|
93,128
|
||
Total
|
$24,323
|
$5,927
|
$162,267
|
||
Charges (Credits) by Activity:
|
|||||
Severance
|
$23,266
|
$4,579
|
$110,856
|
||
Process Reengineering Consulting
|
1,521
|
7
|
20,335
|
||
Other Activities
|
(464)
|
1,341
|
31,076
|
||
Total
|
$24,323
|
$5,927
|
$162,267
|
Six Months
|
|||
Ended October 31,
|
|||
2017
|
2016
|
||
Effective Tax Rate as Reported
|
19.0%
|
76.7%
|
|
Impact
of an unfavorable German court decision in 2016
|
-
|
(56.8)%
|
|
Effective
Tax Rate excluding the impact of an unfavorable German court decision in 2016
|
19.0%
|
19.9%
|
|
Impact of a reduction in the statutory rate in the U.K. in 2016 on deferred tax balances
|
-
|
3.1%
|
|
Effective Tax Rate excluding the impact of an unfavorable German court decision and U.K. tax rate change
|
19.0%
|
23.0%
|
·
|
higher operating income; and
|
·
|
a lower effective income tax rate, primarily due to the impact of the unfavorable German court decision in the prior year.
|
Six Months
|
||||
Ended October 31,
|
||||
2017
|
2016
|
|||
Restructuring charges
|
$
|
(0.33)
|
$
|
(0.07)
|
Foreign exchange losses on intercompany transactions
|
(0.09)
|
(0.04)
|
||
Pension settlement
|
-
|
(0.09)
|
||
Unfavorable German court decision
|
-
|
(0.82)
|
||
U.K. tax rate change
|
-
|
0.04
|
||
$
|
(0.42)
|
$
|
(0.98)
|
Six Months
|
||||
Ended October 31,
|
% change
|
|||
RESEARCH:
|
2017
|
2016
|
% change
|
w/o FX (a)
|
Revenue:
|
||||
Journal Subscriptions
|
$338,488
|
$322,410
|
5%
|
0%
|
Open Access
|
18,153
|
14,936
|
22%
|
22%
|
Licensing, Reprints, Backfiles, and Other
|
79,559
|
73,394
|
8%
|
9%
|
Total Journal Revenue
|
$436,200
|
$410,740
|
6%
|
2%
|
Publishing Technology Services (Atypon)
|
16,297
|
2,478
|
||
Total Research Revenue
|
$452,497
|
$413,218
|
10%
|
6%
|
Cost of Sales
|
120,406
|
105,623
|
14%
|
17%
|
Gross Profit
|
$332,091
|
$307,595
|
8%
|
4%
|
Gross Profit Margin
|
73.4%
|
74.4%
|
||
Operating Expenses
|
(182,199)
|
(174,027)
|
5%
|
4%
|
Amortization of Intangibles
|
(12,820)
|
(12,681)
|
1%
|
-1%
|
Restructuring Charges (See Note 7)
|
(4,448)
|
(160)
|
||
(160)
|
||||
Contribution to Profit
|
$132,624
|
$120,727
|
10%
|
2%
|
Contribution Margin
|
29.3%
|
29.2%
|
·
|
incremental revenue from the recent acquisition of Atypon of $14 million;
|
·
|
Open Access growth driven by the strong performance of existing titles and new title launches; and
|
·
|
other journal revenue increases particularly in advertising, backfiles and the licensing of intellectual content.
|
·
|
11 new society journals were signed in the six months with combined annual revenue of $9.6 million
|
·
|
29 renewals/extensions were signed with $18.3 million in combined annual revenue
|
·
|
4
journal contacts were not renewed with annual revenue of $0.9 million
|
Six Months
|
||||
Ended October 31,
|
% change
|
|||
PUBLISHING:
|
2017
|
2016
|
% change
|
w/o FX (a)
|
Revenue:
|
||||
STM and Professional Publishing
|
$135,060
|
$138,835
|
-3%
|
-3%
|
Education Publishing
|
103,447
|
112,326
|
-8%
|
-8%
|
Course Workflow (WileyPLUS)
|
17,520
|
20,706
|
-15%
|
-16%
|
Test Preparation and Certification
|
19,409
|
17,077
|
14%
|
14%
|
Licensing, Distribution, Advertising and Other
|
20,827
|
19,317
|
8%
|
8%
|
Total Publishing Revenue
|
$296,263
|
$308,261
|
-4%
|
-4%
|
Cost of Sales
|
94,333
|
97,733
|
-3%
|
-3%
|
Gross
Profit
|
$201,930
|
$210,528
|
-4%
|
-4%
|
Gross Profit Margin
|
68.2%
|
68.3%
|
||
Operating Expenses
|
(139,458)
|
(148,938)
|
-6%
|
-6%
|
Amortization of Intangibles
|
(4,062)
|
(5,189)
|
-22%
|
-22%
|
Restructuring Charges (see Note 7)
|
(10,925)
|
(569)
|
||
Contribution to Profit
|
$47,485
|
$55,832
|
-15%
|
3%
|
Contribution
Margin
|
16.0%
|
18.1%
|
Six Months
|
||||
Ended October 31,
|
% change
|
|||
SOLUTIONS:
|
2017
|
2016
|
% change
|
w/o FX (a)
|
Revenue:
|
||||
Education Services (OPM)
|
$56,074
|
$51,179
|
10%
|
10%
|
Professional Assessment
|
30,708
|
29,668
|
4%
|
4%
|
Corporate Learning
|
27,633
|
27,547
|
0%
|
-2%
|
Total Solutions Revenue
|
$114,415
|
$108,394
|
6%
|
5%
|
Cost of Sales
|
19,914
|
$21,696
|
-8%
|
-8%
|
Gross Profit
|
$94,501
|
$86,698
|
9%
|
8%
|
Gross Profit Margin
|
82.6%
|
80.0%
|
||
Operating Expenses
|
(80,070)
|
(73,712)
|
9%
|
9%
|
Amortization of Intangibles
|
(6,920)
|
(6,956)
|
-1%
|
1%
|
Restructuring Charges (see Note 7)
|
(2,170)
|
(524)
|
||
Contribution to Profit
|
$5,341
|
$5,506
|
-3%
|
24%
|
Contribution Margin
|
4.7%
|
5.1%
|
·
|
Education Services (OPM) tuition revenue growth due to higher enrollments; and
|
·
|
Professional Assessment growth due to increased volume in the Company's pre-hire assessment offerings
in the first quarter of fiscal 2018.
|
·
|
one-time benefits in the prior year related to changes in the Company's retiree and long-term disability plans of $4 million and a life insurance recovery of $2 million;
|
·
|
executive transition and strategy consultation costs of $6 million;
|
·
|
lower technology costs of approximately $8 million driven by reduced spending on the Company's ERP system and other reductions in depreciation, outsourcing and systems development consulting costs.
|
Metric
(in millions, except per share data)
|
FY17 Actual
|
FY18 Expectation
(at constant currency)
|
Revenue
|
$1,718.5
|
Approximately even
|
Adjusted Operating Income
|
$228.4
|
Approximately even
|
Adjusted EPS
|
$3.01
|
Low-single digit % decline
|
Cash from Operations
|
$314.5
|
$350.0 million or higher
|
Capital Expenditures
|
$148.3
|
Slightly lower
|
·
|
lower accounts receivable due the timing of collections;
|
·
|
timing of vendor payments; and
|
·
|
lower employee retirement plan contributions
|
|
October 31, 2017
|
October 31, 2016
|
April 30, 2017
|
||
Accounts Receivable
|
$(44,792)
|
$(42,736)
|
$(34,769)
|
||
Inventories
|
7,461
|
6,028
|
4,727
|
||
Accounts and Royalties Payable
|
(7,821)
|
(7,045)
|
(5,741)
|
||
Decrease in Net Assets
|
$(29,510)
|
$(29,663)
|
$(24,300)
|
Total Number of Shares Purchased
|
Average Price Paid Per Share
|
Total Number of Shares Purchased as part of a Publicly Announced Program
|
Maximum Number of Shares that May be Purchased Under the Program
|
||||
August 2017
|
-
|
-
|
-
|
3,528,490
|
|||
September 2017
|
139,770
|
53.41
|
139,770
|
3,388,720
|
|||
October 2017
|
145,829
|
53.33
|
145,829
|
3,242,891
|
|||
Total
|
285,599
|
53.37
|
285,599
|
JOHN WILEY & SONS, INC.
|
||
Registrant
|
By
|
/s/ Brian A. Napack
|
||
Brian A. Napack
|
|||
President and
|
|||
Chief Executive Officer
|
By
|
/s/ John A. Kritzmacher
|
||
John A. Kritzmacher
|
|||
Chief Financial Officer and
|
|||
Executive Vice President, Technology and Operations
|
By
|
/s/ Christopher Caridi
|
||
Christopher Caridi
|
|||
Senior Vice President, Controller and
|
|||
Chief Accounting Officer
|
Dated: December 8, 2017
|
- |
Based on my knowledge, this quarterly report does not contain any untrue statement 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 quarterly report; and
|
- |
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented.
|
- |
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 we 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 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
|
- |
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 board of directors:
|
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 registrant's internal controls.
|
By
|
/s/ Brian A. Napack
|
||
Brian A. Napack
|
|||
President and
|
|||
Chief Executive Officer
|
|||
December 8, 2017
|
- |
Based on my knowledge, this quarterly report does not contain any untrue statement 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 quarterly report; and
|
- |
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
|
- |
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 we 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 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
|
- |
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 board of directors:
|
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 registrant's internal controls.
|
By
|
/s/ John A. Kritzmacher
|
||
John A. Kritzmacher
|
|||
Chief Financial Officer and
|
|||
Executive Vice President, Technology and Operations
|
|||
December 8, 2017
|
(1) |
The Report fully complies with the requirements of section 13(a) or 15 (d) of the Securities Exchange Act of 1934 (as amended), as applicable; 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
|
/s/ Brian A. Napack
|
||
Brian A. Napack
|
|||
President and
|
|||
Chief Executive Officer
|
|||
December 8, 2017
|
(1) |
The Report fully complies with the requirements of section 13(a) or 15 (d) of the Securities Exchange Act of 1934 (as amended), as applicable; 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
|
/s/ John A. Kritzmacher
|
||
John A. Kritzmacher
|
|||
Chief Financial Officer and
|
|||
Executive Vice President, Technology and Operations
|
|||
December 8, 2017
|
·
|
Absent a Change in Control:
Twenty-four months of base salary to be paid in a lump sum and Benefit Continuation for 18 months.
|
·
|
Within Twenty-Four Months of a Change in Control:
Twenty-four months of base salary and twenty-four months of "target" annual incentive to be paid in a lump sum, full acceleration of all unvested equity awards (with performance share units vested at "target") and Benefit Continuation for 18 months.
|