☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
New York
|
13-5593032
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
111 River Street, Hoboken, New Jersey
|
07030
|
|
(Address of principal executive offices)
|
Zip Code
|
(201) 748-6000
|
||
Registrant’s telephone number, including area code
|
Not Applicable
|
||
Former name, former address and former fiscal year, if changed since last report
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
||
Class A Common Stock, par value $1.00 per share
|
JW.A
|
New York Stock Exchange
|
||
Class B Common Stock, par value $1.00 per share
|
JW.B
|
New York Stock Exchange
|
Large accelerated filer ☒
|
Accelerated filer ☐
|
Non-accelerated filer ☐
|
Smaller reporting company ☐
|
Emerging growth company ☐
|
Item 1.
|
Financial Statements
|
|||
5
|
||||
6
|
||||
7
|
||||
8
|
||||
9
|
||||
Notes to Unaudited Condensed Consolidated Financial Statements
|
||||
10
|
||||
10
|
||||
12
|
||||
14
|
||||
15
|
||||
17
|
||||
18
|
||||
18
|
||||
19
|
||||
21
|
||||
22
|
||||
22
|
||||
23
|
||||
23
|
||||
24
|
||||
25
|
||||
25
|
||||
26
|
||||
Item 2.
|
27
|
|||
Item 3.
|
35
|
|||
Item 4.
|
36
|
|||
PART II - OTHER INFORMATION
|
||||
Item 1.
|
37
|
|||
Item 1a.
|
37
|
|||
Item 2.
|
37
|
|||
Item 6.
|
38
|
|||
39
|
● |
Adjusted Earnings Per Share (“Adjusted EPS”);
|
● |
Free Cash Flow less Product Development Spending;
|
● |
Adjusted Revenue;
|
● |
Adjusted Operating Income and margin;
|
● |
Adjusted Contribution to Profit and margin;
|
● |
EBITDA, Adjusted EBITDA and margin;
|
● |
Organic revenue; and
|
● |
Results on a constant currency basis.
|
● |
Adjusted EPS, Adjusted Revenue, Adjusted Operating Income, Adjusted Contribution to Profit, Adjusted EBITDA, and organic revenue provide a more comparable basis to analyze operating results and earnings and are measures commonly used by shareholders to measure our performance.
|
● |
Free Cash Flow less Product Development Spending helps assess our ability, over the long term, to create value for our shareholders as it represents cash available to repay debt, pay common stock dividends and fund share repurchases and acquisitions.
|
● |
Results on a constant currency basis removes distortion from the effects of foreign currency movements to provide better comparability of our business trends from period to period. We measure our performance before the impact of foreign currency (or at “constant currency”), which means that we apply the same foreign currency exchange rates for the current and equivalent prior period.
|
|
July 31, 2020
|
April 30, 2020
|
||||||
Assets:
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$
|
101,385
|
$
|
202,464
|
||||
Accounts receivable, net
|
282,412
|
309,384
|
||||||
Inventories, net
|
45,051
|
43,614
|
||||||
Prepaid expenses and other current assets
|
59,155
|
59,465
|
||||||
Total Current Assets
|
488,003
|
614,927
|
||||||
Product Development Assets, net
|
52,088
|
53,643
|
||||||
Royalty Advances, net
|
28,682
|
36,710
|
||||||
Technology, Property and Equipment, net
|
295,457
|
298,005
|
||||||
Intangible Assets, net
|
829,231
|
807,405
|
||||||
Goodwill
|
1,133,610
|
1,116,790
|
||||||
Operating Lease Right-of-Use Assets
|
139,798
|
142,716
|
||||||
Other Non-Current Assets
|
102,077
|
98,598
|
||||||
Total Assets
|
$
|
3,068,946
|
$
|
3,168,794
|
||||
Liabilities and Shareholders' Equity:
|
||||||||
Current Liabilities
|
||||||||
Accounts payable
|
$
|
52,556
|
$
|
93,691
|
||||
Accrued royalties
|
82,691
|
87,408
|
||||||
Short-term portion of long-term debt
|
10,938
|
9,375
|
||||||
Contract liabilities
|
408,954
|
520,214
|
||||||
Accrued employment costs
|
70,211
|
108,448
|
||||||
Accrued income taxes
|
181
|
13,728
|
||||||
Short-term portion of operating lease liabilities
|
20,647
|
21,810
|
||||||
Other accrued liabilities
|
69,958
|
72,595
|
||||||
Total Current Liabilities
|
716,136
|
927,269
|
||||||
Long-Term Debt
|
835,763
|
765,650
|
||||||
Accrued Pension Liability
|
183,284
|
187,969
|
||||||
Deferred Income Tax Liabilities
|
124,184
|
119,127
|
||||||
Operating Lease Liabilities
|
156,644
|
159,782
|
||||||
Other Long-Term Liabilities
|
79,190
|
75,373
|
||||||
Total Liabilities
|
2,095,201
|
2,235,170
|
||||||
Shareholders’ Equity
|
||||||||
Preferred Stock, $1 par value: Authorized – 2 million, Issued - 0
|
—
|
—
|
||||||
Class A Common Stock, $1 par value: Authorized - 180 million, Issued 70,177 and 70,166 as of July 31, 2020 and April 30, 2020, respectively
|
70,177
|
70,166
|
||||||
Class B Common Stock, $1 par value: Authorized - 72 million, Issued 13,005 and 13,016 as of July 31, 2020 and April 30, 2020, respectively
|
13,005
|
13,016
|
||||||
Additional paid-in-capital
|
431,241
|
431,680
|
||||||
Retained earnings
|
1,775,813
|
1,780,129
|
||||||
Accumulated other comprehensive loss, net of tax
|
(534,118
|
)
|
(575,497
|
)
|
||||
Less Treasury Shares At Cost (Class A - 23,259 and 23,405 as of July 31, 2020 and April 30, 2020, respectively; Class B - 3,920 and 3,920 as of July 31, 2020 and April 30, 2020, respectively)
|
(782,373
|
)
|
(785,870
|
)
|
||||
Total Shareholders’ Equity
|
973,745
|
933,624
|
||||||
Total Liabilities and Shareholders' Equity
|
$
|
3,068,946
|
$
|
3,168,794
|
|
Three Months Ended
July 31,
|
|||||||
2020
|
2019
|
|||||||
Revenue, net
|
$
|
431,326
|
$
|
423,530
|
||||
Costs and Expenses
|
||||||||
Cost of sales
|
144,809
|
143,096
|
||||||
Operating and administrative expenses
|
237,369
|
250,170
|
||||||
Restructuring and related charges
|
2,218
|
10,735
|
||||||
Amortization of intangibles
|
16,891
|
14,970
|
||||||
Total Costs and Expenses
|
401,287
|
418,971
|
||||||
Operating Income
|
30,039
|
4,559
|
||||||
Interest Expense
|
(4,614
|
)
|
(6,077
|
)
|
||||
Foreign Exchange Transaction (Losses) Gains
|
(82
|
)
|
2,652
|
|||||
Interest and Other Income
|
4,391
|
2,833
|
||||||
Income Before Taxes
|
29,734
|
3,967
|
||||||
Provision for Income Taxes
|
13,400
|
343
|
||||||
Net Income
|
$
|
16,334
|
$
|
3,624
|
||||
Earnings Per Share
|
||||||||
Basic
|
$
|
0.29
|
$
|
0.06
|
||||
Diluted
|
$
|
0.29
|
$
|
0.06
|
||||
Weighted Average Number of Common Shares Outstanding
|
||||||||
Basic
|
55,912
|
56,536
|
||||||
Diluted
|
56,193
|
56,905
|
|
Three Months Ended
July 31,
|
|||||||
2020
|
2019
|
|||||||
Net Income
|
$
|
16,334
|
$
|
3,624
|
||||
Other Comprehensive Income (Loss):
|
||||||||
Foreign currency translation adjustment
|
46,853
|
(35,539
|
)
|
|||||
Unamortized retirement (costs) credits, net of tax benefit (expense) of $1,705 and $(2,180), respectively
|
(5,665
|
)
|
8,168
|
|||||
Unrealized gain on interest rate swaps, net of tax (expense) benefit of $(30) and $44, respectively
|
191
|
85
|
||||||
Total Other Comprehensive Income (Loss)
|
41,379
|
(27,286
|
)
|
|||||
Comprehensive Income (Loss)
|
$
|
57,713
|
$
|
(23,662
|
)
|
|
Three Months Ended
July 31,
|
|||||||
2020
|
2019
|
|||||||
Operating Activities
|
||||||||
Net income
|
$
|
16,334
|
$
|
3,624
|
||||
Adjustments to reconcile net income to net cash used in operating activities:
|
||||||||
Amortization of intangibles
|
16,891
|
14,970
|
||||||
Amortization of product development assets
|
9,148
|
8,714
|
||||||
Depreciation and amortization of technology, property and equipment
|
23,468
|
18,535
|
||||||
Restructuring and related charges
|
2,218
|
10,735
|
||||||
Stock-based compensation expense
|
4,314
|
4,604
|
||||||
Employee retirement plan expense
|
4,033
|
1,841
|
||||||
Royalty advances
|
(28,952
|
)
|
(25,687
|
)
|
||||
Earned royalty advances
|
40,125
|
33,886
|
||||||
Foreign exchange transaction losses (gains)
|
82
|
(2,652
|
)
|
|||||
Other non-cash charges
|
15,285
|
3,750
|
||||||
Net change in operating assets and liabilities
|
(223,729
|
)
|
(166,488
|
)
|
||||
Net Cash Used In Operating Activities
|
(120,783
|
)
|
(94,168
|
)
|
||||
Investing Activities
|
||||||||
Product development spending
|
(5,325
|
)
|
(6,211
|
)
|
||||
Additions to technology, property and equipment
|
(18,964
|
)
|
(24,202
|
)
|
||||
Businesses acquired in purchase transactions, net of cash acquired
|
(136
|
)
|
(73,209
|
)
|
||||
Acquisitions of publication rights and other
|
(3,855
|
)
|
(2,270
|
)
|
||||
Net Cash Used In Investing Activities
|
(28,280
|
)
|
(105,892
|
)
|
||||
Financing Activities
|
||||||||
Repayment of long-term debt
|
(139,331
|
)
|
(10,400
|
)
|
||||
Borrowing of long-term debt
|
206,687
|
264,248
|
||||||
Payment of debt issuance costs
|
—
|
(3,957
|
)
|
|||||
Purchase of treasury shares
|
—
|
(10,000
|
)
|
|||||
Change in book overdrafts
|
(3,292
|
)
|
(6,169
|
)
|
||||
Cash dividends
|
(19,261
|
)
|
(19,252
|
)
|
||||
Net payments from exercise of stock options and other
|
(1,319
|
)
|
(1,137
|
)
|
||||
Net Cash Provided By Financing Activities
|
43,484
|
213,333
|
||||||
Effects of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash
|
4,500
|
(2,138
|
)
|
|||||
Cash Reconciliation:
|
||||||||
Cash and Cash Equivalents
|
202,464
|
92,890
|
||||||
Restricted cash included in Prepaid expenses and other current assets
|
583
|
658
|
||||||
Balance at Beginning of Period
|
203,047
|
93,548
|
||||||
(Decrease)/Increase for the Period
|
(101,079
|
)
|
11,135
|
|||||
Cash and cash equivalents
|
101,385
|
104,025
|
||||||
Restricted cash included in Prepaid expenses and other current assets
|
583
|
658
|
||||||
Balance at End of Period
|
$
|
101,968
|
$
|
104,683
|
||||
Cash Paid During the Period for:
|
||||||||
Interest
|
$
|
4,221
|
$
|
5,410
|
||||
Income taxes, net of refunds
|
$
|
25,704
|
$
|
11,484
|
|
Common Stock
Class A
|
Common Stock
Class B
|
Additional
Paid-in Capital
|
Retained
Earnings
|
Accumulated Other Comprehensive Loss
|
Treasury Stock
|
Total
Shareholders' Equity
|
|||||||||||||||||||||
Balance at April 30, 2020
|
$
|
70,166
|
$
|
13,016
|
$
|
431,680
|
$
|
1,780,129
|
$
|
(575,497
|
)
|
$
|
(785,870
|
)
|
$
|
933,624
|
||||||||||||
Cumulative Effect of Change in Accounting Principle, Net of Tax
|
—
|
—
|
—
|
(1,390
|
)
|
—
|
—
|
(1,390
|
)
|
|||||||||||||||||||
Restricted Shares Issued under Stock-based Compensation Plans
|
—
|
—
|
(5,121
|
)
|
1
|
—
|
5,184
|
64
|
||||||||||||||||||||
Net Proceeds (Payments) from Exercise of Stock Options and Other
|
—
|
—
|
368
|
—
|
—
|
(1,687
|
)
|
(1,319
|
)
|
|||||||||||||||||||
Stock-based Compensation Expense
|
—
|
—
|
4,314
|
—
|
—
|
—
|
4,314
|
|||||||||||||||||||||
Class A Common Stock Dividends ($0.3425 per share)
|
—
|
—
|
—
|
(16,149
|
)
|
—
|
—
|
(16,149
|
)
|
|||||||||||||||||||
Class B Common Stock Dividends ($0.3425 per share)
|
—
|
—
|
—
|
(3,112
|
)
|
—
|
—
|
(3,112
|
)
|
|||||||||||||||||||
Common Stock Class Conversions
|
11
|
(11
|
)
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
Comprehensive Income, Net of Tax
|
—
|
—
|
—
|
16,334
|
41,379
|
—
|
57,713
|
|||||||||||||||||||||
Balance at July 31, 2020
|
$
|
70,177
|
$
|
13,005
|
$
|
431,241
|
$
|
1,775,813
|
$
|
(534,118
|
)
|
$
|
(782,373
|
)
|
$
|
973,745
|
|
Common Stock
Class A
|
Common Stock
Class B
|
Additional
Paid-in Capital
|
Retained
Earnings
|
Accumulated Other
Comprehensive Loss
|
Treasury Stock
|
Total
Shareholders' Equity
|
|||||||||||||||||||||
Balance at April 30, 2019
|
$
|
70,127
|
$
|
13,055
|
$
|
422,305
|
$
|
1,931,074
|
$
|
(508,738
|
)
|
$
|
(746,476
|
)
|
$
|
1,181,347
|
||||||||||||
Restricted Shares Issued under Stock-based Compensation Plans
|
—
|
—
|
(2,112
|
)
|
(1
|
)
|
—
|
2,219
|
106
|
|||||||||||||||||||
Net Proceeds (Payments) from Exercise of Stock Options and Other
|
—
|
—
|
107
|
—
|
—
|
(1,244
|
)
|
(1,137
|
)
|
|||||||||||||||||||
Stock-based Compensation Expense
|
—
|
—
|
4,604
|
—
|
—
|
—
|
4,604
|
|||||||||||||||||||||
Purchase of Treasury Shares
|
—
|
—
|
—
|
—
|
—
|
(10,000
|
)
|
(10,000
|
)
|
|||||||||||||||||||
Class A Common Stock Dividends ($0.34 per share)
|
—
|
—
|
—
|
(16,148
|
)
|
—
|
—
|
(16,148
|
)
|
|||||||||||||||||||
Class B Common Stock Dividends ($0.34 per share)
|
—
|
—
|
—
|
(3,104
|
)
|
—
|
—
|
(3,104
|
)
|
|||||||||||||||||||
Common Stock Class Conversions
|
12
|
(12
|
)
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||
Comprehensive Income (Loss), Net of Tax
|
—
|
—
|
—
|
3,624
|
(27,286
|
)
|
—
|
(23,662
|
)
|
|||||||||||||||||||
Balance at July 31, 2019
|
$
|
70,139
|
$
|
13,043
|
$
|
424,904
|
$
|
1,915,445
|
$
|
(536,024
|
)
|
$
|
(755,501
|
)
|
$
|
1,132,006
|
|
Provision for
Credit Losses
|
|||
Balance as of April 30, 2020
|
$
|
18,335
|
||
Adjustment due to adoption of new credit losses standard recorded as an adjustment to retained earnings
|
1,776
|
|||
Current period provision
|
2,678
|
|||
Amounts written off, less recoveries
|
(1,327
|
)
|
||
Foreign exchange translation adjustments and other
|
(1,398
|
)
|
||
Balance as of July 31, 2020
|
$
|
20,064
|
|
Three Months Ended
July 31,
|
|||||||
2020
|
2019
|
|||||||
Research Publishing & Platforms:
|
||||||||
Research Publishing
|
$
|
230,464
|
$
|
219,927
|
||||
Research Platforms
|
10,346
|
9,448
|
||||||
Total Research Publishing & Platforms
|
240,810
|
229,375
|
||||||
Academic & Professional Learning:
|
||||||||
Education Publishing
|
64,084
|
65,523
|
||||||
Professional Learning
|
62,829
|
79,335
|
||||||
Total Academic & Professional Learning
|
126,913
|
144,858
|
||||||
Education Services:
|
||||||||
Education Services (1)
|
50,262
|
48,156
|
||||||
mthree (1)
|
13,341
|
1,141
|
||||||
Total Education Services
|
63,603
|
49,297
|
||||||
Total Revenue
|
$
|
431,326
|
$
|
423,530
|
(1) |
In May 2020, we moved the IT bootcamp business acquired as part of The Learning House acquisition from Education Services to mthree. As a result, the prior period revenue related to the IT bootcamp business has been included in mthree. There were no changes to our total Education Services or our consolidated financial results.
|
|
July 31, 2020
|
April 30, 2020
|
Increase/
(Decrease)
|
|||||||||
Balances from contracts with customers:
|
||||||||||||
Accounts receivable, net
|
$
|
282,412
|
$
|
309,384
|
$
|
(26,972
|
)
|
|||||
Contract liabilities (1)
|
408,954
|
520,214
|
(111,260
|
)
|
||||||||
Contract liabilities (included in Other Long-Term Liabilities)
|
$
|
15,357
|
$
|
14,949
|
$
|
408
|
(1) |
The sales return reserve recorded in Contract Liabilities is $39.4 million and $32.8 million, as of July 31, 2020 and April 30, 2020, respectively.
|
|
July 31, 2020
|
April 30, 2020
|
||||||
Operating lease right-of-use assets
|
$
|
139,798
|
$
|
142,716
|
||||
Short-term portion of operating lease liabilities
|
20,647
|
21,810
|
||||||
Operating lease liabilities, non-current
|
$
|
156,644
|
$
|
159,782
|
Three Months Ended
July 31,
|
||||||||
|
2020
|
2019
|
||||||
Operating lease cost
|
$
|
6,635
|
$
|
6,861
|
||||
Variable lease cost
|
521
|
1,203
|
||||||
Short-term lease cost
|
88
|
—
|
||||||
Sublease income
|
(170
|
)
|
(523
|
)
|
||||
Total net lease cost (1)
|
$
|
7,074
|
$
|
7,541
|
(1) |
Total net lease cost does not include those costs included in Restructuring and Related Charges on our Unaudited Condensed Consolidated Statements of Income. See Note 9, “Restructuring and Related Charges” for more information on these programs.
|
Fiscal Year
|
Operating Lease
Liabilities
|
|||
2021 (remaining 9 months)
|
$
|
23,531
|
||
2022
|
27,903
|
|||
2023
|
25,038
|
|||
2024
|
23,526
|
|||
2025
|
22,233
|
|||
Thereafter
|
114,078
|
|||
Total future undiscounted minimum lease payments
|
236,309
|
|||
Less: Imputed interest
|
59,018
|
|||
Present Value of Minimum Lease Payments
|
177,291
|
|||
Less: Current portion
|
20,647
|
|||
Noncurrent portion
|
$
|
156,644
|
|
Three Months Ended
July 31,
|
|||||||
2020
|
2019
|
|||||||
Restricted Stock:
|
||||||||
Awards granted
|
358
|
500
|
||||||
Weighted average fair value of grant
|
$
|
38.88
|
$
|
45.31
|
|
Foreign
Currency Translation
|
Unamortized
Retirement Costs
|
Interest
Rate Swaps
|
Total
|
||||||||||||
Balance at April 30, 2020
|
$
|
(340,703
|
)
|
$
|
(227,920
|
)
|
$
|
(6,874
|
)
|
$
|
(575,497
|
)
|
||||
Other comprehensive income (loss) before reclassifications
|
46,853
|
(7,190
|
)
|
(669
|
)
|
38,994
|
||||||||||
Amounts reclassified from Accumulated Other Comprehensive Loss
|
—
|
1,525
|
860
|
2,385
|
||||||||||||
Total other comprehensive (loss) income
|
46,853
|
(5,665
|
)
|
191
|
41,379
|
|||||||||||
Balance at July 31, 2020
|
$
|
(293,850
|
)
|
$
|
(233,585
|
)
|
$
|
(6,683
|
)
|
$
|
(534,118
|
)
|
||||
Balance at April 30, 2019
|
$
|
(312,107
|
)
|
$
|
(196,057
|
)
|
$
|
(574
|
)
|
$
|
(508,738
|
)
|
||||
Other comprehensive (loss) income before reclassifications
|
(35,539
|
)
|
7,130
|
328
|
(28,081
|
)
|
||||||||||
Amounts reclassified from Accumulated Other Comprehensive Loss
|
—
|
1,038
|
(243
|
)
|
795
|
|||||||||||
Total other comprehensive (loss) income
|
(35,539
|
)
|
8,168
|
85
|
(27,286
|
)
|
||||||||||
Balance at July 31, 2019
|
$
|
(347,646
|
)
|
$
|
(187,889
|
)
|
$
|
(489
|
)
|
$
|
(536,024
|
)
|
|
Three Months Ended
July 31,
|
|||||||
2020
|
2019
|
|||||||
Weighted average shares outstanding
|
55,916
|
56,564
|
||||||
Less: Unvested restricted shares
|
(4
|
)
|
(28
|
)
|
||||
Shares used for basic earnings per share
|
55,912
|
56,536
|
||||||
Dilutive effect of unvested restricted stock units and other stock awards
|
281
|
369
|
||||||
Shares used for diluted earnings per share
|
56,193
|
56,905
|
|
Three Months Ended
July 31,
|
Total Charges
|
||||||||||
2020
|
2019
|
Incurred to Date
|
||||||||||
Charges (Credits) by Segment:
|
||||||||||||
Research Publishing & Platforms
|
$
|
(197
|
)
|
$
|
2,636
|
$
|
3,349
|
|||||
Academic & Professional Learning
|
(227
|
)
|
2,777
|
10,248
|
||||||||
Education Services
|
139
|
2,192
|
3,913
|
|||||||||
Corporate Expenses
|
2,470
|
3,265
|
17,488
|
|||||||||
Total Restructuring and Related Charges
|
$
|
2,185
|
$
|
10,870
|
$
|
34,998
|
||||||
Charges by Activity:
|
||||||||||||
Severance and termination benefits
|
$
|
1,110
|
$
|
10,709
|
$
|
27,974
|
||||||
Operating lease right-of-use asset impairment
|
—
|
161
|
161
|
|||||||||
Facility related charges
|
1,075
|
—
|
5,061
|
|||||||||
Other activities
|
—
|
—
|
1,802
|
|||||||||
Total Restructuring and Related Charges
|
$
|
2,185
|
$
|
10,870
|
$
|
34,998
|
|
April 30, 2020
|
Charges
|
Payments
|
Foreign
Translation
& Other Adjustments
|
July 31, 2020
|
|||||||||||||||
Severance and termination benefits
|
$
|
17,632
|
$
|
1,110
|
$
|
(6,966
|
)
|
$
|
478
|
$
|
12,254
|
|||||||||
Other activities
|
430
|
—
|
(206
|
)
|
(2
|
)
|
222
|
|||||||||||||
Total
|
$
|
18,062
|
$
|
1,110
|
$
|
(7,172
|
)
|
$
|
476
|
$
|
12,476
|
|
Three Months Ended
July 31,
|
Total Charges
|
||||||||||
2020
|
2019
|
Incurred to Date
|
||||||||||
Charges (Credits) by Segment:
|
||||||||||||
Research Publishing & Platforms
|
$
|
—
|
$
|
(16
|
)
|
$
|
26,884
|
|||||
Academic & Professional Learning
|
260
|
28
|
43,094
|
|||||||||
Education Services
|
—
|
(103
|
)
|
3,764
|
||||||||
Corporate Expenses
|
(227
|
)
|
(44
|
)
|
95,713
|
|||||||
Total Restructuring and Related Charges (Credits)
|
$
|
33
|
$
|
(135
|
)
|
$
|
169,455
|
|||||
Charges (Credits) by Activity:
|
||||||||||||
Severance and termination benefits
|
$
|
33
|
$
|
(350
|
)
|
$
|
116,042
|
|||||
Consulting and contract termination costs
|
—
|
—
|
20,984
|
|||||||||
Other activities
|
—
|
215
|
32,429
|
|||||||||
Total Restructuring and Related Charges (Credits)
|
$
|
33
|
$
|
(135
|
)
|
$
|
169,455
|
|
April 30, 2020
|
Charges
|
Payments
|
Foreign
Translation &
Other Adjustments
|
July 31, 2020
|
|||||||||||||||
Severance and termination benefits
|
$
|
1,360
|
$
|
33
|
$
|
(888
|
)
|
$
|
62
|
$
|
567
|
|||||||||
Other activities
|
230
|
—
|
—
|
128
|
358
|
|||||||||||||||
Total
|
$
|
1,590
|
$
|
33
|
$
|
(888
|
)
|
$
|
190
|
$
|
925
|
|
Three Months Ended
July 31,
|
|||||||
2020
|
2019
|
|||||||
Revenue:
|
||||||||
Research Publishing & Platforms
|
$
|
240,810
|
$
|
229,375
|
||||
Academic & Professional Learning
|
126,913
|
144,858
|
||||||
Education Services
|
63,603
|
49,297
|
||||||
Total Revenue
|
$
|
431,326
|
$
|
423,530
|
||||
Contribution to Profit:
|
||||||||
Research Publishing & Platforms
|
$
|
69,818
|
$
|
55,646
|
||||
Academic & Professional Learning
|
(380
|
)
|
4,911
|
|||||
Education Services
|
558
|
(7,199
|
)
|
|||||
Total Contribution to Profit
|
69,996
|
53,358
|
||||||
Corporate Expenses
|
(39,957
|
)
|
(48,799
|
)
|
||||
Operating Income
|
$
|
30,039
|
$
|
4,559
|
||||
Adjusted Contribution to Profit: (1)
|
||||||||
Research Publishing & Platforms
|
$
|
69,621
|
$
|
58,266
|
||||
Academic & Professional Learning
|
(347
|
)
|
7,716
|
|||||
Education Services
|
697
|
(5,110
|
)
|
|||||
Total Adjusted Contribution to Profit
|
69,971
|
60,872
|
||||||
Adjusted Corporate Expenses
|
(37,714
|
)
|
(45,578
|
)
|
||||
Total Adjusted Operating Income
|
$
|
32,257
|
$
|
15,294
|
||||
Depreciation and Amortization:
|
||||||||
Research Publishing & Platforms
|
$
|
19,701
|
$
|
17,153
|
||||
Academic & Professional Learning
|
18,804
|
16,524
|
||||||
Education Services
|
7,279
|
5,498
|
||||||
Total Depreciation and Amortization
|
45,784
|
39,175
|
||||||
Corporate Depreciation and Amortization
|
3,723
|
3,044
|
||||||
Total Depreciation and Amortization
|
$
|
49,507
|
$
|
42,219
|
||||
Adjusted EBITDA:(2)
|
||||||||
Research Publishing & Platforms
|
$
|
89,322
|
$
|
75,419
|
||||
Academic & Professional Learning
|
18,457
|
24,240
|
||||||
Education Services
|
7,976
|
388
|
||||||
Total Segment Adjusted EBITDA
|
115,755
|
100,047
|
||||||
Corporate Adjusted EBITDA
|
(33,991
|
)
|
(42,534
|
)
|
||||
Total Adjusted EBITDA
|
$
|
81,764
|
$
|
57,513
|
(1) |
Adjusted Contribution to Profit is Contribution to Profit adjusted for restructuring charges (credits). See Note 9, “Restructuring and Related Charges” for these charges (credits) by segment.
|
(2) |
Adjusted EBITDA is Adjusted Contribution to Profit with depreciation and amortization added back.
|
|
Three Months Ended
July 31,
|
|||||||
2020
|
2019
|
|||||||
Net Income
|
$
|
16,334
|
$
|
3,624
|
||||
Interest expense
|
4,614
|
6,077
|
||||||
Provision for income taxes
|
13,400
|
343
|
||||||
Depreciation and amortization
|
49,507
|
42,219
|
||||||
Non-GAAP EBITDA
|
$
|
83,855
|
$
|
52,263
|
||||
Restructuring and related charges
|
2,218
|
10,735
|
||||||
Foreign exchange transaction losses (gains)
|
82
|
(2,652
|
)
|
|||||
Interest and other income
|
(4,391
|
)
|
(2,833
|
)
|
||||
Non-GAAP Adjusted EBITDA
|
$
|
81,764
|
$
|
57,513
|
|
July 31, 2020
|
April 30, 2020
|
||||||
Finished Goods
|
$
|
34,975
|
$
|
36,014
|
||||
Work-in-Process
|
1,688
|
1,398
|
||||||
Paper and Other Materials
|
312
|
331
|
||||||
Total Inventories Before Estimated Sales Returns and LIFO Reserve
|
$
|
36,975
|
$
|
37,743
|
||||
Inventory Value of Estimated Sales Returns
|
10,967
|
8,686
|
||||||
LIFO Reserve
|
(2,891
|
)
|
(2,815
|
)
|
||||
Total Inventories
|
$
|
45,051
|
$
|
43,614
|
|
April 30, 2020
|
Acquisitions (1)
|
Foreign
Translation
Adjustment
|
July 31, 2020
|
||||||||||||
Research Publishing & Platforms
|
$
|
448,130
|
$
|
(11,212
|
)
|
$
|
15,490
|
$
|
452,408
|
|||||||
Academic & Professional Learning
|
501,091
|
—
|
8,794
|
509,885
|
||||||||||||
Education Services
|
167,569
|
—
|
3,748
|
171,317
|
||||||||||||
Total
|
$
|
1,116,790
|
$
|
(11,212
|
)
|
$
|
28,032
|
$
|
1,133,610
|
(1) |
Refer to Note 3, “Acquisitions,” for more information related to the acquisitions that occurred in fiscal year 2020, and the revisions that were made to the allocation of the consideration transferred to the assets acquired and liabilities assumed during the three months ended July 31, 2020.
|
|
July 31, 2020
|
April 30, 2020
|
||||||
Intangible Assets with Definite Lives, net:
|
||||||||
Content and Publishing Rights (1)
|
$
|
366,888
|
$
|
362,106
|
||||
Customer Relationships (1)
|
284,433
|
290,418
|
||||||
Developed Technology (1)
|
28,734
|
13,111
|
||||||
Brands and Trademarks (1)
|
20,371
|
20,188
|
||||||
Covenants not to Compete
|
197
|
246
|
||||||
Total
|
700,623
|
686,069
|
||||||
Intangible Assets with Indefinite Lives:
|
||||||||
Brands and Trademarks
|
37,000
|
37,000
|
||||||
Publishing Rights
|
91,608
|
84,336
|
||||||
Total
|
128,608
|
121,336
|
||||||
Total Intangible Assets, Net
|
$
|
829,231
|
$
|
807,405
|
(1) |
Refer to Note 3, “Acquisitions,” for more information related to the acquisitions that occurred in fiscal year 2020 and the revisions that were made to the allocation of the consideration transferred to the assets acquired and liabilities assumed during the three months ended July 31, 2020.
|
|
Three Months Ended
July 31,
|
|||||||
2020
|
2019
|
|||||||
Service cost
|
$
|
333
|
$
|
224
|
||||
Interest cost
|
4,521
|
5,834
|
||||||
Expected return on plan assets
|
(9,378
|
)
|
(10,059
|
)
|
||||
Amortization of prior service cost
|
(25
|
)
|
(19
|
)
|
||||
Amortization of net actuarial loss
|
1,987
|
1,600
|
||||||
Net pension income
|
$
|
(2,562
|
)
|
$
|
(2,420
|
)
|
July 31, 2020
|
April 30, 2020
|
|||||||
Short-term portion of long-term debt (1)
|
$
|
10,938
|
$
|
9,375
|
||||
Term loan A - Amended and Restated RCA (2)
|
232,179
|
235,263
|
||||||
Revolving credit facility - Amended and Restated RCA
|
603,584
|
530,387
|
||||||
Total long-term debt, less current portion
|
835,763
|
765,650
|
||||||
Total Debt
|
$
|
846,701
|
$
|
775,025
|
(1) |
Relates to our term loan A under the Amended and Restated RCA.
|
(2) |
Amounts are shown net of unamortized issuance costs of $0.6 million as of July 31, 2020 and $0.7 million as of April 30, 2020.
|
|
Three Months Ended
July 31, 2019
|
|||
Shares Repurchased
|
217,511
|
|||
Average Price
|
$
|
45.97
|
Date of Declaration by
Board of Directors
|
Quarterly Cash Dividend
|
Total Dividend
|
Class of Common
Stock
|
Dividend Paid Date
|
Shareholders of
Record as of Date
|
|||||
June 25, 2020
|
$0.3425 per common share
|
$19.2 million
|
Class A and
Class B
|
July 22, 2020
|
July 7, 2020
|
Changes in Common Stock A:
|
2020
|
2019
|
||||||
Number of shares, beginning of year
|
70,166
|
70,127
|
||||||
Common stock class conversions
|
11
|
12
|
||||||
Number of shares issued, end of period
|
70,177
|
70,139
|
||||||
Changes in Common Stock A in treasury:
|
||||||||
Number of shares held, beginning of year
|
23,405
|
22,634
|
||||||
Purchase of treasury shares
|
—
|
218
|
||||||
Restricted shares issued under stock-based compensation plans - non-PSU Awards
|
(94
|
)
|
(36
|
)
|
||||
Restricted shares issued under stock-based compensation plans - PSU Awards
|
(86
|
)
|
(43
|
)
|
||||
Restricted shares, forfeited
|
—
|
1
|
||||||
Restricted shares issued from exercise of stock options
|
(33
|
)
|
(12
|
)
|
||||
Shares withheld for taxes
|
67
|
33
|
||||||
Number of shares held, end of period
|
23,259
|
22,795
|
||||||
Number of Common Stock A outstanding, end of period
|
46,918
|
47,344
|
Changes in Common Stock B:
|
2020
|
2019
|
||||||
Number of shares, beginning of year
|
13,016
|
13,055
|
||||||
Common stock class conversions
|
(11
|
)
|
(12
|
)
|
||||
Number of shares issued, end of period
|
13,005
|
13,043
|
||||||
Changes in Common Stock B in treasury:
|
||||||||
Number of shares held, beginning of year
|
3,920
|
3,918
|
||||||
Number of shares held, end of period
|
3,920
|
3,918
|
||||||
Number of Common Stock B outstanding, end of period
|
9,085
|
9,125
|
● |
an increase of $14.5 million in Education Services, primarily due to the contributions from mthree, which was acquired in January 2020; and
|
● |
an increase of $12.7 million in Research Publishing & Platforms.
|
|
Three Months Ended
July 31,
|
|||||||
2020
|
2019
|
|||||||
U.S. GAAP EPS
|
$
|
0.29
|
$
|
$ $ 0.06
|
||||
Adjustments:
|
||||||||
Restructuring and related charges
|
0.03
|
0.14
|
||||||
Foreign exchange (gains) losses on intercompany transactions
|
(0.02
|
)
|
0.01
|
|||||
Impact of increase in U.K. statutory rate on deferred tax balances in fiscal year 2021
|
0.12
|
—
|
||||||
Non-GAAP Adjusted EPS
|
$
|
0.42
|
$
|
$ $ 0.21
|
|
Three Months Ended
July 31,
|
Constant Currency
|
||||||||||||||
RESEARCH PUBLISHING & PLATFORMS:
|
2020
|
2019
|
% Change
Favorable
(Unfavorable)
|
% Change
Favorable
(Unfavorable)
|
||||||||||||
Revenue:
|
||||||||||||||||
Research Publishing
|
$
|
230,464
|
$
|
219,927
|
5
|
%
|
5
|
%
|
||||||||
Research Platforms
|
10,346
|
9,448
|
10
|
%
|
10
|
%
|
||||||||||
Total Research Publishing & Platforms Revenue
|
240,810
|
229,375
|
5
|
%
|
6
|
%
|
||||||||||
Cost of Sales
|
65,701
|
64,097
|
(3
|
)%
|
(3
|
)%
|
||||||||||
Operating Expenses
|
97,821
|
99,548
|
2
|
%
|
1
|
%
|
||||||||||
Amortization of Intangibles
|
7,667
|
7,464
|
(3
|
)%
|
(4
|
)%
|
||||||||||
Restructuring (Credits) Charges (see Note 9)
|
(197
|
)
|
2,620
|
#
|
#
|
|||||||||||
Contribution to Profit
|
69,818
|
55,646
|
25
|
%
|
26
|
%
|
||||||||||
Restructuring (Credits) Charges (see Note 9)
|
(197
|
)
|
2,620
|
|||||||||||||
Adjusted Contribution to Profit
|
69,621
|
58,266
|
19
|
%
|
20
|
%
|
||||||||||
Depreciation and amortization
|
19,701
|
17,153
|
||||||||||||||
Adjusted EBITDA
|
$
|
89,322
|
$
|
75,419
|
18
|
%
|
19
|
%
|
||||||||
Adjusted EBITDA Margin
|
37.1
|
%
|
32.9
|
%
|
● |
3 new society contracts were signed with a combined annual revenue of approximately $13.4 million,
|
● |
24 society contracts were renewed with a combined annual revenue of approximately $31.3 million,
|
● |
3 society contracts were not renewed with a combined annual revenue of approximately $0.4 million.
|
|
Three Months Ended
July 31,
|
Constant Currency
|
||||||||||||||
ACADEMIC & PROFESSIONAL LEARNING:
|
2020
|
2019
|
% Change
Favorable
(Unfavorable)
|
% Change
Favorable
(Unfavorable)
|
||||||||||||
Revenue:
|
||||||||||||||||
Education Publishing
|
$
|
64,084
|
$
|
65,523
|
(2
|
)%
|
(2
|
)%
|
||||||||
Professional Learning
|
62,829
|
79,335
|
(21
|
)%
|
(20
|
)%
|
||||||||||
Total Academic & Professional Learning
|
126,913
|
144,858
|
(12
|
)%
|
(12
|
)%
|
||||||||||
Cost of Sales
|
36,788
|
43,814
|
16
|
%
|
16
|
%
|
||||||||||
Operating Expenses
|
86,334
|
89,530
|
4
|
%
|
3
|
%
|
||||||||||
Amortization of Intangibles
|
4,138
|
3,798
|
(9
|
)%
|
(9
|
)%
|
||||||||||
Restructuring Charges (see Note 9)
|
33
|
2,805
|
99
|
%
|
99
|
%
|
||||||||||
Contribution to Profit
|
(380
|
)
|
4,911
|
#
|
#
|
|||||||||||
Restructuring Charges (see Note 9)
|
33
|
2,805
|
||||||||||||||
Adjusted Contribution to Profit
|
(347
|
)
|
7,716
|
#
|
#
|
|||||||||||
Depreciation and amortization
|
18,804
|
16,524
|
||||||||||||||
Adjusted EBITDA
|
$
|
18,457
|
$
|
24,240
|
(24
|
)%
|
(23
|
)%
|
||||||||
Adjusted EBITDA Margin
|
14.5
|
%
|
16.7
|
%
|
|
Three Months Ended
July 31,
|
Constant Currency
|
||||||||||||||
EDUCATION SERVICES:
|
2020
|
2019
|
% Change
Favorable
(Unfavorable)
|
% Change
Favorable
(Unfavorable)
|
||||||||||||
Revenue:
|
||||||||||||||||
Education Services (1)
|
$
|
50,262
|
$
|
48,156
|
4
|
%
|
4
|
%
|
||||||||
mthree (1)
|
13,341
|
1,141
|
#
|
#
|
||||||||||||
Total Education Services Revenue
|
63,603
|
49,297
|
29
|
%
|
29
|
%
|
||||||||||
Cost of Sales
|
42,318
|
35,185
|
(20
|
)%
|
(21
|
)%
|
||||||||||
Operating Expenses
|
15,501
|
15,514
|
—
|
—
|
||||||||||||
Amortization of Intangibles
|
5,087
|
3,708
|
(37
|
)%
|
(38
|
)%
|
||||||||||
Restructuring Charges (see Note 9)
|
139
|
2,089
|
93
|
%
|
93
|
%
|
||||||||||
Contribution to Profit
|
558
|
(7,199
|
)
|
#
|
#
|
|||||||||||
Restructuring Charges (see Note 9)
|
139
|
2,089
|
||||||||||||||
Adjusted Contribution to Profit
|
697
|
(5,110
|
)
|
#
|
#
|
|||||||||||
Depreciation and amortization
|
7,279
|
5,498
|
||||||||||||||
Adjusted EBITDA
|
$
|
7,976
|
$
|
388
|
#
|
#
|
||||||||||
Adjusted EBITDA Margin
|
12.5
|
%
|
0.8
|
%
|
(1) |
In May 2020, we moved the IT bootcamp business acquired as part of The Learning House acquisition from Education Services to mthree. As a result, the prior period revenue related to the IT bootcamp business has been included in mthree. There were no changes to our total Education Services or our consolidated financial results. The inorganic revenue from mthree in the three months ended July 31, 2020 was $12.4 million.
|
•
|
In Research Publishing & Platforms, the Company anticipates that COVID-related budget constraints at libraries will result in pricing pressure for 2021, but it is too early to quantify. This pressure is expected to be offset by continued strong growth in open access, research platforms and corporate solutions should offset this pressure.
|
•
|
In Academic & Professional Learning, print book sales will continue to be challenged by COVID lockdowns and enrollment declines, while digital content and courseware will continue to grow strongly. Recovery in test prep and corporate training will be dependent on the reopening of physical sites.
|
•
|
In Education Services, universities continue to operate in a hybrid or virtual learning environment while dealing with financial shortfalls related to COVID-related enrollment declines. While navigating through this uncertainty, the Company is encouraged by enrollment trends, new partner opportunities, and expansion of existing partners.
|
•
|
In the fourth quarter of fiscal year 2020, Wiley recorded a $15 million restructuring charge for actions that will generate annual run rate savings of approximately $30 million. Additional cost savings actions are anticipated in fiscal year 2021.
|
•
|
The Company announced on June 11, 2020 that the Executive Leadership Team (ELT) and the CEO, along with the Board of Directors, agreed to six-month base pay reductions, ranging from 15% of the base salary of the ELT to 30% of the base salary of the CEO.
|
•
|
Discretionary spending controls have been implemented across the Company.
|
•
|
Wiley is reviewing its real estate portfolio for targeted rationalization, given success to date and working from home and the potential workforce benefits.
|
•
|
Wiley is accelerating its process reengineering and technology in-sourcing initiatives to enable its strategic plans and reduce costs, while planning to further simplify, standardize and automate our workflows for sustainable efficiency gains.
|
•
|
Capital expenditures for fiscal 2021 are expected to be approximately $100 million with investment focused on the development of tech-enabled services and platforms, as well as workflow automation and process redesign.
|
•
|
On June 25, 2020, the Company raised its quarterly dividend for the 27th consecutive year to $0.3425 per share on its Class A and Class B common stock.
|
•
|
As previously announced on April 9, 2020, due to the COVID-19 uncertainty, Wiley has decided to temporarily suspend share repurchases. The Company expects to resume share repurchases as the economic environment improves.
|
|
Three Months Ended
July 31,
|
|||||||
2020
|
2019
|
|||||||
Net Income
|
$
|
16,334
|
$
|
3,624
|
||||
Interest expense
|
4,614
|
6,077
|
||||||
Provision for income taxes
|
13,400
|
343
|
||||||
Depreciation and amortization
|
49,507
|
42,219
|
||||||
Non-GAAP EBITDA
|
$
|
83,855
|
$
|
52,263
|
||||
Restructuring and related charges
|
2,218
|
10,735
|
||||||
Foreign exchange transaction losses (gains)
|
82
|
(2,652
|
)
|
|||||
Interest and other income
|
(4,391
|
)
|
(2,833
|
)
|
||||
Non-GAAP Adjusted EBITDA
|
$
|
81,764
|
$
|
57,513
|
|
Three Months Ended
July 31,
|
|||||||
2020
|
2019
|
|||||||
Net Cash Used In Operating Activities
|
$
|
(120,783
|
)
|
$
|
(94,168
|
)
|
||
Net Cash Used In Investing Activities
|
(28,280
|
)
|
(105,892
|
)
|
||||
Net Cash Provided By Financing Activities
|
43,484
|
213,333
|
||||||
Effect of Foreign Currency Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash
|
4,500
|
(2,138
|
)
|
|
Three Months Ended
July 31,
|
|||||||
2020
|
2019
|
|||||||
Net Cash Used In Operating Activities
|
$
|
(120,783
|
)
|
$
|
(94,168
|
)
|
||
Less: Additions to Technology, Property and Equipment
|
(18,964
|
)
|
(24,202
|
)
|
||||
Less: Product Development Spending
|
(5,325
|
)
|
(6,211
|
)
|
||||
Free Cash Flow less Product Development Spending
|
$
|
(145,072
|
)
|
$
|
(124,581
|
)
|
Net Cash Used In Operating Activities – Three Months Ended July 31, 2019
|
$
|
(94.2
|
)
|
|
Working Capital Changes:
|
||||
Accounts payable and royalties payable - primarily due to the timing of payments
|
(31.1
|
)
|
||
Accrued income taxes - primarily due to the timing of certain international and U.S. tax payments and refunds
|
(7.1
|
)
|
||
Accounts receivable, net and contract liabilities - due to the timing of customer payments, including customers payments that were delayed due to the economic downturn
|
(6.0
|
)
|
||
Other working capital items – primarily due to an increase in restructuring and employee related payments partially offset by lower inventory purchases
|
(13.1
|
)
|
||
Higher net income adjusted for items to reconcile net income to net cash used in operating activities
|
30.7
|
|||
Net Cash Used In Operating Activities – Three Months Ended July 31, 2020
|
$
|
(120.8
|
)
|
|
July 31, 2020
|
April 30, 2020
|
||||||
Increase in Inventories, net
|
$
|
10,967
|
$
|
8,686
|
||||
Decrease in Accrued royalties
|
$
|
(5,277
|
)
|
$
|
(4,441
|
)
|
||
Increase in Contract liabilities
|
$
|
39,384
|
$
|
32,769
|
||||
Print book sales return reserve net liability balance
|
$
|
(23,140
|
)
|
$
|
(19,642
|
)
|
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
|
Maximum Dollar Value of Shares
that May be Purchased
Under Additional Plans or Programs
(Dollars in millions)
|
||||||||||||||||
May 2020
|
—
|
$
|
—
|
—
|
806,758
|
$
|
200
|
|||||||||||||
June 2020
|
—
|
—
|
—
|
806,758
|
$
|
200
|
||||||||||||||
July 2020
|
—
|
—
|
—
|
806,758
|
$
|
200
|
||||||||||||||
Total
|
—
|
$
|
—
|
—
|
806,758
|
$
|
200
|
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
|
||
Executive Vice President, Chief Financial Officer, and Interim Chief Accounting Officer
|
||
Dated: September 4, 2020
|
1. |
I have reviewed this quarterly report on Form 10-Q of John Wiley & Sons, Inc.;
|
2. |
Based on my knowledge, this 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 report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this 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 in this report;
|
4. |
The registrant’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 registrant 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 registrant, 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 registrant’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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’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 control over financial reporting.
|
By:
|
/s/ Brian A. Napack
|
||
Brian A. Napack
|
|||
President and Chief Executive Officer
|
|||
September 4, 2020
|
1. |
I have reviewed this quarterly report on Form 10-Q of John Wiley & Sons, Inc.;
|
2. |
Based on my knowledge, this 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 report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this 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 in this report;
|
4. |
The registrant’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 registrant 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 registrant, 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 registrant’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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a. |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
By:
|
/s/ John A. Kritzmacher
|
||
John A. Kritzmacher
|
|||
Executive Vice President, Chief Financial Officer, and Interim Chief Accounting Officer
|
|||
September 4, 2020
|
(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:
|
/s/ Brian A. Napack
|
||
Brian A. Napack
|
|||
President and Chief Executive Officer
|
|||
September 4, 2020
|
(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:
|
/s/ John A. Kritzmacher
|
||
John A. Kritzmacher
|
|||
Executive Vice President, Chief Financial Officer, and Interim Chief Accounting Officer
|
|||
September 4, 2020
|
Section |
Subject
|
Page
|
I. |
Definitions
|
2
|
II. |
Plan Objectives
|
3
|
III. |
Eligibility
|
3
|
IV. |
Performance Measurement
|
3
|
V.
|
Performance Evaluation
|
4
|
VI. |
Payouts
|
4
|
VII. |
Administration and Other Matters
|
5
|
|
I. DEFINITIONS
|
|
II. PLAN OBJECTIVES
|
|
III. ELIGIBILITY
|
|
IV. PERFORMANCE MEASUREMENT
|
A.
|
Financial Performance
|
|
1. |
The CEO recommends and the Committee adopts, in its sole
discretion, financial goals and performance
levels for the Company to be used in the plan year.
|
|
2. |
Each financial goal is assigned a weight, such that the sum of
the weights of all financial goals equals 100%.
|
B.
|
Personal Performance
|
1.
|
Each participant’s objectives are determined
at the beginning of the plan year by the participant and the President & CEO. The President & CEO’s objectives are determined by the President &
CEO and the Committee.
|
2.
|
Objectives may be revised during the plan year, as appropriate.
|
|
V. PERFORMANCE EVALUATION
|
A. |
Financial Performance
|
1.
|
Actual financial results achieved by the Company will be determined at the end of the plan year, by comparing financial results with previously set financial goals.
|
2.
|
In determining the attainment of financial results,
|
a.
|
the impact of foreign exchange gains or losses will be excluded.
|
b.
|
the impact of any of the events (1) through (9) listed in Section 4(b)(ii) of the shareholder plan will be excluded from the financial results of any affected business unit.
|
3.
|
Funding
|
a.
|
Funding under the plan is determined on a continuum, as follows:
|
1.
|
For performance below the threshold level,
the funding is zero.
|
2.
|
For performance at the threshold level, the
funding is 50%.
|
3.
|
For performance between the threshold and target levels, the funding is
between 50% and 100%, determined on a pro-rata basis.
|
4.
|
For performance at the target level, the funding is 100%.
|
5.
|
For performance between the target and outstanding levels, the funding is
between 100% and 150%, determined on a pro-rata basis.
|
6.
|
For performance at or above the outstanding level, the funding is
150%.
|
b.
|
In the case where the Company misses threshold performance for one or both financial
goals, but achieves 80% of the Company’s full-year operating income target, a minimum funding of 50% will be available for payout under the plan.
|
B.
|
Personal Performance
|
1.
|
At the end of the plan year, each participant’s
performance will be measured by achievement of his/her objectives, with a personal performance modifier in the range of 0-200%. This assessment will be made by the President & CEO, and in the case of the President & CEO, by the Committee. The personal performance modifier is
multiplied by the funding to determine payout under the plan.
|
2.
|
The Committee approves payouts made to all participants
under the plan.
|
A.
|
Payouts 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 payout for the plan year, the payout, if any, will be determined by the Committee. Any such payout will be calculated as noted in
Section V.
|
C.
|
A participant must be actively employed by
the Company on the date of payout without having given notice or having been given notice of termination to be eligible for a payout for the plan year.
Exceptions 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 year may receive a prorated payout as determined by the Committee, in its sole discretion.
|
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.
|
In the event that the Company is required
to file a restatement of its financial results due to fraud, gross negligence or intentional misconduct by one or more employees, and/or material non-compliance with Securities laws, the Company will require reimbursement of any annual incentive compensation awarded to all participants
in the amount by which such compensation exceeded any lower payment that would have been made based on the restated financial results,
for the fiscal year in which the restatement was required, to the full extent required or permitted by law.
|
D.
|
This plan may not be modified or amended
except with the approval of the Committee, in accordance with the provisions of the shareholder plan.
|
E.
|
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.
|
F.
|
In the event that any provision of this plan
shall be considered illegal or invalid for any reason, such illegality and invalidity shall not affect the remaining provisions of the plan,
but shall be fully severable, and the plan shall be construed and enforced as if such illegal or invalid provision had never been
contained therein.
|
1.
|
Issuance of
Shares and Shareholder Rights. You shall not have any right in, to, or with respect to any of the Shares (including any voting rights or rights
with respect to dividends paid on the Common Stock) issuable under the Award until the Award is settled by the issuance of such Shares to you. The restricted share units shall vest in accordance with the above Vesting Schedule. One Share
shall be issuable for each restricted share unit that vests on such vesting date subject to the terms and provisions of the Plan and this Agreement. On or promptly following those dates, the Company shall transfer such Shares to you upon
satisfaction of any required tax withholding obligations. Following settlement of the Award, and upon satisfaction of all tax withholding obligations, you become a shareholder of record, and shall receive voting rights and rights with
respect to dividends paid thereafter on the Shares awarded.
|
2.
|
Termination of Employment.
|
a.
|
Retirement, Resignation or
Termination with or without Cause or Constructive Discharge. Except as otherwise provided in this Section or in a written agreement
approved by the Executive Compensation and Development Committee (Committee), if you retire, or if you resign, or if your employment is
terminated by the Company with or without Cause or Constructive Discharge before the Award vests, you shall forfeit the right to receive an Award.
|
b.
|
Death or Disability.
In the event of your death or Disability while in employment prior to the vesting of the Shares, all unvested Shares shall immediately become fully vested and payable to you (or, in the event of your death, your estate). “Disability” for
this purpose shall be determined by the Committee pursuant to Section 22(e) (3) of the Code.
|
c.
|
Change in Control.
In the event of a Change in Control, as that term is defined in the Plan, in cases where:
|
i.
|
the acquiring company is not publicly traded, or
|
ii.
|
where the acquiring company is publicly traded and the company does not assume or
replace the outstanding equity, or
|
iii.
|
your employment is terminated due to a without Cause termination or Constructive Discharge within twenty-four (24) months following a Change in Control where the awards were assumed or replaced,
|
3.
|
Restrictions. Except as
otherwise provided for in this Agreement or in the Plan, the restricted share units or rights granted hereunder may not be sold, pledged or otherwise transferred.
|
|
|
4.
|
Non-Compete, Non-Solicitation
|
a.
|
During your employment with the Company, you have and will become familiar with the Company’s trade secrets, information
related to the operations, products and services of the Company, and with other Confidential Information concerning the Company, its subsidiaries, affiliates, and companies acquired by the Company. Therefore, during your employment period
and for a period of one year thereafter, you agree that you shall not directly or indirectly own any interest in, manage, control, participate in, consult with, or render services for any Competing Business.
|
b.
|
During your employment and for a period of one year thereafter, you agree that you shall not directly, or indirectly through
another entity, (i) induce or attempt to induce any employee of the Company or any affiliate to leave the employ of the Company or such affiliate, or in any way interfere with the relationship between the Company or any affiliate and any
employee thereof, (ii) hire any person who was an employee of the Company or any affiliate at any time during the last twelve (12) months, or (iii) induce or attempt to induce any customer, supplier, licensee, licensor, franchisee or other
business relation of the Company or any affiliate to cease doing business with the Company or such affiliate, or in any way interfere with the relationship between any such customer, supplier, licensee, licensor, franchisee or business
relation and the Company or any affiliate (including, without limitation, making any negative statements or communications about the Company or its affiliates).
|
5.
|
Taxes.
|
a.
|
Generally. You
are ultimately liable and responsible for all taxes owed in connection with the Award, regardless of any action the Company or UBS takes with respect to any tax withholding obligations that arise in connection with the Award. Neither the
Company nor UBS makes any representation or undertaking regarding the treatment of any tax withholding in connection with the grant or vesting of the Award or the subsequent sale of Shares issuable pursuant to the Award. The Company does
not commit and is under no obligation to structure the Award to reduce or eliminate your tax liability. The Company may refuse to issue any Shares to you until you satisfy the tax withholding obligation. For purposes hereof, “UBS”
includes the Plan third party administrator and any successor thereto.
|
b.
|
Payment of Withholding Taxes.
Prior to each vesting date in connection with the Award that results in any domestic or foreign tax withholding obligation, whether national, federal, state or local, including any social tax obligation, you must arrange for the
satisfaction of the minimum amount of such tax withholding obligation, as required, in a manner acceptable to the Company. You are responsible for obtaining professional advice as appropriate. Prior to the vesting dates in connection with
the Award, you shall be notified by UBS of any tax withholding obligation. You have the option of satisfying your tax withholding obligation in one of two ways:
|
i.
|
By
Surrendering Shares. Unless you choose to satisfy the tax withholding obligation by some other means in accordance with clause (ii) below, your acceptance of this Award constitutes your instruction and authorization to the
Company and UBS to withhold a whole number of Shares from those Shares issuable to you as the Company and UBS determine to be appropriate to satisfy your tax withholding obligation on each vesting date.
|
ii.
|
By Check
(U.S. participants only), Wire Transfer or Other Means.
You may elect to satisfy your tax withholding obligation by remitting to UBS as instructed an amount that the Company and UBS determine is sufficient to satisfy the minimum tax withholding obligation.
|
6.
|
Plan
Information. You agree to receive stockholder information, including copies of any annual report, proxy statement and other periodic reports, from the
Investor Relations section of http://www.wiley.com.
You acknowledge that copies of the Plan and stockholder information are available upon written or telephonic request to the Corporate Secretary.
|
7.
|
Limitation on
Rights; No Right to Future Grants; Extraordinary Item. By entering into this Agreement and accepting the Award, you acknowledge that: (a) the Plan is discretionary and may be modified, suspended or terminated by the Company at any
time as provided in the Plan; (b) the grant of the Award is a one-time benefit and does not create any contractual or other right to receive future grants of awards or benefits in lieu of awards; (c) all determinations with respect to any
such future grants, including, but not limited to, the times when awards shall be granted, the number of shares subject to each award, the award price, if any, and the time or times when each award shall be settled, shall be at the sole
discretion of the Company; (d) your participation in the Plan is voluntary; (e) the value of this Award on an ongoing basis is an extraordinary item which is outside the scope of your terms of employment or your employment contract, if any;
(f) except as otherwise provided for in any Employment Agreement you may participate in, the Award is not part of normal or expected compensation for any purpose, including without limitation for calculating any benefits, severance,
resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; (g) the future value of the Common Stock subject to the Award is unknown and cannot be
predicted with certainty, (h) neither the Plan, the Award nor the issuance of the Shares confers upon you any right to continue in the employ of (or any other relationship with) the Company or any Subsidiary, nor do they limit in any
respect the right of the Company or any Subsidiary to terminate your employment or other relationship with the Company or any Subsidiary, as the case may be, at any time.
|
8.
|
Acceptance
and Acknowledgment. I accept and agree to the terms of the restricted share unit Award described in this Agreement and in the Plan, acknowledge receipt of a copy of this Agreement and the Plan, and acknowledge that I have read
them carefully and that I fully understand their contents.
|
1.
|
Issuance of
Shares and Shareholder Rights. You shall not have any right in, to, or with respect to any of the Shares (including any voting rights or rights
with respect to dividends paid on the Common Stock) issuable under the Award until the Award is settled by the issuance of such Shares to you. The restricted share units shall vest in accordance with the above Vesting Schedule. One Share
shall be issuable for each restricted share unit that vests on such vesting date subject to the terms and provisions of the Plan and this Agreement. On or promptly following those dates, the Company shall transfer such Shares to you upon
satisfaction of any required tax withholding obligations. Following settlement of the Award, and upon satisfaction of all tax withholding obligations, you become a shareholder of record, and shall receive voting rights and rights with
respect to dividends paid thereafter on the Shares awarded.
|
2.
|
Termination of Employment.
|
a.
|
Retirement, Resignation or
Termination with or without Cause or Constructive Discharge. Except as otherwise provided in this Section or in a written agreement
approved by the Executive Compensation and Development Committee (Committee), if you retire, or if you resign, or if your employment is
terminated by the Company with or without Cause or Constructive Discharge before the Award vests, you shall forfeit the right to receive an Award.
|
b.
|
Death or Disability.
In the event of your death or Disability while in employment prior to the vesting of the Shares, all unvested Shares shall immediately become fully vested and payable to you (or, in the event of your death, your estate). “Disability” for
this purpose shall be determined by the Committee pursuant to Section 22(e) (3) of the Code.
|
c.
|
Change in Control.
In the event of a Change in Control, as that term is defined in the Plan, in cases where:
|
i.
|
the acquiring company is not publicly traded, or
|
ii.
|
where the acquiring company is publicly traded and the company does not assume or
replace the outstanding equity, or
|
iii.
|
your employment is terminated due to a without Cause termination or Constructive Discharge within twenty-four months following a Change in Control where the awards were assumed or replaced.
|
3.
|
Restrictions.
Except as otherwise provided for in this Agreement or in the Plan, the restricted share units or rights granted hereunder may not be sold, pledged or otherwise
transferred.
|
4.
|
Non-Compete, Non-Solicitation
|
a.
|
During your employment with the Company, you have and will become familiar with the Company’s trade secrets, information
related to the operations, products and services of the Company, and with other Confidential Information concerning the Company, its subsidiaries, affiliates, and companies acquired by the Company. Therefore, during your employment period
and for a period of one year thereafter, you agree that you shall not directly or indirectly own any interest in, manage, control, participate in, consult with, or render services for any Competing Business.
|
b.
|
During your employment and for a period of one year thereafter, you agree that you shall not directly, or indirectly through
another entity, (i) induce or attempt to induce any employee of the Company or any affiliate to leave the employ of the Company or such affiliate, or in any way interfere with the relationship between the Company or any affiliate and any
employee thereof, (ii) hire any person who was an employee of the Company or any affiliate at any time during the last twelve (12) months, or (iii) induce or attempt to induce any customer, supplier, licensee, licensor, franchisee or other
business relation of the Company or any affiliate to cease doing business with the Company or such affiliate, or in any way interfere with the relationship between any such customer, supplier, licensee, licensor, franchisee or business
relation and the Company or any affiliate (including, without limitation, making any negative statements or communications about the Company or its affiliates).
|
a.
|
Generally. You
are ultimately liable and responsible for all taxes owed in connection with the Award, regardless of any action the Company or UBS takes with respect to any tax withholding obligations that arise in connection with the Award. Neither the
Company nor UBS makes any representation or undertaking regarding the treatment of any tax withholding in connection with the grant or vesting of the Award or the subsequent sale of Shares issuable pursuant to the Award. The Company does
not commit and is under no obligation to structure the Award to reduce or eliminate your tax liability. The Company may refuse to issue any Shares to you until you satisfy the tax withholding obligation. For purposes hereof, “UBS”
includes the Plan third party administrator and any successor thereto.
|
b.
|
Payment of Withholding Taxes.
Prior to each vesting date in connection with the Award that results in any domestic or foreign tax withholding obligation, whether national, federal, state or local, including any social tax obligation, you must arrange for the
satisfaction of the minimum amount of such tax withholding obligation, as required, in a manner acceptable to the Company. You are responsible for obtaining professional advice as appropriate. Prior to the vesting dates in connection with
the Award, you shall be notified by UBS of any tax withholding obligation. You have the option of satisfying your tax withholding obligation in one of two ways:
|
i.
|
By
Surrendering Shares. Unless you choose to satisfy the tax withholding obligation by some other means in accordance with clause (ii) below, your acceptance of this Award constitutes your instruction and authorization to the
Company and UBS to withhold a whole number of Shares from those Shares issuable to you as the Company and UBS determine to be appropriate to satisfy your tax withholding obligation on each vesting date.
|
ii.
|
By Check
(U.S. participants only), Wire Transfer or Other Means.
You may elect to satisfy your tax withholding obligation by remitting to UBS as instructed an amount that the Company and UBS determine is sufficient to satisfy the minimum tax withholding obligation.
|
6.
|
Plan
Information. You agree to receive stockholder information, including copies of any annual report, proxy statement and other periodic reports, from the
Investor Relations section of http://www.wiley.com.
You acknowledge that copies of the Plan and stockholder information are available upon written or telephonic request to the Corporate Secretary.
|
7.
|
Limitation on
Rights; No Right to Future Grants; Extraordinary Item. By entering into this Agreement and accepting the Award, you acknowledge that: (a) the Plan is discretionary and may be modified, suspended or terminated by the Company at any
time as provided in the Plan; (b) the grant of the Award is a one-time benefit and does not create any contractual or other right to receive future grants of awards or benefits in lieu of awards; (c) all determinations with respect to any
such future grants, including, but not limited to, the times when awards shall be granted, the number of shares subject to each award, the award price, if any, and the time or times when each award shall be settled, shall be at the sole
discretion of the Company; (d) your participation in the Plan is voluntary; (e) the value of this Award on an ongoing basis is an extraordinary item which is outside the scope of your terms of employment or your employment contract, if any;
(f) except as otherwise provided for in any Employment Agreement you may participate in, the Award is not part of normal or expected compensation for any purpose, including without limitation for calculating any benefits, severance,
resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; (g) the future value of the Common Stock subject to the Award is unknown and cannot be
predicted with certainty, (h) neither the Plan, the Award nor the issuance of the Shares confers upon you any right to continue in the employ of (or any other relationship with) the Company or any Subsidiary, nor do they limit in any
respect the right of the Company or any Subsidiary to terminate your employment or other relationship with the Company or any Subsidiary, as the case may be, at any time.
|
8.
|
Acceptance
and Acknowledgment. I accept and agree to the terms of the restricted share unit Award described in this Agreement and in the Plan, acknowledge receipt of a copy of this Agreement and the Plan, and acknowledge that I have read
them carefully and that I fully understand their contents.
|
•
|
Absent a Change in Control: One month of base salary for each year of employment, subject to a minimum of 12 months and a maximum of 18 months.
Continued health insurance for the number of months of the cash severance period. If such termination occurs on or before the first anniversary of your employment date, you will be eligible for an accrued benefit as of the following
April 30 under the Executive Long-Term Incentive Plan.
|
•
|