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 October 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 October 31, 2003 were:
Class A, par value $1.00 - 50,832,923
Class B, par value $1.00 - 11,307,964
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 October 31, 2003 and 2002, and April 30, 2003...................3
Condensed Consolidated Statements of Income - Unaudited
for the Three and Six Months ended October 31, 2003 and 2002... .....4
Condensed Consolidated Statements of Cash Flows - Unaudited
for the Six Months ended October 31, 2003 and 2002.................. 5
Notes to Unaudited Condensed Consolidated Financial Statements......6-12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................................13-20
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)
October 31, April 30,
------------------------------------ ----------------
Assets 2003 2002 2003
---------------- --------------- ----------------
Current Assets
Cash and cash equivalents $ 10,756 21,414 $ 33,241
Accounts receivable 170,002 145,470 120,057
Taxes receivable 346 5,372 9,657
Inventories 84,049 80,454 83,337
Deferred income tax benefits 26,196 33,496 26,028
Prepaid expenses 8,701 9,480 11,524
---------------- --------------- ----------------
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
Intangible Assets 279,697 279,559 280,872
Goodwill 194,114 192,774 192,186
Deferred Income Tax Benefits 249 12,418 2,800
Other Assets 22,310 20,382 20,558
---------------- --------------- ----------------
Total Assets $ 974,588 961,881 $ 955,972
================ =============== ================
Liabilities & Shareholders' Equity
Current Liabilities
Current portion of long-term debt and notes payable $ 60,000 125,000 $ 35,000
Accounts and royalties payable 91,080 104,850 71,296
Deferred subscription revenue 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
Class A & Class B common stock 83,191 83,191 83,191
Additional paid-in-capital 41,651 30,584 34,103
Retained earnings 408,332 342,621 368,963
Accumulated other comprehensive income (loss) 1,015 555 (7,171)
Unearned deferred compensation (1,997) (1,644) (1,283)
Treasury stock (132,780) (130,364) (133,799)
---------------- --------------- ----------------
Total Shareholders' Equity 399,412 324,943 344,004
---------------- --------------- ----------------
Total Liabilities & Shareholders' Equity $ 974,588 961,881 $ 955,972
================ =============== ================
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
JOHN WILEY & SONS, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands except per share information)
Three Months Six Months
Ended October 31, Ended October 31,
---------------------------------------- -----------------------------------
2003 2002 2003 2002
----------------- ---------------- ----------------- ----------------
Revenue $ 228,880 223,008 $ 448,540 429,445
Costs and Expenses
Cost of sales 78,182 77,251 150,291 145,972
Operating and administrative expenses 111,296 107,371 223,339 209,738
Amortization of intangibles 2,535 2,535 4,865 4,711
Unusual Item - Relocation related expen - - - 2,465
----------------- ---------------- ----------------- ----------------
Total Costs and Expenses 192,013 187,157 378,495 362,886
----------------- ---------------- ----------------- ----------------
Operating Income 36,867 35,851 70,045 66,559
Interest Income and Other - Net 720 228 815 521
Interest Expense (1,332) (2,352) (2,687) (4,382)
Income Before Taxes 36,255 33,727 68,173 62,698
Provision For Income Taxes 10,607 (1,004) 20,725 7,937
----------------- ---------------- ----------------- ----------------
Net Income $ 25,648 34,731 $ 47,448 54,761
================= ================ ================= ================
Income Per Share
Diluted $ 0.41 0.55 $ 0.75 0.86
Basic $ 0.41 0.57 $ 0.77 0.89
Cash Dividends Per Share
Class A Common $ 0.07 0.05 $ 0.13 0.10
Class B Common $ 0.07 0.05 $ 0.13 0.10
Average Shares
Diluted 63,176 63,092 63,091 63,370
Basic 61,891 61,429 61,788 61,580
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 Six Months
Ended October 31,
-----------------------------------
2003 2002
------------------ ----------------
<s> <c> <c>
Operating Activities
- --------------------
Net income $ 47,448 54,761
Adjustments to reconcile net income to cash provided
by (used for) operating activities
Amortization of intangibles 4,865 4,711
Amortization of composition costs 15,254 14,753
Depreciation of property and equipment 13,720 11,793
Non-cash items & Other 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 (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)
Purchase of treasury stock (2,486) (8,117)
Cash dividends (8,079) (6,172)
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
------------------ ----------------
Cash and Cash Equivalents
Decrease for Period (22,485) (18,291)
Balance at Beginning of Period 33,241 39,705
------------------ ----------------
Balance at End of Period $ 10,756 21,414
================== ================
Supplemental Information
Businesses Acquired:
Fair value of assets acquired $ 1,904 7,842
Liabilities assumed - (30)
------------------ ----------------
Cash Paid for Businesses Acquired $ 1,904 7,812
================== ================
Cash Paid (Refunded) During the Period for:
Interest $ 2,462 7,467
Income taxes - Net $ 3,485 (1,554)
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 October 31, 2003 and 2002, and results
of operations and cash flows for the three month and six month periods
ended October 31, 2003 and 2002. The results for the three months and six
months ended October 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, 2003.
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 revenue and expenses during
the reporting period. Actual results could differ from those estimates.
Stock-Based Compensation: Stock options and restricted stock grants are
accounted for in accordance with Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees," and the disclosure-only
provisions of Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation," as amended by SFAS No. 148,"
Accounting for Stock Based Compensation - Transition and Disclosure."
Accordingly, the Company recognizes no compensation expense for fixed stock
option grants since the exercise price is equal to the fair value of the
shares at date of grant. For restricted stock grants, compensation cost is
generally recognized ratably over the vesting period based on the fair
value of shares.
Pro forma information under SFAS No. 123 and SFAS No. 148
---------------------------------------------------------
The per share value of options granted in connection with the Company's
stock option plans during the following periods are estimated using the
Black Scholes option pricing model with the following weighted average
assumptions:
For the Three and Six Months
Ending October 31,
----------------------------------
2003 2002
------------- ----------------
Expected life of options (years) 8.1 8.0
Risk-free interest rate 2.9% 4.9%
Volatility 30.7% 34.3%
Dividend yield 1.0% 0.8%
Per share fair value of options granted $8.97 $11.09
For purposes of the following pro forma disclosure, the fair value of the
awards was estimated at the date of grant using the Black Scholes
option-pricing model and amortized to expense over the expected life of the
options.
For the Three Months Ending For the Six Months Ending
October 31, October 31,
-------------------------------- -------------------------------
2003 2002 2003 2002
------------- -------------- ------------ --------------
Net income as reported $25,648 34,731 $47,448 54,761
Stock-based compensation, net of tax,
included in the determination of net
income as reported -
Restricted stock plans 429 359 950 485
Director stock plan (13) (79) 15 (53)
Stock-based compensation costs, net of
tax, that would have been included in
the determination of net income had the
fair value-based method been applied (1,537) (1,244) (3,218) (2,360)
------------- -------------- ------------ --------------
Pro forma net income $24,527 33,767 $45,195 52,833
============= ============== ============ ==============
Reported earnings per share
Diluted $0.41 0.55 $0.75 0.86
Basic $0.41 0.57 $0.77 0.89
Pro forma earnings per share
Diluted $0.39 0.54 $0.72 0.83
Basic $0.40 0.55 $0.73 0.86
2. Comprehensive Income
--------------------
Comprehensive income was as follows (in thousands):
For the Three Months Ending For the Six Months Ending
October 31, October 31,
-------------------------------- -------------------------------
2003 2002 2003 2002
------------- -------------- ------------ --------------
Net income $25,648 34,731 $47,448 54,761
Change in other comprehensive income
(loss), net of taxes:
Derivative cash flow hedges (248) - (277) 168
Foreign currency translation
adjustments 6,608 253 8,463 3,089
------------- -------------- ------------ --------------
Comprehensive income $32,008 34,984 $55,634 58,018
============= ============== ============ ==============
A reconciliation of accumulated other comprehensive gain (loss) follows (in
thousands):
Three Months Ended October 31, 2003
-----------------------------------------------------
Beginning Change for Ending
Balance Period Balance
------------- --------------- --------------
Derivative cash flow hedges, net of tax $(29) (248) (277)
Foreign currency translation adjustment 11,989 6,608 18,597
Minimum pension liability, net of tax (17,305) - (17,305)
------------- --------------- --------------
Total $(5,345) 6,360 1,015
============= =============== ==============
Six Months Ended October 31, 2003
-------------------------------------------------------
Beginning Change for Ending
Balance Period Balance
------------- --------------- --------------
Derivative cash flow hedges, net of tax $0 (277) (277)
Foreign currency translation adjustment 10,134 8,463 18,597
Minimum pension liability, net of tax (17,305) - (17,305)
------------- --------------- --------------
Total $(7,171) 8,186 1,015
============= =============== ==============
3. Weighted Average Shares for Earning Per Share
---------------------------------------------
A reconciliation of the shares used in the computation of income per share
follows (in thousands):
For the Three Months Ending For the Six Months Ending
October 31, October 31,
-------------------------------- -------------------------------
2003 2002 2003 2002
------------- -------------- ------------ --------------
Weighted average shares outstanding 62,176 61,588 62,033 61,742
Less: Unearned deferred compensation
shares (285) (159) (245) (162)
------------- -------------- ------------ --------------
Shares used for basic income per 61,891 61,429 61,788 61,580
share
Dilutive effect of stock options and
other stock awards 1,285 1,663 1,303 1,790
------------- -------------- ------------ --------------
Shares used for diluted income per 63,176 63,092 63,091 63,370
share ============= ============== ============ ==============
For the three and six months ended October 31, 2003 and 2002, options to
purchase shares of Class A common stock of zero and 2.1 million,
respectively, have been excluded from the shares used for diluted income
per share as their inclusion would have been anti-dilutive. 4.
4. Inventories
-----------
Inventories were as follows (in thousands):
As of
As of October 31, April 30,
----------------------------------- ---------------
2003 2002 2003
--------------- -------------- ---------------
Finished goods $76,138 70,783 $76,452
Work-in-process 5,995 6,708 5,643
Paper, cloth and other 5,671 6,777 4,798
--------------- -------------- ---------------
87,804 84,268 86,893
LIFO reserve (3,755) (3,814) (3,556)
--------------- -------------- ---------------
Total inventories $84,049 80,454 $83,337
=============== ============== ===============
5. Acquisitions
------------
In the current year's first quarter the Company made two additional
payments aggregating $1.0 million to complete prior year acquisitions. In
the current year's second quarter the Company purchased higher education
titles from Leyh Publishing and extended the publishing rights for two STM
journals for a total of $0.9 million.
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.
6. Recent Accounting Standards
---------------------------
In January 2003, The Financial Accounting Standards Board issued
Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN
46). FIN 46 was effective June 15, 2003 and did not have a material impact
on the Company's financial position or results of operations.
In April 2003, the FASB issued SFAS 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities". SFAS 149 amends and
clarifies accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging
activities under SFAS 133. The amendments set forth in SFAS 149 require
that contracts with comparable characteristics be accounted for similarly.
SFAS 149 is generally effective for contracts entered into or modified
after June 30, 2003 and for hedging relationships designated after June 30,
2003. The guidance is to be applied prospectively. SFAS 149 did not have a
material impact on the Company's financial position or results of
operations.
In May 2003, the FASB issued Statement No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity".
The statement requires that certain financial instruments be classified as
liabilities, instead of equity, in statements of financial position. SFAS
150 was effective August 1, 2003 and did not have an impact on the
Company's financial position or results of operations. 7.
7. Segment Information
-------------------
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. The Company's reportable segments are
based on the management reporting structure used to evaluate performance.
Segment information is as follows:
Three Months Ended October 31,
----------------------------------------------------------------------------------
2003 2002
----------------------------------------- -------------------------------------
(thousands)
Inter- Inter-
External segment External segment
Customers Sales Total Customers Sales Total
------------- -------------- ------------ ------------ ----------- ------------
Revenue
-------
U.S. segments:
Professional/Trade $77,238 9,293 86,531 80,506 9,153 89,659
Scientific, Technical, and Medical 40,937 1,757 42,694 40,339 2,077 42,416
Higher Education 29,586 8,088 37,674 28,954 7,621 36,575
European segment 56,310 3,708 60,018 51,406 3,671 55,077
Asia, Australia & Canada 24,809 268 25,077 21,803 132 21,935
Eliminations - (23,114) (23,114) - (22,654) (22,654)
------------- -------------- ------------ ------------ ----------- ------------
Total revenue $228,880 - 228,880 223,008 - 223,008
------------- -------------- ------------ ------------ ----------- ------------
Direct Contribution to Profit
-----------------------------
U.S. segments:
Professional/Trade $25,382 27,492
Scientific, Technical, and Medical 20,503 20,400
Higher Education 9,935 8,625
European segment 19,230 17,039
Asia, Australia & Canada 5,480 4,050
------------ ------------
Total direct contribution to profit 80,530 77,606
Shared services and administrative costs
Distribution (11,591) (11,410)
Information technology (12,428) (10,665)
Finance (7,189) (6,744)
Other administration (12,455) (12,936)
------------ ------------
Total shared services and administration costs (43,663) (41,755)
------------ ------------
Operating income 36,867 35,851
Interest expense and other - net (612) (2,124)
------------ ------------
Income before taxes $36,255 33,727
============ ============
Six Months Ended October 31,
----------------------------------------------------------------------------------
2003 2002
----------------------------------------- -------------------------------------
(thousands)
Inter- Inter-
External segment External segment
Customers Sales Total Customers Sales Total
------------- -------------- ------------ ------------ ----------- ------------
Revenue
-------
U.S. segments:
Professional/Trade $146,688 15,987 162,675 143,903 15,937 159,840
Scientific, Technical, and Medical 81,051 3,350 84,401 80,977 3,896 84,873
Higher Education 69,719 15,723 85,442 67,001 14,489 81,490
European segment 103,174 7,427 110,601 94,838 8,131 102,969
Asia, Australia & Canada 47,908 565 48,473 42,726 369 43,095
Eliminations - (43,052) (43,052) - (42,822) (42,822)
------------- -------------- ------------ ------------ ----------- ------------
Total revenue $448,540 - 448,540 429,445 - 429,445
------------- -------------- ------------ ------------ ----------- ------------
Direct Contribution to Profit
-----------------------------
U.S. segments:
Professional/Trade $43,570 41,784
Scientific, Technical, and Medical 41,219 40,717
Higher Education 28,619 26,783
European segment 34,652 33,075
Asia, Australia & Canada 9,623 7,662
------------ ------------
Total direct contribution to profit 157,683 150,021
Shared services and administrative costs
Distribution (22,852) (22,464)
Information technology (24,229) (19,187)
Finance (14,240) (14,111)
Other administration (26,317) (25,235)
------------ ------------
Total shared services and administration costs (87,638) (80,997)
Unusual item - relocation expenses - (2,465)
------------ ------------
Operating income 70,045 66,559
Interest expense and other - net (1,872) (3,861)
------------ ------------
Income before taxes $68,173 62,698
============ ============
8. Intangible Assets
-----------------
Intangible Assets consist of the following (in thousands):
As of
As of October 31, April 30,
----------------------------------- ---------------
2003 2002 2003
---------------- -------------- ---------------
Intangible assets not subject to amortization
Branded trade marks $57,900 57,900 $57,900
Acquired publication rights 116,450 107,216 115,585
---------------- -------------- ---------------
Total intangible assets not subject to amortization 174,350 165,116 173,485
---------------- -------------- ---------------
Intangible assets subject to amortization, principally
acquired publication rights 105,347 114,443 107,387
---------------- -------------- ---------------
Total $279,697 279,559 $280,872
================ ============== ===============
9. Derivative Financial Instruments
--------------------------------
Under certain circumstances, the Company enters into derivative financial
instruments in the form of forward contracts as a hedge against foreign
currency fluctuation of specific transactions, including inter-company
purchases. The Company does not use derivative financial instruments for
trading or speculative purposes.
During the first quarter of fiscal year 2004 the Company entered into
forward contracts to hedge potential foreign currency volatility on a
portion of fiscal year 2004 inventory purchases. The contracts have been
designated as cash flow hedges and are considered by management to be
highly effective. Several derivative foreign exchange contracts settled
during the second quarter resulting in an exchange loss of approximately
$144,000, which will be recognized in cost of sales as the inventory is
sold. The remaining contracts expire through April 2004. During the six
months ending October 31, 2003 there was no material ineffectiveness
related to the cash flow hedges, and the estimated amount of gains or
losses expected to be reclassified into earnings over the current fiscal
year are not material. The outstanding contracts are as follows:
Average Contract
Currency Sold Currency Purchased Notional Value Rate
-------------------------- ------------------------- --------------------------- -------------------
Canadian dollar US $ US$6,500,000 1.4143
10. Special Items
-------------
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 $2.5 million, or $1.5 million after tax
equal to $0.02 per diluted share, was reported.
During the second quarter of fiscal year 2003, the Company completed the
merger of several of its European subsidiaries into a new entity, which
enabled the Company to increase the tax-deductible net 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 tax benefit, equal to $0.19 per diluted share, in the three and six
months ended October 31, 2002, which was reported as a deferred tax asset.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS -
SECOND QUARTER ENDED OCTOBER 31, 2003
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, excluding a
one-time tax benefit of $12.0 million, or $0.19 per diluted share, reported in
the second quarter of the prior fiscal year. Including the one-time benefit in
the prior year, earnings per diluted share and net income for the second quarter
decreased 26%.
Revenue for the second quarter of fiscal year 2004 advance 3% to $228.9 million
from $223.0 million in the prior year's quarter. This increase was driven by
foreign exchange translation benefits, journal performance globally, and Higher
Education results.
Gross profit as a percentage of revenue improved during the quarter to 65.8%
from 65.4% in the prior year's quarter, principally due to favorable product
mix, improved worldwide journal sales and cost savings.
Operating and administrative expenses increased 4% over last year's second
quarter, reflecting the negative effect of foreign currency translation and
higher expenses associated with technology investment, partially offset by cost
savings. Second quarter operating income of $36.9 million increased 3% from
$35.9 million in the prior year's second quarter.
The decrease of $1.0 million in interest expense from the prior year period is a
result of lower average outstanding debt and interest rates.
Non-GAAP Disclosure
- -------------------
During the second quarter of fiscal year 2003, the Company completed the merger
of several of its European subsidiaries into a new entity, which enabled the
Company to increase the tax-deductible net 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 tax benefit,
equal to $0.19 per diluted share, which was reported as a deferred tax asset.
Management believes this non-GAAP financial measure provides a more meaningful
comparison of the Company's year-over-year results. This event is unusual to the
Company and unlikely to recur in the foreseeable future. Pro forma results of
operations for the second quarter, excluding the tax benefit, were as follows:
For the Three Months Ending
October 31,
-------------------------------
2003 2002
------------ --------------
Net income as reported $25,648 34,731
One-time tax benefit - (12,025)
------------ --------------
Pro Forma net income before one-time tax benefit $25,648 22,706
============ ==============
Income per diluted share as reported $0.41 0.55
One-time tax benefit - (0.19)
Pro Forma income per diluted share
before one-time tax benefit $0.41 0.36
Excluding the one-time tax benefit described above, the effective tax rate for
the second quarter of fiscal year 2003 was 32.7% compared to 29.3% for the
second quarter of fiscal year 2004 reflecting a decline due to lower foreign and
state taxes.
SEGMENT RESULTS
Professional/Trade (P/T)
- ------------------------
U.S. P/T revenue of $86.5 million for the second quarter declined 3% over the
comparable prior year period. Lower backlist sales of consumer technology and
business titles were partially offset by strong culinary and architecture sales
and improved sales returns. Sales showed recovery in October after a slow start
to the second quarter. The direct contribution margin declined from 30.7% to
29.3% principally due to product mix.
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 more
than 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)
- ---------------------------------------
U.S. STM revenue was essentially flat with prior year's second quarter.
Increased journal revenue, despite the adverse impact of the Rowecom bankruptcy,
and higher online protocols sales were offset by lower advertising revenue and
continued weakness in the STM book market. Direct contribution margin and direct
contribution to profit were essentially flat compared to the prior year' second
quarter.
Global STM journal revenue increased approximately 6% in the second quarter.
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
- ----------------
Second quarter U.S. Higher Education revenue of $37.7 million increased 3% as
compared to the prior year's second quarter. Revenue growth was principally in
the social sciences and business. Industry-wide conditions in engineering
continue to be weak. The second quarter direct contribution margin was 26.4%
compared to 23.6% in the prior year's second quarter due to product mix, lower
unit costs and cost containment.
Globally, Higher Education revenue increased over prior year by approximately 6%
in the quarter.
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 of $60.0 million was up
9% over prior year, or 3% excluding foreign currency translation gains. Healthy
STM journal performance was partially offset by sluggish P/T and STM book sales,
primarily in the U.K. October sales were relatively strong after a slower start
to the quarter. Despite the weak German economy, Wiley-VCH reported solid
results in many of its indigenous professional and STM book programs. The direct
contribution to profit of $19.2 million was 13% above the prior year, or 10%
excluding the impact of foreign exchange, principally due to favorable product
mix and cost savings. Contribution margin increased 1.1% over the prior year's
second quarter.
There was positive market response to new revenue-generating features
(advertorials and HTML email newsletters) for two community-of-interest portals,
spectroscopyNOW.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.
Asia, Australia & Canada
- ------------------------
Wiley's revenue in Asia, Australia and Canada advanced 14% in the second
quarter. Excluding the benefit of foreign currency, revenue was up 3%. 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.
Shared Services and Administrative Costs
- ----------------------------------------
Shared services and administrative costs increased 5% to $43.7 million for the
second quarter mainly due to the negative impact of foreign exchange and higher
technology investments.
SIX MONTHS ENDED OCTOBER 31, 2003
Earnings per diluted share increased 8% to $0.75 and net income increased 7% to
$47.4 million, excluding a one-time tax benefit of $12.0 million, or $0.19 per
diluted share and an unusual after tax charge of $1.5 million, or $0.02 per
diluted share, related to the Company's relocation to Hoboken, New Jersey, both
reported in the prior fiscal year period. Including these unusual items in the
prior year comparative period, earnings per diluted share and net income for the
six months ending October 31, 2003 decreased 13%.
Revenue for the first half of fiscal year 2004 increased 4% or 2% excluding
foreign currency translation gains. For the first six months of fiscal year
2004, gross profit as a percentage of revenue improved to 66.5% from 66.0% in
the prior year period, principally due to favorable product mix, improved trade
returns and improved worldwide journal sales.
Excluding relocation expenses incurred in the prior year's first quarter,
operating income increased 1%. Including the relocation expenses, operating
income for the first half of fiscal year 2004 of $70.0 million increased 5% from
$66.6 million in the prior year period.
Operating and administrative expenses increased 6% over last year's period, or
3% excluding the negative effect of foreign currency translation. The increase
was primarily due to higher technology investment associated with the transition
of certain aspects of the business from print to electronic delivery, higher
pension costs and higher sales volume.
The decrease of $1.7 million in interest expense from the prior year period is a
result of lower average outstanding debt and interest rates.
Special Items
- -------------
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 $2.5 million, or $1.5 million after-tax equal to $0.02 per
diluted share, was reported in last year's first quarter.
During the second quarter of fiscal year 2003, the Company completed the merger
of several of its European subsidiaries into a new entity, which enabled the
Company to increase the tax-deductible net 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 tax benefit,
equal to $0.19 per diluted share, which was reported as a deferred tax asset.
Management believes the 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 are unusual to the Company
and unlikely to recur in the foreseeable future. Pro forma results of operations
for the six months, excluding the relocation charges and tax benefit, were as
follows:
For the Six Months Ending
October 31,
----------------------------------
2003 2002
-------------- ---------------
Operating income as reported 70,045 66,559
Unusual relocation charge - 2,465
-------------- ---------------
Operating income before unusual charge 70,045 69,024
============== ===============
Net income as reported 47,448 54,761
Unusual relocation charge, net of taxes - 1,479
One-time Tax Benefit - (12,025)
-------------- ---------------
Net income before tax benefit and unusual charge 47,448 44,215
============== ===============
Income per diluted share as reported 0.75 0.86
Unusual relocation charge, net of taxes - 0.02
One-time tax benefit - (0.19)
Income per diluted share before unusual charge and tax benefit 0.75 0.70
Excluding the one-time tax benefit described above, the effective tax rate for
the half of fiscal year 2003 was 31.8% compared to 30.4% for the first half of
fiscal year 2004 reflecting a decline due to lower foreign and state taxes.
SEGMENT RESULTS
Professional/Trade (P/T)
- ------------------------
U.S. P/T revenue for the first six months of fiscal year 2004 of $162.7 million
increased 2% from $159.8 million, reflecting improved sales returns experience
and strong culinary and architecture sales partially offset by lower backlist
sales of technology, consumer and business titles. The contribution margin in
the first six months of fiscal year 2004 was 26.8% compared to 26.1% in the
prior year reflecting improved returns experience and product mix.
Scientific, Technical And Medical (STM)
- ---------------------------------------
U.S. STM revenue for the first half of fiscal year 2004 was $84.4 million
compared to $84.9 million in the prior year. The effects of the Rowecom
bankruptcy and lower advertising revenue were offset by higher journal revenue.
The contribution margin was 48.8% for the first 6 months of fiscal year 2004
compared to 48.0% in the prior year reflecting cost savings. Globally, STM
revenue for the first six months of fiscal 2004 increased approximately 5% over
the prior year period.
Higher Education
- ----------------
U.S. Higher Education revenue for the first six months of fiscal year 2004 of
$85.4 million increased 5% from $81.5 million due to higher social science and
business sales partially offset by a weak engineering market. The contribution
margin increased 0.6% to 33.5% for the first six months of fiscal year 2004
reflecting cost savings and product mix. Globally, Higher Education revenue
increased approximately 7% over the prior year period.
Europe
- ------
European revenue of $110.6 million in the first six months of fiscal year 2004
increased 7% over the prior year or was flat excluding foreign exchange. STM
journal improvement was partially offset by sluggish STM and P/T book sales,
primarily in the U.K. For the first six months of fiscal year 2004, the
contribution margin excluding foreign exchange was 32.7% compared to 32.1% in
the prior year reflecting higher journal revenue and cost savings.
Asia, Australia & Canada
- ------------------------
Asia, Australia and Canada revenue increased for the first half of fiscal year
2004 from $43.1 million to $48.5 million or 12%, or 2% excluding foreign
exchange translation gains. Improvements in the indigenous Higher Education
programs in Australia and Canada were offset by higher returns of P/T books in
Canada. The contribution margin increased 2.1% to 19.9% for the first six months
of fiscal year 2004 due to the same.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities for the first six months of fiscal year 2004 used $.5
million of cash, as compared to providing $3.9 million in the prior period. Cash
used for operating assets and liabilities was partially offset by higher cash
from operations and higher prepaid subscription receipts. Operating assets and
liabilities in the prior year period included a $12 million source of cash for
accrued relocation related expenditures and a $9 million income tax refund.
Investing activities used $41.3 million for the first six months of fiscal year
2004 as compared to $69.7 million in the prior year period. The decrease is
primarily due to capital spending in connection with the relocation of the
Company's headquarters and new facility costs in the prior year. Current year
investing activities include $26.3 million for product development and $13.1
million of property and equipment expenditures, the majority of which was for
investments in technology. Capital spending on product development for the full
fiscal year 2004 is projected to be $60 million. Capital spending for property
and equipment is projected to be approximately $35 million.
Current year financing activities reflect short-term debt borrowings of $60
million and a $35 million scheduled term loan payment paid on October 31, 2003.
In the first quarter, the Company announced a 30% increase in its quarterly
dividend to shareholders from $0.05 per share to $0.065 per share in response to
the recent change in tax laws affecting the taxability of dividends. The
increased dividend was effective on July 17, 2003.
Although the Condensed Statement of Financial Position as of October 31, 2003
indicates working capital of $16.0 million, current liabilities includes
deferred income related to journal subscriptions for which a significant portion
of the cash has been received and 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. At October
31, 2003 the Company had $260.0 million of variable rate loans outstanding,
which approximated fair value and $70 million available under its revolving
credit facilities.
"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 earnings 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 October 31, 2003 was
approximately 1.78%. A hypothetical 1% change in interest rates on the Company's
debt would affect annual net income and cash flow by approximately $1.7 million.
Foreign Exchange Rates
Under certain circumstances, the Company enters into derivative financial
instruments in the form of forward contracts as a hedge against foreign currency
fluctuation of specific transactions, including inter-company purchases. The
Company does not use derivative financial instruments for trading or speculative
purposes.
During the first quarter of fiscal year 2004 the Company entered into derivative
contracts to hedge potential foreign currency volatility on a portion of fiscal
year 2004 inventory purchases. The contracts have been designated as cash flow
hedges and are considered by management to be highly effective. Several
derivative foreign exchange contracts settled during the second quarter
resulting in an exchange loss of approximately $144,000, which will be
recognized in cost of sales as the inventory is sold. The remaining contracts
expire through April 2004. During the period ending October 31, 2003 there was
no material ineffectiveness related to the cash flow hedges, and the estimated
amount of gains or losses expected to be reclassified into earnings over the
current fiscal year are not material. The outstanding contracts are as follows:
Average Contract
Currency Sold Currency Purchased Notional Value Rate
-------------------------- ------------------------- --------------------------- -------------------
Canadian dollar US $ US$6,500,000 1.4143
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 customers
accounted for more than 6% of total fiscal year 2003 consolidated revenue, the
top ten book customers accounted for approximately 26% of total fiscal year 2003
consolidated revenue and approximately 45% of total gross trade accounts
receivable at April 30, 2003. 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 accounted for approximately 16% of total fiscal year 2003
consolidated revenue and no one agent accounted for more than 6% of total fiscal
year 2003 consolidated revenue. Insurance for these accounts is not commercially
feasible and/or available. A journal subscription agent, Rowecom, Inc., filed
for bankruptcy in January 2003. The bankruptcy will affect STM journal revenue
in calendar year 2003 and is expected to be immaterial to the Company.
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) The following reports on Form 8-K were furnished to the Securities and
Exchange Commission since the filing of the Company's 10-K on June 30,
2003.
i. Earnings release on the first quarter fiscal 2004 results issued on
form 8-K dated September 3, 2003, which include the condensed
financial statements of the Company.
ii. Earnings release on the second quarter fiscal 2004 results issued on
form 8-K dated December 2, 2003, which include the condensed financial
statements of the Company.
The following reports on Form 8-K were filed with the Securities and
Exchange Commission since the filing of the Company's 10-K on June 30,
2003.
None
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: December 11, 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 in order 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-15(e) and 15d-15(e)) for the
registrant and we have:
a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under
our supervision, to ensure that material information
relating to the 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 and presented in this report our
conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered
by this quarterly report based on such evaluation; and
c) Disclosed in this quarterly report any change in the
registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter
that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over
financial reporting and
- The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
function):
a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls over financial reporting.
By /s/ William J. Pesce
-----------------------
William J. Pesce
President and
Chief Executive Officer
Dated: December 11, 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 in order 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-15(e) and 15d-15(e)) for the
registrant and we have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
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 and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
quarterly report based on such evaluation; and
c) Disclosed in this quarterly report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting and
- The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
function):
a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls over financial reporting.
By /s/ Ellis E. Cousens
-----------------------
Ellis E. Cousens
Executive Vice President and
Chief Financial & Operations Officer
Dated: December 11, 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 October 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: December 11, 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 October 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: December 11, 2003