SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT 1934
For the quarterly period ended January 31, 2003 Commission File No. 1-11507
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES ACT OF 1934
For the transition period from to
JOHN WILEY & SONS, INC.
-----------------------
(Exact name of Registrant as specified in its charter)
NEW YORK 13-5593032
- ------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
111 RIVER STREET, HOBOKEN NJ 07030
- ------------------------------ ---------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (201) 748-6000
---------------------------------
NOT APPLICABLE
-------------------------------
Former name, former address, and former fiscal year,
if changed since last report
Indicate by check mark, whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
The number of shares outstanding of each of the Registrant's classes of common
stock as of January 31, 2003 were:
Class A, par value $1.00 - 50,081,330
Class B, par value $1.00 - 11,575,964
This is the first page of a 27 page document
JOHN WILEY & SONS, INC.
INDEX
PART I - FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements.
Condensed Consolidated Statements of Financial Position - Unaudited
as of January 31, 2003 and 2002, and April 30, 2002........................................3
Condensed Consolidated Statements of Income - Unaudited
for the Three and Nine Months ended January 31, 2003 and 2002..............................4
Condensed Consolidated Statements of Cash Flows - Unaudited
for the Nine Months ended January 31, 2003 and 2002....................................... 5
Notes to Unaudited Condensed Consolidated Financial Statements.............................6-13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................................................14-21
Item 3. Quantitative and Qualitative Disclosures About Market Risk................................21-22
Item 4. Controls and Procedures......................................................................22
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.............................................................22
SIGNATURES AND CERTIFICATIONS........................................................................23-25
EXHIBITS
99.1 - 18 U.S.C. Section 1350 Certificate by the President and Chief
Executive Officer
99.2 - 18 U.S.C. Section 1350 Certificate by the Chief Financial and
Operations Officer
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands)
(UNAUDITED)
January 31, April 30,
------------------------------------ ----------------
Assets 2003 2002 2002
---------------- --------------- ----------------
Current Assets
Cash and cash equivalents $ 31,941 80,487 $ 39,705
Accounts receivable 157,698 137,535 101,084
Taxes receivable 4,238 10,168 18,664
Inventories 80,545 68,994 69,799
Deferred income tax benefits 33,331 34,915 34,394
Prepaid expenses 10,566 11,194 11,613
---------------- --------------- ----------------
Total Current Assets 318,319 343,293 275,259
Product Development Assets 62,107 63,266 63,055
Property and Equipment 109,756 63,501 72,127
Intangible Assets 280,142 249,666 275,295
Goodwill 193,392 170,427 189,099
Deferred Income Tax Benefits 11,410 2,182 1,351
Other Assets 20,459 20,230 19,959
---------------- --------------- ----------------
Total Assets $ 995,585 912,565 $ 896,145
================ =============== ================
Liabilities & Shareholders' Equity
Current Liabilities
Current portion of long-term debt $ 35,000 30,000 $ 30,000
Accounts and royalties payable 99,106 87,870 67,516
Deferred subscription revenues 148,524 146,224 125,793
Accrued income taxes 21,753 18,897 9,769
Other accrued liabilities 64,183 63,312 87,315
---------------- --------------- ----------------
Total Current Liabilities 368,566 346,303 320,393
Long-Term Debt 200,000 235,000 235,000
Other Long-Term Liabilities 59,991 46,428 49,827
Deferred Income Taxes 15,004 10,324 14,275
Shareholders' Equity 352,024 274,510 276,650
---------------- --------------- ----------------
Total Liabilities & Shareholders' Equity $ 995,585 912,565 $ 896,145
================ =============== ================
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
JOHN WILEY & SONS, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands except per share information)
Three Months Nine Months
Ended January 31, Ended January 31,
--------------------------------------- -------------------------------------
2003 2002 2003 2002
-------------------- ---------------- ------------------- ---------------
Revenues $ 221,196 207,981 $ 650,641 545,226
Costs and Expenses
Cost of sales 72,674 70,657 218,646 177,542
Operating and administrative expenses 109,122 98,213 318,860 260,457
Amortization of intangibles 2,548 4,395 7,259 13,061
Unusual Item - Relocation related expenses - - 2,465 -
-------------------- ---------------- ------------------- ---------------
Total Costs and Expenses 184,344 173,265 547,230 451,060
-------------------- ---------------- ------------------- ---------------
Operating Income 36,852 34,716 103,411 94,166
Interest Income and Other - Net 713 (215) 1,234 43
Interest Expense (2,086) (2,149) (6,468) (5,108)
-------------------- ---------------- ------------------- ---------------
Interest Expense - Net (1,373) (2,364) (5,234) (5,065)
-------------------- ---------------- ------------------- ---------------
Income Before Taxes 35,479 32,352 98,177 89,101
Provision For Income Taxes 11,259 11,000 19,196 30,294
-------------------- ---------------- ------------------- ---------------
Net Income $ 24,220 21,352 $ 78,981 58,807
-------------------- ---------------- ------------------- ---------------
Income Per Share
Diluted $ .39 .34 $ 1.25 0.93
Basic $ .39 .35 $ 1.28 0.97
Cash Dividends Per Share
Class A Common $ .05 .05 $ 0.15 0.14
Class B Common $ .05 .05 $ 0.15 0.14
Average Shares
Diluted 62,575 63,376 63,202 63,036
Basic 61,447 60,961 61,505 60,632
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW - UNAUDITED
(In thousands)
For The Nine Months
Ended January 31,
---------------------------
2003 2002
------------ ---------
Operating Activities
--------------------
Net income $ 78,981 $ 58,807
Non-cash items
Amortization of Intangibles 7,259 13,061
Amortization of Composition Costs 22,019 18,206
Depreciation of Property and Equipment 17,903 12,315
Other non-cash items 27,906 29,351
Net change in operating assets and liabilities (15,794) (1,635)
Payment of acquisition related liabilities - (12,544)
----------- ----------
Cash Provided By Operating Activities 138,274 117,561
----------- ----------
Investing Activities
--------------------
Additions to product development assets (36,452) (32,921)
Additions to property and equipment (51,476) (20,059)
Acquisition of publishing assets (7,835) (200,599)
----------- ----------
Cash Used for Investing Activities (95,763) (253,579)
----------- ----------
Financing Activities
--------------------
Borrowings of long-term debt - 200,000
Repayment of long-term debt (30,000) (30,000)
Purchase of treasury shares (10,380) (2,783)
Cash dividends (9,259) (8,245)
Proceeds from exercise of stock options 1,990 3,722
----------- ----------
Cash Provided By (Used for) Financing Activities (47,649) 162,694
----------- ----------
Effects of Exchange Rate Changes on Cash (2,626) 864
----------- ----------
Cash and Cash Equivalents
Increase (decrease) for Period (7,764) 27,540
Balance at Beginning of Period 39,705 52,947
----------- ----------
Balance at End of Period $ 31,941 $ 80,487
=========== ==========
Supplemental Information
Businesses Acquired:
Fair value of assets acquired $ 7,865 $ 268,258
Liabilities assumed (30) (67,659)
----------- ----------
Cash paid for businesses acquired $ 7,835 $ 200,599
=========== ==========
Cash Paid (Refunded) During the Period for:
Interest $ 9,689 $ 5,028
Income taxes - Net $ (1,194) $ 10,261
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting only
of normal recurring adjustments, necessary to present fairly the
consolidated financial position of John Wiley & Sons, Inc., and
Subsidiaries (the "Company") as of January 31, 2003 and 2002, and April 30,
2002, and results of operations and cash flows for the periods ended
January 31, 2003 and 2002. The results for the three months and nine months
ended January 31, 2003 are not necessarily indicative of the results to be
expected for the full year. These statements should be read in conjunction
with the most recent audited financial statements contained in the
Company's Form 10-K for the fiscal year ended April 30, 2002.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Certain prior year amounts have been reclassified to provide a more
meaningful comparison.
2. Comprehensive income was as follows (in thousands):
Three Months Nine Months
Ended January 31, Ended January 31,
------------------------------ --------------------------------
2003 2002 2003 2002
----------- ------------- ------------- --------------
Net Income $24,220 21,352 $78,981 58,807
Other Comprehensive Income (Loss), net of
taxes -
Transition adjustment for cash flow
hedges as of May 1, 2001 - - - (454)
Period change in fair value of cash
flow hedges - (115) 168 (212)
Foreign currency translation
adjustments 6,834 (447) 9,923 (714)
----------- ------------- ------------- --------------
Comprehensive Income $31,054 20,790 $89,072 57,427
=========== ============= ============= ==============
A reconciliation of accumulated other comprehensive gain (loss) follows (in
thousands):
Three Months Ended January 31, 2003 Nine Months Ended January 31, 2003
----------------------------------- ----------------------------------
Beginning Change for Ending Beginning Change for Ending
Balance Period Balance Balance Period Balance
------------- ------------ ------------ -------------- ------------ ----------
Foreign currency translation
adjustment $ 555 6,834 7,389 $ (2,534) 9,923 7,389
Cash flow hedge - - - (168) 168 -
------------- ------------ ------------ -------------- ------------ ---------
Total $ 555 6,834 7,389 $ (2,702) 10,091 7,389
============= ============ ============ ============== ============ =========
3. A reconciliation of the shares used in the computation of income per share
follows (in thousands):
Three Months Nine Months
Ended January 31, Ended January 31,
---------------------------------- ---------------------------------
2003 2002 2003 2002
--------------- --------------- -------------- ---------------
Weighted average shares outstanding 61,656 61,238 61,682 60,901
Less: Unearned deferred compensation
shares (209) (277) (177) (269)
--------------- --------------- -------------- ---------------
Shares used for basic income per share 61,447 60,961 61,505 60,632
Dilutive effect of stock options and
other stock awards 1,128 2,415 1,697 2,404
--------------- --------------- -------------- ---------------
Shares used for diluted income per share 62,575 63,376 63,202 63,036
=============== =============== ============== ===============
For the three and nine months ended January 31, 2003 and 2002, options to
purchase shares of Class A common stock of 2.1 million and 1.2 million,
respectively, have been excluded from the shares used for diluted income
per share as their inclusion would have been antidilutive.
4. Inventories were as follows (in thousands):
January 31, April 30,
-------------------------------- -------------
2003 2002 2002
-------------- -------------- -------------
Finished goods $71,345 62,278 $62,756
Work-in-process 6,927 5,602 6,845
Paper, cloth and other 6,186 4,505 3,811
-------------- -------------- -------------
84,458 72,385 73,412
LIFO reserve (3,913) (3,391) (3,613)
-------------- -------------- -------------
Total inventories $80,545 68,994 $69,799
============== ============== =============
5. The Company is a global publisher of print and electronic products,
providing must-have content and services to customers worldwide. Core
businesses include professional and consumer books and subscription
services; scientific, technical, and medical journals, encyclopedias, books
and online products and services; and educational materials for
undergraduate and graduate students, and lifelong learners. The Company has
publishing, marketing, and distribution centers in the United States,
Canada, Europe, Asia, and Australia. Certain prior year amounts have been
reclassified to provide a more meaningful comparison. The Company's
reportable segments are based on the management reporting structure used to
evaluate performance. Segment information is as follows:
Three Months Ended January 31,
-----------------------------------------------------------------------------------
2003 2002
----------------------------------------- --------------------------------------
(thousands)
Inter- Inter-
External segment External segment
Customers Sales Total Customers Sales Total
-------------- ------------- ------------ ------------- ----------- ------------
Revenues
- --------
U.S. Segments:
Professional/Trade $72,809 8,999 81,808 $76,105 $3,569 79,674
Scientific, Technical, and Medical 37,486 2,194 39,680 36,619 2,126 38,745
Higher Education 37,222 6,383 43,605 36,071 5,730 41,801
European Segment 46,075 3,719 49,794 38,229 3,251 41,480
Asia, Australia & Canada 27,604 255 27,859 20,957 153 21,110
Eliminations - (21,550) (21,550) - (14,829) (14,829)
-------------- ------------- ------------ ------------- ----------- ------------
Total Revenues $221,196 - 221,196 $207,981 - 207,981
-------------- ------------- ------------ ------------- ----------- ------------
Direct Contribution to Profit
- -----------------------------
U.S. Segments:
Professional/Trade $24,220 $21,065
Scientific, Technical, and Medical 17,188 16,039
Higher Education 15,318 16,729
European Segment 14,996 14,060
Asia, Australia & Canada 7,063 6,101
------------ ------------
Total Direct Contribution to Profit 78,785 73,994
Shared Services and Administrative Costs
- ----------------------------------------
Distribution (11,651) (10,921)
Information Technology (10,898) (9,870)
Finance (6,799) (5,393)
Other Administration (12,585) (13,094)
------------ ------------
Total Shared Services and Administration Costs (41,933) (39,278)
------------ ------------
Operating Income 36,852 34,716
Interest Expense - Net (1,373) (2,364)
------------ ------------
Income Before Taxes $35,479 $32,352
============ ============
Nine Months Ended January 31,
------------------------------------------------------------------------------------
2003 2002
----------------------------------------- ---------------------------------------
(thousands)
Inter- Inter-
External segment External segment
Customers Sales Total Customers Sales Total
-------------- ------------- ------------ ------------- ------------ ------------
Revenues
- --------
U.S. Segments:
Professional/Trade $216,712 24,936 241,648 $165,656 11,000 176,656
Scientific, Technical, and Medical 118,463 6,090 124,553 115,388 5,253 120,641
Higher Education 104,223 20,872 125,095 100,300 18,773 119,073
European Segment 140,913 11,850 152,763 111,139 9,312 120,451
Asia, Australia & Canada 70,330 624 70,954 52,743 558 53,301
Eliminations - (64,372) (64,372) - (44,896) (44,896)
-------------- ------------- ------------ ------------- ------------ ------------
Total Revenues $650,641 - 650,641 $545,226 - 545,226
-------------- ------------- ------------ ------------- ------------ ------------
Direct Contribution to Profit
- -----------------------------
U.S. Segments:
Professional/Trade $66,004 $43,719
Scientific, Technical, and Medical 57,905 54,288
Higher Education 42,101 44,843
European Segment 48,071 41,575
Asia, Australia & Canada 14,725 12,473
------------ ------------
Total Direct Contribution to Profit 228,806 196,898
Shared Services and Administrative Costs
- ----------------------------------------
Distribution (34,115) (26,500)
Information Technology (30,085) (26,514)
Finance (20,910) (15,775)
Other Administration (37,820) (33,943)
------------ ------------
Total Shared Services and Administration Costs (122,930) (102,732)
Unusual Items - Relocation Expenses (2,465) -
------------ ------------
Operating Income 103,411 94,166
Interest Expense - Net (5,234) (5,065)
------------ ------------
Income Before Taxes $98,177 $89,101
============ ============
6. Acquisitions
------------
In the first quarter of fiscal year 2003 the Company made three
acquisitions totaling approximately $7.8 million including a $6.5 million
acquisition of teacher education titles from Prentice Hall Direct/Pearson
Education.
In September 2001, the Company acquired 100% of the outstanding shares of
Hungry Minds, Inc. (Hungry Minds) for a total purchase price of
approximately $184.9 million, consisting of approximately $90.2 million in
cash for the common stock of Hungry Minds, $92.5 million in cash to enable
Hungry Minds to repay its outstanding debt, and fees and expenses of
approximately $2.2 million. The acquisition included 2,500 active titles
which are available in 39 languages. Well-known brands include the For
Dummies and Unofficial Guide series, the technological Bible and Visual
series, Frommer's travel guides, CliffsNotes, Webster's New World
Dictionary, Betty Crocker, and Weight Watchers.
In fiscal year 2002, the Company also acquired four other businesses for
purchase prices aggregating $35.1 million. These included: A&M Publishing
Ltd., a U.K.-based publisher for the pharmaceutical and health care
sectors; GIT Verlag GmbH, a German publisher for the chemical,
pharmaceutical, biotechnology, security and engineering industries; and
Frank J. Fabozzi Publishing and an Australian publisher, Wrightbooks Pty
Ltd., both publishing high-quality finance books for the professional
market.
7. Goodwill and Other Intangible Assets
------------------------------------
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 141, "Business Combinations" and
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires all
business combinations initiated after June 30, 2001 to be accounted by the
purchase method of accounting. In addition, the statement requires the
purchase price to be allocated to identifiable intangible assets in
addition to goodwill if certain criteria are met.
On May 1, 2002, the Company adopted SFAS No. 142, which eliminates the
requirement to amortize goodwill and those intangible assets that have
indefinite useful lives, but requires an annual test for impairment or more
frequently if impairment indicators arise. Intangible assets that have
finite useful lives will continue to be amortized over their useful lives.
The Company completed its initial evaluation and assessment of its goodwill
and other intangible assets in accordance with SFAS No. 142 during the
first quarter. No impairment charge was required. The Company reclassified
certain acquired publication rights to indefinite life intangibles in
connection with the implementation of SFAS No. 142.
The following table represents unaudited adjusted net income of the
Company, giving effect to SFAS No. 142 as if it were adopted on May 1, 2001
(in thousands):
Three Months Ended January 31, Nine Months Ended January 31,
---------------------------- ------------------------------
2002 2001 2002 2001
----------- ------------ ----------- -------------
Net income, as reported $24,220 21,352 $78,981 58,807
Add back: amortization expense, net of tax
Indefinite lived intangibles - 999 - 3,000
Goodwill - 940 - 2,901
----------- ------------ ----------- -------------
Adjusted net income $24,220 23,291 $78,981 64,708
=========== ============ =========== =============
Income per Diluted Share:
As reported $0.39 0.34 $1.25 0.93
Adjusted $0.39 0.37 $1.25 1.03
Income per Basic Share:
As reported $0.39 0.35 $1.28 0.97
Adjusted $0.39 0.38 $1.28 1.07
The following table summarizes the activity in goodwill by segment (in
thousands):
Cummulative
As of Acquisitions & Translation & As of
April 30, 2002 Dispositions Other Adjustments January 31, 2003
------------------- ------------------ ------------------ ----------------------
Professional/Trade $146,191 - 2,053 148,244
Scientific, Technical and Medical 23,193 - - 23,193
European 18,010 - 2,105 20,115
Other 1,705 - 135 1,840
------------------- ------------------ ----------------- ----------------------
Total $189,099 - 4,293 193,392
=================== ================== ================= ======================
The following table summarizes the activity in other intangibles subject to
amortization (in thousands):
As of As of
January 31, 2003 April 30, 2002
--------------------- --------------------
Acquired publication rights $149,488 $263,392
Accumulated amortization (41,230) (57,815)
--------------------- --------------------
Net acquired publication rights 108,258 205,577
Covenants not to compete 1,590 1,257
Accumulated amortization (943) (937)
--------------------- --------------------
Net covenants not to compete 647 320
--------------------- --------------------
Total $108,905 $205,897
===================== ====================
Based on the current amount of intangible assets subject to amortization,
the estimated amortization expense for each of the succeeding 5 years are
as follows: Fiscal 2003 $9.6 million; 2004 $9.0 million; 2005 $8.9 million,
2006 $8.6 million and 2007 $8.5 million. As acquisitions and dispositions
occur in the future and as purchase price allocations are finalized, these
amounts may vary.
The following table summarizes other intangibles not subject to
amortization (in thousands):
As of As of
January 31, 2003 April 30, 2002
------------------------ ---------------------
Acquired publication rights $113,337 $11,498
Branded trademarks 57,900 57,900
------------------------ ---------------------
$171,237 $69,398
======================== =====================
8. Recent Accounting Standards
---------------------------
In October 2001, the Financial Accounting Standards Board (FASB) issued
SFAS No. 143, "Accounting for Asset Retirement Obligations". This standard
addresses the financial accounting and reporting for obligations associated
with the retirement of tangible long-lived assets and the associated asset
retirement costs. The standard is effective for fiscal year 2004. The
adoption of SFAS No. 143 is not expected to have a material impact on the
Company's financial position or results of operations.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". This standard addresses
financial accounting and reporting for the impairment or disposal of
long-lived assets. The standard is effective for fiscal year 2003. The
adoption of SFAS No. 144 had no effect on the Company's financial position
or results of operations.
In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". SFAS 146, which is effective
prospectively for exit or disposal activities initiated after December 31,
2002, applies to costs associated with an exit activity, including
restructurings, or with a disposal of long-lived assets. SFAS 146 requires
that exit or disposal costs are recorded as an operating expense when the
liability is incurred and can be measured at fair value. The adoption of
SFAS No. 146 did not have a material effect on the Company's financial
position or results of operations.
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Compensation - Transition and Disclosure." SFAS No. 148 amends SFAS No.
123, "Accounting for Stock-Based Compensation," to provide alternative
methods of transition for a voluntary change to the fair value method of
accounting for stock-based employee compensation. In addition, SFAS No. 148
amends the disclosure provisions of SFAS No. 123 to require prominent
disclosures in both annual and interim financial statements about the
method of accounting and the effect of the method used on reported results.
This standard is effective for fiscal year end 2003. Currently, the Company
uses the intrinsic method of accounting for stock-based compensation.
Therefore, the adoption of SFAS No. 148 will have no effect on the
Company's financial position or results of operations.
9. Special Items
-------------
The first quarter fiscal 2003 results include an unusual charge of
approximately $2.5 million, or $1.5 million after taxes, equal to $0.02 per
diluted share relating to the relocation of the Company's headquarters to
Hoboken, New Jersey from New York City, and includes duplicate rent
payments and moving expenses. In fourth quarter of fiscal year 2002, the
Company reported an unusual charge of $12.3 million or $7.7 million after
tax related to the relocation, including lease payments of approximately
$10.2 million on the vacated premises. Included in the balance sheet at
January 31, 2003 is an accrued liability of $3.3 million principally
related to the remaining lease payments on the vacated offices in New York
City.
During the second quarter of fiscal year 2003 the Company merged several of
its European subsidiaries into a new legal entity, which enabled the
Company to increase the tax-deductible asset basis of the merged
subsidiaries to fair market value creating a tax asset greater than the
related book value. The increase in tax basis resulted in a $12.0 million,
$.19 per diluted share, tax benefit recognized as income in the second
quarter and a deferred tax asset in the Consolidated Statement of Financial
Position.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS -
THIRD QUARTER ENDED JANUARY 31, 2003
Net income for the third quarter increased 13% to $24.2 million or $0.39 per
diluted share including the effect of the adoption of Statement of Financial
Accounting Standards ("SFAS") No. 142, compared with $21.4 million or $0.34 per
diluted share in the third quarter of last year.
Revenues for the third quarter of 2003 of $221.2 million increased 6%, from
$208.0 million in the prior year's quarter. The third quarter revenue increase
was driven primarily by organic growth in the U.S. and Europe; the April 2002
acquisition of GIT Verlag and A&M Publishing in Europe; continuing strength in
Asia; and foreign exchange.
Gross profit as a percentage of revenue improved during the quarter to 67.1%
from 66.0% in the prior year's quarter, principally due to Hungry Minds products
and higher STM journal revenue.
The 11% increase in operating and administrative expenses in the third quarter
reflects the combined effects of incremental costs related to acquisitions and
depreciation on new facilities in the U.S. and Europe. The Company recently
centralized several web development activities, which were previously in the
various publishing operations. This organizational change will enable the
Company to leverage these capabilities more efficiently across all of Wiley's
global businesses. The expenses for these activities are now included in the
Information Technology line within shared services and administrative costs,
whereas previously they were included in direct contribution to profit in each
of the appropriate business segment results. Accordingly, these expenses have
been reclassified for the prior year periods on the attached financial
statements included herein to provide a more meaningful comparison.
Operating income for the current quarter increased 6% to $36.9 million from
$34.7 million in the prior year.
Effective May 1, 2002, the Company adopted SFAS No. 142, which eliminates the
amortization of goodwill and indefinite lived intangible assets. In fiscal year
2003, the after-tax impact of the non-amortization of goodwill and intangible
assets was $1.9 million, or $0.03 per share, for the third quarter and $5.9
million, or $0.09 per share, for the nine-month period. The Company expects the
earnings benefit of SFAS No. 142 to be partially offset by higher depreciation
expense for new facilities in the U.S. and Europe. Operating income and net
income for the third quarter after adjusting for the elimination of amortization
of goodwill and indefinite life intangibles was as follows (in thousands):
Quarter Ending January 31,
-------------------------------------------
2003 2002
-------------------- -------------------
Operating Income as reported $36,852 34,716
SFAS No. 142 - 2,347
-------------------- -------------------
Operating income as adjusted $36,852 37,063
==================== ===================
Net Income as reported $24,220 21,352
SFAS No. 142, net of taxes - 1,939
-------------------- -------------------
Net Income as adjusted $24,220 23,291
==================== ===================
The effective tax rate was 31.7% for the current quarter compared with the 34.0%
in the prior year. The decline is mainly due to lower taxes outside the U.S. In
addition, the absence of nondeductible goodwill amortization related to the
adoption of SFAS No. 142 reduced the effective tax rate.
SEGMENT RESULTS
Professional/Trade
- ------------------
U.S. Professional/Trade revenues of $81.8 million for the third quarter advanced
3% over the comparable prior year period, and the direct contribution to profit
advanced 15% to $24.2 million. The increase was mainly attributable to margin
improvement in the Hungry Minds publishing programs. The quarter was affected by
a weaker than anticipated holiday season throughout the industry, although
January sales rebounded nicely. The direct contribution margin increased to
29.6% from 26.4% in the prior year.
Despite soft market conditions, Wiley's business program continues to exhibit
strength, and gain market share. The industry was flat in the business category
throughout calendar year 2002, but the Company's business publishing program
grew as a result of a strong front list and healthy backlist reorders. Nine
Wiley titles were on major bestseller lists during the quarter, including
Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression,
Five Dysfunctions of a Team: A Leadership Fable, The Morningstar Guide to Mutual
Funds: 5-Star Strategies for Success, Home Buying For Dummies, Religion For
Dummies, Starting an Ebay Business For Dummies, Straight Talk on Investing: What
You Need to Know, The Ernst & Young Tax Guide 2003, and JK Lasser's Your Income
Tax 2002. This collection of titles spans the entire spectrum of Wiley's
business publishing program.
The Company's consumer publishing programs performed very well, particularly
cooking, reference, and travel, led by the Betty Crocker, For Dummies,
Frommer's, and Webster's New World brands. Cookbooks that sold well during the
quarter were The Low-Carb Comfort Food Cookbook, How to Cook Everything and
Weight Watchers New Complete Cookbook.
Although the overall market for computer books continues to be weak, Wiley's
technology publishing did well with its consumer titles in areas such as digital
photography, digital imaging software, general PC technology, Windows XP, home
networking, eBay, Apple's Mac OS X and Red Hat Linux, and CD/DVD recording.
The Company's professional and academic programs in architecture,
culinary/hospitality, psychology, and teacher education had a solid third
quarter. Highlights include the successful release of Irving Weiner's 12-volume
Handbook of Psychology, the first complete reference treatment of the science
and practice of psychology, edited by one of the experts in the field. In
addition, the Company launched the new Graphicstandards.com, which is a major
step in the evolution of the Architectural Graphic Standards franchise.
Scientific, Technical And Medical (STM)
- --------------------------------------
U.S. STM revenues of $39.7 million increased 2% over the prior year. The revenue
growth was attributable to new and renewed Wiley InterScience licenses and
higher margin journal subscriptions, partially offset by sluggish book sales.
The direct contribution to profit increased 7% to $17.2 million from $16.0
million mainly due to the same effects. Globally, STM revenues increased 9% for
the third quarter aided by acquisitions in Europe and worldwide journal revenue
growth.
A major journal subscription agent, Rowecom Inc., filed for bankruptcy in
January. It is estimated that this event will reduce calendar year 2003 revenue
by less than $3 million, with some of that occurring in fiscal year 2003, but
most of it affecting fiscal year 2004. Wiley has taken a leadership role in
negotiations with various parties regarding this unfortunate situation. We have
supported our customers, while protecting the Company's financial interests.
Wiley InterScience's growth in the third quarter reflects the continuing demand
from the research community for its content and services. Over the past year,
the online service experienced a significant increase in the number of journal
articles viewed with an approximate 61% growth from the prior year's third
quarter. Over 60% of global journal subscription revenues are now under Wiley
InterScience licenses, compared with approximately 40% a year ago. Several
licenses were signed during the quarter, including ConWIS in Taiwan, the Spanish
National Consortium, the University of New South Wales in Australia, Simon
Fraser University in Canada, and the University of Washington and the National
Agricultural Library in the U.S.
The Company continues to add content and functionality to Wiley InterScience to
meet customer needs and increase its revenue base. A new Online Books library
was launched in mathematics and statistics. In addition, six more major
reference works were added during the quarter, including Ullman's Encyclopedia
of Industrial Chemistry, 6/e; Burger's Medicinal Chemistry and Drug Discovery,
6/e; Encyclopedia of Cell Technology; Encyclopedia of Environmental
Microbiology; and Encyclopedia of Space Science and Technology. The Company also
entered into agreements with the National Institute of Science and Technology,
Accelrys, and Cognia to collaborate on chemistry and bioinformatics database
products.
In January, the Association of American Publishers/Professional and Scholarly
Publishing announced that four Wiley publications were named as Best New Books:
Handbook of Organopalladium Chemistry for Organic Synthesis, Randomization in
Clinical Trials, Encyclopedia of Imaging Science and Technology, and The Human
Fossil Record, Volume 1. The Anatomical Record: Special Issue on Astrobiology
was also cited as the Best Single Issue of a Journal.
At the close of the quarter, the Company announced that the second annual Wiley
Prize in the Biomedical Sciences was awarded to Dr. Andrew Z. Fire of the
Carnegie Institution of Washington and the Johns Hopkins University; Dr. Craig
C. Mello of the University of Massachusetts Medical School; Dr. Thomas Tuschl
formerly of the Max-Planck Institute for Biophysical Chemistry in Germany and
most recently of the Rockefeller University; and Dr. David Baulcombe of the
Sainsbury Laboratory at the John Innes Centre in Norwich, England. The
recipients were recognized for their contributions to the discovery of novel
mechanisms for regulating gene expression by small interfering RNAs.
Higher Education
- ----------------
Third quarter U.S. Higher Education revenues of $43.6 million increased 4% as
compared to the prior year. Revenue growth was principally due to the life
sciences program, particularly Principles Of Anatomy and Physiology, 10/e. In
addition, biology performed well, as did chemistry. Results continued to be
affected by sluggish industry-wide conditions in engineering. As expected,
geography and accounting were down year-to-date due to the revision cycles of
key titles. Globally, Higher Education revenues increased 7% for the third
quarter. The direct contribution to profit decreased 8% to $15.3 million,
principally due to product development costs, product mix and investment in
e-learning initiatives.
Forty-five new textbooks were published during the third quarter, including
Calculus: Ideas and Applications; Elementary Statistics; The Extraordinary
Chemistry of Ordinary Things; Financial Institutions, Markets and Money; and
Financial Statement Analysis. The Company also published new versions of
existing titles with new product models, including Active Learning Editions of
Adjustment and Math Methods; Calculus Study Skills Edition, featuring a
customized version of the CliffsNotes QuickReview for Calculus; and the Core
Concepts Series in business, which includes brief, low-cost alternative texts
that are packaged with customized articles, readings, and cases.
An agreement was signed with XanEdu, a division of ProQuest, to build Wiley
Business Extra Select, an online custom courseware program
(http://www.wiley.com/college/bxs). This program will enable professors to
create customized business course materials by combining Wiley's textbooks and
learning materials with content from sources such as The Wall Street Journal,
Harvard Business School, Ivey Cases, Fortune Inc., and many others. The Higher
Education Website offers online learning materials on more than 2,300 subsites
to support teaching and learning. Virtual peer training through Wiley's Faculty
Resource Network increased dramatically during the third quarter. Wiley also
formed an alliance with Content Connections to obtain feedback from the
marketplace on new products.
Europe
- ------
Third quarter revenues from Wiley's European operations of $49.8 million were up
20% over prior year, reflecting the GIT Verlag and A&M Publishing acquisitions,
and organic growth. Excluding the GIT Verlag and A&M Publishing acquisitions,
revenues for the quarter were up 10%, fueled by strong performances in the
journals program, as well as P/T titles. Direct contribution margin was 30.1% in
the current quarter as compared to 33.9% in the prior year. Higher sales from
the expansion of Hungry Mind products into Europe had a dilutive impact on the
current year margin.
Wiley's strong performance in the UK is resulting in market share gains.
Southern Europe, especially France and Spain, is showing gradual improvement,
while the German economy continues to be weak with no signs of a recovery in
sight. Top-selling Wiley titles in Europe during the quarter included
Interaction Design, Principles of Anatomy and Physiology, Ullman's Encyclopedia
of Industrial Chemistry, and the journal, Numerical Methods in Engineering. The
release of Ullman's was an enormous undertaking, as measured by its 40 volumes
and 40,000 pages.
In January, Wiley Europe published its first issues of Ultrasound in Obstetrics
and Gynecology and the British Journal of Surgery. The Company also launched a
re-branded website for the British Journal of Surgery Society. Agreements were
signed with the European Peptide Society and Pathological Society of Great
Britain and Northern Ireland for Wiley to develop similar Society Web Select
sites. Traffic on community-of-interest portals, spectroscopyNOW.com and
pro.physik.de, reached all-time highs during the third quarter.
Wiley recently co-published four CD-based training courses in mobile
communications technologies in partnership with BusinessInteractive, a German
company serving the telecommunications industry. Handbook of Eating Disorders
was chosen as a main selection of the Behavioral Science Book Club for March.
Asia, Australia & Canada
- ------------------------
Wiley's other international operations recorded strong results, as reflected in
a 32% revenue increase over the prior year's third quarter. P/T and Higher
Education in Canada, Higher Education in Australia, and P/T and STM in Asia,
drove these results. Rapid growth of the Company's subscription and translation
rights businesses continued in Asia, notably in Singapore and China. To increase
awareness of its products in India, the Company formed strategic alliances with
the Indian Pharmacological Society and the Association of Plastic Surgeons of
India to link relevant Wiley pharmacological and medical science journals to
their websites. The expansion of Hungry Mind products into the Asian, Australian
and Canadian markets had a dilutive impact on the current year margin as
compared to the prior period.
RESULTS OF OPERATIONS -
NINE MONTHS ENDED JANUARY 31, 2003
Earnings per share and net income, as reported, for the nine-month period were
$1.25 and $79.0, respectively. Excluding a one-time tax benefit of $12.0
million, or $0.19 per share, in the second quarter of fiscal year 2003, and an
unusual after tax charge of $1.5 million, or $0.02 per share, related to the
Company's relocation to Hoboken, New Jersey, in the first quarter of fiscal year
2003, earnings per diluted share for the first nine-months advanced 16% to $1.08
from $0.93 per share in the prior year. Net income, excluding these unusual
items, was $68.4 million compared to $58.8 million in the prior year, an
increase of 16%. Revenues for the first nine months of fiscal year 2003
increased 19% to $650.6 million from $545.2 million in the prior year period.
For the nine-month period, cost of sales and operating administrative expenses
increased 23% and 22%, respectively. The increase in cost of sales as a percent
of revenue was principally due to the addition of Hungry Minds and product mix.
While Hungry Minds has attractive financial characteristics, its gross margin is
lower than the Company's consolidated gross margin. The increase in operating
and administrative expenses reflects the incremental costs related to
acquisitions, depreciation on new facilities in the U.S. and Europe, and foreign
exchange.
Including the relocation charge, operating income for the first nine months of
fiscal year 2003 was $103.4 million. Operating income increased 12% to $105.9
million, compared with $94.2 million in the prior year, excluding $2.5 million
of unusual charges related to the relocation and including the effect of the
adoption of SFAS No.142.
During the second quarter, the Company merged several of its European
subsidiaries into a new legal entity, which enabled the Company to increase the
tax-deductible asset basis of the merged subsidiaries to the fair market value.
Under U.S. accounting principles, the tax benefit attributable to the increase
in tax basis is immediately included in income. From an economic perspective,
the cash benefit of this change will be recognized pro-rata over a 15 year
period.
Operating income and net income excluding the relocation charges, the one-time
tax benefit and the elimination of amortization of goodwill and indefinite life
intangibles for the nine-month period were as follows (in thousands):
Nine Months Ended January 31,
-------------------------------------------
2003 2002
-------------------- -------------------
Operating Income as reported $ 103,411 94,166
Unusual relocation charges 2,465 -
SFAS No. 142 - 7,157
-------------------- -------------------
Operating income as adjusted $ 105,876 101,323
==================== ===================
Net Income as reported $ 78,981 58,807
Unusual relocation charges, net of taxes 1,479 -
SFAS No. 142, net of taxes - 5,901
One-time tax benefit (12,025) -
-------------------- -------------------
Net income as adjusted $ 68,435 64,708
==================== ===================
Excluding the one-time tax benefit of $12.0 million, the effective tax rate was
31.8% in the current nine month period compared with 34.0% in the prior year.
The decline is mainly due to lower taxes outside the U.S. In addition, the
absence of nondeductible goodwill amortization related to the adoption of SFAS
No. 142 reduced the effective tax rate.
SEGMENT RESULTS
Professional/Trade
- ------------------
U.S. Professional/Trade revenues of $241.6 million for the first nine months
advanced 37% over the comparable prior year period and the direct contribution
to profit advanced 51% to $66.0 million, reflecting the positive effect of the
Hungry Minds acquisition and organic growth. Excluding Hungry Minds, revenue
grew by 5%. The direct contribution margin in the first nine months of fiscal
year 2003 was 27.3% as compared to 24.7% in the prior year reflecting higher
global sales of Hungry Mind product through the Company's worldwide sales and
marketing efforts.
Scientific, Technical and Medical (STM)
- --------------------------------------
U.S. STM revenues of $124.6 million increased 3% over the prior year. The direct
contribution to profit increased 7% to $57.9 million reflecting higher margin
journal subscriptions, partially offset by sluggish book sales. Globally, STM
revenue for the first nine months of the year increased 11% over the prior year
period.
Higher Education
- ----------------
U.S. Higher Education revenues of $125.1 million increased 5% from the prior
year. The direct contribution to profit decreased 6% to $42.1 million mainly due
to product mix, product development costs and investment in e-learning
initiatives. Globally Higher Education revenue for the first nine months of the
year increased 7% over the prior year period.
Europe
- ------
European revenues of $152.8 million for the first nine months advanced 27% and
the direct contribution to profit of $48.1 million increased 16% over the prior
year. The improvement was principally due to the strong sales of journal and
professional/trade titles in addition to revenue from acquisitions.
Asia, Australia & Canada
- -------------------------
The other segment revenues of $71.0 million for the first nine months advanced
33% and the direct contribution to profit increased 18% over the prior year. The
improvement was mainly due to additional revenue from the sale of Hungry Mind
titles, higher sales of Canadian professional/trade and higher education titles
and growth of the Company's subscription and translation rights business in
Asia.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities for the first nine months of fiscal year 2003 provided
$138.3 million of cash, as compared to $117.6 million in the prior period. The
improvement reflected higher net income and lower acquisition related payments
this year. The third quarter of the Company's fiscal year reflects the
cyclicality of the journal subscription and higher education businesses.
Investing activities used $95.8 million for the first nine months of fiscal year
2003 as compared to $253.6 million in the prior year period. Investing
activities in the nine-month period include $36.5 million for product
development, the acquisition of titles from Prentice Hall Direct/Pearson
Education for $6.5 million and $51.5 million of property and equipment
expenditures of which $31.6 million was for the purchase of a building in the
United Kingdom, the additions to a building in Germany, and leasehold
improvements at the Company's new Hoboken, NJ headquarters. Capital spending on
product development for the full fiscal year 2003 is projected to be $60
million. Capital spending for property and equipment is projected to be
approximately $65 million, including $40 million of costs associated with the
new facilities in the U.S. and Europe.
Current year financing activities primarily reflect the purchase of treasury
shares, dividend payments, and the payment of $30.0 million against long-term
debt.
Although the statement of financial condition as of January 31, 2003 indicates a
negative working capital of $50.2 million, current liabilities include $148.5
million of deferred income related to journal subscriptions for which the cash
has been received and which will be recognized in revenue as the journals are
delivered to customers. The Company believes its cash balances together with
existing credit facilities are sufficient to meet its obligations. The Company
had $235.0 million of variable rate loans outstanding at January 31, 2003, which
approximated fair value. The Company had $150.0 million available under its
revolving credit facilities at January 31, 2003.
"Safe Harbor" Statement under the
Private Securities Litigation Reform Act of 1995
- ------------------------------------------------
This report contains certain forward-looking statements concerning the Company's
operations, performance, and financial condition. Reliance should not be placed
on forward-looking statements, as actual results may differ materially from
those in any forward-looking statements. Any such forward-looking statements are
based upon a number of assumptions and estimates that are inherently subject to
uncertainties and contingencies, many of which are beyond the control of the
Company, and are subject to change based on many important factors. Such factors
include, but are not limited to (i) the level of investment in new technologies
and products; (ii) subscriber renewal rates for the Company's journals; (iii)
the financial stability and liquidity of journal subscription agents; (iv) the
consolidation of book wholesalers and retail accounts; (v) the market position
and financial stability of key online retailers; (vi) the seasonal nature of the
Company's educational business and the impact of the used book market; (vii)
worldwide economic and political conditions; and (viii) other factors detailed
from time to time in the Company's filings with the Securities and Exchange
Commission. The Company undertakes no obligation to update or revise any such
forward-looking statements to reflect subsequent events or circumstances.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
The Company is exposed to market risk primarily related to interest rates,
foreign exchange and credit risk. It is the Company's policy to monitor these
exposures and to use derivative financial instruments and/or insurance contracts
from time to time to reduce fluctuations in earning and cash flows when it is
deemed appropriate to do so. The Company does not use derivative financial
investments for trading or speculative purposes.
Interest Rates
The Company did not use any derivative financial investments to manage this
exposure. The weighted average interest rate as of January 31, 2003 was
approximately 2.22%. A hypothetical 1% change in interest rates for the variable
rate debt would affect annual net income and cash flow by approximately $1.4
million.
Foreign Exchange Rates
The Company is exposed to foreign currency exchange movements primarily in
European, Asian, Canadian and Australian currencies. Consequently, the Company
and its subsidiaries, from time to time, enter into foreign exchange forward
contracts as a hedge against foreign currency asset, liability, commitment, and
anticipated transaction exposures, including intercompany purchases. At January
31, 2003 the Company has no outstanding foreign exchange contracts. The Company
does not use derivative financial instruments for trading or speculative
purposes.
Credit Risk
The Company's business is not dependent upon a single customer; however, the
industry has experienced a significant concentration in national, regional, and
online bookstore chains in recent years. Although no one book customer accounts
for more than 8% of total fiscal 2002 consolidated revenues, the top ten book
customers account for approximately 31% of total fiscal 2002 consolidated
revenues and approximately 48% of total gross trade accounts receivable at April
30, 2002. To mitigate its credit risk exposure, the Company obtains credit
insurance where available and economically justifiable.
In the journal publishing business, subscriptions are primarily sourced through
independent subscription agents who, acting as agents for library customers,
facilitate ordering by consolidating the subscription orders/billings of each
subscriber with various publishers. Monies are generally collected in advance
from subscribers by the subscription agents and are remitted to the journal
publisher, including the Company, generally prior to the commencement of the
subscriptions. Although at fiscal year-end the Company had minimal credit risk
exposure to these agents, future calendar-year subscription receipts from these
agents are highly dependent on their financial condition and liquidity.
Subscription agents account for approximately 25% of total fiscal 2002
consolidated revenues and no one agent accounts for more than 7% of total fiscal
2002 consolidated revenues. Insurance for these accounts is not commercially
feasible and/or available. A major journal subscription agent, Rowecom Inc.,
filed for bankruptcy in January. It is estimated that this event will reduce
calendar year 2003 revenue by less than $3 million, with some of that occurring
in fiscal year 2003, but most of it affecting fiscal year 2004.
ITEM 4. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures designed to ensure that
information required to be disclosed in reports filed or submitted under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported within the time periods specified by the Securities and Exchange
Commission's rules and regulations. 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 these
disclosure controls and procedures as of a date within 90 days prior to the date
of filing this report. Based on this evaluation, the Chief Executive Officer and
Chief Financial Officer have concluded that the Company's disclosure controls
and procedures are effective. There were no significant changes in the Company's
internal controls or in other factors that could significantly affect such
internal controls subsequent to this evaluation. Accordingly, no corrective
actions were required or undertaken with respect to the internal controls.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
99.1 - 18 U.S.C. Section 1350 Certificate by the President and Chief
Executive Officer
99.2 - 18 U.S.C. Section 1350 Certificate by the Chief Financial and
Operations Officer
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended January
31, 2003.
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/ William J. Pesce
-----------------------
William J. Pesce
President and
Chief Executive Officer
By /s/ Ellis E. Cousens
-----------------------
Ellis E. Cousens
Executive Vice President and
Chief Financial & Operations Officer
By /s/ Edward J. Melando
-----------------------
Edward J. Melando
Vice President, Controller and
Chief Accounting Officer
Dated: March 14, 2003
CERTIFICATIONS
I, William J. Pesce, certify that:
- - I have reviewed this quarterly report on Form 10-Q of John Wiley & Sons,
Inc.;
- - Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report; and
- - Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report.
- - The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
- - The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which would adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
- - The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weakness.
By /s/ William J. Pesce
-----------------------
William J. Pesce
President and
Chief Executive Officer
Dated: March 14, 2003
I, Ellis E. Cousens, certify that
- - I have reviewed this quarterly report on Form 10-Q of John Wiley & Sons,
Inc.;
- - Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report; and
- - Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report.
- - The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
- - The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which would adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
- - The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weakness.
By /s/ Ellis E. Cousens
-----------------------
Ellis E. Cousens
Executive Vice President and
Chief Financial & Operations Officer
Dated: March 14, 2003
Exhibit 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of John Wiley & Sons, Inc. (the
"Company") on Form 10-Q for the period ending January 31, 2003 as filed
with the Securities and Exchange Commission on the date hereof (the
"Report"), I, William J. Pesce, President and Chief Executive Officer of
the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on my
knowledge:
(1) The Report fully complies with the requirements of section 13(a)
or 15 (d) of the Securities Exchange Act of 1934 (as amended), as
applicable; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
/s/William J. Pesce
--------------------
William J. Pesce
President and
Chief Executive Officer
Dated: March 14, 2003
Exhibit 99.2
CERTIFICATION PURSUANT TO
18 .S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of John Wiley & Sons, Inc. (the
"Company") on Form 10-Q for the period ending January 31, 2003 as filed
with the Securities and Exchange Commission on the date hereof (the
"Report"), I, Ellis E. Cousens, Executive Vice President and Chief
Financial & Operations Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that based on my knowledge:
(1) The Report fully complies with the requirements of section 13(a)
or 15 (d) of the Securities Exchange Act of 1934 (as amended), as
applicable; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
/s/Ellis E. Cousens
-------------------
Ellis E. Cousens
Executive Vice President and
Chief Financial & Operations Officer
Dated: March 14, 2003