UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 20202021

OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_____ to _____

Commission File No. 001-11507

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

New York 13-5593032
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
   
111 River Street, Hoboken, 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

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☒   No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Accelerated filer ☐
Non-accelerated filer ☐
Smaller reporting company ☐
 
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ☐   No ☒

The number of shares outstanding of each of the Registrant’s classes of common stock as of August 31, 20202021 were:

Class A, par value $1.00 – 46,920,39046,828,460
Class B, par value $1.00 – 9,083,1639,048,725


JOHN WILEY & SONS, INC. AND SUBSIDIARIES
INDEX

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements  
     
  
Condensed Consolidated Statements of Financial Position – Unaudited as of July 31, 20202021 and as of April 30, 20202021
 5
     
  
Condensed Consolidated Statements of Net Income – Unaudited for the three months ended July 31, 20202021 and 20192020
 6
     
  
Condensed Consolidated Statements of Comprehensive Income (Loss) – Unaudited for the three months ended July 31, 20202021 and 20192020
 7
     
  
Condensed Consolidated Statements of Cash Flows – Unaudited for the three months ended July 31, 20202021 and 20192020
 8
     
  
Condensed Consolidated Statements of Shareholders' Equity – Unaudited for the three months ended July 31, 20202021 and 20192020
 9
     
  Notes to Unaudited Condensed Consolidated Financial Statements  
  
Note 1.    Basis of Presentation
 10
  
Note 2.    Recent Accounting Standards
 1011
  
Note 3.    Acquisitions
 1211
  
Note 4.    Revenue Recognition, Contracts with Customers
 1412
  
Note 5.    Operating Leases
 15
  
Note 6.    Stock-Based Compensation
 1716
  
Note 7.    Accumulated Other Comprehensive Loss
 1817
  
Note 8.    Reconciliation of Weighted Average Shares Outstanding
 18
  
Note 9.    Restructuring and Related (Credits) Charges
 1918
  
Note 10.  Segment Information
 2119
  
Note 11.  Inventories
 2220
  
Note 12.  Goodwill and Intangible Assets
 2220
  
Note 13.  Income Taxes
 2321
  
Note 14.  Retirement Plans
 2321
  
Note 15.  Debt and Available Credit Facilities
 2422
  
Note 16.  Derivative Instruments and Hedging Activities
 2522
  
Note 17.  Capital Stock and Changes in Capital Accounts
 2523
  
Note 18.  Commitments and Contingencies
 2624
     
Item 2. 
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 2725
     
Item 3. 
Quantitative and Qualitative Disclosures About Market Risk
 3537
     
Item 4. 
Controls and Procedures
 3638
     
PART II - OTHER INFORMATION
  
     
Item 1. 
Legal Proceedings
 3739
     
Item 1a.1A. 
Risk Factors
 3739
     
Item 2. 
Unregistered Sales of Equity Securities and Use of Proceeds
 3739
     
Item 6. 
Exhibits
 3840
     
SIGNATURES
 3941
2
Index


Cautionary Notice Regarding Forward-Looking Statements “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

This report contains certain “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 concerning our business, consolidated financial condition and results of operations. The Securities and Exchange Commission (“SEC”)(SEC) encourages companies to disclose forward-looking information so that investors can better understand a company’s prospects and make informed investment decisions. Forward-looking statements are subject to risks and uncertainties, many of which are outside our control, which could cause actual results to differ materially from these statements. Therefore, you should not rely on any of these forward-looking statements. Forward-looking statements can be identified by such words as “anticipates,” “believes,” “plan,” “assumes,” “could,” “should,” “estimates,” “expects,” “intends,” “potential,” “seek,” “predict,” “may,” “will” and similar references to future periods. All statements other than statements of historical facts included in this report regarding our strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding our fiscal year 20212022 outlook, the anticipated impact on the ability of our employees, contractors, customers and other business partners to perform our and their respective responsibilities and obligations relative to the conduct of our business in the future due to the current coronavirus (COVID-19) outbreak, anticipated restructuring charges and savings, operations, performance, and financial condition. Reliance should not be placed on forward-looking statements, as actual results may differ materially from those described in any forward-looking statements. Any such forward-looking statements are based upon many assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond our control, and are subject to change based on many important factors. Such factors include, but are not limited to (i) the level of investment by Wiley in new technologies and products; (ii) subscriber renewal rates for our journals; (iii) the financial stability and liquidity of journal subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and financial stability of key retailers; (vi) the seasonal nature of our educational business and the impact of the used book market; (vii) worldwide economic and political conditions; (viii) our ability to protect our copyrights and other intellectual property worldwide; (ix) our ability to successfully integrate acquired operations and realize expected opportunities; (x) the ability to realize operating savings over time and in fiscal year 20212022 in connection with our multi-yearmultiyear Business Optimization Program; and (xi) other factors detailed from time to time in our filings with the SEC. We undertake no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances.

Please refer to Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K and as revised and updated by our Quarterly Reports in Form 10-Q for important factors that we believe could cause actual results to differ materially from those in our forward-looking statements. Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Non-GAAP Financial Measures:

We present financial information that conforms to Generally Accepted Accounting Principles in the United States of America (“U.S. GAAP”)(US GAAP). We also present financial information that does not conform to U.S.US GAAP, which we refer to as non-GAAP.

In this report, we may present the following non-GAAP performance measures:

●Adjusted Earnings Per Share (“Adjusted EPS”)(Adjusted EPS);
●Free Cash Flow less Product Development Spending;
●Adjusted Revenue;
●Adjusted Operating IncomeContribution to Profit and margin;
●Adjusted Contribution to Profit and margin;Income Before Taxes;
●Adjusted Income Tax Provision;
●Adjusted Effective Tax Rate;
●EBITDA, Adjusted EBITDA and margin;
●Organic revenue; and
●Results on a constant currency basis.

Management uses these non-GAAP performance measures as supplemental indicators of our operating performance and financial position as well for internal reporting and forecasting purposes, when publicly providing our outlook, to evaluate our performance and calculate incentive compensation. We present these non-GAAP performance measures in addition to U.S.US GAAP financial results because we believe that these non-GAAP performance measures provide useful information to certain investors and financial analysts for operational trends and comparisons over time. The use of these non-GAAP performance measures may also provide a consistent basis to evaluate operating profitability and performance trends by excluding items that we do not consider to be controllable activities for this purpose.
3
Index


The performance metric used by our chief operating decision maker to evaluate performance of our reportable segments is Adjusted Contribution to Profit. We present both Adjusted Contribution to Profit and Adjusted EBITDA for each of our reportable segments since we believe Adjusted EBITDA provides additional useful information to certain investors and financial analysts for operational trends and comparisons over time as it removes the impact of depreciation and amortization expense, as well as a consistent basis to evaluate operating profitability and comparing our financial performance to that of our peer companies and competitors.

For example:

●Adjusted EPS, Adjusted Revenue, Adjusted Operating Income, Adjusted Contribution to Profit, Adjusted Income Before Taxes, Adjusted Income Tax Provision, Adjusted Effective Tax Rate, Adjusted EBITDA, and organic revenue (excluding acquisitions) 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 beforeexcluding the impact of foreign currency (or at “constant currency”)constant currency), which means that we apply the same foreign currency exchange rates for the current and equivalent prior period.

In addition, we have historically provided these or similar non-GAAP performance measures and understand that some investors and financial analysts find this information helpful in analyzing our operating margins and net income, and in comparing our financial performance to that of our peer companies and competitors. Based on interactions with investors, we also believe that our non-GAAP performance measures are regarded as useful to our investors as supplemental to our U.S.US GAAP financial results, and that there is no confusion regarding the adjustments or our operating performance to our investors due to the comprehensive nature of our disclosures. We have not provided our 20212022 outlook for the most directly comparable U.S.US GAAP financial measures, as they are not available without unreasonable effort due to the high variability, complexity, and low visibility with respect to certain items, including restructuring charges and credits, gains and losses on foreign currency, and other gains and losses. These items are uncertain, depend on various factors, and could be material to our consolidated results computed in accordance with U.S.US GAAP.

Non-GAAP performance measures do not have standardized meanings prescribed by U.S.US GAAP and therefore may not be comparable to the calculation of similar measures used by other companies and should not be viewed as alternatives to measures of financial results under U.S.US GAAP. The adjusted metrics have limitations as analytical tools, and should not be considered in isolation from, or as a substitute for, U.S.US GAAP information. It does not purport to represent any similarly titled U.S.US GAAP information and is not an indicator of our performance under U.S.US GAAP. Non-U.S. GAAPNon-GAAP financial metrics that we present may not be comparable with similarly titled measures used by others. Investors are cautioned against placing undue reliance on these non-U.S. GAAPnon-GAAP measures.

4
Index


PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION – UNAUDITED
In thousands

 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  0   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 
  July 31, 2021  April 30, 2021 
Assets:      
Current assets      
Cash and cash equivalents $82,982  $93,795 
Accounts receivable, net of allowance for credit losses of $21.4 million and $21.5 million, respectively
  284,579   311,571 
Inventories, net  40,392   42,538 
Prepaid expenses and other current assets  70,736   78,393 
Total current assets  478,689   526,297 
         
Product development assets, net  49,017   49,517 
Royalty advances, net  27,668   39,582 
Technology, property and equipment, net  273,306   282,270 
Intangible assets, net  995,613   1,015,302 
Goodwill  1,301,599   1,304,340 
Operating lease right-of-use assets  122,334   121,430 
Other non-current assets  114,574   107,701 
Total assets $3,362,800  $3,446,439 
         
Liabilities and shareholders' equity:        
Current liabilities        
Accounts payable $62,230  $95,791 
Accrued royalties  90,064   78,582 
Short-term portion of long-term debt  12,500   12,500 
Contract liabilities  418,459   545,425 
Accrued employment costs  66,771   144,744 
Accrued income taxes  9,628   8,590 
Short-term portion of operating lease liabilities  21,547   22,440 
Other accrued liabilities  81,902   80,900 
Total current liabilities  763,101   988,972 
         
Long-term debt  952,020   809,088 
Accrued pension liability  136,391   146,247 
Deferred income tax liabilities  188,880   172,903 
Operating lease liabilities  145,340   145,832 
Other long-term liabilities  99,163   92,106 
Total liabilities  2,284,895   2,355,148 
         
Shareholders’ equity        
Preferred stock, $1 par value per share: Authorized shares – 2 million, Issued shares - 0
  0   0 
Class A common stock, $1 par value per share: Authorized shares- 180 million, Issued shares - 70,211 and 70,208 as of July 31, 2021 and April 30, 2021, respectively
  70,211   70,208 
Class B common stock, $1 par value per share: Authorized shares - 72 million, Issued shares - 12,971 and 12,974 as of July 31, 2021 and April 30, 2021, respectively
  12,971   12,974 
Additional paid-in-capital  445,690   444,358 
Retained earnings  1,844,578   1,850,058 
Accumulated other comprehensive loss, net of tax  (494,600)  (490,790)
Less treasury shares at cost (Class A – 23,390 and 23,419 as of July 31, 2021 and April 30, 2021, respectively; Class B – 3,923 and 3,922 as of July 31, 2021 and April 30, 2021, respectively)
  (800,945)  (795,517)
Total shareholders’ equity  1,077,905   1,091,291 
Total liabilities and shareholders' equity $3,362,800  $3,446,439 

See accompanying notesNotes to the unaudited condensed consolidated financial statements.Unaudited Condensed Consolidated Financial Statements
5
Index




JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME – UNAUDITED
Dollars in thousands except per share information

 
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,
 
  2021  2020 
Revenue, net $488,388  $431,326 
         
Costs and expenses        
Cost of sales  165,956   144,809 
Operating and administrative expenses  260,589   237,369 
Restructuring and related (credits) charges  (276)  2,218 
Amortization of intangible assets  21,151   16,891 
Total costs and expenses  447,420   401,287 
         
Operating income  40,968   30,039 
         
Interest expense  (4,639)  (4,614)
Foreign exchange transaction gains (losses)  370   (82)
Gain on sale of certain assets  3,750   0 
Other income, net  3,553   4,391 
         
Income before taxes  44,002   29,734 
Provision for income taxes  30,172   13,400 
         
Net income $13,830  $16,334 
         
Earnings per share:        
Basic $0.25  $0.29 
Diluted $0.24  $0.29 
         
Weighted average number of common shares outstanding:        
Basic  55,869   55,912 
Diluted  56,599   56,193 

See accompanying notesNotes to the unaudited condensed consolidated financial statements.Unaudited Condensed Consolidated Financial Statements.

6
Index



JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) – UNAUDITED
Dollars in thousands

 
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,
 
  2021  2020 
Net income $13,830  $16,334 
         
Other comprehensive (loss) income:        
Foreign currency translation adjustment  (5,937)  46,853 
Unamortized retirement credits (costs), net of tax (expense) benefit of $(443) and $1,705, respectively
  1,589   (5,665)
Unrealized gain on interest rate swaps, net of tax (expense) of $(173) and $(30), respectively
  538   191 
Total other comprehensive (loss) income  (3,810)  41,379 
         
Comprehensive income $10,020  $57,713 

See accompanying notesNotes to the unaudited condensed consolidated financial statements.Unaudited Condensed Consolidated Financial Statements.

7
Index


JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – UNAUDITED
Dollars in thousands

 
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  0   (3,957)
Purchase of treasury shares  0   (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 
 
Three Months Ended
July 31,
 
  2021  2020 
Operating activities      
Net income $13,830  $16,334 
Adjustments to reconcile net income to net cash used in operating activities:        
Amortization of intangible assets  21,151   16,891 
Amortization of product development assets  9,058   9,148 
Depreciation and amortization of technology, property and equipment  24,357   23,468 
Restructuring and related (credits) charges  (276)  2,218 
Stock-based compensation expense  6,341   4,314 
Employee retirement plan expense  6,239   4,033 
Foreign exchange transaction (gains) losses  (370)  82 
Gain on sale of certain assets  (3,750)  0 
Other noncash charges  27,672   15,285 
    Net change in operating assets and liabilities  (189,026)  (212,556)
Net cash used in operating activities  (84,774)  (120,783)
Investing activities        
Product development spending  (5,670)  (5,325)
Additions to technology, property and equipment  (17,910)  (18,964)
Businesses acquired in purchase transactions, net of cash acquired  (3,032)  (136)
Proceeds related to the sale of certain assets  3,375   0 
Acquisitions of publication rights and other  (295)  (3,855)
Net cash used in investing activities  (23,532)  (28,280)
Financing activities        
Repayments of long-term debt  (41,300)  (139,331)
Borrowings of long-term debt  184,003   206,687 
Purchases of treasury shares  (7,367)  0 
Change in book overdrafts  (12,780)  (3,292)
Cash dividends  (19,307)  (19,261)
Impact of tax withholding on stock-based compensation and other  (4,160)  (1,319)
Net cash provided by financing activities  99,089   43,484 
Effects of exchange rate changes on cash, cash equivalents, and restricted cash  (1,586)  4,500 
Cash reconciliation:        
Cash and cash equivalents  93,795   202,464 
Restricted cash included in Prepaid expenses and other current assets  564   583 
Balance at beginning of period  94,359   203,047 
(Decrease)/increase for the period  (10,803)  (101,079)
Cash and cash equivalents  82,982   101,385 
Restricted cash included in Prepaid expenses and other current assets  574   583 
Balance at end of period $83,556  $101,968 
Cash paid during the period for:        
Interest $4,183  $4,221 
Income taxes, net of refunds $6,441  $25,704 

See accompanying notesNotes to the unaudited condensed consolidated financial statements.Unaudited Condensed Consolidated Financial Statements.

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JOHN WILEY & SONS, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OFSHAREHOLDERS’ EQUITY – UNAUDITED
Dollars in thousands

 
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  0   0   0   (1,390)  0   0   (1,390)
Restricted Shares Issued under Stock-based Compensation Plans  0   0   (5,121)  1   0   5,184   64 
Net Proceeds (Payments) from Exercise of Stock Options and Other  0   0   368   0   0   (1,687)  (1,319)
Stock-based Compensation Expense  0   0   4,314   0   0   0   4,314 
Class A Common Stock Dividends ($0.3425 per share)  0   —   0   (16,149)  0   0   (16,149)
Class B Common Stock Dividends ($0.3425 per share)  —   0   0   (3,112)  0   0   (3,112)
Common Stock Class Conversions  11   (11)  0   0   0   0   0 
Comprehensive Income, Net of Tax  0   0   0   16,334   41,379   0   57,713 
Balance at July 31, 2020 $70,177  $13,005  $431,241  $1,775,813  $(534,118) $(782,373) $973,745 
 Class A common stock  Class B common stock  
Additional
paid-in capital
  
Retained
earnings
  Accumulated other comprehensive loss, net of tax  Treasury stock  
Total
shareholders' equity
 
Balance at April 30, 2021 $70,208  $12,974  $444,358  $1,850,058  $(490,790) $(795,517) $1,091,291 
Restricted shares issued under stock-based compensation plans  0   0   (6,342)  (3)  0   6,409   64 
Impact of tax withholding on stock-based compensation and other  0   0   310   0   0   (4,470)  (4,160)
Stock-based compensation expense  0   0   7,364   0   0   0   7,364 
Purchase of treasury shares  0   0   0   0   0   (7,367)  (7,367)
Class A common stock dividends ($0.3450 per share)
  0   —   0   (16,185)  0   0   (16,185)
Class B common stock dividends ($0.3450 per share)
  —   0   0   (3,122)  0   0   (3,122)
Common stock class conversions  3   (3)  0   0   0   0   0 
Comprehensive income, net of tax  0   0   0   13,830   (3,810)  0   10,020 
Balance at July 31, 2021
 $70,211  $12,971  $445,690  $1,844,578  $(494,600) $(800,945) $1,077,905 


 
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  0   0   (2,112)  (1)  0   2,219   106 
Net Proceeds (Payments) from Exercise of Stock Options and Other  0   0   107   0   0   (1,244)  (1,137)
Stock-based Compensation Expense  0   0   4,604   0   0   0   4,604 
Purchase of Treasury Shares  0   0   0   0   0   (10,000)  (10,000)
Class A Common Stock Dividends ($0.34 per share)  0   —   0   (16,148)  0   0   (16,148)
Class B Common Stock Dividends ($0.34 per share)  —   0   0   (3,104)  0   0   (3,104)
Common Stock Class Conversions  12   (12)  0   0   0   0   0 
Comprehensive Income (Loss), Net of Tax  0   0   0 �� 3,624   (27,286)  0   (23,662)
Balance at July 31, 2019 $70,139  $13,043  $424,904  $1,915,445  $(536,024) $(755,501) $1,132,006 
 Class A common stock  Class B common stock  
Additional
paid-in capital
  
Retained
earnings
  
Accumulated other
comprehensive loss, net of tax
  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  0   0   0   (1,390)  0   0   (1,390)
Restricted shares issued under stock-based compensation plans  0   0   (5,121)  1   0   5,184   64 
Impact of tax withholding on stock-based compensation and other  0   0   368   0   0   (1,687)  (1,319)
Stock-based compensation expense  0   0   4,314   0   0   0   4,314 
Class A common stock dividends ($0.3425 per share)
  0   —   0   (16,149)  0   0   (16,149)
Class B common stock dividends ($0.3425 per share)
  —   0   0   (3,112)  0   0   (3,112)
Common stock class conversions  11   (11)  0   0   0   0   0 
Comprehensive income, net of tax  0   0   0   16,334   41,379   0   57,713 
Balance at July 31, 2020
 $70,177  $13,005  $431,241  $1,775,813  $(534,118) $(782,373) $973,745 

See accompanying notesNotes to the unaudited condensed consolidated financial statementsUnaudited Condensed Consolidated Financial Statements.

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JOHN WILEY & SONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Basis of Presentation

Throughout this report, when we refer to “Wiley,” the “Company,” “we,” “our,” or “us,” we are referring to John Wiley & Sons, Inc. and all our subsidiaries, except where the context indicates otherwise.

Our Unaudited Condensed Consolidated Financial Statements include all the accounts of the Company and our subsidiaries. We have eliminated all intercompany transactions and balances in consolidation. In the opinion of management, the accompanying unauditedUnaudited Condensed Consolidated Financial Statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Unaudited Condensed Consolidated Financial Condition, Results of Operations, Comprehensive Income and Cash Flows for the periods presented. Operating results for the interim period are not necessarily indicative of the results expected for the full year. All amounts are in thousands, except per share amounts, and approximate due to rounding. These financial statements should be read in conjunction with the most recent audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended April 30, 20202021 as filed with the SEC on June 26, 2020 (“2020July 6, 2021 (2021 Form 10-K”)10-K).

Our Unaudited Condensed Consolidated Financial Statements were prepared in accordance with the interim reporting requirements of the SEC. As permitted under those rules, annual footnotes or other financial information that are normally required by U.S.US GAAP have been condensed or omitted. The preparation of our Unaudited Condensed Consolidated Financial Statements in conformity with U.S.US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Certain prior year amounts have been reclassified to conform to the current year’s presentation.

In the fourth quarter of fiscal year 2021, a UK entity acquired in connection with the acquisition of mthree, which was acquired on January 1, 2020, was erroneously dissolved by the Company in accordance with UK Companies Act regulations while still holding assets. This entity, along with its subsidiaries, (the entity) had various net intercompany receivables owed to them from other Wiley companies of approximately $188.8 million as of April 30, 2021 (approximately $189.1 million as of July 31, 2021), which upon a dissolution technically revert to the British Crown (Crown). Wiley has petitioned to Companies House to reinstate the entity without prejudice. The Company believes the likelihood that reinstatement will not occur is remote as it entails an administrative exercise to remedy, not a negotiation.

As a result of these events, the Company evaluated whether it was appropriate to consolidate the assets, liabilities, and operations of the entity as part of its consolidated financial statements as of April 30, 2021 and for the period from the entity being dissolved through April 30, 2021, and also whether there was a liability to the Crown and a related loss associated with the dissolution of the entity under US GAAP in the fiscal year 2021.

The Company evaluated the criteria in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 810, “Consolidations” to determine if consolidating the entity was appropriate under US GAAP. Based on that evaluation and the administrative nature of the process to restore, the Company concluded that although the entity was dissolved, we maintained control of the assets of the entity and, therefore, appropriately consolidated the assets, liabilities and operations of the entity in our consolidated financial statements as of April 30, 2021. In connection with that conclusion, the Company also concluded that it does not have conditions to require a loss or liability to the Crown to be recorded in fiscal year 2021, other than immaterial fees associated with the restoration process. The Company anticipates the restoration of the entity, with the entirety of its net assets, to be completed by the second quarter of fiscal year 2022.

As of July 31, 2021, there has been no change in the Company’s conclusions or in the expected timing of the restoration of the entity as described above. Accordingly, the Company continued to consolidate the assets, liabilities and operations of the entity in its consolidated financial statements as of July 31, 2021.

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Note 2 — Recent Accounting Standards

Recently Adopted Accounting Standards

Intangibles-Goodwill and Other-Internal-Use Software: Customer’sSimplifying the Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service ContractIncome Taxes

In August 2018,December 2019, the FASB issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40)Accounting Standards Update (ASU) 2019-12, “Income Taxes (Topic 740): Customer’sSimplifying the Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement ThatIncome Taxes.”  This ASU is a Service Contract.” ASU 2018-15 alignsintended to simplify various aspects related to accounting for income taxes, eliminates certain exceptions within Topic 740, “Income Taxes” and clarifies certain aspects of the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurredcurrent guidance to develop or obtain internal-use software.promote consistent application. We adopted ASU 2018-152019-12 on May 1, 20202021. The adoption did not have a material impact on a prospective basis. There was no impact to our consolidated financial statements at the datetime of adoption.

Changes to The impact in the Disclosure Requirements for Fair Value Measurement

future would depend on any changes in tax laws and the applicable enactment dates. In August 2018,accordance with ASU 2019-12, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes toenactment date is when any effects are recognized in the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 removes, modifies and added disclosures. We adopted ASU 2018-13 on May 1, 2020. There was no impact to our consolidated financial statements at the date of adoption.statements.

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Measurement of Credit Losses on Financial Instruments

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.” Subsequently, in May 2019, the FASB issued ASU 2019-05 - "Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief”, in April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” in November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” in November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” and in February 2020, the FASB issued ASU 2020-02, “Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842)—Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842)  (SEC Update)”. ASU 2016-13 requires entities to measure all expected credit losses for most financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. ASU 2016-13 also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses. ASU 2016-13, ASU 2019-05, ASU 2019-04, ASU 2018-19, ASU 2019-11 and ASU 2020-02 were effective for us on May 1, 2020, including interim periods within those fiscal periods, with early adoption permitted.

We adopted the new standard on May 1, 2020, with a cumulative effect adjustment to retained earnings as of the beginning of the year of adoption. Based on financial instruments currently held by us, the adoption of ASU 2016-13 primarily impacted our trade receivables, specifically our allowance for doubtful accounts. The adoption of the standard did not have an impact on our Unaudited Condensed Consolidated Statements of Income, or our Unaudited Condensed Consolidated Statements of Cash Flows. See the table below for further details on the immaterial impact to our Unaudited Condensed Consolidated Statements of Financial Position and Unaudited Condensed Consolidated Statements of Shareholders’ Equity.

We are exposed to credit losses through our accounts receivable with customers. Accounts Receivable, net is stated at amortized cost net of provision for credit losses. Our methodology to measure the provision for credit losses requires an estimation of loss rates based upon historical loss experience adjusted for factors that are relevant to determining the expected collectability of accounts receivable including the impact of COVID-19, delinquency trends, aging behavior of receivables, credit and liquidity indicators for industry groups, customer classes or individual customers and reasonable and supportable forecasts of the economic conditions that may exist through the contractual life of the asset.  Our provision for credit losses is reviewed and revised periodically.  Our accounts receivable is evaluated on a pool basis that is based on customer groups with similar risk characteristics.  This includes consideration of the following factors to develop these pools; size of the customer, industry, geographical location, historical risk and types of services or products sold.

Our customer’s ability to pay is assessed through our internal credit review processes. Based on the dollar value of credit extended, we assess our customers' credit by reviewing the total expected receivable exposure, expected timing of payments and the customer’s established credit rating. In determining customer creditworthiness, we assess our customers' credit utilizing different resources including external credit validations and/or our own assessment through analysis of the customers' financial statements and review of trade/bank references. We also consider contract terms and conditions, country and political risk, and the customer's mix of products purchased in our evaluation. A credit limit is established for each customer based on the outcome of this review. Credit limits are periodically reviewed for existing customers and whenever an increase in the credit limit is being considered. When necessary, we utilize collection agencies and legal counsel to pursue recovery of defaulted receivables. We write off receivables only when deemed no longer collectible.

The following table presents the change in provision for credit losses, which is presented net in Accounts Receivable on our Unaudited Condensed Consolidated Statements of Financial Position for the period indicated:

 
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 

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Recently Issued Accounting Standards

Convertible Debt Instruments, Derivatives and EPS

In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)”. This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock.  As well as amend the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions.  In addition, this ASU improves and amends the related EPSearnings-per-share (EPS) guidance. This standard is effective for us on May 1, 2022, including interim periods within thosethe fiscal years.year. Adoption is either a modified retrospective method or a fully retrospective method of transition. We are currently assessing the impact the new guidance will have on our consolidated financial statements.

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” In January 2021, the FASB clarified the scope of that guidance with the issuance of ASU 2021-01, “Reference Rate Reform: Scope.” This ASU provides optional guidance for a limited period of time to ease the burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.  This would apply to companies meeting certain criteria that have contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This standard is effective for us immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We are currently assessing the impact the new guidance will have on our consolidated financial statements.statements

Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.”  This ASU is intended to simplify various aspects related to accounting for income taxes, eliminates certain exceptions within Topic 740, “Income Taxes” and clarifies certain aspects of the current guidance to promote consistent application.  The standard is effective for us on May 1, 2021, and early adoption is permitted in any interim period for which financial statements have not yet been issued. We are currently assessing the impact the new guidance will have on our consolidated financial statements.

Changes to the Disclosure Requirements for Defined Benefit Plans

In August 2018, the FASB issued ASU 2018-14, “Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans.” ASU 2018-14 removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and added additional disclosures. The standard is effective for us on May 1, 2021, with early adoption permitted. The amendments in ASU 2018-14 would need to be applied on a retrospective basis.  We are currently assessing the impact the new guidance will have on our disclosures..

Note 3 — Acquisitions

Fiscal Year 2020

Pro forma financial information related to these acquisitions has not been provided as it is not material to our consolidated results of operations.

mthreeFiscal Year 2021

Hindawi

On January 1,December 31, 2020, we completed the acquisition of 100% of the outstanding stock of mthree. mthreeHindawi Limited (“Hindawi”). Hindawi is a rapidly growing education services provider that addresses the IT skills gap by finding, trainingscientific research publisher and placing job-ready technology talentan innovator in roles with leading corporations worldwide.open access publishing. Its results of operations are included in our Education ServicesResearch Publishing & Platforms segment.

The preliminary fair value of the consideration transferred at the acquisition date was $128.6$300.1 million (£97.5 million) which included $122.2$299.3 million of cash and $6.4$0.8 million related to the settlement of additional consideration to be paid after the acquisition date.a preexisting relationship. We financed the payment of the cash consideration primarily through borrowings under our Amended and Restated RCA (as defined below in Note 15, “Debt and Available Credit Facilities”) and using cash on hand. The fair value of the cash consideration transferred, including those amounts paid after the acquisition date, net of $2.2$1.0 million of cash acquired was approximately $126.4$298.3 million.

mthree’sHindawi’s revenue and operating income included in our Education ServicesResearch Publishing and Platforms segment results for the three months ended July 31, 20202021 was $12.4 million.$11.5 million and $1.8 million, respectively.
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During the three months ended July 31, 2020,2021, no revisions were made to the allocation of the consideration transferred to the assets acquired and liabilities assumed. We recorded the preliminary fair value of the assets acquired and liabilities assumed on the acquisition date, which included a preliminary allocation of $82.6$147.4 million of goodwill allocated to the Education ServicesResearch Publishing & Platforms segment, and $56.8$194.9 million of intangible assets.assets subject to amortization.

The allocation of the total consideration transferred to the assets acquired, including intangible assets and goodwill, and the liabilities assumed is preliminary, and could be revised as a result of additional information obtained due to the finalization of the third-party valuation report, leases and related commitments, tax related matters and contingencies and certain assets and liabilities, including receivables and payables, but such amounts will be finalized within the measurement period, which will not exceed one year from the acquisition date.

Zyante Inc.

On July 1, 2019, we completed the acquisition of Zyante Inc. (“zyBooks”), a leading provider of computer science and STEM education courseware. The results of operations of zyBooks is included in our Academic & Professional Learning segment results. The fair value of the consideration transferred at the acquisition date was $57.1 million which included $55.9 million of cash and $1.2 million of additional consideration to be paid after the acquisition date, inclusive of purchase price adjustments which were finalized We are also in the three months ended January 31, 2020. The fair valueprocess of the cash consideration transferred after the acquisition date, that was paid during the three months ended July 31, 2020 was $0.1 million.

zyBooks incremental revenue includedaligning our accounting policies, which could result in our Academic & Professional Learning segment results for the three months ended July 31, 2020 was $1.3 million.

The allocation of the consideration transferred to the assets acquired and the liabilities assumed was final as of April 30, 2020. This included goodwill of $36.9 million allocated to the Academic & Professional Learning segment, and $24.5 million of intangible assets.

Other Acquisitions in Fiscal Year 2020

The preliminary fair value of cash consideration transferred during the year ended April 30, 2020 for all other acquisitions was approximately $48.5 million. These other acquisitions were accounted for using the acquisition method of accounting as of their respective acquisition dates.

During the three months ended July 31, 2020, a revision of $11.7 million from goodwill to intangibles assets was made to the allocation of the consideration transferred to the assets acquired and liabilities assumed for the Informatics and Madgex acquisitions, due to additional information obtainedchanges related to the third-party valuation. The excess purchase price over identifiable net tangible and intangible assets of $16.6 million has been recorded to Goodwill on our Condensed Consolidated Statements of Financial Position as of July 31, 2020, and $39.4 million of intangible assets subject to amortization have been recorded, including customer relationships, developed technology, content and trademarks that are being amortized over estimated weighted average useful lives of 7, 8, 10, and 10 years, respectively. The fair value assessed for the majority of the tangible assets acquired and liabilities assumed equaled their carrying value. Goodwill represents synergies and economies of scale expected from the combination of services. Goodwill of $8.5 million has been allocated to the Academic & Professional Learning segment, and $8.1 million has been allocated to the Research Publishing & Platforms segment. The incremental revenue for the three months ended July 31, 2020 related to these other acquisitions was approximately $2.3 million.

On April 1, 2020, we completed the acquisition of Bio-Rad Laboratories Inc.’s Informatics products including the company’s spectroscopy software and spectral databases (“Informatics”). The results of Informatics are included in our Research Publishing & Platforms segment results.

On March 2, 2020, we completed the acquisition of Madgex Holdings Limited (“Madgex”), a market-leading provider of advanced job board software and career center services. The results of Madgex are included in our Research Publishing & Platforms segment results.

The allocation of the total consideration transferred to the assets acquired and the liabilities assumed for Informatics and Madgex is preliminary, and could be revised as a result of additional information obtained due to the finalization of the third-party valuation report, leases and related commitments, tax related matters and contingencies and certain assets and liabilities, including receivables and payables, but such amounts will be finalized within the measurement period, which will not exceed one year from the acquisition dates.

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On May 31, 2019, we completed the acquisition of certain assets of Knewton, Inc. (“Knewton”). Knewton is a provider of affordable courseware and adaptive learning technology. The results of Knewton are included in our Academic & Professional Learning segment results. The allocation of the consideration transferred to the assets acquired and the liabilities assumed for Knewton was final as of April 30, 2020.

We also completed in fiscal year 2020 the acquisition of 2 immaterial businesses, which are included in our Research Publishing & Platforms segment, 1 immaterial business included in our Academic & Professional Learning segment results and 1 immaterial business in our Education Services business.financial statement presentation.

Note 4 — Revenue Recognition, Contracts with Customers

Disaggregation of Revenue

The following table presents our revenue from contracts with customers disaggregated by segment and product type.

 
Three Months Ended
July 31,
  
Three Months Ended
July 31,
 
 2020  2019  2021  2020 
Research Publishing & Platforms:            
Research Publishing $230,464  $219,927  $263,358  $230,464 
Research Platforms  10,346   9,448   11,398   10,346 
Total Research Publishing & Platforms  240,810   229,375   274,756   240,810 
                
Academic & Professional Learning:                
Education Publishing(1)  64,084   65,523   66,380   63,603 
Professional Learning  62,829   79,335   72,884   62,829 
Total Academic & Professional Learning  126,913   144,858   139,264   126,432 
                
Education Services:                
Education Services (1)
  50,262   48,156 
mthree (1)
  13,341   1,141 
University Services (2)
  54,394   50,262 
Talent Development Services (1)(3)
  19,974   13,822 
Total Education Services  63,603   49,297   74,368   64,084 
                
Total Revenue $431,326  $423,530  $488,388  $431,326 

(1)In May 2020,2021, we moved the IT bootcamp business acquired as part of TheWileyNXT product offering from Academic & Professional Learning House acquisition from– Education Publishing to Education Services to mthree.– Talent Development Services. As a result, the prior period revenueresults related to the IT bootcamp business hasWileyNXT product offering have been included in mthree.Education Services - Talent Development Services. The revenue was $0.5 million for the three months ended July 31, 2020. There were no changes to our total Education Services or our consolidated financial results.
(2)University Services was previously referred to as Education Services OPM.
(3)Talent Development Services was previously referred to as mthree.

The following information describes our disaggregation of revenue by segment and product type. Overall, the majority of our revenue is recognized over time.

Research Publishing & Platforms

Research Publishing & Platforms’ customers include academic, corporate, government, and public libraries, funders of research, researchers, scientists, clinicians, engineers and technologists, scholarly and professional societies, and students and professors. Research Publishing & Platforms products are sold and distributed globally through multiple channels, including research libraries and library consortia, independent subscription agents, direct sales to professional society members, and other customers. Publishing centers include Australia, China, Germany, India, the United Kingdom (UK), and the United States (US). The majority of revenue generated from Research Publishing and Platforms products is recognized over time. Total Research Publishing & Platforms revenue was $274.8 million in the three months ended July 31, 2021.
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We disaggregated revenue by Research Publishing and Research Platforms to reflect the different type of products and services provided.

Research Publishing Products

Research Publishing products provide scientific, technical, medical, and scholarly journals, as well as related content and services, to academic, corporate, and government libraries, learned societies, and individual researchers and other professionals. Research Publishing revenue was $263.4 million in the three months ended July 31, 2021 and the majority is recognized over time.

Research Publishing products generate approximately 80% of its revenue from contracts with its customers from Journal Subscriptions (pay to read), Open Access (pay to publish) and Comprehensive Agreements (read and publish) and the remainder from Licensing, Reprints, Backfiles, and Other.

Research Platforms Services

Research Platforms is a publishing software and service provider that enables scholarly and professional societies and publishers to deliver, host, enhance, market, and manage their content on the web through the Literatum platform. Research Platforms revenue was $11.4 million in the three months ended July 31, 2021 and the majority is recognized over time.

Academic & Professional Learning

Academic & Professional Learning provides Education Publishing and Professional Learning products and services including scientific, professional, and education print and digital books, digital courseware, and test preparation services, to libraries, corporations, students, professionals, and researchers, as well as learning, development, and assessment services for businesses and professionals. Communities served include business, finance, accounting, workplace learning, management, leadership, technology, behavioral health, engineering/ architecture, science and medicine, and education.  Products are developed for worldwide distribution through multiple channels, including chain and online booksellers, libraries, colleges and universities, corporations, direct to consumer, web sites, distributor networks and other online applications. Publishing centers include Australia, Germany, India, the UK, and the US. Total Academic & Professional Learning revenue was $139.3 million in the three months endedJuly 31, 2021.

We disaggregated revenue by type of products provided. Academic & Professional Learning products are Education Publishing and Professional Learning. Academic & Professional Learning revenues are mainly recognized at a point in time.

Education Publishing Products
Education Publishing products revenue was $66.4 million in the three months ended July 31, 2021. Education Publishing products generate approximately 75% of its revenue from contracts with its customers from Education (print and digital) Publishing, which is recognized at a point in time, and 7% from Digital Courseware which is recognized over time. The remainder of its revenues were from Test Preparation and Certification and Licensing and Other, which has a mix of revenue recognized at a point in time and over time.

Professional Learning Products
Professional Learning products revenue was $72.9 million in the three months ended July 31, 2021. Professional Learning (print and digital) products generate approximately 61% of revenue from contracts with its customers from Professional Publishing, and Licensing and Other, and both are mainly recognized at a point in time. Approximately 39% of Professional Learning products revenue is from contracts with its customers from Corporate Training and Corporate Learning, which is recognized mainly over time.

Education Services

Education Services revenue was $74.4 million in the three months ended July 31, 2021 and the majority is recognized over time. We disaggregated revenue by type of services provided, which are University Services (previously referred to as Education Services OPM) and Talent Development Services (previously referred to as mthree).
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University Services

University Services revenue was $54.4 million in the three months ended July 31, 2021 and is mainly recognized over time. University Services engages in the comprehensive management of online degree programs for universities and has grown to include a broad array of tech enabled service offerings that address our partner specific pain points. Increasingly, this includes delivering full stack career credentialing education that advances specific careers with in-demand skills.
Talent Development Services

Talent Development Services revenue was $20.0 million in the three months endedJuly 31, 2021 and is recognized at the point in time the services are provided to its customers. Talent Development Services is a talent placement provider that finds, trains and places job-ready technology talent in roles with leading corporations worldwide.

Accounts Receivable, net and Contract Liability Balances

When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue when, or as, control of the products or services are transferred to the customer and all revenue recognition criteria have been met.

The following table provides information about receivablesaccounts receivable, net and contract liabilities from contracts with customers.

 July 31, 2020  April 30, 2020  
Increase/
(Decrease)
  July 31, 2021  April 30, 2021  
Increase/
(Decrease)
 
Balances from contracts with customers:                  
Accounts receivable, net $282,412  $309,384  $(26,972) $284,579  $311,571  $(26,992)
Contract liabilities (1)
  408,954   520,214   (111,260)  418,459   545,425   (126,966)
Contract liabilities (included in Other Long-Term Liabilities) $15,357  $14,949  $408 
Contract liabilities (included in Other long-term liabilities) $18,382  $19,560  $(1,178)

(1)The sales return reserve recorded in Contract Liabilitiesliabilities is $39.4$40.7 million and $32.8$38.0 million, as of July 31, 20202021 and April 30, 2020,2021, respectively.
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For the three months ended July 31, 2020,2021, we estimate that we recognized revenue of approximately 38%40% that was included in the current contract liability at April 30, 2020.2021.

The decrease in contract liabilities as of July 31, 2020excluding the sales return reserve, was primarily driven by revenue earned primarily on journal subscriptions,subscription agreements, comprehensive agreements, open access and comprehensive agreements, and test preparation and certification offerings, partially offset by renewals of journal subscription agreements, and comprehensive agreements, open access, and the impact of foreign exchange.test preparation and certification offerings.

Remaining Performance Obligations included in Contract Liability

As of July 31, 2020,2021, the aggregate amount of the transaction price allocated to the remaining performance obligations is approximately $424.3$436.8 million, which included the sales return reserve of $39.4$40.7 million. Excluding the sales return reserve, we expect that approximately $369.5$377.7 million will be recognized in the next twelve months with the remaining $15.4$18.4 million to be recognized thereafter.

Assets Recognized for the Costs to Fulfill a Contract

Costs to fulfill a contract are directly related to a contract that will be used to satisfy a performance obligation in the future and are expected to be recovered. These costs are amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. These types of costs are incurred in the following revenue streams,product types, (1) Research Platforms services, which includes customer specific implementation costs per the terms of the contract and (2) Education Services.University Services, which includes customer specific costs to develop courses per the terms of the contract.

Our assets associated with incremental costs to fulfill a contract were $11.6$11.8 million and $11.5$12.1 million at July 31, 20202021 and April 30, 2020,2021, respectively, and are included within Other Non-Current Assetsnon-current assets on our Unaudited Condensed Consolidated Statements of Financial Position. We recorded amortization expense of $1.5 million and $1.2 million and $1.0 million duringin the three months ended July 31, 20202021 and 2019,2020, respectively, related to these assets within Cost of Salessales on our Unaudited Condensed Consolidated Statements of Net Income.
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Sales and value-added taxes are excluded from revenues. Shipping and handling costs, which are primarily incurred within the Academic & Professional Learning segment, occur before the transfer of control of the related goods. Therefore, in accordance with the revenue standard, it is not considered a promised service to the customer and would be considered a cost to fulfill our promise to transfer the goods. Costs incurred for third party shipping and handling are primarily reflected in Operating and Administrative Expensesadministrative expenses on our Unaudited Condensed Consolidated Statements of Net Income. We incurred $6.7$6.8 million and $7.4$6.7 million in shipping and handling costs in the three months ended July 31, 20202021 and 2019,2020, respectively.

Note 5 — Operating Leases

Lessee

We have contractual obligations as a lessee with respect to offices, warehouses and distribution centers, automobiles, and office equipment.

We determine if an arrangement is a lease at inception of the contract in accordance with guidance detailed in the lease standard and we perform the lease classification test as of the lease commencement date. Right-of-use (“ROU”)(ROU) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.

The present value of the lease payments is calculated using an incremental borrowing rate, which was determined based on the rate of interest that we would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. We use an unsecured borrowing rate and risk-adjust that rate to approximate a collateralized rate.

Under the leasing standard, leases that are more than one year in duration are capitalized and recorded on our Unaudited Condensed Consolidated Statements of Financial Position. Some of our leases offer an option to extend the term of such leases. We utilize the reasonably certain threshold criteria in determining which options we will exercise. Furthermore, some of our lease payments are based on index rates with minimum annual increases. These represent fixed payments and are captured in the future minimum lease payments calculation.

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For operating leases, the ROU assets and lease liabilities are presented on our Unaudited Condensed Consolidated Statement of Financial Position as follows:

 July 31, 2020  April 30, 2020  July 31, 2021  April 30, 2021 
Operating lease right-of-use assets $139,798  $142,716 
Operating lease ROU assets $122,334  $121,430 
Short-term portion of operating lease liabilities  20,647   21,810   21,547   22,440 
Operating lease liabilities, non-current $156,644  $159,782  $145,340  $145,832 

During the three months ended July 31, 2020,2021, we added $0.3$5.0 million to the ROU assets and $0.3 million to the operating lease liabilities due to new leases, as well as modifications and remeasurements to our existing operating leases.

Our total net lease costs are as follows:

 
Three Months Ended
July 31,
  
Three Months Ended
July 31,
 
 2020  2019  2021  2020 
Operating lease cost $6,635  $6,861  $5,917  $6,635 
Variable lease cost  521   1,203   344   521 
Short-term lease cost  88   0   20   88 
Sublease income  (170)  (523)  (201)  (170)
Total net lease cost (1)
 $7,074  $7,541  $6,080  $7,074 

(1)
Total net lease cost does not include those costs and sublease income included in Restructuring and Related Chargesrelated (credits) charges on our Unaudited Condensed Consolidated Statements of Net Income. This includes those operating leases we had identified in the year ended April 30, 2021 as part of our Business Optimization program that would be subleased. See Note 9, “Restructuring and Related (Credits) Charges” for more information on these programs.
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Other supplemental information includes the following for our operating leases:following:

  
Three Months Ended
July 31,
 
 2020  2019 
Weighted-average remaining contractual lease term (years)  10   10 
         
Weighted-average discount rate  5.89%  5.82%
         
Cash paid for amounts included in the measurement of lease liabilities:        
Operating cash flows from operating leases $8,974  $7,300 

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Three Months Ended
July 31,
 
  2021  2020 
Weighted-average remaining contractual lease term (years)  9   10 
Weighted-average discount rate  5.83%  5.89%
Cash paid for amounts included in the measurement of lease liabilities:        
Operating cash flows from operating leases $7,974  $8,974 

The table below reconciles the undiscounted cash flows for the first five years and total of the remaining years to the operating lease liabilities recorded in our Unaudited Condensed Consolidated Statement of Financial Position as of July 31, 2020:2021:

Fiscal Year 
Operating Lease
Liabilities
  
Operating Lease
Liabilities
 
2021 (remaining 9 months) $23,531 
2022  27,903 
2022 (remaining 9 months) $22,263 
2023  25,038   27,323 
2024  23,526   26,010 
2025  22,233   24,630 
2026  21,991 
Thereafter  114,078   95,376 
Total future undiscounted minimum lease payments  236,309   217,593 
        
Less: Imputed interest  59,018   50,706 
        
Present Value of Minimum Lease Payments  177,291 
Present value of minimum lease payments  166,887 
        
Less: Current portion  20,647   21,547 
        
Noncurrent portion $156,644  $145,340 


Note 6 — Stock-Based Compensation

We have stock-based compensation plans under which employees may be granted performance-based stock awards, and other restricted stock awards.  Prior to fiscal year 2017, we also granted options to purchase shares of our common stock at the fair market value at the time of grant.awards and options. We recognize the grant date fair value of stock-based compensation in net income on a straight-line basis, net of estimated forfeitures over the requisite service period. The measurement of performance for performance-based stock awards is based on actual financial results for targets established up to three years in advance. advance, or less. For the three months ended July 31, 20202021 and 2019,2020, we recognized stock-based compensation expense, on a pre-taxpretax basis, of $6.3 million and $4.3 million, respectively.

Performance-Based and $4.6 million, respectively.Other Restricted Stock Activity

Under the terms of our long-term incentive plans, performance-based restricted unit awards are payable in restricted shares of our Class A Common Stock upon the achievement of certain three-year or less financial performance-based targets. During each three-year period or less, we adjust compensation expense based upon our best estimate of expected performance.

We may also grant individual restricted unit awards payable in restricted shares of our Class A Common Stock to key employees in connection with their employment.

The following table summarizes restricted stock awards we granted to employees (shares in thousands):

 
Three Months Ended
July 31,
 
  2020  2019 
Restricted Stock:      
Awards granted  358   500 
Weighted average fair value of grant $38.88  $45.31 

 
Three Months Ended
July 31,
 
  2021  2020 
Restricted Stock:
      
Awards granted (shares)  433   358 
Weighted average fair value of grant $57.36  $38.88 
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Stock Option Activity

On June 24, 2021, we granted 220,000 stock option awards. These options vest 10% on April 30,2022, 20% on April 30,2023, 30% on April 30,2024 and 40% on April 30,2025. The options are exercisable over a maximum period of ten years from the date of grant. The grant date fair value of these options was $11.80 using the Black-Scholes option-pricing model. The significant assumptions used in the fair value determination were as follows:

Expected life of options (years)  6.3 
Risk-free interest rate  1.1%
Expected volatility  30.6%
Expected dividend yield  2.4%
Fair value of common stock on grant date $57.34 
Exercise price of stock option grant $63.07 

Prior to the above stock option grants in the three months endedJuly 31, 2021, we did 0t grant any stock option awards since the year ended April 30, 2016. As of April 30, 2019, all outstanding stock options vested allowing the participant the right to exercise their awards, and there was 0 unrecognized share-based compensation expense remaining related to those stock options.

Note 7 — Accumulated Other Comprehensive Loss

Changes in Accumulated Other Comprehensive Loss by component, net of tax, for the three months ended July 31, 20202021 and 20192020 were as follows:

 
Foreign
Currency Translation
  
Unamortized
Retirement Costs
  
Interest
Rate Swaps
  Total 
Balance at April 30, 2021
 $(257,941) $(228,146) $(4,703) $(490,790)
Other comprehensive (loss) income before reclassifications  (5,937)  142   (293)  (6,088)
Amounts reclassified from Accumulated other comprehensive loss  0   1,447   831   2,278 
Total other comprehensive (loss) income  (5,937)  1,589   538   (3,810)
Balance at July 31, 2021
 $(263,878) $(226,557) $(4,165) $(494,600)
 
Foreign
Currency Translation
  
Unamortized
Retirement Costs
  
Interest
Rate Swaps
  Total                 
Balance at April 30, 2020 $(340,703) $(227,920) $(6,874) $(575,497) $(340,703) $(227,920) $(6,874) $(575,497)
Other comprehensive income (loss) before reclassifications  46,853   (7,190)  (669)  38,994   46,853   (7,190)  (669)  38,994 
Amounts reclassified from Accumulated Other Comprehensive Loss  0   1,525   860   2,385 
Total other comprehensive (loss) income  46,853   (5,665)  191   41,379 
Amounts reclassified from Accumulated other comprehensive loss  0   1,525   860   2,385 
Total other comprehensive income (loss)  46,853   (5,665)  191   41,379 
Balance at July 31, 2020 $(293,850) $(233,585) $(6,683) $(534,118) $(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  0   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)

During the three months ended July 31, 2021 and 2020, and 2019, pre-taxpretax actuarial losses included in Unamortized Retirement Costs of approximately $1.9$1.8 million and $1.3$1.9 million, respectively, were amortized from Accumulated Other Comprehensive Lossother comprehensive loss and recognized as pension and post-retirement benefit expense primarily in Operating and Administrative Expenses and Interestadministrative expenses and Other Incomeincome, net on our Unaudited Condensed Consolidated Statements of Net Income.

Our policy for releasing the income tax effects from accumulated other comprehensive (loss) income is to release when the corresponding pretax accumulated other comprehensive (loss) income items are reclassified to earnings.

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Note 8 — Reconciliation of Weighted Average Shares Outstanding

A reconciliation of the shares used in the computation of earnings per share follows:follows (shares in thousands):

 
Three Months Ended
July 31,
  
Three Months Ended
July 31,
 
 2020  2019  2021  2020 
Weighted average shares outstanding  55,916   56,564   55,869   55,916 
Less: Unvested restricted shares  (4)  (28)  0   (4)
Shares used for basic earnings per share  55,912   56,536   55,869   55,912 
Dilutive effect of unvested restricted stock units and other stock awards  281   369   730   281 
Shares used for diluted earnings per share  56,193   56,905   56,599   56,193 
Antidilutive options to purchase Class A common shares, restricted shares, warrants to purchase Class A common shares, and contingently issuable restricted stock which are excluded from the table above  930   1,086 

Since their inclusionThe shares associated with performance-based stock awards are considered contingently issuable shares and will be included in the calculationdiluted weighted average number of diluted earnings per share wouldcommon shares outstanding when they have been anti-dilutive, options to purchase 201,743met the performance conditions and 252,704 shares of Class A Common Stock have been excluded for the three months ended July 31, 2020 and 2019, respectively.

There were 0 restricted shares excluded in the calculation of diluted earnings per share for the three months ended July 31, 2020 and 2019.

Warrants to purchase 528,452 and 511,094 shares of Class A Common Stock have been excluded in the calculation of diluted earnings per share for the three months ended July 31, 2020 and 2019, respectively aswhen their inclusion would have been anti-dilutiveeffect is dilutive.

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Note 9 — Restructuring and Related (Credits) Charges

Business Optimization Program

Beginning in fiscal year 2020, we initiated a multi-year Business Optimization Program (the “Business Optimization Program”) to drive efficiency improvement and operating savings.

The following tables summarize the pre-taxpretax restructuring (credits) charges (credits) related to this program:

 
Three Months Ended
July 31,
  Total Charges  
Three Months Ended
July 31,
  Total Charges 
 2020  2019  Incurred to Date  2021  2020  Incurred to Date 
Charges (Credits) by Segment:         
(Credits) Charges by Segment:         
Research Publishing & Platforms $(197) $2,636  $3,349  $216  $(197) $3,861 
Academic & Professional Learning  (227)  2,777   10,248   171   (227)  13,875 
Education Services  139   2,192   3,913   (34)  139   4,271 
Corporate Expenses  2,470   3,265   17,488   (629)  2,470   43,979 
Total Restructuring and Related Charges $2,185  $10,870  $34,998 
Total Restructuring and Related (Credits) Charges $(276) $2,185  $65,986 
                        
Charges by Activity:            
(Credits) Charges by Activity:            
Severance and termination benefits $1,110  $10,709  $27,974  $(614) $1,110  $37,781 
Operating lease right-of-use asset impairment  0   161   161 
Facility related charges  1,075   0   5,061 
Impairment of operating lease ROU assets and property and equipment  0   0   15,079 
Acceleration of expense related to operating lease ROU assets and property and equipment  0   0   3,378 
Facility related charges, net  338   1,075   8,008 
Other activities  0   0   1,802   0   0   1,740 
Total Restructuring and Related Charges $2,185  $10,870  $34,998 
Total Restructuring and Related (Credits) Charges $(276) $2,185  $65,986 

The credits in severance and termination benefits activities for the three months ended July 31, 2021, primarily reflects changes in the number of headcount reductions and estimates for previously accrued costs.

Facilities related charges include sublease income related to those operating leases we had identified in the year ended April 30, 2021 as part of our Business Optimization program that would be subleased.

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The following table summarizes the activity for the Business Optimization Program liability for the three months ended July 31, 2020:2021:

 April 30, 2020  Charges  Payments  
Foreign
Translation
& Other Adjustments
  July 31, 2020  April 30, 2021  (Credits)  Payments  
Foreign
Translation
& Other Adjustments
  July 31, 2021 
Severance and termination benefits $17,632  $1,110  $(6,966) $478  $12,254  $11,465  $(614) $(3,766) $(71) $7,014 
Other activities  430   0   (206)  (2)  222 
Total $18,062  $1,110  $(7,172) $476  $12,476  $11,465  $(614) $(3,766) $(71) $7,014 

Approximately $12.0 million of theThe restructuring liability for accrued severance and termination benefits is reflected in Accrued Employment Costs and approximately $0.3 million is reflectedemployment costs in Other Long-Term Liabilities on our Unaudited Condensed Consolidated Statement of Financial Position.

The amount included in Other Long-Term Liabilities that relates to severance and termination benefits is expected to be paid in the year ended April 30, 2022.

The restructuring liability as of July 31, 2020 for other activities is reflected in Other Accrued Liabilities on our Unaudited Condensed Consolidated Statement of Financial Position.

Restructuring and Reinvestment Program

Beginning in the year ended April 30, 2013, we initiated a global program (the “Restructuring and Reinvestment Program”) to restructure and realign our cost base with current and anticipated future market conditions. We are targeting a majority of the expected cost savings achieved to improve margins and earnings, while the remainder will be reinvested in high-growth digital business opportunities.

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The following tables summarize the pre-tax restructuring charges (credits) related to this program:

 
Three Months Ended
July 31,
  Total Charges 
  2020  2019  Incurred to Date 
Charges (Credits) by Segment:         
Research Publishing & Platforms $0  $(16) $26,884 
Academic & Professional Learning  260   28   43,094 
Education Services  0   (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  0   —   20,984 
Other activities  0   215   32,429 
Total Restructuring and Related Charges (Credits) $33  $(135) $169,455 

The credits in severance and termination benefits activities for the three months endedJuly 31, 2019 primarily reflect changes in the number of headcount reductions and estimates for previously accrued benefit costs. Other activities for the three months ended July 31, 2019 include facility related costs.

The following table summarizes the activity for the Restructuring and Reinvestment Program liability for the three months ended July 31, 2020:

 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   0   0   128   358 
Total $1,590  $33  $(888) $190  $925 

The restructuring liability as of July 31, 2020 for accrued severance and termination benefits is reflected in Accrued Employment Costs on our Unaudited Condensed Consolidated Statement of Financial Position.

The restructuring liability as of July 31, 2020 of $0.4 million of other activities are reflected in Other Long-Term Liabilities on our Unaudited Condensed Consolidated Statement of Financial Position and mainly relate to facility related costs. The amount included in Other Long-Term Liabilities is expected to be paid in the year ended April 30, 2022.

We currently do not anticipate any further material charges related to the Restructuring and Reinvestment Program.

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as of July 31, 2021.

Note 10 — Segment Information

We report our segment information in accordance with the provisions of FASB ASCAccounting Standards Codification (ASC) Topic 280, “Segment Reporting”. These segments reflect the way our chief operating decision maker evaluates our business performance and manages the operations. The performance metric used by our chief operating decision maker to evaluate performance of our reportable segments is Adjusted Contribution to Profit. Our segment reporting structure consists of three reportable segments, which are listed below, as well as a Corporate category, which includes certain costs that are not allocated to the reportable segments:

●Research Publishing & Platforms
●Academic & Professional Learning
●
Education Services

Segment information is as follows:

 
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 
 
Three Months Ended
July 31,
 
  2021  2020 
Revenue:      
Research Publishing & Platforms $274,756  $240,810 
Academic & Professional Learning (1)
  139,264   126,432 
Education Services (1)
  74,368   64,084 
Total revenue $488,388  $431,326 
         
Adjusted Contribution to Profit:        
Research Publishing & Platforms $79,024  $69,621 
Academic & Professional Learning (1)
  8,323   (245)
Education Services (1)
  (1,861)  595 
Total adjusted contribution to profit  85,486   69,971 
Adjusted corporate contribution to profit  (44,794)  (37,714)
Total adjusted contribution to profit $40,692  $32,257 
         
Depreciation and Amortization:        
   Research Publishing & Platforms $23,762  $19,701 
   Academic & Professional Learning (1)
  18,364   18,804 
   Education Services (1)
  8,303   7,279 
Total depreciation and amortization  50,429   45,784 
Corporate depreciation and amortization  4,137   3,723 
Total depreciation and amortization $54,566  $49,507 

(1)In May 2021, we moved the WileyNXT product offering from Academic & Professional Learning to Education Services. As a result, the prior period results related to the WileyNXT product offering have been included in Education Services. The Revenue, Adjusted Contribution to Profit is Contributionand Depreciation and Amortization for WileyNXT was $0.5 million, $0.1 million, and NaN, respectively, for the three months ended July 31, 2020. There were no changes 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.our total consolidated financial results.

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The following table shows a reconciliation of our consolidated U.S.US GAAP net incomeOperating Income to Non-GAAP EBITDA and Adjusted EBITDA:Contribution to Profit:

 
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,
 
  2021  2020 
US GAAP Operating Income $40,968  $30,039 
Adjustments:        
Restructuring and related (credits) charges (1)
  (276)  2,218 
Non-GAAP Adjusted Contribution to Profit $40,692  $32,257 

(1)See Note 9, “Restructuring and Related (Credits) Charges” for these charges by segment.

See Note 4, “Revenue Recognition, Contracts with Customers,” for revenue from contracts with customers disaggregated by segment and product type for the three months ended July 31, 2021 and 2020.

Note 11 — Inventories

Inventories, net consisted of the following:

 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 
 July 31, 2021  April 30, 2021 
Finished goods $28,645  $31,704 
Work-in-process  2,767   2,060 
Paper and other materials  376   331 
Total inventories before estimated sales returns and LIFO reserve $31,788  $34,095 
Inventory value of estimated sales returns  11,047   10,886 
LIFO reserve  (2,443)  (2,443)
Inventories, net $40,392  $42,538 

Note 12 — Goodwill and Intangible Assets

Goodwill

The following table summarizes the activity in goodwill by segment as of July 31, 2020:2021:

 April 30, 2020  
Acquisitions (1)
  
Foreign
Translation
Adjustment
  July 31, 2020  
April 30, 2021 (1)
  
Foreign
Translation
Adjustment
  July 31, 2021 
Research Publishing & Platforms $448,130  $(11,212) $15,490  $452,408  $619,203  $(763) $618,440 
Academic & Professional Learning  501,091   0   8,794   509,885   512,512   (1,884)  510,628 
Education Services  167,569   0   3,748   171,317   172,625   (94)  172,531 
Total $1,116,790  $(11,212) $28,032  $1,133,610  $1,304,340  $(2,741) $1,301,599 

(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 allocationThe Education Services goodwill balance as of the consideration transferred to the assets acquired and liabilities assumed during the three months ended July 31, 2020.
April 30, 2021 includes a cumulative pretax noncash goodwill impairment of $110.0 million.

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Intangible Assets

Intangible assets, net were as follows:

 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 
 July 31, 2021  
April 30, 2021 (1)
 
Intangible assets with definite lives, net:      
Content and publishing rights $552,624  $564,229 
Customer relationships  259,158   266,477 
Developed technology  36,667   34,961 
Brands and trademarks  18,684   19,536 
Covenants not to compete  23   58 
Total intangible assets with definite lives, net  867,156   885,261 
Intangible assets with indefinite lives:        
Brands and trademarks  37,000   37,000 
Publishing rights  91,457   93,041 
Total intangible assets with indefinite lives  128,457   130,041 
Total intangible assets, net $995,613  $1,015,302 

(1)
Refer to Note 3, “Acquisitions,” for more information related to the acquisitions that occurred in fiscal year 2020The developed technology balance as of April 30, 2021 is presented net of accumulated impairments and the revisions that were made to the allocationwrite-offs of the consideration transferred to the assets acquired$2.8 million. The indefinite-lived brands and liabilities assumed during the three months ended July 31, 2020.
trademarks as of April 30, 2021 is net of accumulated impairments of $93.1 million.

Note 13 — Income Taxes

The effective tax rate for the three months ended July 31, 20202021 was 45.1%68.6% compared to 8.6%45.1% for the three months ended July 31, 2019.2020. The rate for each three-month period was greater than the US statutory rate primarily due to increases in the UK statutory rate in each period, resulting in a noncash deferred tax expense in each period from the re-measurement of our applicable UK net deferred tax liabilities. The rate for the three months ended July 31, 20202021 was greater than the rate for the corresponding prior periodthree months ended July 31, 2020 due to ana larger increase in the UK statutory rate discussed below and a $0.5 million discrete item relating to compensation deductions from restricted stock which vested at lower values than the values at time of grant.prior period.

During the first quarterthree months of fiscal 2022, the UK enacted legislation that increased its statutory rate from 19% to 25% effective April 1, 2023, resulting in a $20.7 million non-cash deferred tax expense. During the first three months of fiscal 2021, the U.K.UK officially enacted legislation that increased its statutory rate from 17% to 19%. This resulted, resulting in a $6.7 million non-cash deferred tax expense from the re-measurement of our applicable U.K. net deferred tax liabilities.expense.

Note 14 — Retirement Plans

The components of net pension income for the defined benefit plans were as follows:

 
Three Months Ended
July 31,
  
Three Months Ended
July 31,
 
 2020  2019  2021  2020 
Service cost $333  $224  $307  $333 
Interest cost  4,521   5,834   5,223   4,521 
Expected return on plan assets  (9,378)  (10,059)  (10,259)  (9,378)
Amortization of prior service cost  (25)  (19)  (22)  (25)
Amortization of net actuarial loss  1,987   1,600   1,897   1,987 
Net pension income $(2,562) $(2,420) $(2,854) $(2,562)

The service cost component of net pension income is reflected in Operating and Administrative Expensesadministrative expenses on our Unaudited Condensed Consolidated Statements of Net Income. The other components of net benefit costspension income are reported separately from the service cost component and below Operating Income.income. Such amounts are reflected in Interest and Other Incomeincome, net on our Unaudited Condensed Consolidated Statements of Net Income.

Employer defined benefit pension plan contributions were $5.1$4.5 million and $4.7$5.1 million for the three months ended July 31, 20202021 and 2019,2020, respectively.

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Defined Contribution Savings Plans

The expense for employer defined contribution savings plans was $6.6$9.1 million and $4.3$6.6 million for the three months ended July 31, 20202021 and 2019,2020, respectively.

Note 15 — Debt and Available Credit Facilities

Our total debt outstanding consisted of the amounts set forth in the following table: 

 July 31, 2020  April 30, 2020  July 31, 2021  April 30, 2021 
Short-term portion of long-term debt (1)
 $10,938  $9,375  $12,500  $12,500 
                
Term loan A - Amended and Restated RCA (2)
  232,179   235,263   219,844   222,928 
Revolving credit facility - Amended and Restated RCA  603,584   530,387   732,176   586,160 
Total long-term debt, less current portion  835,763   765,650   952,020   809,088 
                
Total Debt $846,701  $775,025 
Total debt $964,520  $821,588 

(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$0.5 million as of July 31, 20202021 and $0.7$0.5 million as of April 30, 2020.2021.

Amended and Restated RCA

On May 30, 2019, we entered into a credit agreement that amended and restated our existing revolving credit agreement (“Amended and Restated RCA”). The Amended and Restated RCA provides for senior unsecured credit facilities comprised of a (i) five-year revolving credit facility in an aggregate principal amount up to $1.25 billion, and (ii) a five-year term loan A facility consisting of $250 million.

Under the terms of the Amended and Restated RCA, which can be drawn in multiple currencies, we have the option of borrowing at the following floating interest rates: (i) at a rate based on the London Interbank Offered Rate (“LIBOR”) plus an applicable margin ranging from 0.98% to 1.50%, depending on our consolidated net leverage ratio, as defined, or (ii) at the lender’s base rate plus an applicable margin ranging from zero0 to 0.50%, depending on our consolidated net leverage ratio. The lender’s base rate is defined as the highest of (i) the U.S.US federal funds effective rate plus a 0.50% margin, (ii) the Eurocurrency rate, as defined, plus a 1.00% margin, or (iii) the Bank of America prime lending rate. In addition, we pay a facility fee for the revolving credit facility ranging from 0.15% to 0.25% depending on our consolidated net leverage ratio. We also have the option to request an increase in the revolving credit facility by an amount not to exceed $500 million, in minimum increments of $50 million, subject to the approval of the lenders.

The Amended and Restated RCA contains certain customary affirmative and negative covenants, including a financial covenant in the form of a consolidated net leverage ratio and consolidated interest coverage ratio, which we were in compliance with as of July 31, 2020.2021.

InThe amortization expense of the three months ended July 31, 2019, wecosts incurred an immaterial loss on the write-off of unamortized deferred costs in connection with the refinancing of our revolving credit agreement at that time which is reflected in Interest and Other Income on our Unaudited Condensed Consolidated Statements of Income for the three months ended July 31, 2019.

In the three months ended July 31, 2019, we incurred $4.0 million of costs related to the Amended and Restated RCA which resulted in total costs capitalized of $5.2 million. The amount related to the term loan A facility was $0.9 million, consisting of $0.8 million of lender fees and recorded as a reduction to Long-Term Debt and $0.1 million of non-lender fees included in Other Non-Current Assets on our Unaudited Condensed Consolidated Statement of Financial Position. The amount related to the five-year revolving credit facility was $4.3 million, all of which is included in Other Non-Current Assets on our Unaudited Condensed Consolidated Statement of Financial Position.

The amortization expense of the lender and non-lender fees is recognized over the five-year term of the Amended and Restated RCA. Total amortization expense inwas $0.3 million for the three months ended July 31, 20202021 and 2019 was $0.3 million and $0.2 million2020, respectively and is included in Interest Expense expense on our Unaudited Condensed Consolidated StatementStatements of Income.
Net Income.

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As of July 31, 2021, we had approximately $518.8 million of unused borrowing capacity under our Amended and Restated RCA and other facilities.

Note 16 — Derivative Instruments and Hedging Activities

From time-to-time, we enter into forward exchange and interest rate swap contracts as a hedge against foreign currency asset and liability commitments, changes in interest rates and anticipated transaction exposures, including intercompany purchases. All derivatives are recognized as assets or liabilities and measured at fair value on our Unaudited Condensed Consolidated Statements of Financial Position.value. Derivatives that are not determined to be effective hedges are adjusted to fair value with a corresponding adjustment to earnings. We do not use financial instruments for trading or speculative purposes.

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Interest Rate Contracts

As of July 31, 2020,2021, we had total debt outstanding of $846.7$964.5 million, net of unamortized issuance costs of $0.6$0.5 million of which $847.3$965.0 million are variable rate loans outstanding under the Amended and Restated RCA, which approximated fair value.

We had outstanding interest rate swap agreements with combined notional amounts of $300.0$400.0 million as of July 31, 20202021 and April 30, 2020.2021. These agreements were accounted for as cash flow hedges which fixed a portion of the variable interest due on our Amended and Restated RCA.

We record the fair value of our interest rate swaps on a recurring basis using Level 2 inputs of quoted prices for similar assets or liabilities in active markets. The fair value of the interest rate swaps as of July 31, 20202021 and April 30, 20202021 was a deferred loss of $8.2$4.9 million and $8.3$5.6 million, respectively. Based on the maturity dates of the contracts, $1.6 million of the entire deferred loss as of July 31, 20202021 was recorded within Other accrued liabilities and $3.3 million of the deferred loss was recorded within Other long-term liabilities. The entire deferred loss as of April 30, 20202021 was recorded within Other Long-Term Liabilitieslong-term liabilities.

The pre-tax (losses) gainspretax losses that were reclassified from Accumulated Other Comprehensive Lossother comprehensive loss into Interest Expenseexpense for the three months ended July 31, 2021 and 2020 and 2019 were $(0.9)$1.1 million and $0.2$0.9 million, respectively.

Foreign Currency Contracts

We may enter into forward exchange contracts to manage our exposure on certain foreign currency denominated assets and liabilities. The forward exchange contracts are marked to market through Foreign Exchange Transaction (Losses) Gainsexchange transaction gains (losses) on our Unaudited Condensed Consolidated Statements of Net Income and carried at their fair value on our Unaudited Condensed Consolidated Statements of Financial Position. Foreign currency denominated assets and liabilities are remeasured at spot rates in effect on the balance sheet date, with the effects of changes in spot rates reported in Foreign Exchange Transaction (Losses) Gainsexchange transaction gains (losses) on our Unaudited Condensed Consolidated Statements of Net Income.

As of July 31, 2020,2021, and April 30, 2020,2021, we did not maintain any open forward exchange contracts. In addition, we did not maintain any open forward contracts during the three months ended July 31, 20202021 and 2019.2020.

Note 17 — Capital Stock and Changes in Capital Accounts

Share Repurchases

The following table summarizes the shares repurchased of Class A and Class B Common Stock for the three months ended July 31, 2019. (shares in thousands):

 
Three Months Ended
July 31, 2021
 
Shares repurchased - Class A  129 
Shares repurchased - Class B  1 
Average price - Class A and Class B $56.88 

There were 0 share repurchases during the three months ended July 31, 2020.

 
Three Months Ended
July 31, 2019
 
Shares Repurchased  217,511 
Average Price $45.97 

Dividends

The following table summarizes the cash dividends paid during the three months ended July 31, 2020:2021:

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, 202022, 2021 $0.34250.3450 per common share $19.219.3 million 
Class A and
Class B
 July 22, 202021, 2021 July 7, 20206, 2021

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Changes in Common Stock

The following is a summary of changes during the three months ended July 31, in shares of our common stock and common stock in treasury (shares in thousands):

Changes in Common Stock A: 2020  2019  2021  2020 
Number of shares, beginning of year  70,166   70,127   70,208   70,166 
Common stock class conversions  11   12   3   11 
Number of shares issued, end of period  70,177   70,139   70,211   70,177 
                
Changes in Common Stock A in treasury:                
Number of shares held, beginning of year  23,405   22,634   23,419   23,405 
Purchase of treasury shares  0   218   129   0 
Restricted shares issued under stock-based compensation plans - non-PSU Awards  (94)  (36)  (118)  (94)
Restricted shares issued under stock-based compensation plans - PSU Awards  (86)  (43)  (103)  (86)
Restricted shares, forfeited  0   1 
Restricted shares issued from exercise of stock options  (33)  (12)  (22)  (33)
Shares withheld for taxes  67   33   85   67 
Number of shares held, end of period  23,259   22,795   23,390   23,259 
Number of Common Stock A outstanding, end of period  46,918   47,344   46,821   46,918 

Changes in Common Stock B: 2020  2019  2021  2020 
Number of shares, beginning of year  13,016   13,055   12,974   13,016 
Common stock class conversions  (11)  (12)  (3)  (11)
Number of shares issued, end of period  13,005   13,043   12,971   13,005 
                
Changes in Common Stock B in treasury:                
Number of shares held, beginning of year  3,920   3,918   3,922   3,920 
Purchase of treasury shares  1   0 
Number of shares held, end of period  3,920   3,918   3,923   3,920 
Number of Common Stock B outstanding, end of period  9,085   9,125   9,048   9,085 

Note 18 — Commitments and Contingencies

We are involved in routine litigation in the ordinary course of our business. A provision for litigation is accrued when information available to us indicates that it is probable a liability has been incurred and the amount of loss can be reasonably estimated. Significant judgment may be required to determine both the probability and estimates of loss. When the amount of the loss can only be estimated within a range, the most likely outcome within that range is accrued. If no amount within the range is a better estimate than any other amount, the minimum amount within the range is accrued. When uncertainties exist related to the probable outcome of litigation and/or the amount or range of loss, we do not record a liability, but disclose facts related to the nature of the contingency and possible losses if management considers the information to be material. Reserves for legal defense costs are recognized when incurred. The accruals for loss contingencies and legal costs are reviewed regularly and may be adjusted to reflect updated information on the status of litigation and advice of legal counsel. In the opinion of management, the ultimate resolution of all pending litigation as of July 31, 2020,2021, will not have a material effect upon our Unaudited Condensed Consolidated Statementsconsolidated financial condition or results of Financial Position or Unaudited Condensed Consolidated Statements of Income.operations.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information in our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)(MD&A) should be read together with our Condensed Consolidated Financial Statements and related notes set forth in Item 1 of Part I of this Quarterly Report on Form 10-Q, our MD&A set forth in Item 7 of Part II of our 20202021 Form 10-K and our Consolidated Financial Statements and related notes set forth in Item 8 of Part II of our 20202021 Form 10-K. See Part II, Item 1A, “Risk Factors,” below and “Cautionary Notice Regarding Forward-Looking Statements “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995,” above, and the information referenced therein, for a description of risks that we face and important factors that we believe could cause actual results to differ materially from those in our forward-looking statements. All amounts and percentages are approximate due to rounding and all dollars are in thousands, except per share amounts or where otherwise noted. When we cross-reference to a “Note,” we are referring to our “Notes to Unaudited Condensed Consolidated Financial Statements,” unless the context indicates otherwise.

Overview

Wiley is a global leader in research and education, unlocking human potential by enabling discovery, powering education, and shaping workforces. For over 200 years, Wiley has fueled the world’s knowledge ecosystem. Today, our high-impact content, platforms, and services help researchers, learners, institutions, and corporations achieve their goals in an ever-changing world. Wiley is a predominantly digital company with revenue generated by digital products and services.

We report financial information for the following segments, as well as a Corporate category, which includes certain costs that are not allocated to the reportable segments:
●Research Publishing & Platforms
●Academic & Professional Learning
●Education Services
Through the Research Publishing & Platforms segment, we provide peer-reviewed scientific, technical, and medical (STM) publishing, content platforms, and related services to academic, corporate, and government customers, academic societies, and individual researchers. The Academic & Professional Learning segment provides Education Publishing and Professional Learning content and courseware, training and learning services, to students, professionals, and corporations. The Education Services segment provides online program management (OPM) services for academic institutions and talent development services for professionals and businesses.

Wiley’s business strategies are tightly aligned with accelerating growth trends, including open research, online education, and digital curriculum. Research strategies include driving publishing output to meet the increasing demand for peer-reviewed research and expanding platform and service offerings for corporations and societies. Education strategies include expanding online degree programs and driving online enrollment for university partners, scaling digital content and courseware, and expanding IT talent placement for corporate partners.

CONSOLIDATED RESULTS OF OPERATIONS – THREE MONTHS ENDED JULY 31, 2020

CONSOLIDATED OPERATING RESULTS2021

Revenue:

Revenue for the three months ended July 31, 20202021 increased $7.8$57.1 million, or 2%13%, as compared with the prior year. On a constant currency basis, revenue increased 2% as compared with the prior year. This increase was mainly driven by an increase in Research Publishing & Platforms, which included the following factors:
●contributions from Hindawi, which was acquired on December 31, 2020 and, to a lesser extent, 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.

These increases were partially offset by a decline of $17.1 million in Academic & Professional Learning.Learning and Education Services.

On a constant currency basis, revenue increased 9% as compared with the prior year. Excluding the inorganic impact of acquisitions, organic revenue on a constant currency basis decreased 1%increased 7%.

See the “Segment Operating Results” below for additional details on each segment’s revenue and Adjusted EBITDA performance.

Cost of Sales:

Cost of sales for the three months ended July 31, 20202021 increased $1.7$21.1 million, or 1%15%, as compared with the prior year. On a constant currency basis, cost of sales increased 2%10% as compared with the prior year. This increase was primarily due to higher employment related costs in Education Services, primarily due to the incremental impact from the acquisition of mthree;increased print product costs in Academic & Professional Learning and, to a lesser extent, an increase in royaltyhigher marketing costs partially offset by lower inventory costs in Academic & Professional Learning.for our Education Services business.
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Operating and Administrative Expenses:

Operating and administrative expenses for the three months ended July 31, 2020 decreased $12.82021 increased $23.2 million, or 5%10%, as compared with the prior year. On a constant currency basis, operating and administrative expenses decreased 4%increased 7% as compared with the prior year primarily reflecting lower discretionary spendinghigher editorial costs due to additional resources to support investments in growth, employee benefit and employee-related costsretirement related expenses and, to a lesser extent, lower professional fees associated with strategic planning. These factors were partially offset by an increase in other administrativehigher technology related costs, primarily due to the incremental impact of the acquisition of mthree.costs.

Restructuring and Related (Credits) Charges:

Business Optimization Program

For the three months ended July 31, 2021 and 2020, we recorded pre-taxpretax restructuring credits of $0.3 million and charges of $2.2 million, respectively, related to this program compared with the prior year of $10.9 million.program. We anticipate $10.0 million in run rate savings from actions starting in fiscal 2022. These (credits) charges are reflected in Restructuring and Related Chargesrelated (credits) charges in our Unaudited Condensed Consolidated Statements of Net Income. See Note 9, “Restructuring and Related (Credits) Charges” for more details on these charges.

We anticipate our restructuring actionsIn November 2020, in response to generate annual gross savingsthe COVID-19 pandemic and the Company’s successful transition to a virtual work environment, we increased use of $130 million overvirtual work arrangements for post-pandemic operations. As a result, we expanded the three-year period. The majorityscope of the savings will be reinvestedBusiness Optimization Program to include the exit of certain leased office space beginning in the Company to drivethird quarter of fiscal 2021, and sustain profitable revenue growth.the reduction of our occupancy at other facilities. We are reducing our real estate square footage occupancy by approximately 12%.

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Restructuring and Reinvestment Program

For the three months ended July 31, 2020 we recorded minimalThese actions are anticipated to yield annualized cost savings estimated to be approximately $8.0 million. We anticipate ongoing facility-related costs associated with certain properties to result in additional restructuring charges and for the three months ended July 31, 2019, we recorded pre-tax restructuring credits of $0.1 million, related to this program. These charges and credits are reflected in Restructuring and Related Charges in our Unaudited Condensed Consolidated Statements of Income. See Note 9, “Restructuring and Related Charges” for more details on these charges.future periods.

For the impact of both of our restructuring programsprogram on diluted earnings per share, see the section below, “Diluted Earnings per Share (“EPS”)(EPS).”

Amortization of Intangibles:Intangible Assets:

Amortization of intangiblesintangible assets was $16.9$21.2 million for the three months ended July 31, 2020,2021, an increase of $1.9$4.3 million, or 13%25%, as compared with the prior year on a reported and onyear. On a constant currency basis. The increase inbasis, amortization wasof intangible assets increased 22% as compared with the prior year primarily due to the intangibles acquired as part of the acquisitionsHindawi acquisition completed in fiscal year 2020, partially offset by a decrease due to the completion of amortization of certain acquired intangible assets. 2021. See Note 3, “Acquisitions” for more details on these transactions.this acquisition.

Operating Income:Income, Adjusted Contribution to Profit (CTP) and Adjusted EBITDA:

Operating income for the three months ended July 31, 2020 was $30.02021 increased $10.9 million, or 36%, as compared with the prior year.  On a constant currency basis, operating income increased 28% as compared with the prior year, primarily due to the increase in revenue, partially offset by an increase in operating and administrative expenses, and cost of $4.6 million. Onsales.

Adjusted CTP and Adjusted EBITDA on a constant currency basis and excluding restructuring (credits) charges, Adjusted EBITDA increased 42%.18% and 12% respectively, as compared with the prior year. The increase in operating incomeAdjusted CTP and Adjusted EBITDA was primarily due to higher revenue and lowerperformance described above, partially offset by an increase in operating and administrative expenses, as described above.and cost of sales. In addition, the increase in Adjusted CTP was partially offset by higher depreciation and amortization.

Adjusted CTP

Below is a reconciliation of our consolidated US GAAP Operating Income to Non-GAAP Adjusted CTP:

  
Three Months Ended
July 31,
 
  2021  2020 
US GAAP Operating Income $40,968  $30,039 
Adjustments:        
Restructuring and related (credits) charges  (276)  2,218 
Non-GAAP Adjusted CTP $40,692  $32,257 

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Adjusted EBITDA

Below is a reconciliation of our consolidated US GAAP Net Income to Non-GAAP EBITDA and Adjusted EBITDA:

  
Three Months Ended
July 31,
 
  2021  2020 
Net Income $13,830  $16,334 
Interest expense  4,639   4,614 
Provision for income taxes  30,172   13,400 
Depreciation and amortization  54,566   49,507 
Non-GAAP EBITDA  103,207   83,855 
Restructuring and related (credits) charges  (276)  2,218 
Foreign exchange transaction (gains) losses  (370)  82 
Gain on sale of certain assets  (3,750)  — 
Other income, net  (3,553)  (4,391)
Non-GAAP Adjusted EBITDA $95,258  $81,764 

Interest Expense:

Interest expense was $4.6 million for both the three months ended July 31, 2021 and 2020, respectively. The expense was $4.6 million comparedconsistent with the prior year of $6.1 million. This decrease was due toperiod as a lower weighted average effective borrowing rate, partially offset by higher average debt balancesbalance outstanding, which included borrowings for the funding of acquisitions in fiscal year 2020.2021, was offset by a lower weighted average effective borrowing rate for the current fiscal year compared with the prior fiscal year.

Foreign Exchange Transaction Gains (Losses) Gains::

Foreign exchange transaction gains were $0.4 million for the three months ended July 31, 2021 and were primarily due to gains on our intercompany accounts receivable and payable balances, partially offset by losses on our third-party receivable and payable balances due to the impact of the change in average foreign exchange rates as compared to the US dollar.

Foreign exchange transaction losses were $0.1$0.1 million for the three months ended July 31, 2020 and were primarily due to losses on our third-party receivable and payable balances, offset by gains on our intercompany accounts receivable and payable balances due to the impact of the change in average foreign exchange rates as compared to the U.S. dollar.US dollar.

Foreign exchange transaction gains were $2.7Gain on Sale of Certain Assets:

The gain on the sale of certain assets is due to the sale of our world languages product portfolio which was included in our Academic & Professional Learning segment and resulted in a pretax gain of approximately $3.8 million forduring the three months ended July 31, 2019 and were primarily due to the net impact of the change in average foreign exchange rates as compared to the U.S. dollar on our third-party accounts receivable and payable balances.2021.

Provision for Income Taxes:

Below is a reconciliation of our US GAAP Income Before Taxes to Non-GAAP Adjusted Income Before Taxes:

  
Three Months Ended
July 31,
 
  2021  2020 
US GAAP Income Before Taxes $44,002  $29,734 
Pretax Impact of Adjustments:        
Restructuring and related (credits) charges  (276)  2,218 
Foreign exchange gains on intercompany transactions  (795)  (1,569)
Gain on sale of certain assets  (3,750)  — 
Non-GAAP Adjusted Income Before Taxes $39,181  $30,383 

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Index


Below is a reconciliation of our US GAAP Income Tax Provision to Non-GAAP Adjusted Income Tax Provision, including our US GAAP Effective Tax Rate and our Non-GAAP Adjusted Effective Tax Rate:

  
Three Months Ended
July 31,
 
  2021  2020 
US GAAP Income Tax Provision $30,172  $13,400 
Income Tax Impact of Adjustments (1):
        
Restructuring and related (credits) charges  45   743 
Foreign exchange gains on intercompany transactions  (101)  (612)
Gain on sale of certain assets  (936)  — 
Income Tax Adjustments:        
Impact of increase in UK statutory rate on deferred tax balances (2)
  (20,726)  (6,689)
Non-GAAP Adjusted Income Tax Provision $8,454  $6,842 
         
US GAAP Effective Tax Rate  68.6%  45.1%
Non-GAAP Adjusted Effective Tax Rate  21.6%  22.5%

(1)For the three months ended July 31, 2021, substantially all of the tax impact was from deferred taxes. For the three months ended July 31, 2020, the tax impact was $0.2 million from current taxes offset by $0.1 million from deferred taxes.
(2)These adjustments impacted deferred taxes in the three months ended July 31, 2021 and 2020.

The effective tax rate for the three months ended July 31, 20202021 was 45.1%,68.6% compared to 8.6%45.1% for the three months ended July 31, 2019.2020. The rate for each three-month period was impacted by increases in the UK statutory rate in each period, resulting in a noncash deferred tax expense in each period from the re-measurement of our applicable UK net deferred tax liabilities.  The rate for the three months ended July 31, 20202021 was greater than the rate for the corresponding prior periodthree months ended July 31, 2020 due to ana larger increase in the UK statutory rate discussed below and a $0.5 million discrete item relating to compensation deductions from restricted stock which vested at lower values than the values at time of grant.prior period. Excluding the tax impact of the UK statutory tax rate changes and other adjustments tonoted in the table above, the Non-GAAP Adjusted EPS, discussed below,Effective Tax Rate was 21.6% for the effective tax rate wasthree months ended July 31, 2021 compared to 22.5% for the three months ended July 31, 2020 compared to 20.1% for the three months ended July 31, 2019. This increase was due to the discrete item related to the compensation deductions mentioned above.2020.

During the first quarterthree months of fiscal 2022, the UK enacted legislation that increased its statutory rate from 19% to 25% effective April 1, 2023, resulting in a $20.7 million non-cash deferred tax expense. During the first three months of fiscal 2021, the U.K.UK officially enacted legislation that increased its statutory rate from 17% to 19%. This resulted, resulting in a $6.7 million non-cash deferred tax expense from the re-measurement of our applicable U.K. net deferred tax liabilities.expense.

Diluted Earnings per Share (“EPS”)(EPS):

EPS for the three months ended July 31, 20202021 was $0.29$0.24 per share compared with $0.06$0.29 per share for the three months ended July 31, 2019.

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Index
2020. This decrease was due to a higher provision for income taxes, partially offset by higher operating income and, to a lesser extent, the gain on sale of certain assets.

Below is a reconciliation of our U.S.US GAAP EPS to Non-GAAP Adjusted EPS:EPS. The amount of the pretax, and the related income tax impact for the adjustments included in the table below, are presented in the section above, “Provision for Income Taxes”.

 
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,
 
  2021  2020 
US GAAP EPS $0.24  $0.29 
Adjustments:        
   Restructuring and related (credits) charges  (0.01)  0.03 
   Foreign exchange gains on intercompany transactions  (0.01)  (0.02)
   Gain on sale of certain assets  (0.05)  — 
   Income tax adjustments  0.37   0.12 
Non-GAAP Adjusted EPS $0.54  $0.42 

On a constant currency basis, Adjusted EPS increased 124%17% primarily due to an increase in Adjusted EBITDA.CTP and, to a lesser extent, a slightly lower Adjusted Effective Tax Rate.

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SEGMENT OPERATING RESULTSRESULTS:

 
Three Months Ended
July 31,
     Constant Currency  
Three Months Ended
July 31,
     Constant Currency 
RESEARCH PUBLISHING & PLATFORMS: 2020  2019  
% Change
Favorable
(Unfavorable)
  
% Change
Favorable
(Unfavorable)
  2021  2020  
% Change
Favorable
(Unfavorable)
  
% Change
Favorable
(Unfavorable)
 
Revenue:                        
Research Publishing $230,464  $219,927   5%  5% $263,358  $230,464   14%  10%
Research Platforms  10,346   9,448   10%  10%  11,398   10,346   10%  10%
Total Research Publishing & Platforms Revenue  240,810   229,375   5%  6%  274,756   240,810   14%  10%
                                
Cost of Sales  65,701   64,097   (3)%  (3)%  72,631   65,701   (11)%  (5)%
Operating Expenses  97,821   99,548   2%  1%  111,195   97,821   (14)%  (10)%
Amortization of Intangibles  7,667   7,464   (3)%  (4)%
Restructuring (Credits) Charges (see Note 9)  (197)  2,620   #   # 
Amortization of Intangible Assets  11,906   7,667   (55)%  (49)%
Restructuring Charges (Credits) (see Note 9)  216   (197)  #   # 
                                
Contribution to Profit  69,818   55,646   25%  26%  78,808   69,818   13%  10%
Restructuring (Credits) Charges (see Note 9)  (197)  2,620         
Restructuring Charges (Credits) (see Note 9)  216   (197)  #   # 
Adjusted Contribution to Profit  69,621   58,266   19%  20%  79,024   69,621   14%  10%
Depreciation and amortization  19,701   17,153           23,762   19,701   (21)%  (18)%
Adjusted EBITDA $89,322  $75,419   18%  19% $102,786  $89,322   15%  12%
Adjusted EBITDA Margin  37.1%  32.9%          37.4%  37.1%        

# Not meaningful

Revenue:

Research Publishing & Platforms revenue for the three months ended July 31, 2020 2021 increased $11.4$33.9 million, or 5%14%, as compared with the prior year on a reported basis. On a constant currency basis, revenue increased 6%10% as compared with the prior year. Excluding revenue from acquisitions, organic revenue increased 5% on a constant currency basis. This increase was primarily due to continued growth in Open Access in Research Publishing primarily due to growth in comprehensive “read and publish” agreements and, to a lesser extent, due to the contribution from acquisitions.an increase in platforms and corporate sales. In addition, approximately $4.0 million, or 2% of revenue for the three months ended July 31, 2020 reflected COVID-19 related delays2021, we experienced a 5% increase in renewing certain journalorganic article output, which resulted in a 56% increase in Open Access revenue as compared to prior year. This was partially offset by a decline in subscriptions revenue partially attributable to those “read and publish” agreements which would have typically been completed inand, to a lesser extent, the fourth quarterpreviously anticipated libraries and academic budget challenges as a result of 2020.COVID-19.

Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA increased 19%12% as compared with the prior year. This increase was primarily due to higher revenues,revenue, partially offset by higher editorial costs due to additional resources to support investments in growth, which includes the impact of the acquisition of Hindawi and, lower discretionary spending.to a lesser extent, higher cost of sales and technology related costs.

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Society Partnerships:

For the three months ended July 31, 2020:
●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%        

# Not meaningful

Revenue:

Academic & Professional Learning revenue decreased $17.9 million, or 12%, as compared with the prior year on a reported and constant currency basis.  Excluding revenue from our zyBooks and Knewton acquisitions, organic revenue declined 13% on a constant currency basis. This decrease was primarily due to the continued decline in print book publishing reflecting continuing market conditions. Also contributing to this decrease was the adverse impact of COVID-19 related retail closures, cancelled exams, and the decline in classroom dependent corporate training due to continued office closures and cancellations of in-person engagements. In Education Publishing, growth in digital content and courseware offerings has been accelerated by the impact of COVID-19 and an increase in virtual school sessions.

Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA decreased 23% as compared with the prior year. This decrease reflected revenue performance, partially offset by lower discretionary spending.
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Three Months Ended
July 31,
     Constant Currency  
Three Months Ended
July 31,
     Constant Currency 
EDUCATION SERVICES: 2020  2019  
% Change
Favorable
(Unfavorable)
  
% Change
Favorable
(Unfavorable)
 
ACADEMIC & PROFESSIONAL LEARNING: 2021  2020  
% 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%
Education Publishing (1)
 $66,380  $63,603   4%  1%
Professional Learning  72,884   62,829   16%  13%
Total Academic & Professional Learning  139,264   126,432   10%  7%
                                
Cost of Sales  42,318   35,185   (20)%  (21)%  42,071   36,482   (15)%  (12)%
Operating Expenses  15,501   15,514   —   —   85,246   86,057   1%  4%
Amortization of Intangibles  5,087   3,708   (37)%  (38)%
Amortization of Intangible Assets  3,624   4,138   12%  14%
Restructuring Charges (see Note 9)  139   2,089   93%  93%  171   33   #   # 
                                
Contribution to Profit  558   (7,199)  #   #   8,152   (278)  #   # 
Restructuring Charges (see Note 9)  139   2,089           171   33   #   # 
Adjusted Contribution to Profit  697   (5,110)  #   #   8,323   (245)  #   # 
Depreciation and amortization  7,279   5,498           18,364   18,804   2%  5%
Adjusted EBITDA $7,976  $388   #   #  $26,687  $18,559   44%  37%
Adjusted EBITDA Margin  12.5%  0.8%          19.2%  14.7%        

# Not meaningful

(1)In May 2020,2021, we moved the IT bootcamp business acquired as part of TheWileyNXT product offering from Academic & Professional Learning House acquisition from– Education Publishing to Education Services to mthree.– Talent Development Services. As a result, the prior period revenueresults related to the IT bootcamp business hasWileyNXT product offering have been included in mthree.Education Services - Talent Development Services. The Revenue, Adjusted Contribution to Profit and Adjusted EBITDA for WileyNXT was $0.5 million, $0.1 million, and $0.1 million, respectively, for the three months ended July 31, 2020.  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.

Revenue:

Education ServicesAcademic & Professional Learning revenue increased $14.3$12.8 million, or 29%10%, as compared with the prior year on a reported basis. On a constant currency basis, revenue increased 29%7% as compared with the prior year. Excluding revenue from acquisitions, organic revenue increased 4% on a constant currency basis mainly driven byThis increase was primarily due to Professional Learning due to an increase in online program management services.trade print book publishing, and corporate training due to further recovery from the prior year COVID-19 impact.  In Education Publishing, there was an increase in courseware offerings, and print textbooks and digital content, which were partially offset by declines in test preparation.

Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA increased $7.637% as compared with the prior year. This increase was due to higher revenues, and to a lesser extent, lower sales costs. This was partially offset by higher print product costs and, to a lesser extent, higher technology related costs.

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Three Months Ended
July 31,
     Constant Currency 
EDUCATION SERVICES: 2021  2020  
% Change
Favorable
(Unfavorable)
  
% Change
Favorable
(Unfavorable)
 
Revenue:            
University Services (1)
 $54,394  $50,262   8%  8%
Talent Development Services (2)(3)
  19,974   13,822   45%  34%
Total Education Services Revenue  74,368   64,084   16%  13%
                 
Cost of Sales  51,252   42,625   (20)%  (17)%
Operating Expenses  19,355   15,777   (23)%  (20)%
Amortization of Intangible Assets  5,622   5,087   (11)%  (9)%
Restructuring (Credits) Charges (see Note 9)  (34)  139   #   # 
                 
Contribution to Profit  (1,827)  456   #   # 
Restructuring (Credits) Charges (see Note 9)  (34)  139   #   # 
Adjusted Contribution to Profit  (1,861)  595   #   # 
Depreciation and amortization  8,303   7,279   (14)%  (13)%
Adjusted EBITDA $6,442  $7,874   (18)%  (21)%
Adjusted EBITDA Margin  8.7%  12.3%        

# Not meaningful

(1)University Services was previously referred to as Education Services OPM.
(2)Talent Development Services was previously referred to as mthree.
(3)In May 2021, we moved the WileyNXT product offering from Academic & Professional Learning – Education Publishing to Education Services – Talent Development Services. As a result, the prior period results related to the WileyNXT product offering have been included in Education Services - Talent Development Services. The Revenue, Adjusted Contribution to Profit and Adjusted EBITDA for WileyNXT was $0.5 million, $0.1 million, and $0.1 million, respectively, for the three months ended July 31, 2020.  There were no changes to our total consolidated financial results.

Revenue:

Education Services revenue increased $10.3 million, or 16%, as compared with the prior year on a reported basis. On a constant currency basis, revenue increased 13% as compared with the prior year. This increase was primarily due to an increase in placements in Talent Development Services and higher enrollments in University Services. For the three months ended July 31, 2021, we experienced a 9% increase in online enrollment and 13 new degree programs were added in University Services. For the three months ended July 31, 2021, we delivered nearly 70% growth in IT talent placements in Talent Development Services.

Adjusted EBITDA:

On a constant currency basis, Adjusted EBITDA decreased 21% as compared with the prior year. This was due to an increase in employment related costs due to increased investments to support the revenue growth and, to a lesser extent, higher revenue, and business optimization savings, notably improvements in student acquisition costs.marketing related costs, partially offset by higher revenue.

Education Services Partners:Partners and Programs:

As of July 31, 2021, Wiley had 65 university partners under contract. As of July 31, 2020 and 2019, Wiley had 67 university partners under contract.

CORPORATE EXPENSES:

Corporate expensesExpenses for the three months endedJuly 31, 2020 decreased 18% to $40.02021 increased $4.2 million, or 11%, as compared with the prior year. On a constant currency basis and excluding restructuring (credits) charges, these expenses decreased 16%.increased 17% as compared with the prior year. This decrease was primarily due to a decrease in employee-related costshigher employee benefit and to a lesser extent, lower professional feesretirement related to strategic planning. These factors were partially offset by an increase in legal related costs.expenses.

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FISCAL YEAR 20212022 OUTLOOK:

COVID-19 continues to disruptThe Company is reaffirming its full year outlook and adding the global economy, and this has impactednewly defined Adjusted EPS metric described below.  Going forward, Wiley will discontinue reporting on the former Adjusted EPS metric.

(amounts in millions, except Adjusted EPS)

Metric 
Fiscal Year 2021
Actual
  
Fiscal Year 2022
Outlook
 
Revenue $1,942  $$2,070 to $2,100 
Adjusted EBITDA $419  $$415 to $435 
Adjusted EPS - former $2.92  $$2.80 to $3.05 
Adjusted EPS -newly defined $4.00  $$4.00 to $4.25 
Free Cash Flow $257  $$200 to $220 

●
Revenue Outlook: Wiley expects consolidated revenue growth of mid-to-high single digits, to a range of $2.07 to $2.1 billion.
●
Adjusted EBITDA Outlook: Wiley expects a range between $415 and $435 million, with profit gains on higher revenue tempered by investments to accelerate growth initiatives.
●
Adjusted EPS Outlook (newly defined): Wiley expects arange between $4.00 to $4.25 reflecting investments, and a higher effective tax rate. Again, this is a reaffirmation of guidance but now excludes the non-cash amortization of acquired intangible assets totaling $1.20 per share.
●
Free Cash Flow Outlook: Wiley expects a range between $200 and $220 million. While cash earnings are expected to be strong, we see certain one-time headwinds compared to Fiscal Year 2021, including higher capital expenditures, higher net cash taxes, and higher annual incentive compensation payments for Fiscal Year 2021 outperformance.

Adjusted EPS Change:

Going forward, Wiley’s more traditional revenue sources, such as physical books, test prep, and in-person training.  At the same time, the pandemic is accelerating opportunities in open research and online education, with strong underlying momentum in Research article output and content consumption, online enrollment, and digital courseware.  However, given the continued uncertainty with university budgets and student enrollment, Wiley cannot confidently predict the extent or duration ofAdjusted EPS metric will exclude the impact of certain non-cash items directly related to acquisitions, most notably the pandemic on its operating results and therefore hasamortization of acquired intangible assets. The Company does not provided a specific fiscal year 2021 outlook.
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 expectedconsider these non-cash items to be offset by continued strong growthindicative of its ongoing operating performance. The amortization of intangible assets is reflected 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 dependentAmortization of intangible assets on the reopeningCondensed Consolidated Statements of physical sites.Net Income. It also includes the amortization of acquired product development assets, which is reflected in Cost of sales in the Condensed Consolidated Statements of Net Income. For the three months ended July 31, 2021, under the new measurement, Adjusted EPS (excluding the impact of amortization of acquired intangible assets) was $0.85 compared to $0.67 in the three months ended July 31, 2020. See the reconciliation tables below for more information.

  
Three Months Ended
July 31,
  Fiscal Year  Fiscal Year 
 2021  2020  2021  2020 
US GAAP Earnings (Loss) Per Share $0.24  $0.29  $2.63  $(1.32)
Adjustments:                
Restructuring and related (credits) charges  (0.01)  0.03   0.44   0.43 
Foreign exchange (gains) losses on intercompany transactions  (0.01)  (0.02)  (0.02)  0.02 
Gain on sale of certain assets  (0.05)  —   —   — 
Income tax adjustments  0.37   0.12   (0.13)  (0.03)
Impairment of goodwill  —   —   —   1.94 
Impairment of Blackwell trade name  —   —   —   1.31 
Impairment of developed technology intangible  —   —   —   0.04 
EPS impact of using weighted-average dilutive shares for adjusted EPS calculation (1)
  —   —   —   0.01 
Non-GAAP Adjusted EPS (Previously Reported) $0.54  $0.42  $2.92  $2.40 
Amortization of acquired intangible assets  0.31   0.25   1.08   0.90 
Non-GAAP Adjusted EPS (Newly Defined) $0.85  $0.67  $4.00  $3.30 
                 
Weighted average number of common shares outstanding                
Diluted (shares in 000's) (1)
  56,599   56,193   56,461   56,729 

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Index

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.

(1)For Fiscal Year 2020, represents the impact of using diluted weighted-average number of common shares outstanding (56.7 million shares for the year ended April 30, 2020) included in the Non-US GAAP Adjusted EPS calculation in order to apply the dilutive impact on adjusted net income due to the effect of unvested restricted stock units and other stock awards. This impact occurs when a US GAAP net loss is reported and the effect of using dilutive shares is antidilutive.
The Company
Below is implementing cost reduction and efficiency initiativesa reconciliation of our US GAAP Income (Loss) Before Taxes to mitigate the adverse impacts of the economic downturn and improve its agility and efficiency.  These programs are company-wide and include optimizing content development workflows, streamlining our customer support operations and achieving benchmark efficiency levels for corporate support functions, such as HR and Finance.
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.
In regard to capital allocation:
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.
Non-GAAP Adjusted Income Before Taxes:

  
Three Months Ended
July 31,
  Fiscal Year  Fiscal Year 
 2021  2020  2021  2020 
US GAAP Income (Loss) Before Taxes $44,002  $29,734  $175,912  $(63,092)
Pretax Impact of Adjustments:                
Restructuring and related (credits) charges  (276)  2,218   33,310   32,607 
Foreign exchange (gains) losses on intercompany transactions  (795)  (1,569)  (1,457)  1,256 
Gain on sale of certain assets  (3,750)  —   —   — 
Impairment of goodwill  —   —   —   110,000 
Impairment of Blackwell trade name  —   —   —   89,507 
Impairment of developed technology intangible  —   —   —   2,841 
Non-GAAP Adjusted Income Before Taxes (Previously Reported) $39,181  $30,383  $207,765  $173,119 
        Amortization of acquired intangible assets  22,284   18,149   79,421   68,269 
Non-GAAP Adjusted Income Before Taxes (Newly Defined) $61,465  $48,532  $287,186  $241,388 

Below is a reconciliation of our US GAAP Income Tax Provision to Non-GAAP Adjusted EBITDA:Income Tax Provision, including our US GAAP Effective Tax Rate and our Non-GAAP Adjusted Effective Tax Rate:

  
Three Months Ended
July 31,
  Fiscal Year  Fiscal Year 
 2021  2020  2021  2020 
US GAAP Income Tax Provision $30,172  $13,400  $27,656  $11,195 
Income Tax Impact of Adjustments (1):
                
Restructuring and related (credits) charges  45   743   8,065   7,949 
Foreign exchange (gains) losses on intercompany transactions  (101)  (612)  (363)  242 
Gain on sale of certain assets  (936)  —   —   — 
Impairment of Blackwell trade name  —   —   —   15,216 
Impairment of developed technology intangible  —   —   —   686 
Income Tax Adjustments:                
Impact of increase in UK statutory rate on deferred tax balances (2)
  (20,726)  (6,689)  (3,511)  — 
Impact of US CARES Act (3)
  —   —   13,998   — 
Impact of change in certain US state tax rates in 2021 and tax rates in France in 2020 (2)
  —   —   (3,225)  1,887 
Non-GAAP Adjusted Income Tax Provision (Previously Reported) $8,454  $6,842  $42,620  $37,175 
       Amortization of acquired intangible assets (1)
  4,843   4,298   18,511   16,820 
Non-GAAP Adjusted Income Tax Provision (Newly Defined) $13,297  $11,140  $61,131  $53,995 
                 
US GAAP Effective Tax Rate  68.6%  45.1%  15.7%  (17.7)%
Non-GAAP Adjusted Effective Tax Rate (Previously Reported)  21.6%  22.5%  20.5%  21.5%
Non-GAAP Adjusted Effective Tax Rate (Newly Defined)  21.6%  23.0%  21.3%  22.4%

(1)These adjustments substantially impacted deferred taxes.
(2)These adjustments impacted deferred taxes.
(3)The tax impact was $8.4 million from current taxes and $5.6 million from deferred taxes in the year ended April 30, 2021.

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Index


Below is a reconciliation of our consolidated U.S.US GAAP net incomeNet Income to Non-GAAP EBITDA and Adjusted EBITDA:EBITDA for the year ended April 30, 2021:
  Fiscal Year 
  2021 
Net Income $148,256 
Interest expense  18,383 
Provision for income taxes  27,656 
Depreciation and amortization  200,189 
Non-GAAP EBITDA  394,484 
Restructuring and related charges  33,310 
Foreign exchange transaction losses  7,977 
Other income, net  (16,761)
Non-GAAP Adjusted EBITDA $419,010 

Below are the details of Free Cash Flow Less Product Development Spending for the year ended April 30, 2021:

 
 
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 
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Index
  Fiscal Year 
  2021 
Net cash provided by operating activities $359,923 
Less: Additions to technology, property and equipment  (77,407)
Less: Product development spending  (25,954)
Free cash flow less product development spending $256,562 

LIQUIDITY AND CAPITAL RESOURCES

Principal Sources of Liquidity

We believe that our operating cash flow, together with our revolving credit facilities and other available debt financing, will be adequate to meet our operating, investing and financing needs in the foreseeable future. There can be no assurance that continued or increased volatility in the global capital and credit markets will not impair our ability to access these markets on terms commercially acceptable in the future. In addition, our liquidity could be adversely impacted by COVID-19 due to the continued impact on our customers, including cash collections. We do not have any off-balance-sheet debt. We will continue to pursue attractive opportunities to add scale and provide enhanced tech-enabled services in research and online education.

As of July 31, 2020,2021, we had cash and cash equivalents of $101.4$83.0 million, of which approximately $95.7$79.9 million, or 94%96%, was located outside the U.S.US. Maintenance of these cash and cash equivalent balances outside the U.S.US does not have a material impact on the liquidity or capital resources of our operations. Notwithstanding the Tax Cuts and Jobs Act of 2017 (the “Tax Act”)Tax Act), which generally eliminated federal income tax on future cash repatriation to the U.S.,US, cash repatriation may be subject to state and local taxes or withholding or similar taxes. Since April 30, 2018, we no longer intend to permanently reinvest earnings outside the U.S.US. We have a $2.0$2.5 million liability related to the estimated taxes that would be incurred upon repatriating certain non-U.S.non-US earnings.

On May 30, 2019, we entered into a credit agreement that amended and restated our existing revolving credit agreement (“Amended and Restated RCA”). The Amended and Restated RCA provides for senior unsecured credit facilities comprised of a (i) five-year revolving credit facility in an aggregate principal amount up to $1.25 billion, and (ii) a five-year term loan A facility consisting of $250 million. The agreement contains certain customary affirmative and negative covenants, including a financial covenant in the form of a consolidated net leverage ratio and consolidated interest coverage ratio. 

As of July 31, 2020,2021, we had approximately $846.7$964.5 million of debt outstanding, net of unamortized issuance costs of $0.6$0.5 million, and approximately $648.1$518.8 million of unused borrowing capacity under our Amended and Restated RCA and other facilities. Our Amended and Restated RCA contains certain restrictive covenants related to our consolidated leverage ratio and interest coverage ratio, which we were in compliance with as of July 31, 2020.2021.

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Analysis of Historical Cash Flow

The following table shows the changes in our Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended July 31, 20202021 and 2019.2020.

 
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)

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 dividends, and fund share repurchases and new acquisitions. Below are the details of Free Cash Flow less Product Development Spending for the three months ended July 31, 2020 and 2019.
 
Three Months Ended
July 31,
 
  2021  2020 
Net cash used in operating activities $(84,774) $(120,783)
Net cash used in investing activities  (23,532)  (28,280)
Net cash provided by financing activities  99,089   43,484 
Effect of foreign currency exchange rate changes on cash, cash equivalents and restricted cash $(1,586) $4,500 

Cash flow from operations is seasonally a use of cash in the first half of Wiley’s fiscal year principally due to the timing of collections for annual journal subscriptions, which occurs in the beginning of the second half of our fiscal year.

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 dividends, and fund share repurchases, and acquisitions. Below are the details of Free cash flow less product development spending.

Free Cash Flow less Product Development Spending:
 
 
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)

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Index
 
 
Three Months Ended
July 31,
 
  2021  2020 
Net cash used in operating activities $(84,774) $(120,783)
Less: Additions to technology, property and equipment  (17,910)  (18,964)
Less: Product development spending  (5,670)  (5,325)
Free cash flow less product development spending $(108,354) $(145,072)

Net Cash Used In Operating Activities

The following is a summary of the $26.6$36.0 million change in Net Cash Used In Operating Activitiescash used in operating activities for the three months ended July 31, 20202021 as compared with the three months ended July 31, 20192020 (amounts in millions).

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)
Net cash used in operating activities – Three months ended July 31, 2020 $(120.8)
Net income adjusted for items to reconcile net income to net cash used in operating activities, including the following noncash items: depreciation and amortization, and the change in deferred taxes  12.5 
Working capital changes:   
Accounts payable and royalties payable  36.0 
Income taxes  20.2 
Other accrued liabilities  (37.7)
Accounts receivable, net and contract liabilities  (6.4)
Other working capital items  11.4 
Net cash used in operating activities – Three months ended July 31, 2021 $(84.8)

The changes in accounts payable and royalties payable and accounts receivable, net and contract liabilities were primarily due to timing. The change in income taxes was due to lower international tax payments, net of refunds in the three months ended July 31, 2021. The change in other accrued liabilities was primarily due to an increase in payments due to higher annual incentive compensation.

The change in other working capital items noted in the table above was primarily due to a decrease in employee benefit and retirement related costs, and a reduction in cash used for prepayments.

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Our negative working capital (current assets less current liabilities) was $228.1$284.4 million and $312.3$462.7 million as of July 31, 20202021 and April 30, 2020, respectively,2021, respectively. This $178.3 million change in negative working capital was primarily due to the seasonality of our businesses.business. The primary driver of the negative working capital is the benefit realized from unearned contract liabilities related to subscriptions for which cash has been collected in advance. The contract liabilities will be recognized as income when the products are shipped or made available online to the customers over the term of the subscription. Current liabilities as of July 31, 2021 and as of April 30, 2021 includes $418.5 million and $545.4 million, respectively, primarily related to deferred subscription revenue for which cash was collected in advance.

Cash receivedcollected in advance for subscriptions is used by us for a number of purposes including funding: operations, capital expenditures, acquisitions, debt repayments, operations and dividend payments, and purchasing treasury shares. Due to the economic downturn, we estimate that approximately $30 million of customer payments were delayed into fiscal year 2021. Our Accounts Receivable collections were in line with our expectations. Although, in certain situations, the timing of collections may be extended, we do not anticipate any material issues with Accounts Receivable collections.share repurchases. Many of our customers have been adversely impacted by COVID-19, and we expect some continued delays in payments due to widespread disruption and pervasive cash conservation behaviors in the face of uncertainty.

The $84.2 million change in negative working capital was primarily due to the decrease in cash and cash equivalents, and in accounts receivable and contract liabilities due to the timing of customer payments, including customer payments that were delayed into fiscal year 2021 and the recognition of revenue, partially offset by a decrease in accounts payable due to the timing of payments, a decrease in accrued employment costs due to payments of annual incentive compensation and a decrease in accrued income taxes, primarily due to international tax payments, partially offset by the current year provision.

The contract liabilities will be recognized as income when the products are shipped or made available online to the customers over the term of the subscription. Current liabilities as of July 31, 2020 and as of April 30, 2020 includes $409.0 million and $520.2 million, respectively, primarily related to deferred subscription revenue  We have recorded provisions for which cash was collected in advance.bad debt where appropriate.

Net Cash Used In Investing Activities

Net Cash Used In Investing Activitiescash used in investing activities for the three months ended July 31, 20202021 was $28.3$23.5 million compared to $105.9$28.3 million in the prior year. The decrease in cash used in investing activities was due to a reductiondecrease of $73.1$3.6 million in cash used to acquire businesses,for the acquisition of publication rights and to a lesser extent, a decreaseother activities, and cash proceeds of $5.2$3.4 million for additions of technology, property and equipment in the three months ended July 31, 2020.2021 due to the sale of our world language product portfolio as described above. This was partially offset by an increase of $2.9 million in cash used to acquire businesses.

Net Cash Provided By Financing Activities

Net Cash Provided By Financing Activitiescash provided by financing activities was $99.1 million for the three months ended July 31, 2021 compared to $43.5 million for the three months ended July 31, 2020 compared2020. This increase in cash provided by financing activities was primarily due to $213.3a decrease in net repayments of long-term debt of $75.3 million, partially offset by an increase in cash used for book overdrafts of $9.5 million, and $7.4 million of cash used for purchases of treasury shares in the three months ended July 31, 2021.

Dividends and Share Repurchases

In the three months ended July 31, 2021, we increased our quarterly dividend to shareholders to $1.38 per share annualized versus $1.37 per share annualized in the prior year.

The following table summarizes the shares repurchased of Class A and Class B Common Stock for the three months ended July 31, 2019. This decrease2021 (shares in cash provided by financing activities was due to a decrease in net borrowings of $186.5 million, which was primarily due to an increase in repayments for the three months ended July 31, 2020, partially offset by $10.0 million of lower cash used forthousands):
  
Three Months Ended
July 31, 2021
 
Shares repurchased – Class A  129 
Shares repurchased – Class B  1 
Average price – Class A and Class B $56.88 

There were no share repurchases of common stock induring the three months ended July 31, 2020.

During the three months ended July 31, 2020, we made no repurchases of shares of common stock. During the three months ended July 31, 2019, we repurchased 217,511 shares of Class A Common stock at an average price of $45.97.

In the three months ended July 31, 2020, we increased our quarterly dividend to shareholders to $1.37 per share annualized versus $1.36 per share annualized in the prior year.

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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

We are exposed to market risk primarily related to interest rates, foreign exchange, and credit risk. It is our policy to monitor these exposures and to use derivative financial investments and/or insurance contracts from time to time to reduce fluctuations in earnings and cash flows when it is deemed appropriate to do so. We do not use derivative financial instruments for trading or speculative purposes.

Interest Rates

From time to time, we may use interest rate swaps, collars, or options to manage our exposure to fluctuations in interest rates. It is management’s intention that the notional amount of interest rate swaps be less than the variable rate loans outstanding during the life of the derivatives.

The information set forth in Note 16, "Derivatives Instruments and Hedging Activities," of the Notes to Unaudited Condensed Consolidated Financial Statements under the caption "Interest Rate Contracts," is incorporated herein by reference.

On an annual basis, a hypothetical one percent change in interest rates for the $547.3$565.0 million of unhedged variable rate debt as of July 31, 20202021 would affect net income and cash flow by approximately $4.3$4.4 million.

Foreign Exchange Rates

Fluctuations in the currencies of countries where we operate outside the U.S.US may have a significant impact on financial results. We are primarily exposed to movements in British pound sterling, euros, Canadian and Australian dollars, and certain currencies in Asia. The Statementsstatements of Financial Positionfinancial position of non-U.S.non-US business units are translated into U.S.US dollars using period-end exchange rates for assets and liabilities and the Statementsstatements of Incomeincome are translated into U.S.US dollars using weighted-average exchange rates for revenues and expenses.

Our significant investments in non-U.S.non-US businesses are exposed to foreign currency risk. Adjustments resulting from translating assets and liabilities are reported as a separate component of Accumulated Other Comprehensive Lossother comprehensive loss, net of tax within Shareholders’ Equity under the caption Foreign Currency Translation Adjustment.currency translation adjustment. During the three months ended July 31, 2021, we recorded foreign currency translation losses in Accumulated other comprehensive loss, net of tax of approximately $5.9 million, primarily as a result of the fluctuations of the US dollar relative to the euro and, to a lesser extent the Australian dollar. During the three months ended July 31, 2020, we recorded foreign currency translation gains in Accumulated Other Comprehensive Lossother comprehensive loss, net of tax of approximately $46.9 million, primarily as a result of the fluctuations of the U.S.US dollar relative to the British pound sterling, and to a lesser extent the euro. During the three months ended July 31, 2019, we recorded foreign currency translation losses in Accumulated Other Comprehensive Loss of approximately $35.5 million primarily as a result of the fluctuations of the U.S. dollar relative to the British pound sterling and, to a lesser extent, the euro.euro.

Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains or losses in ouron the Unaudited Condensed Consolidated Statements of Net Income as incurred. Under certain circumstances, we may enter into derivative financial instruments in the form of foreign currency forward contracts to hedge against specific transactions, including intercompany purchases and loans.

The information set forth in Note 16, "Derivatives Instruments and Hedging Activities," of the Notes to Unaudited Condensed Consolidated Financial Statements under the caption "Foreign Currency Contracts," is incorporated herein by reference.

Sales Return Reserves

The estimated allowance for print book sales returns is based upon historical return patterns, as well as current market trends in the businesses in which we operate, including the impact of COVID-19. In connection with the estimated sales return reserves, we also include a related increase to inventory and a reduction to accrued royalties as a result of the expected returns.

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The reserves are reflected in the following accounts of our Unaudited Condensed Consolidated Statements of Financial Position – increase (decrease):Position:

 July 31, 2020  April 30, 2020  July 31, 2021  April 30, 2021 
Increase in Inventories, net $10,967  $8,686  $11,047  $10,886 
Decrease in Accrued royalties $(5,277) $(4,441) $(5,342) $(4,949)
Increase in Contract liabilities $39,384  $32,769  $40,694  $38,034 
Print book sales return reserve net liability balance $(23,140) $(19,642) $(24,305) $(22,199)

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A one percent change in the estimated sales return rate could affect net income by approximately $0.3$0.5 million. A change in the pattern or trends in returns could affect the estimated allowance.

Customer Credit Risk

In the journal publishing business, subscriptions are primarily sourced through journal subscription agents who, acting as agents for library customers, facilitate ordering by consolidating the subscription orders/billings of each subscriber with various publishers. Cash is generally collected in advance from subscribers by the subscription agents and is principally remitted to us between the months of December and April. Although currently we have minimal credit risk exposure to these agents, future calendar-year subscription receipts from these agents are highly dependent on their financial condition and liquidity. Subscription agents account for approximately 20% of total annual consolidated revenue, and no one affiliated group of subscription agents accounts for approximatelymore than 10% of total annual consolidated revenue.

Our book business is not dependent upon a single customer; however, the industry is concentrated in national, regional, and online bookstore chains. Although noNo single book customer accounts for more than 11%8% of total consolidated revenue and more than 15% of accounts receivable at July 31, 2020, the2021.  The top 10 book customers account for approximately 15%13% of total consolidated revenue and approximately 27%26% of accounts receivable at July 31, 2020.2021.

DisclosureMany of Certain Activities Relatingour customers have been adversely impacted by COVID-19, and we expect some continued delays in payments due to Iranwidespread disruption and pervasive cash conservation behaviors in the face of uncertainty.

The European Union, Canada and United States have imposed sanctions on business relationships with Iran, including restrictions on financial transactions and prohibitions on direct and indirect trading with listed “designated persons.” In the three months ended July 31, 2020, we recorded an immaterial amount of revenue and net earnings related to the sale of scientific and medical content to certain publicly funded universities, hospitals and institutions that meet the definition of the “Government of Iran” as defined under section 560.304 of title 31, Code of Federal Regulations. We assessed our business relationship and transactions with Iran and believe we are in compliance with the regulations governing the sanctions. We intend to continue in these or similar sales as long as they continue to be consistent with all applicable sanction-related regulations.

ITEM 4.  CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial Officer, together with the Chief Accounting Officer and other members of the Company's management, have conducted an evaluation of the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this report. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission's rules and forms and (ii) accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting: During the three months ended January 31, 2020,fiscal year 2021, we closed on the acquisition of mthree.Hindawi. We excluded mthreeHindawi from the scope of management’s report on internal control over financial reporting for the year-endedyear ended April 30, 2020.2021. We are in the process of integrating mthree intoHindawi to our overall internal control over financial reporting and will include them in scope for the year ending April 30, 2021.2022. This process may result in additions or changes to our internal control over financial reporting.

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We are in the process of implementing a newcontinue to implement additional functionality and enhancements to our previously disclosed global ERP that will enhance our business and financial processes and standardize our information systems. As previously disclosed, we have completed the implementation of record-to-report, purchase-to-pay and several other business processes within all locations through fiscal year 2017. We completed the implementation of order-to-cash for certain businesses in May 2018 and may continue to roll out additional processes and functionality of the ERP in phases in the foreseeable future.

implementation. As with any new information system we implement, this application, along with the internal controls over financial reporting included in this process, will require testing for effectiveness. In connection with this ERP implementation, we are updating our internal controls over financial reporting, as necessary, to accommodate modifications to our business processes and accounting procedures. We do not believe that the ERP implementation will have an adverse effect on our internal control over financial reporting.

Except as described above, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) during the quarter ended July 31, 20202021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There have been no significant developments related to legal proceedings during the three months ended July 31, 2020.2021. For information regarding legal proceedings, see our Annual Report on Form 10-K for the fiscal year ended April 30, 20202021 Note 16, “Commitment and Contingencies”.

ITEM 1a.1A. RISK FACTORS

See Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended April 30, 2020.2021. Except as required by the federal securities law, we undertake no obligation to update or revise any risk factor, whether as a result of new information, future events or otherwise.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended July 31, 2020, there were no share repurchases2021, we made the following purchases of our Class A and Class B Common Stock under our publicly announced stock repurchase programs.programs:
  
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 
  
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 2021  —  $—   —   497,197  $200 
June 2021  75,513   56.49   75,513   421,684   200 
July 2021  54,000   57.43   54,000   367,684   200 
Total  129,513  $56.88   129,513   367,684  $200 

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ITEM 6. EXHIBITS

Material Contracts
10.1
Separation and Release Agreement, dated June 11, 2021 between Matthew S. Kissner, Group Executive Vice President, and the Company (incorporated by reference to the Company’s Report on Form of the Fiscal Year 2021 Qualified Executive Annual Incentive Plan.8-K filed on June 17, 2021).
10.2
Transition and Consulting Agreement, dated June 15, 2021 between Matthew S. Kissner, Group Executive Vice President, and the Company (incorporated by reference to the Company’s Report on Form of the Fiscal 2021 8-K filed on June 17, 2021).
10.3*
Restricted Share Unit Grant Agreement under the Executive Long-Term Incentive Plan under the Business Officer Equity Program, pursuantPursuant to the 2014 Key Employee Stock Plan.
10.310.4*
Form of the Fiscal 2021 RestrictedPerformance Share Unit Grant Agreement with Matthew S. Kissner under the Executive Long-Term Incentive Plan under the Business Officer Equity Program, pursuantPursuant to the 2014 Key Employee Stock Plan.
10.4
Employment Letter dated April 20, 2018 between Aref Matin, Executive Vice President and Chief Technology Officer, and the Company.
31.110.5*
Non-Qualified Premium Stock Option Grant Agreement Pursuant to the 2014 Key Employee Stock Plan.
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.1*
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.231.2*
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.132.1*
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.232.2*
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
Inline XBRL
101.INS*Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH101.SCH*Inline XBRL Taxonomy Extension Schema Document.
101.CAL101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)


*Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

  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 and Chief Financial Officer and Interim Chief Accounting Officer
   
By/s/ Christopher F. Caridi
Christopher F. Caridi
Senior Vice President, Global Corporate Controller and Chief Accounting Officer
   
  Dated: September 4, 20203, 2021


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