SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
June 15, 2005
(Date of Report)
(Date of earliest event reported)
JOHN WILEY & SONS, INC.
(Exact name of registrant as specified in its charter)
New York
(State or jurisdiction of incorporation)
0-11507 13-5593032
- -------------------------------------- ----------------------------------
Commission File Number IRS Employer Identification Number
111 River Street, Hoboken NJ 07030
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Address of principal executive offices Zip Code
Registrant's telephone number, including area code: (201) 748-6000
------------------------
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act(17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act(17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act(17 CFR 240.13e-4(c))
This is the first page of a 14-page document.
Exhibit No. Description
99.1 Press release dated June 15, 2005 titled "John Wiley and Sons,
Inc. Reports Record Revenues, EPS and Cash Flow for Fiscal Year
2005" (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 Operation
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 June 15, 2005, John Wiley & Sons Inc., a New York corporation
(the "Company"), issued a press release announcing the Company's
financial results for fiscal year 2005. 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 and Sons, Inc.
(201) 748-6534
John Wiley & Sons, Inc. Reports
Record Revenue, EPS and Cash Flow for Fiscal Year 2005
Hoboken, NJ, June 15, 2005. John Wiley & Sons, Inc., (NYSE:JWa) (NYSE:JWb),
announced today that revenue, earnings per diluted share and cash flow reached
record levels in fiscal year 2005. Full-year revenue of $974 million increased
6%, or 4% excluding foreign currency effects. Earnings per diluted share rose 8%
to $1.47, excluding certain tax adjustments noted below. Including the tax
adjustments, fiscal year 2005 earnings per diluted share was $1.35.
The year-on-year revenue growth was driven by Wiley's global Scientific,
Technical and Medical business. Professional/Trade performed well, particularly
in Europe and Asia. Higher Education had a difficult year, as reflected in a
revenue decrease from prior year of 1%.
Fiscal year 2005 operating income of $141.4 million increased 9% over prior
year. Operating income as a percent of revenue increased to 14.5% from 14.0%
last year. Operating and administrative expenses for the full year increased 5%,
or 3% excluding foreign exchange effects. Auditing and compliance costs
associated with certification of internal controls as required by Sarbanes-Oxley
Section 404 added approximately 1%, or $3.2 million, to the year-on-year
increase in expenses.
"Once again, Wiley delivered strong financial results despite challenging market
conditions. Our record results reflect the combined effects of Wiley's unique
mix of core businesses; the resiliency of our highly regarded brands and
must-have content; and our ability to adapt and change, while executing our
strategies to serve customers better," said William J. Pesce, President and CEO.
Mr. Pesce continued, "Wiley's record of accomplishment is largely due to the
commitment, creativity and integrity of an extraordinary team of colleagues
around the world. Earlier this year, Wiley's special culture was recognized by
FORTUNE magazine in its list of 100 Best Companies to Work For."
Mr. Pesce concluded, "Based on leading indicators and market conditions, we
anticipate fiscal year 2006 revenue growth in the mid-to-high single digits and
EPS growth greater than that of revenue."
For the fourth quarter, revenue increased 4% over the prior year to $241.6
million, or 3% excluding foreign currency effects. Earnings per diluted share of
$0.20 advanced from the comparable prior year period by 25%, excluding certain
tax adjustments noted below.
Free cash flow increased 23% to a record level of $152 million from $124 million
in the prior year. The increase was driven in part by factors that will not
drive similar gains in the immediate future. These include an improvement in
receivables collections which reduced Days Sales Outstanding by two days,
improvement in STM Enhanced Access License collections, no growth in product
development spending and inventory, and a reduction in capital spending. We
anticipate some growth in the latter three areas.
The Company utilized $135 million of this free cash flow during the year for the
following: to acquire 2.9 million shares of Class A common stock at an all-in
average price of $32.94 per share; for the acquisition of publishing assets in
several transactions aggregating to $23 million; and for the payment of $18
million in cash dividends to Class A and Class B shareholders. The Company's
management evaluates operating performance based on several measures, including
the non-GAAP measure of free cash flow, as presented in the attached financial
schedules. The Company believes free cash flow is an important measure of the
operational strength of its business. Since free cash flow is not a measure
calculated in accordance with GAAP, it should not be considered as a substitute
for other GAAP measures as an indicator of operating performance.
During the fourth quarter of fiscal year 2005, the Company elected to repatriate
approximately $94 million of dividends from its European subsidiaries under the
American Jobs Creation Act of 2004, which became law in October 2004. The law
provides for a favorable one-time tax rate on dividends from foreign
subsidiaries. The tax accrual on the dividend included approximately $7.5
million, or $0.12 per diluted share of tax that will have no cash impact on the
Company. The Income Statement effect recorded in the fourth quarter of fiscal
year 2005 will be fully offset by a tax benefit that will be recognized by the
Company in the first quarter of fiscal year 2006. In addition, the Company
previously reported in the third quarter of fiscal year 2004, a net tax benefit
of $3 million, or $0.05 per diluted share, due to favorable resolution of
certain state and federal tax matters and an adjustment to accrued foreign
taxes. The Company believes that for comparative purposes these tax items should
be excluded so as to not distort the underlying operating performance of the
Company.
Segment Highlights
Professional/Trade (P/T):
- -------------------------
Revenue of Wiley's U.S. P/T business increased 3% to $350.3 million in fiscal
year 2005, as a result of organic growth in key publishing categories,
particularly For Dummies books, the professional culinary program and Webster's
New World Dictionary. High-end technology titles showed improvement for the
year, while consumer technology publishing remained sluggish. Other publishing
revenue, principally generated through brand licensing, the sale of rights and
online advertising was up 22% for the year. Improved sales return experience
also contributed to the favorable results. P/T's direct contribution to profit
was up 9% over fiscal year 2004, reflecting gross margin improvement, lower
inventory and advance provisions and prudent expense management. Fourth quarter
revenue of $93.5 million was up 1% over the previous year's strong finish.
During the quarter, P/T's books benefited from widespread media attention. Young
and Simon/ iCon: Steve Jobs, The Greatest Second Act in the History of Business
received extensive media coverage around the world. Two titles published with
television series tie-ins, Bittman/How to Cook Everything and Ramsay/In the Heat
of the Kitchen. Rivoli/Travels of a T-Shirt was the subject of a three-part
series on National Public Radio, which generated positive coverage in The Wall
Street Journal, Time Magazine and the San Francisco Chronicle. Borba/Nobody
Likes Me was featured on two Today show segments.
Titles included on bestseller lists in the fourth quarter were the
market-leading J.K. Lasser's Your Income Tax, as well as Lencioni/Five
Dysfunctions of a Team and Tyson/Investing For Dummies. Additional Wiley titles
which made bestseller lists earlier in the year included Winger/Shut Up, Stop
Whining and Get a Life; Scott/Mentored by a Millionaire; Harkins/Everybody Wins;
Lencioni/Death by Meeting; Allen/Multiple Streams of Income; Mauldin/Bull's Eye
Investing; and Tisch/The Power of We.
Several P/T books and authors received awards in the fourth quarter. The annual
Skystone-Ryan Research Award in Philanthropy and Fundraising was presented to
Richard P. Chait, William P. Ryan and Barbara E. Taylor for Governance as
Leadership: Reframing the Work of Nonprofit Boards. Hamelman/Bread won the
coveted IACP Julia Child Award for best first book.
Frommers.com, Dummies.com, and CliffsNotes.com all had a strong quarter and
year, in terms of site traffic, subscriber counts and sales. A new site
supporting direct ordering by government employees went live in March, providing
product information and facilitating the purchase of Wiley titles.
P/T's customization and special sales business had a banner year, with business
growing rapidly. Of special note are customized For Dummies publications, which
are in great demand by corporations and organizations around the world that want
to leverage the power of this well known brand.
Wiley signed an agreement with TTE Corporation, the manufacturer of RCA digital
television products, to publish HDTV For Dummies; launch a "Digital TV Center"
site featuring technical articles and related information; and create a
customized reference and setup guide that will be packaged with selected RCA
products. In April, Wiley signed an agreement to acquire California-based Sybex,
Inc., a global publisher of computer books and software for information
technology professionals. The sale closed on May 31, 2005.
Scientific, Technical and Medical (STM):
- ----------------------------------------
Wiley's U.S. STM revenue increased 7% to $190.5 million in fiscal year 2005.
Electronic journals, new society publications and non-subscription revenue, such
as STM reference books, journal backfiles and advertising sales, all contributed
to the year-on-year growth. STM's direct contribution to profit for fiscal year
2005 was up 3% over prior year, reflecting the combined effects of increased
revenue and favorable product mix, partially offset by costs associated with new
society journals. For the fourth quarter, revenue increased 6% to $54.4 million.
Globally, the STM business recorded strong growth, up approximately 9% for the
full year. Journals and books, in print and online, contributed to the solid
year-on-year growth. The global STM book program recorded its sixth straight
quarter of robust growth, especially in Europe and Asia, resulting in an
increase of 12% in fiscal year 2005 over the previous year. It was also a strong
year for the electronic major reference work program.
The Company's STM business continued its transformation to digital access
through Wiley InterScience. Wiley believes that the research community and
society at large are best served by the widest possible dissemination of
scientific, technical and medical information and continues to make significant
investments to add content and functionality and facilitate greater
accessibility and discoverability.
In fiscal year 2005, STM enjoyed healthy renewals of Enhanced Access Licenses
for Wiley InterScience. More and more customers gained access to Wiley
InterScience through Google and by taking advantage of alternative pricing
programs such as Pay-Per-View and the new, customer-driven pricing model for
Wiley InterScience Online Books. Reference linking improvements, new marketing
initiatives like Google Adword, ISI alerts and Wiley InterScience feature boxes
and the addition of content, including new society journals and backfile
collections, also drove traffic. As a result, usage during the fourth quarter
increased 23% over the third quarter and 56% over the previous year's fourth
quarter.
The quality of Wiley's content continued to be a strong draw to Wiley
InterScience. For example, an article from Wiley's journal Chirality, "Toward
Catalytic Rigid-Rod Beta Barrels: A Hexamer with Multiple Histadines," by Das,
Sakal and Matile was cited by the Chemical Abstracts Service as the most
requested article in 2004 from all of their products and services, which include
SciFinder and SciFinder Scholar. Additionally, the January/February 2005 issue
of ISI Science Watch, a subscription newsletter that uses ISI's citation data
to provide rankings, listed five Wiley journals among the top 10 in three of
eleven categories in the "Hottest Journals of the Millennium (so Far)".
Additional digitized journal backfiles were added to Wiley InterScience through
the launch of the Cell & Developmental Biology and Analytical Science
collections. Earlier this year, the Neuroscience collection was launched. The
Company announced its ambitious new program to digitize all its journal
holdings, dating back to the 1800s. Wiley's digitization of legacy content is
designed to improve the research pathway and ensure content discovery is as
seamless and efficient as possible. This initiative is scheduled for completion
in 2007, in conjunction with Wiley's 200th Anniversary. The completed backfile
collection will span two centuries of scientific research and comprise over 7.5
million pages - one of the largest archives of its kind issued by a single
publisher.
Wiley continued to develop its journal and book programs by forming partnerships
with prominent national, regional and international societies. In the fourth
quarter, the Company executed a multi-year co-publishing agreement with the
American Institute of Chemical Engineers. Earlier in the year, the Company
signed agreements with the Orthopaedic Research Society and the Society of
Hospital Medicine. The American Society of Cytopathology adopted as its official
journal Cancer Cytopathology, which Wiley publishes on behalf of the American
Cancer Society.
Higher Education:
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Wiley's U.S. Higher Education business closed out a challenging year with
revenue of $150.9 million, down 1% from the previous year. The disappointing
results reflect industry-wide price resistance among students and continued
softness in engineering, mathematics and computer science. Higher Education's
direct contribution to profit in fiscal year 2005 was down 8% from the previous
year, reflecting the top-line results, investments in new products, services and
business models and inventory write-offs. Revenue for the fourth quarter of
$19.6 million was $1 million below prior year.
Wiley is committed to delivering quality learning materials and services, while
addressing concerns among students about price and value. The Company is
migrating to online delivery in pace with the needs of students and professors.
The prime example is eGrade Plus, which has been well received in the States and
abroad. More and more students and professors are using its customizable
multi-format content that is organized around teaching and learning activities
such as studying, self-testing, assessment and classroom management. A new
version of eGrade Plus, with increased functionality and enhanced branding, is
set to launch in time for the next academic year.
During the fourth quarter, Higher Education began to roll out a strong frontlist
for the coming academic year, with a number of promising first editions, as well
as revisions of widely used titles. In addition, the number of low-cost
textbooks being offered continues to increase. Outside the States, more local
adaptations of U.S. textbooks are being published, primarily for markets in Asia
and the Middle East.
Earlier in the year, Higher Education signed a multi-year publishing agreement
with the National Geographic Society (NGS), one of the world's foremost research
and educational societies. Wiley will create textbooks and digital learning
tools that will incorporate maps, photographs, graphics, illustrations and
videos from the NGS's vast library. During the first quarter, Wiley renewed and
expanded its agreement with Rand McNally & Co. to be the exclusive distributor
to the higher education community of their Goode's World Atlas. Other alliances
formed during the year include agreements with GlobalSpec to provide search
functionality to engineering students through eGradePlus; OuterNet Publishing to
co-develop lab manuals for introductory biology textbooks; Tata, a software
developer in India, for licensing and selling business simulations; Just Ask! to
create customized online solutions for several Wiley textbooks; and Aplia to
sell Besanko/Microeconomics 2e along with their software product.
Europe:
- -------
Fiscal year 2005 was a strong year for Wiley's European-based companies, with
revenue for the year advancing 13% over the prior year to $268.9 million, or 8%
excluding foreign currency effects. Journals and non-subscription revenue, such
as STM reference books and advertising sales, contributed to the year-on-year
growth. Indigenous and imported P/T titles also performed well. Direct
contribution to profit for the year was up 16% over prior year, reflecting
top-line growth and favorable product mix. Fourth quarter revenue of $75.2
million was up 9%, or 6% excluding foreign currency effects.
Wiley's success in Europe was widespread, with nearly all business categories
growing strongly. Particularly worth noting were the strong performances of the
Cochrane Collaboration in evidence-based medicine, the success of the U.K. For
Dummies program and the robust performance of the STM book program.
Wiley continues to grow in Europe through an effective combination of organic
growth and acquisitions. During the fourth quarter, the Company completed the
acquisition of Whurr Publishers Limited, a London-based publisher of books and
journals for the Nursing, Speech and Language Therapy and Audiology, Psychology
and Special Education markets. The acquisition brings to Wiley a distinguished
list of professional reference books, peer-reviewed journals and textbooks.
Acquisitions completed earlier in the year include the reference portfolio of
the Nature Publishing Group; the book list of Professional Engineering
Publishing; the publishing arm of the Institute of Mechanical Engineers; and
four journals from Henry Stewart Publications.
Wiley signed an agreement during the fourth quarter with the British Library for
delivery of Wiley content through their document delivery service. Earlier in
the year, the Company extended its publishing partnerships with the Society of
Chemical Industry and the Cochrane Collaboration. Closer collaboration with the
American Health Care Journalists Society and the Centre for the Advancement of
Health has generated media exposure for Cochrane. Cooperative marketing
initiatives with a number of scholarly societies have also been formed to
promote other Wiley publications.
Wiley-VCH formed an alliance with the Shanghai Institute of Organic Chemistry, a
part of the Chinese Academy of Sciences, to publish the Chinese Journal of
Chemistry, the Institute's flagship journal. An agreement was also signed during
the third quarter with the Securities Institute to publish a series of
introductory finance books, bringing to Wiley a new source of authors and
customers.
The power of the For Dummies brand in Europe was evident throughout fiscal year
2005. More than one million copies of Wi-Fi For Dummies, which was custom
published for Intel, were distributed to their customers throughout the U.K. All
visitors to the 2005 London Book Fair received a copy of the London Book Fair
Tips For Dummies, which was supported and distributed by Reed Exhibitions. Over
160,000 copies of French History For Dummies have been sold since its
publication. In April, Wiley-VCH secured the German publishing rights for the
For Dummies brand.
Asia, Australia and Canada:
- ---------------------------
Wiley's revenue in Asia, Australia and Canada was up a combined 10% to $108.6
million, or 6% excluding foreign currency effects. Revenue growth in all regions
contributed to the improvement, particularly Asia, which grew 11% for the year.
Direct contribution to profit in fiscal year 2005 increased 9% over the previous
year, reflecting the top-line growth and the foreign exchange effects. Fourth
quarter revenue of $21.3 million increased 17% over prior year.
Asia showed impressive revenue growth, particularly during the second half of
the year. STM books had an excellent year, driven by strong library markets in
India, Taiwan, Japan and Korea, and increased research funding in Malaysia and
Thailand. P/T revenue was up despite the challenging retail environment in many
Asian markets. Sales grew strongly in adoption, library and corporate channels
and in the business and finance, culinary and hospitality and architecture
categories. Wiley Asia's Higher Education business picked up in the fourth
quarter, mainly driven by strong adoption sales in the sciences, mathematics and
engineering.
In Australia, the Higher Education and School businesses both had a good year
due to the strength of local publishing, while P/T's performance was
disappointing, as a result of a challenging retail environment. Wiley Australia
was once again awarded the Employer of Choice citation from the Federal
Government's Equal Opportunity in the Workplace Agency. Earlier in the year, the
Australian Campus Booksellers Association and the Australian Publishers
Association awarded Wiley Australia with Publisher of the Year awards.
In Canada, P/T sales exceeded expectations as a result of improved sell-through
and lower returns at certain retail, online and mass-market accounts. Solid
gains were realized in the For Dummies and STM book programs. Higher Education
had a difficult year in Canada, reflecting similar concerns and conditions as in
the U.S.
Conference Call Instructions
- ----------------------------
Wiley will hold a conference call on Wednesday, June 15, at 11:30 a.m. (EDT) to
discuss its financial results for the fourth quarter and full year of fiscal
year 2005. 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) 479-1628
International callers may participate by dialing:(719) 457-2729
A replay of the call will be available from 1:30 p.m. (ET) on Wednesday, June 15
through midnight (EDT) on Tuesday, June 21 by dialing (888) 203-1112 or (719)
457-0820 and entering Passcode 7603407
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.
"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; (viii)the Company's ability to
protect its copyrights and other intellectual property worldwide and (ix)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.
Signature
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 hereunto duly authorized.
John Wiley & Sons, Inc.
/S/ Ellis E. Cousens
--------------------------------------
Ellis E. Cousens
Executive Vice President,
Chief Financial and Operations Officer
JOHN WILEY & SONS, INC.
SUMMARY OF OPERATIONS
FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED
APRIL 30, 2005 AND 2004
(in thousands, except per share amounts)
Fourth Quarter Ended Year Ended
ADJUSTED April 30, April 30,
- --------- ------------------------------------ ------------------------------------
2005 2004 % Change 2005 2004 % Change
------------------------------------ ------------------------------------
Revenue $ 241,631 232,065 4% 974,048 922,962 6%
Costs and Expenses
Cost of Sales 78,877 76,635 3% 325,061 308,905 5%
Operating and Administrative Expenses 139,494 137,552 1% 496,726 474,902 5%
Amortization of Intangibles 3,205 2,394 34% 10,880 9,776 11%
----------------------- ------------------------
Total Costs and Expenses 221,576 216,581 2% 832,667 793,583 5%
----------------------- ------------------------
Operating Income 20,055 15,484 30% 141,381 129,379 9%
Operating Margin 8.3% 6.7% 14.5% 14.0%
Interest Expense and Other, Net 997 1,177 5,718 4,269
----------------------- -------------------------
Income Before Taxes 19,058 14,307 33% 135,663 125,110 8%
Provision for Income Taxes (A)(B) 6,875 4,259 44,346 39,289
----------------------- -------------------------
Adjusted Net Income $ 12,183 10,048 21% 91,317 85,821 6%
======================= =========================
Adjusted Income Per Share
Diluted $ 0.20 0.16 25% 1.47 1.36 8%
Basic $ 0.20 0.16 1.50 1.39
Reconciliation of Non-GAAP Adjusted Financial Disclosure
- --------------------------------------------------------
Adjusted Net Income $ 12,183 10,048 91,317 85,821
Tax Benefit (A)(B) (7,476) - (7,476) 3,019
----------------------- -------------------------
Net Income - as Reported $ 4,707 10,048 -53% 83,841 88,840 -6%
======================= =========================
Adjusted Income Per Share - Diluted $ 0.20 0.16 1.47 1.36
Tax Benefit (A)(B) (0.12) - (0.12) 0.05
----------------------- -------------------------
Income Per Share - Diluted as Reported $ 0.08 0.16 -52% 1.35 1.41 -4%
======================= =========================
Average Shares
Diluted 60,949 63,080 62,093 63,226
Basic 59,443 61,680 60,721 61,771
(A) For the fourth quarter of fiscal year 2005, the Provision for Income Tax in
the Adjusted Net Income Statement excludes $7.5 million, or $0.12 per diluted
share of accrued tax on $94 million of dividends from European subsidiaries
repatriated under the American Jobs Creation Act of 2004. The law provides for a
favorable one-time tax rate on dividends from foreign subsidiaries. On May 10,
2005, the US Internal Revenue Service issued Notice 2005-38, which provides for
a tax benefit which will substantially offset the tax on the foreign dividends.
Consequently, the tax accrual will have no cash impact on the Company and the
Income Statement effect recorded in the fourth quarter of fiscal year 2005 will
be fully offset by a tax credit that will be recognized in the Company's
financial statements in the first quarter of fiscal year 2006.
(B) The third quarter of fiscal year 2004 Provision for Income Taxes excludes a
net tax benefit of $3.0 million, or $0.05 per diluted share, related to the
resolution of certain state and federal tax matters and an adjustment to accrued
foreign taxes.
Note:
- -----
Management believes the above non-GAAP financial measures, which exclude
the tax charge or benefit, provide a more meaningful comparison of the Company's
year-over-year results. These measures improve investors' ability to understand
the Company's performance and future expectations. As required by the SEC, the
Company provides the above reconciliation.
JOHN WILEY & SONS, INC.
SEGMENT RESULTS
FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED
APRIL 30, 2005 AND 2004
(in thousands, except per share amounts)
Fourth Quarter Ended Year Ended
April 30, April 30,
--------------------------------------- ----------------------------------------
2005 2004 % Change 2005 2004 % Change
--------------------------------------- ----------------------------------------
Revenue
- ----------------------------------------
US Segment
Professional/Trade $ 93,493 92,970 1% 350,338 340,252 3%
Scientific, Technical and Medical 54,380 51,215 6% 190,515 178,100 7%
Higher Education 19,561 20,597 -5% 150,905 152,861 -1%
--------------------------- --------------------------
Total US 167,434 164,782 2% 691,758 671,213 3%
European Segment 75,165 68,970 9% 268,857 238,436 13%
Asia, Australia & Canada Segment 21,325 18,237 17% 108,649 98,986 10%
Intersegment Sales Eliminations (22,293) (19,924) -12% (95,216) (85,673) -11%
--------------------------- --------------------------
Total Revenue $ 241,631 232,065 4% 974,048 922,962 6%
=========================== ==========================
Direct Contribution to Profit
- ---------------------------------------
US Segment
Professional/Trade $ 29,682 27,003 10% 102,326 93,945 9%
Scientific, Technical and Medical 26,598 25,458 4% 88,899 86,310 3%
Higher Education (5,442) (4,705) -16% 38,221 41,749 -8%
--------------------------- --------------------------
Total US 50,838 47,756 6% 229,446 222,004 3%
European Segment 25,379 21,855 16% 86,226 74,585 16%
Asia, Australia & Canada Segment 2,920 2,175 34% 24,175 22,218 9%
--------------------------- --------------------------
Total Direct Contribution to Profit 79,137 71,786 10% 339,847 318,807 7%
Shared Services and Administrative Costs
- ----------------------------------------
Distribution (12,323) (12,928) -5% (47,631) (47,570) 0%
Information Technology & Development (17,138) (15,430) 11% (55,147) (51,918) 6%
Finance (9,521) (9,180) 4% (33,880) (29,900) 13%
Other Administration (20,100) (18,764) 7% (61,808) (60,040) 3%
--------------------------- --------------------------
Total Shared Services and Admin. Costs (59,082) (56,302) 5% (198,466) (189,428) 5%
Operating Income $ 20,055 15,484 30% 141,381 129,379 9%
=========================== ==========================
JOHN WILEY & SONS, INC.
CONDENSED STATEMENTS OF FINANCIAL POSITION
(in thousands)
April 30,
-------------------------------
2005 2004
-------------------------------
Current Assets
Cash & cash equivalents $ 99,401 82,027
Accounts receivable 137,787 126,822
Inventories 83,372 83,789
Deferred income tax benefit 5,921 12,392
Other current assets 12,437 12,853
-------------------------------
Total Current Assets 338,918 317,883
Product Development Assets 61,511 60,755
Property, Equipment and Technology 115,383 117,305
Intangible Assets 291,041 276,440
Goodwill 195,563 194,893
Deferred income tax benefit 4,285 9,061
Other Assets 25,868 22,207
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Total Assets 1,032,569 998,544
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Current Liabilities
Accounts and royalties payable 70,958 68,338
Deferred subscription revenues 142,766 126,822
Accrued income taxes 36,376 19,338
Deferred income taxes - -
Other accrued liabilities 91,211 85,744
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Total Current Liabilities 341,311 300,242
Long-Term Debt 196,214 200,000
Accrued Pension Liability 62,116 48,505
Other Long-Term Liabilities 34,652 31,757
Deferred Income Taxes 1,702 2,976
Shareholders' Equity 396,574 415,064
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Total Liabilities & Shareholders' Equity $ 1,032,569 998,544
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STATEMENT OF FREE CASH FLOW
Year Ended
April 30,
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2005 2004
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Operating Activities
Net income $ 83,841 88,840
Amortization of intangibles 10,881 9,776
Amortization of composition costs 36,026 31,852
Depreciation of property and equipment 31,447 29,739
Non-cash charges and other 39,654 50,612
Change in deferred subscription revenue 14,446 7,675
Net change in operating assets and liabilities 27,191 (6,282)
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Cash Provided By Operating Activities 243,486 212,212
Investments in Organic Growth:
Additions to product development assets (64,407) (59,426)
Additions to property, equipment and technology (26,826) (29,222)
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Free Cash Flow 152,253 123,564
Other Investing and Financing Activities:
Acquisition of publishing assets, net of cash acquired (22,527) (3,070)
Repayment of long-term debt (net) (4,008) (35,000)
Purchase of treasury shares (94,786) (26,126)
Cash dividends (18,125) (16,270)
Proceeds from exercise of stock options 3,444 4,958
Effects of Exchange Rate Changes on Cash 1,123 730
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Increase in Cash and Cash Equivalents for Period $ 17,374 48,786
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