Exhibit No. Description
99.1 Press Release dated December 2, 2003 titled "John Wiley & Sons,
Inc. Reports 13% EPS Increase for Second Quarter of Fiscal Year
2004 Excluding One-Time Tax Benefit in Fiscal Year 2003"
(furnished and not filed for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, and not deemed
incorporated by reference in any filing under the Securities Act
of 1934, as amended). ITEM 9: REGULATION FD DISCLOSURE The
information in this report is being furnished (i) pursuant to
Regulation FD, and (ii) pursuant to Item 12 Results of Operations
and Financial Condition (in accordance with SEC interim guidance
issued March 28, 2003). In accordance with General Instructions
B.2 and B.6 of Form 8-K, the information in this report shall not
be deemed to be "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, nor shall it be
deemed incorporated by reference in any filing under the
Securities Act of 1934, as amended. The furnishing of the
information set forth in this report is not intended to, and does
not, constitute a determination or admission as to the
materiality or completeness of such information.
On December 2, 2003, John Wiley & Sons Inc., a New York
corporation (the "Company"), issued a press release announcing
the Company's financial results for the second quarter and first
six months of fiscal year 2004. A copy of the Company press
release is attached hereto as Exhibit 99.1 and incorporated
Ellis E. Cousens
Executive Vice President, Chief Financial & Operations Officer
John Wiley & Sons, Inc.
(201) 748-6534
John Wiley & Sons, Inc. Reports
13% EPS Increase for Second Quarter of Fiscal Year 2004
Excluding One-Time Tax Benefit Reported in Fiscal Year 2003
- -----------------------------------------------------------
Hoboken, N.J. December 2, 2003 -- John Wiley & Sons, Inc. (NYSE:JWa) (NYSE:JWb)
announced today that earnings per diluted share and net income for the second
quarter of fiscal year 2004 increased 13% to $0.41 and $25.6 million,
respectively. These results exclude a one-time tax benefit of $12.0 million, or
$0.19 per diluted share, reported in the second quarter of fiscal year 2003.
Revenue for the second quarter advanced 3% to $228.9 million from $223.0 million
in the prior year. This increase was driven by foreign exchange translation
benefits, journal performance globally and Higher Education results.
For the first half of fiscal year 2004, revenue advanced 4%, or 2% excluding
foreign currency translation gains. Net income for the six-month period
increased 7%, excluding unusual charges related to the Company's relocation to
Hoboken, New Jersey and the aforementioned one-time tax benefit, both of which
were reported in the prior year. On the same basis, earnings per share increased
8% from $0.70 to $0.75.
"Second quarter and year-to-date results were essentially as expected. Assuming
gradual improvement in market conditions throughout the balance of the year, we
expect growth in fiscal year 2004 of approximately 4-6% for revenue and in the
mid to high single digits for EPS, excluding the unusual items reported in
fiscal year 2003," said William J. Pesce, President and CEO.
Professional/Trade (P/T)
- ------------------------
Revenue of Wiley's U.S. P/T business declined 3% during the second quarter
versus the same period last year, reflecting lower backlist sales of consumer
technology and business titles, partially offset by strong culinary and
architecture sales and improved sales returns. While the second quarter started
slowly, sales recovered nicely in October. Year-to-date revenue was up 2%.
In a soft technology market, Wiley continues to strengthen its market position,
as evidenced by the success of new releases, such as Windows XP Timesaving
Techniques For Dummies, Internet For Dummies, 9th edition, and PCs For Dummies,
9th edition. The professional segment showed some initial signs of improvement
during the quarter.
Five Wiley business titles appeared on major bestseller lists, including
Bonner/Financial Reckoning Day, Lencioni/Five Dysfunctions of a Team: A
Leadership Fable, Tyson and Brown/Home Buying For Dummies, Garcia/Message From
Garcia and Gitomer/Sales Bible. The first Wiley edition of the Stock Trader's
Almanac 2004 by Jeff Hirsch was published in the quarter. This highly regarded
and frequently cited reference tool has been a mainstay on Wall Street for three
decades.
Some of Wiley's consumer programs performed particularly well during the quarter
despite weakness in the retail environment. Dershowitz/The Case for Israel hit
numerous bestseller lists including The New York Times and USA Today. Kinzer/All
the Shah's Men: An American Coup and the Roots of Middle East Terror and Armey's
Axioms by former Majority Leader of the U.S. House of Representatives Dick Armey
are performing well. The Company recently signed an agreement with Target, Inc.,
to create a For Dummies brand extension series. Three one-hour television
specials, Dating For Dummies, Making Marriage Work For Dummies and Parenting For
Dummies, premiered on the Discovery Health Channel in September.
Wiley's culinary program had an excellent quarter with the release of a strong
list that included such titles as Cooking at Home with the Culinary Institute of
America and Wolfert/Slow Mediterranean Cooking. James Villas, author of Between
Bites and a forthcoming collection of essays on food, was named "Best Food
Writer" of the year by Bon Appetit magazine.
Wiley launched a Betty Crocker microsite on FoodTV.com to increase the brand's
presence and drive sales. During the quarter, the Company agreed to participate
in the development of a 13-part television series featuring Mark Bittman, author
of the best-seller How to Cook Everything. The series, which will air in the
fall of next year, will include 30-second spot ads featuring Wiley books. A book
tie-in is being developed for simultaneous publication.
P/T's professional and academic programs in architecture and
culinary/hospitality performed well during the quarter. Sales were led by
McGowan/Interior Graphic Standards. The Company signed an extension of its
agreement with the National Restaurant Association Educational Foundation to
distribute leading books on food sanitation.
Scientific, Technical, and Medical (STM)
- ----------------------------------------------
Wiley's U.S. STM revenue was essentially flat with prior year in the quarter and
for the six months. Increased journal revenue, despite the adverse impact of the
Rowecom bankruptcy, and higher online protocols sales were partially offset by
lower advertising revenue and continued weakness in the STM book market.
Globally, STM journal revenue increased approximately 6% in the second quarter
and 5% for the six months.
During the quarter, Wiley phased in a new electronic journal production
management system, a key component of our integrated online publishing program
that will accelerate delivery of journal content to our customers. Wiley's STM
digital access business, which utilizes the Wiley InterScience platform,
continued to add functionality for customers with the launch of a comprehensive
redesign of underlying information architecture and graphical interface. These
enhancements accommodate the expanding scope of content and deliver a more
intuitive, consistent and engaging interface to a global user community of well
over 13 million scholars and researchers.
The Wiley InterScience calendar year 2004 license renewal process began during
the second quarter and is proceeding as expected. Several licenses were signed
during the quarter. Fourteen more universities joined the Chinese Academic
Libraries Information Service (CALIS) consortium agreement, which is Wiley's
first major license in China.
Wiley took a leadership role in the October launch of an initiative, which
includes the United Nations' Food and Agriculture Organization (FAO), The
Rockefeller Foundation, Cornell University and STM publishers. This initiative,
known as AGORA, will provide researchers in developing countries with free
access to journal content about food, agriculture, and water resources. AGORA
builds on the success of HINARI, a similar initiative started by the World
Health Organization (WHO) and STM publishers, including Wiley, that brings
medical research information to the developing world.
Wiley has built upon its reputation for innovation in online publishing and for
longstanding publishing service to learned societies and their members by
forming new partnerships with numerous prominent national, regional and
international societies. Shortly after the close of the quarter, the Company
announced an agreement to publish three journals, for The American Institute of
Chemical Engineers (AIChE), including its flagship journal, effective January
2004. As a result of this partnership, Wiley will provide all publishing
services, including launching online editions through Wiley InterScience and
creating a digital archive. Wiley also renewed its agreement with the
International Union of Cancer (UICC) to publish The International Journal of
Cancer.
Higher Education
- ----------------
Growth in Wiley's U.S. Higher Education business in the second quarter and first
half was 3% and 5%, respectively. As a reminder, Wiley's second quarter does not
include July revenue, which is historically the highest in the Higher Education
business. The year-on-year growth was driven primarily by the
accounting/business, science and social science programs. Industry-wide
conditions in engineering continue to be weak. Globally, Higher Education
revenue increased over prior year by approximately 6% in the quarter and 7% for
the first half of fiscal year 2004.
During the second quarter, Higher Education benefited from the strong
performance of key titles, such as Kieso/Intermediate Accounting,
Kimmel/Financial Accounting, Cutnell/Physics, Solomons/Organic Chemistry,
White/The Analysis and Use of Financial Statements, Salas/Calculus: One
Variable, Connally/Functions of Modeling Change and Huffman/Psychology In
Action.
In August, the Company added to its e-learning offerings with the successful
release of five new courseware titles: Kieso/Intermediate Accounting,
Kimmel/Financial Accounting, Weygandt/Managerial Accounting, Horstmann/Big Java
and Schermerhorn/Management. The Company's e-learning platform, Edugen, enables
us to deliver content in an integrated format that is organized around the
teaching and learning activities of students and professors. This courseware,
which is already being used in over forty college and university courses,
generated over eight million hits on its website in September and October.
Textbooks continue to be widely regarded by professors and students as crucial
to effective teaching and learning, particularly in the markets served by Wiley.
Wiley is as committed as ever to delivering the highest quality materials and
services to the customers that we serve in the States and abroad. The Company is
employing technology to deliver value-added products and services to professors
and students. For example, we offer educational packages that include brief
"core concept" textbooks with online and customized components. The Company is
helping professors to integrate technology into the classroom through its
significant investment in Wiley's Faculty Resource Network (FRN). Through its
virtual seminars and one-on-one collaborations, the FRN is providing training
and support for hundreds of professors across the U.S.
Europe
- ------
Second quarter revenue for Wiley's European operations was up 9% over prior
year, or 3% excluding foreign currency translation gains. For the six-months,
Wiley-Europe's revenue was up 7% over prior year, but flat excluding foreign
currency translation gains. Healthy STM journal performance was partially offset
by sluggish STM and P/T book sales, primarily in the U.K. Encouragingly, October
sales were relatively strong. Despite the weak German economy, Wiley-VCH
reported solid results in many of its indigenous professional and STM book
programs.
There was positive market response to new revenue-generating features
(advertorials and HTML email newsletters) for two community-of-interest portals,
spectroscopy NOW.com and separationsNOW.com. Subscriptions to www.pro-physik.de
continue to grow nicely.
During the quarter, The British Journal of Surgery added the Swiss Surgical
Society to the growing number of European societies with which it is affiliated,
further strengthening its position as the premier surgical journal throughout
Europe. Wiley acquired European Transactions in Electrical Power, a bimonthly
primary research journal published in collaboration with several European
societies. The German Biometrical Society renewed its agreement with Wiley-VCH
to publish the Biometrical Journal.
Four psychology titles won British Medical Association awards: Stallard/Think
Good, Feel Good, Graham/Substance Misuse in Psychosis, Ballard/Understanding
Menopause and McMurran/Motivating Offenders to Change. An agreement was signed
with Nokia for fifteen of its training managers to promote the Nokia series that
is published with Wiley to engineers in the industry.
Asia, Australia & Canada
- --------------------------
Wiley's revenue in Asia, Australia and Canada advanced 14% in the second quarter
and 12% for the first half. Excluding the benefit of foreign currency, revenue
was up 3% and 2% for the same periods, respectively. These results were driven
mainly by the performance of the indigenous Higher Education programs in
Australia and Canada. Higher-than-anticipated returns of P/T books in Canada
partially offset these results.
Indigenous publishing programs are performing well. Fels/A Portrait of Power has
been strong throughout Australia and is creating interest in the U.K. and U.S.
The 20th anniversary edition of a Wiley Canadian title, The Game by Ken Dryden,
has been called "the best hockey book ever written". In September, Wiley Canada
signed an agreement with The Canadian Press to publish four to six books
annually for three years, including quick-to-market titles that respond to major
Canadian events. Additionally, the partnership will publish yearbooks,
biographies and highlights of historic events.
During the quarter, Wiley was named one of the "100 Best Companies for Working
Mothers" by Working Mother Magazine. In addition, the New Jersey Business and
Industry Association honored the Company with its "Enterprise Award" for the
positive effect Wiley has had on the New Jersey economy as a result of
relocating to the Hoboken waterfront. These awards represent tangible evidence
that Wiley is not only financially strong and performance-driven, but is also an
organization that values and appreciates the relationships it has formed with
colleagues and the community.
Special Items
- -------------
During the second quarter of fiscal year 2003, the Company merged several of its
European subsidiaries into a new entity, which enabled the Company to increase
the tax-deductible asset basis of the merged subsidiaries to the fair value of
the business at the date of merger. Under U.S. accounting principles, the tax
benefit attributable to the increase in tax basis was immediately included in
income, although the cash benefit of this change will be recognized pro-rata
over a 15-year period. The Company's effective tax rate, excluding this tax
benefit, was 33% for the second quarter of fiscal year 2003.
Wiley completed the relocation of the Company's headquarters to Hoboken, New
Jersey in the first quarter of fiscal year 2003 and reported an unusual charge
for costs associated with the relocation of approximately $1.5 million
after-tax, or $.02 cents per share.
"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.
Conference Call
John Wiley & Sons, Inc., will hold a conference call on Tuesday, December 2,
2003, at 10:30 a.m. (EDT) to discuss its results for the second quarter of
fiscal year 2004. The call will include a brief management presentation followed
by a question and answer session.
To participate in the conference call, please dial the following number
approximately ten minutes prior to the scheduled starting time: (800)-310-1961
International callers may participate by dialing: (719)-457-2692
A replay of the call will be available from 1:30 p.m. (EST) on Tuesday, December
2 through midnight (EST) on Monday, December 8 by dialing (888)-203-1112 or
(719)-457-0820 and entering Passcode 677675
A live audio Webcast will be accessible at
http://www.wiley.com/go/communications. A replay of the Webcast will be
accessible for 14 days afterwards.
Founded in 1807, John Wiley & Sons, Inc. provides must-have content and services
to customers worldwide. Its core businesses include scientific, technical, and
medical journals, encyclopedias, books, and online products and services;
professional and consumer books and subscription services; and educational
materials for undergraduate and graduate students and lifelong learners. Wiley
has publishing, marketing, and distribution centers in the United States,
Canada, Europe, Asia and Australia. The Company is listed on the New York Stock
Exchange under the symbols JWa and JWb. Wiley's Internet site can be accessed at
http://www.wiley.com.
###
JOHN WILEY & SONS, INC.
SUMMARY OF OPERATIONS
FOR THE SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2003 AND 2002
(in thousands, except per share amounts)
Second Quarter Ended Six Months Ended
October 31, October 31,
-------------------------------------- ---------------------------------
2003 2002 % Change 2003 2002 % Change
------------ --------- -------- -------- --------- ---------
Revenue $ 228,880 223,008 3% 448,540 429,445 4%
Costs and Expenses
Cost of Sales 78,182 77,251 1% 150,291 145,972 3%
Operating and Administrative Expenses 111,296 107,371 4% 223,339 209,738 6%
Amortization of Intangibles 2,535 2,535 4,865 4,711 3%
Unusual Item - Relocation Expenses (A) - - - 2,465
----------- ---------- --------- ---------
Total Costs and Expenses 192,013 187,157 3% 378,495 362,886 4%
----------- ---------- --------- ---------
Operating Income 36,867 35,851 3% 70,045 66,559 5%
Operating Margin 16.1% 16.1% 15.6% 15.5%
Interest Expense and Other, Net 612 2,124 1,872 3,861
----------- ---------- --------- ---------
Income Before Taxes 36,255 33,727 7% 68,173 62,698 9%
Provision (Benefit) for Income Taxes (B) 10,607 (1,004) 20,725 7,937
----------- ---------- --------- ---------
Net Income $ 25,648 34,731 -26% 47,448 54,761 -13%
=========== ========== ========= ========
Income Per Share
Diluted $ 0.41 0.55 -26% 0.75 0.86 -13%
Basic $ 0.41 0.57 0.77 0.89
Reconciliation of Non-GAAP Financial Disclosure
- ------------------------------------------------
Net Income as Reported $ 25,648 34,731 47,448 54,761
Relocation Expense, Net of Tax (A) - - - 1,479
Tax Benefit (B) - (12,025) - (12,025)
----------- ---------- --------- --------
Net Income Before Unusual Items $ 25,648 22,706 13% 47,448 44,215 7%
=========== ========== ========= ========
Income Per Share-Diluted as Reported $ 0.41 0.55 0.75 0.86
Relocation Expense, Net of Tax (A) - - - 0.02
Tax Benefit (B) - (0.19) - (0.19)
Income Per Share-Diluted Before Unusual Item $ 0.41 0.36 13% 0.75 0.70 8%
=========== ========== ========= ========
Average Shares
Diluted 63,176 63,092 63,091 63,370
Basic 61,891 61,429 61,788 61,580
(A) The Company completed the relocation of its headquarters to Hoboken, N.J.
in the first quarter of fiscal year 2003. An unusual charge for costs
associated with the relocation of approximately $1.5 million after tax, or
$.02 per share, was reported.
(B) Fiscal year 2003 includes a tax benefit of $12.0 million equal to $0.19 per
diluted share, relating to the step up in the tax basis of a European
subsidiary's assets.
Note: Management believes the above non-GAAP financial measures, which exclude
the relocation charge and the tax benefit, provide a more meaningful comparison
of the Company's year-over-year results. These events, which were completed
during fiscal year 2003, were unusual to the Company and unlikely to recur in
the foreseeable future.
JOHN WILEY & SONS, INC.
SEGMENT RESULTS
FOR THE SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2003 AND 2002
(in thousands, except per share amounts)
Second Quarter Ended Six Months Ended
October 31, October 31,
-------------------------------------- -------------------------------------
2003 2002 % Change 2003 2002 % Change
----------- --------- -------- --------- --------- --------
Revenue
- ---------------------------------------
US Segment
Professional/Trade $ 86,531 89,659 -3% 162,675 159,840 2%
Scientific, Technical and Medical 42,694 42,416 1% 84,401 84,873 -1%
Higher Education 37,674 36,575 3% 85,442 81,490 5%
----------- --------- --------- ---------
Total US 166,899 168,650 -1% 332,518 326,203 2%
European Segment 60,018 55,077 9% 110,601 102,969 7%
Asia, Australia & Canada Segment 25,077 21,935 14% 48,473 43,095 12%
Intersegment Sales Eliminations (23,114) (22,654) 2% (43,052) (42,822) 1%
----------- --------- --------- ---------
Total Revenue $ 228,880 223,008 3% 448,540 429,445 4%
=========== ========= ========= =========
Direct Contribution to Profit
- --------------------------------------
US Segment
Professional/Trade $ 25,382 27,492 -8% 43,570 41,784 4%
Scientific, Technical and Medical 20,503 20,400 1% 41,219 40,717 1%
Higher Education 9,935 8,625 15% 28,619 26,783 7%
----------- --------- --------- ---------
Total US 55,820 56,517 -1% 113,408 109,284 4%
European Segment 19,230 17,039 13% 34,652 33,075 5%
Asia, Australia & Canada Segment 5,480 4,050 35% 9,623 7,662 26%
----------- --------- --------- ---------
Total Direct Contribution to Profit (A) 80,530 77,606 4% 157,683 150,021 5%
Shared Services and Administrative Costs
- -----------------------------------------
Distribution (11,591) (11,410) 2% (22,852) (22,464) 2%
Information Technology & Development (12,428) (10,665) 17% (24,229) (19,187) 26%
Finance (7,189) (6,744) 7% (14,240) (14,111) 1%
Other Administration (12,455) (12,936) -4% (26,317) (25,235) 4%
----------- --------- --------- ---------
Total Shared Services and Admin. Costs (43,663) (41,755) 5% (87,638) (80,997) 8%
Unusual Item - Relocation Expenses (A) - - - (2,465)
----------- --------- --------- ---------
Operating Income $ 36,867 35,851 70,045 66,559
=========== ========= ========= =========
(A) The Company completed the relocation of its headquarters to Hoboken, N.J.
in the first quarter of fiscal year 2003. An unusual charge for costs
associated with the relocation of approximately $1.5 million after tax, or
$.02 per share, was reported.
JOHN WILEY & SONS, INC.
CONDENSED STATEMENTS OF FINANCIAL POSITION
(in thousands)
October 31,
---------------------------- April 30,
2003 2002 2003
------------ ----------- ------------
Current Assets
Cash & cash equivalents $ 10,756 21,414 33,241
Accounts receivable 170,002 145,470 120,057
Inventories 84,049 80,454 83,337
Other current assets 35,243 48,348 47,209
------------ ----------- -----------
Total Current Assets 300,050 295,686 283,844
Product Development Assets 61,353 59,609 60,842
Property and Equipment 116,815 101,453 114,870
Goodwill 194,114 192,774 192,186
Intangible Assets 279,697 279,559 280,872
Deferred Income Taxes 249 12,418 2,800
Other Assets 22,310 20,382 20,558
------------ ----------- -----------
Total Assets 974,588 961,881 955,972
============ =========== ===========
Current Liabilities
Notes Payable & Current portion of long-term debt 60,000 125,000 35,000
Accounts and royalties payable 91,080 104,850 71,296
Deferred subscription revenues 65,543 51,977 131,392
Accrued income taxes 6,283 17,131 7,953
Other accrued liabilities 61,114 65,163 77,624
------------ ----------- -----------
Total Current Liabilities 284,020 364,121 323,265
Long-Term Debt 200,000 200,000 200,000
Accrued Pension liability 56,378 29,324 54,909
Other Long-Term Liabilities 28,997 28,842 28,190
Deferred Income Taxes 5,781 14,651 5,604
Shareholders' Equity 399,412 324,943 344,004
------------ ----------- -----------
Total Liabilities & Shareholders' Equity $ 974,588 961,881 955,972
============ =========== ===========
CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended
October 31,
----------------------------
2003 2002
----------- ---------
Operating Activities
Net income $ 47,448 54,761
Amortization of intangibles 4,865 4,711
Amortization of composition costs 15,254 14,753
Depreciation of property and equipment 13,720 11,793
Other non-cash items 25,030 13,796
Change in deferred subscription revenue (68,149) (74,680)
Net change in operating assets and liabilities (38,699) (21,200)
----------- ---------
Cash Provided By (Used For) Operating Activities (531) 3,934
Investing Activities
Additions to product development assets (26,305) (22,655)
Additions to property and equipment (13,140) (39,212)
Acquisition of publishing assets, net of cash acquired (1,904) (7,812)
----------- ---------
Cash Used for Investing Activities (41,349) (69,679)
Financing Activities
Borrowings of short-term debt 60,000 90,000
Repayment of long-term debt (35,000) (30,000)
Cash dividends (8,079) (6,172)
Purchase of treasury shares (2,486) (8,117)
Proceeds from exercise of stock options 3,287 1,442
----------- ---------
Cash Provided by Financing Activities 17,722 47,153
Effects of Exchange Rate Changes on Cash 1,673 301
----------- ---------
Decrease in Cash and Cash Equivalents for Period $ (22,485) (18,291)
=========== ==========