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
December 6, 2006
(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 11-page document.
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 September 6, 2006, John Wiley & Sons Inc., a New York
corporation (the "Company"), issued a press release announcing
the Company's financial results for the second quarter and first
six months of fiscal year 2007. A copy of the Company's press
release is attached hereto as Exhibit 99.1 and incorporated.
Exhibit No. Description
99.1 Press release dated December 6, 2006 titled "John Wiley and
Sons, Inc., Reports Revenues and Earnings Growth for the Second
Quarter" (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).
Ellis E. Cousens
Executive Vice President,
Chief Financial & Operations Officer
(201) 748-6534
John Wiley & Sons, Inc. Reports 8% Second Quarter Revenue Growth
Hoboken, N.J. December 6, 2006. John Wiley & Sons, Inc. (NYSE:JWa) (NYSE:JWb)
announced today that second quarter revenue of $285 million increased 8% from
$263 million in the previous year's second quarter, or 7% excluding favorable
foreign exchange. Adjusted earnings per diluted share was $0.44 for the second
quarter, excluding an income tax benefit of $4 million, or $0.07 per diluted
share. Operating income for the second quarter was $42 million compared to $43
million in the prior year period. Results for the quarter include incremental
stock option expense due to the adoption of SFAS 123R of $3 million, or $0.03
per diluted share. On a basis comparable to prior year, adjusted earnings per
diluted share increased 7%. Second quarter expenses and earnings were also
adversely affected by the timing of a relocation incentive from the State of New
Jersey of approximately $3 million, or $0.03 per diluted share, which has been
delayed to the third quarter of this fiscal year.
For the first half of fiscal year 2007, Wiley's revenue advanced 10% to $548
million, or 9% excluding favorable foreign exchange. Adjusted earnings per
diluted share for the six-month period was $0.82, excluding the income tax
benefit. Operating income was $77 million compared to $76 million in the prior
year period. Results were adversely affected by incremental stock option expense
due to the adoption of SFAS 123R of $5 million, or $0.06 per diluted share. On a
basis comparable to prior year, adjusted earnings per diluted share increased
13%. Operating income for the six-month period was also adversely affected by
the aforementioned relocation incentive.
"Wiley had a solid second quarter as reflected in top-line growth of 8%, with
Professional/Trade and STM leading the way," said William J. Pesce, President
and Chief Executive Officer. "On a comparable basis, excluding the effect of
SFAS 123R and the income tax benefit, EPS growth was consistent with revenue for
the quarter and six months."
He continued, "Wiley's acquisition of Blackwell Publishing (Holdings) Ltd.,
which we announced on November 17, will enable us to build on our solid
foundation. The combination of Blackwell and Wiley, two of the world's most
respected global publishers, is a rare opportunity with highly favorable,
long-term strategic implications. Together, we will deliver even greater value
than we could as separate entities to all stakeholders - our customers, authors,
society partners and shareholders."
The acquisition purchase price of (pound)572 million will be financed with a
combination of debt and cash. Wiley has received irrevocable commitments from
all of the principal shareholders who serve on the Board of Directors of
Blackwell Publishing to sell their shares to Wiley. The closing of the
transaction is anticipated early in 2007.
Segment Highlights
As previously reported, during the first quarter of fiscal year 2007, the
Company finalized a review of certain product prices used to settle
inter-segment sales. While the modification has no effect on consolidated
financial results, it does impact individual segment operating results. The
impact of the change, where significant to segment results, is described below.
Professional/Trade (P/T)
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Wiley's U.S. P/T revenue for the second quarter advanced 10% over the prior year
to $104 million. For the six-month period, revenue was up 9%, to $190 million.
Direct contribution to profit increased by 14% to $29 million for the quarter
and 9% to $48 million for the six-month period. Adjusting for the effect of the
change in inter-segment product prices, revenue for the quarter and six-month
period increased 12%.
Building on the first quarter's momentum, P/T delivered solid second quarter
results driven by frontlist and backlist books in business, consumer and
architecture/culinary, as well as online advertising. Second quarter highlights
include the publication of The Little Book of Value Investing by Christopher
Browne, a Managing Director of Tweedy, Browne Company LLC, a follow-up to Joel
Greenblatt's hugely successful The Little Book that Beats the Market; Seven
Years to Seven Figures by Michael Masterson; Maui Millionaires by David Finkel
and Diane Kennedy; and A Leader's Legacy by James Kouzes and Barry Posner,
authors of The Leadership Challenge.
The August release of Barbara Fairchild's The Bon Appetit Cookbook launched an
unprecedented fall cookbook line-up that included the 8th edition of The
Culinary Institute of America's Professional Chef; the Betty Crocker Cookbook
Bonus Edition and Christmas Cookbook; Pillsbury Baking; and Marcus Samuelson's
Soul of a New Cuisine. During the quarter, the first two titles (Italy and
Ireland) of the MTV-branded series of travel guides published.
P/T's online business had an active quarter with the launch of new products,
such as Schein/Career Anchors, an online self-assessment product; two new
modules of Therascribe, the Child 4E Treatment Planner and the Child 2E 2006
Treatment Planner; and the Certified Internal Auditor Examination Test Prep 1.0.
Wiley's branded web sites - CliffsNotes.com, For Dummies.com and Frommers.com -
generated new advertising and licensing revenue through co-promotions with major
corporations and the launch of Podcasts to promote books.
Several P/T books received considerable media and customer attention during the
quarter. The Wall Street Journal included a major feature on Patrick Lencioni
and his Wiley books. The Five Dysfunctions of a Team continues to enjoy
bestseller status on the BusinessWeek, The Wall Street Journal and The New York
Times lists. Five other Wiley titles made major bestseller lists during the
quarter, including The Little Book That Beats the Market, The Little Book of
Value Investing, Investing For Dummies, Hotel California and The Leadership
Challenge.
In September, Gavriel Salvendy, author of The Handbook of Human Factors, dean of
the Industrial Engineering Department at Tsinghua University and professor at
Purdue University, was awarded the Friendship Award by Chinese Premier Wen
Jiabao in the Great Hall of the People in Beijing, China. This award is the
highest honor that the Chinese government confers on foreigners.
During the quarter, Wiley acquired Whatsonwhen Ltd., a U.K.-based provider of
travel-related online content, technology and related services. The acquisition
will enhance Wiley's extensive travel-related content business, which includes
the integrated online and print Frommer's, For Dummies and Unofficial Guides
brands.
The Company announced a multi-year publishing agreement with the Lincoln Center
for the Performing Arts, Inc. for a minimum of 15 books that will draw on
Lincoln Center's community of artists, extensive archives and educational
expertise. The first title, Lincoln Center: A Promise Realized, 1979-2006 by
Stephen Stamas and Sharon Zane, published in October. Another alliance was
formed with Essential Learning Partnership, a provider of web-based continuing
education for clinical professionals in psychology, counseling and social work.
As a result of this agreement, clinicians will be able to purchase training
courses using Wiley titles to meet license requirements.
Scientific, Technical, and Medical (STM)
- ----------------------------------------
U.S. STM revenue increased 7% over the previous year's second quarter to $53
million and 9% to $106 million for the first half of the fiscal year. The
improvement was driven by increased revenue from journals, books and
controlled-circulation advertising. New businesses and publications acquired
during the past year, such as InfoPOEMs, Dialysis & Transplantation, The
Hospitalist and the Journal of Orthopaedic Research, contributed $2 million to
year-to-date revenue growth.
Direct contribution to profit for the second quarter of fiscal years 2007 and
2006 was $23 million. Direct contribution to profit for the six-month period of
fiscal year 2007 was $48 million, which was flat with prior year. Revenue
improvement was offset by additional costs associated with new business growth,
gross margins on imported books, royalty costs on society-owned journals and
stock option costs associated with the adoption of SFAS 123R.
Customers continue to take advantage of Wiley InterScience's content. The number
of visits through the first six months of this fiscal year increased by
approximately 32% over the first half of last year.
Early in the quarter, Wiley and the International Society for Stem Cell Research
(ISSCR) signed a multi-year agreement to jointly develop and publish Current
Protocols in Stem Cell Biology, the first comprehensive source of high-quality
methods for isolating, maintaining and differentiating embryonic and adult stem
cells for both novice researchers and experienced investigators.
In addition, the Company announced the launch of Statistical Analysis and Data
Mining, a new international journal providing an interdisciplinary focus on data
analysis. The journal will publish six times per year beginning in calendar year
2007. Designed to encourage collaboration across the diverse disciplines of
computer science, engineering and statistics, Statistical Analysis and Data
Mining will communicate novel data mining and statistical techniques to both
novices and experts involved in the analysis of data.
Two of the 2003 recipients of the Wiley Prize in Biomedical Sciences, Dr. Andrew
Z. Fire and Dr. Craig C. Mello, were awarded the 2006 Nobel Prize in Physiology
or Medicine for their discovery of RNA interference. Elizabeth H. Blackburn, PhD
and Carol W. Greider, co-recipients of the Wiley Prize in Biomedical Sciences
earlier this year, received the 2006 Lasker Award for Basic Medical Research.
Higher Education
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U.S. Higher Education revenue for the second quarter of fiscal year 2007 was $42
million, essentially the same as in the prior year. Year-to-date revenue
increased 3% from prior year to $90 million. Adjusting for the effect of the
change in inter-segment product prices, revenue grew 3% for the quarter and 5%
for the first six months. Improvement in accounting and social sciences,
licenses and reprint revenue was partially offset by lower sales in the sciences
and mathematics.
Adjusting for the effect of the change in inter-segment product prices, direct
contribution to profit for the quarter and six-month period improved 11% and 8%,
respectively as a result of cost reduction initiatives in composition, paper
purchasing and printing.
Year-to-date WileyPLUS sales were up 83%. Usage continued on an upward trend
with more than a half million individual visits during the quarter. In
September, the Company published WileyPLUS For Dummies, employing the series'
unique pedagogical style to serve as an instructor reference manual. WileyPLUS
sales are deferred with the majority of the revenue recognized over the course
of the second half of the fiscal year. As of October 31st, approximately $3
million of current WileyPLUS sales were deferred until the second half of this
fiscal year. Excluding the impact of the deferral and after adjusting for the
effect of inter-segment product prices, Higher Education revenue would have
increased 6% for the six-month period.
The accounting and social sciences programs continued their strong results,
particularly Kimmel/Financial Accounting 4e; Kieso/Intermediate Accounting 12e;
deBlij/Regions 12e and Human Geography 8e; Huffman/Psychology 8e;
Callister/Materials 7e; Incropera/Heat Transfer 6e; and Meriam/Statistics
Dynamics 6e.
October was the first month in which Wiley distributed Microsoft Official
Academic Curriculum (MOAC) textbooks and e-learning tools. The alliance with
Microsoft was extended internationally during the quarter, and our global sales
force is already launching it around the world. This important relationship
enables Wiley to establish a significant global position in the technology
certification market.
Europe
- ------
Wiley Europe's second quarter revenue of $81 million improved 5% over prior
year. Revenue for the first six months of the year increased 9% to $153 million.
Foreign exchange favorably affected revenue in the second quarter and six-month
period by 3% and 2%, respectively over the prior year periods. Adjusting for the
effect of the change in inter-segment product prices, as well as foreign
exchange, Wiley Europe's revenue for second quarter and six-months of fiscal
year 2007 improved 4% and 8%, respectively. Growth in journal revenue and P/T
sales was partially offset by the anticipated reduction in Sudoku For Dummies
sales and lower advertising revenue.
Direct contribution to profit for the second quarter and six-month period
improved over prior year by 11% and 19% to $28 million and $52 million,
respectively. Foreign exchange favorably affected the second quarter direct
contribution to profit by approximately 2% over the prior year's second quarter.
Foreign exchange had no impact on the six-month comparison. Adjusting for the
effect of the change in inter-segment product prices, as well as foreign
exchange, direct contribution to profit for the second quarter and six-month
period improved over prior year by 3% and 11%, respectively. Higher journal
revenue and inventory cost reduction initiatives contributed to the results.
STM journal subscriptions continued to improve in all disciplines, particularly
Chemistry, which includes the Angewandte Chemie journals published on behalf of
the German Chemical Society. For the second quarter and six-month period of
fiscal year 2007, The Cochrane Library, an evidence-based medicine collection
available through Wiley InterScience, increased 30% and 28%, respectively.
Wiley Europe forged a publishing agreement with the Royal Meteorological Society
(RMetS), a leading professional and learned society, to publish all five of its
journals. This agreement expands an existing relationship, establishing Wiley as
the exclusive publisher of all the RMetS journals. Wiley and the RMetS have
worked together since 1980, when they launched the International Journal of
Climatology.
The three Sudoku For Dummies titles continue to sell, although not at the same
pace as last year. Cedric Reid: CFO Insights published during the quarter with
strong bulk sales. The publication of Davison/The Shopaholic's Guide to Buying
Online received considerable promotion from a number of bookstore chains. The
Company continues to take advantage of opportunities afforded by WileyPLUS, such
as designing customized products to meet pharmaceutical companies' training
needs.
Early in the quarter, Wiley Europe announced the formation of a multi-year
publishing partnership with the Dana Centre, an extension of the Science Museum
in London. Written by leading technology journalists and experts in the U.K.,
the books will examine technology-related news stories from around the world,
explore their implications on everyday life and predictions for the future. The
Dana Centre is well-known for its innovative and thought-provoking adults-only
events and debates on contemporary science, technology and culture.
Asia, Australia, and Canada
- ---------------------------
Wiley's revenue in Asia, Australia and Canada advanced 7% to $32 million, or 5%
excluding favorable foreign exchange. For the first half of fiscal year 2007,
revenue advanced 11% to $60 million, or 8% excluding foreign exchange. Growth
was driven by P/T in Asia and Canada and Higher Education and School sales in
Australia. Lower STM reference book sales in Asia and sluggish Higher Education
sales in Canada, partially offset the revenue improvements in other areas.
Excluding the effect of foreign exchange and the change in inter-segment product
prices, direct contribution to profit decreased $1.8 million for the second
quarter and $2.5 million for the six-months of fiscal year 2007, principally due
to product mix and higher sales, marketing and composition costs associated with
new business development. Foreign exchange favorably affected the second quarter
and six-month direct contribution to profit by approximately $.5 million and $.7
million, respectively over the prior year periods.
Wiley Asia published several key P/T titles during the quarter including Iqbal
and Mirakhor's An Introduction to Islamic Finance; The Rise of India: Its
Transformation from Poverty to Prosperity by Niranjan Rajadhyaksha, the Deputy
Editor of Business World, one of India's leading business magazines; and
Equities by Mark Mobius, as part of his Master Class series. Strong retail
performance in many Asian markets on such titles as China CEO: Voices of
Experience from 20 International Leaders by Juan Antonio Fernandez boosted
results. In addition, WileyPLUS continued to gain momentum, particularly in
Malaysia where the government is funding new universities. MOAC titles are
eliciting much interest, especially in India.
All of Wiley Australia's businesses showed strength during the quarter. The
second half of the year, which is the peak selling season for the Higher
Education and School businesses, began on a high note, with the rollout of more
than 20 WileyPLUS related titles. A new website went live in August, offering
more than 30,000 P/T titles with rich functionality. This enhanced web presence
has already helped to attract a new partnership with the Association of
Professional Engineers, Scientists and Managers. Cricket For Dummies was
released concurrently with the Australia vs. England cricket competition.
Wiley Canada delivered mixed results for the second quarter, showing strength in
its P/T business, but falling short in Higher Education. Wiley Canada's P/T
growth was due to the continued demand for local real estate books and frontlist
releases.
Tax Benefits
- ------------
In the second quarter of fiscal year 2007 the Company reported a tax benefit of
$4.2 million, or $0.07 per diluted share, mainly due to the favorable resolution
of certain tax matters.
As previously discussed in the Company's Annual Report filed on Form 10-K for
fiscal year 2006, pursuant to guidance issued by the Internal Revenue Service in
May 2005, the Company recorded a tax benefit of approximately $7.5 million, or
$0.12 per diluted share, in the first quarter of fiscal year 2006 and reduced
income taxes due on the fiscal year 2005 repatriation of earnings from its
European subsidiaries. The tax benefit offsets a tax charge recorded in the
fourth quarter of fiscal year 2005.
Neither of the tax adjustments had a cash impact to the Company. The Company has
excluded these tax items for comparative purposes so as not to distort the
underlying performance of the Company.
Conference Call
Wiley will hold a conference call today, Wednesday, December 6, 2006, at 10:30
a.m. (ET) to discuss its financial results for the second quarter of fiscal year
2007. 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) 967-7184
International callers may participate by dialing: (719) 457-2633
A replay of the call will be available from 1:30 p.m. (ET) on Wednesday,
December 6 through midnight on Wednesday, December 13, by dialing (888) 203-1112
or (719) 457-0820 and entering Pass code: 5384926.
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.
"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.
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 www.wiley.com.
JOHN WILEY & SONS, INC.
SUMMARY OF OPERATIONS
FOR THE SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2006 AND 2005
(in thousands, except per share amounts)
Second Quarter Ended Six Months Ended
Adjusted - For Tax Benefits October 31, October 31,
- --------------------------- ----------------------------------- -----------------------------------
2006 2005 % Change 2006 2005 % Change
----------- ---------- ----------- ----------- ----------- ----------
Revenue $ 284,502 262,683 8% 547,934 499,432 10%
Costs and Expenses
Cost of Sales 93,296 86,589 8% 178,470 163,410 9%
Operating and Administrative Expenses 145,577 129,573 12% 285,290 254,279 12%
Amortization of Intangibles 3,596 3,050 18% 7,179 6,116 17%
----------- ---------- ----------- -----------
Total Costs and Expenses 242,469 219,212 11% 470,939 423,805 11%
----------- ---------- ----------- -----------
Operating Income 42,033 43,471 -3% 76,995 75,627 2%
Operating Margin 14.8% 16.5% 14.1% 15.1%
Interest Expense and Other, Net 2,791 2,323 4,703 3,831
----------- ---------- ----------- -----------
Income Before Taxes 39,242 41,148 -5% 72,292 71,796 1%
Adjusted Provision for Income Taxes 13,543 14,144 24,648 24,411
----------- ---------- ----------- -----------
Adjusted Net Income $ 25,699 27,004 -5% 47,644 47,385 1%
=========== ========== =========== ===========
Adjusted Income Per Share- Diluted $ 0.44 0.45 -2% 0.82 0.78 5%
- Basic $ 0.45 0.46 0.84 0.81
Average Shares - Diluted 57,971 60,497 57,928 60,568
- Basic 56,777 58,578 56,763 58,746
Reconciliation of Non-GAAP Adjusted Financial Disclosure (Tax Benefit)
- ----------------------------------------------------------------------
Adjusted Net Income $ 25,699 27,004 47,644 47,385
Tax Benefit (A) 4,193 - 4,193 7,476
----------- ---------- ----------- -----------
Net Income - GAAP $ 29,892 27,004 11% 51,837 54,861 -6%
=========== ========== =========== ===========
Adjusted Income Per Share - Diluted $ 0.44 0.45 0.82 0.78
Tax Benefit (A) 0.07 - 0.07 0.12
Income Per Diluted Share - GAAP $ 0.52 0.45 16% 0.89 0.91 -2%
=========== ========== =========== ===========
Reconciliation of Non-GAAP Adjusted Financial Disclosure (SFAS 123R and Tax Benefit)
- ------------------------------------------------------------------------------------
Operating Income - GAAP $ 42,033 43,471 76,995 75,627
Incremental costs due to adoption of SFAS 123R (B) 2,965 5,358
----------- ---------- ----------- -----------
Adjusted Operating Income $ 44,998 43,471 4% 82,353 75,627 9%
=========== ========== =========== ===========
Net Income - GAAP $ 29,892 27,004 51,837 54,861
Incremental Costs due to Adoption of SFAS 123R, Net of Tax(B) 1,850 3,343
Tax Benefit (A) (4,193) (4,193) (7,476)
----------- ---------- ----------- -----------
Adjusted Net Income $ 27,549 27,004 2% 50,987 47,385 8%
=========== ========== =========== ===========
Income Per Diluted Share - GAAP $ 0.52 0.45 0.89 0.91
Incremental Costs due to Adoption of SFAS 123R, Net of Tax(B) 0.03 0.06 -
Tax Benefit (A) (0.07) (0.07) (0.12)
Adjusted Income Per Diluted Share $ 0.48 0.45 7% 0.88 0.78 13%
=========== ========== =========== ===========
(A) The second quarter and six month periods ending October 31, 2006 excludes a
$4.2 million tax benefit, $0.07 per diluted share, mainly due to the
favorable resolution certain tax matters in the quarter.The six month
period ending October 31, 2005 excludes a $7.5 million, or $0.12 per
diluted share, tax benefit associated with the reversal of a tax accrual
recorded on the repatriation of dividends from European subsidiaries in the
fourth quarter of fiscal year 2005. On May 10, 2005, the US Internal
Revenue Service issued Notice 2005-38. The notice provided for a tax
benefit that fully offset the tax accrued by the Company on foreign
divideds in the fourth quarter of fiscal year 2005. Neither tax benefits
nor the corresponding tax accrual had a cash impact on the Company.
(B) In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based
Payment" ("SFAS 123R"). SFAS 123R requires that companies recognize
share-based compensation to employees in the Statement of Income based on
the fair value of the share-based awards. The Company adopted SFAS 123R in
the first quarter of fiscal year 2007. The adjusted amounts above exclude
the impact of expenses associated with the adoption of SFAS No. 123R.
Note: The Company's management evaluates operating performance excluding unusual
and/or nonrecurring events. The Company believes excluding such events provides
a more effective and comparable measure of performance. Since the adjusted
amounts are not measures calculated in accordance with GAAP, they should not be
considered as a substitute for other GAAP measures, including net income and
earnings per share, as reported, as an indicator of operating performance.
JOHN WILEY & SONS, INC.
SEGMENT RESULTS
FOR THE SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2006 AND 2005
(in thousands, except per share amounts)
Second Quarter Ended Six Months Ended
October 31, October 31,
----------------------------------------- --------------------------------------
2006 2005 % Change 2006 2005 % Change
----------- ------------ -------------- ----------- ---------- ------------
Revenue
- ----------------------------------------
US Segment
Professional/Trade $ 104,281 94,943 10% 189,935 173,459 9%
Scientific, Technical and Medical 52,893 49,355 7% 106,460 98,108 9%
Higher Education 41,977 41,800 0% 89,718 87,342 3%
----------- ------------ ----------- -----------
Total US 199,151 186,098 7% 386,113 358,909 8%
European Segment 80,836 76,782 5% 152,756 139,908 9%
----------- ------------ ----------- -----------
Asia, Australia & Canada Segment 32,236 30,179 7% 60,302 54,335 11%
Intersegment Sales Eliminations (27,721) (30,376) -9% (51,237) (53,720) -5%
----------- ------------ ----------- -----------
Total Revenue $ 284,502 262,683 8% 547,934 499,432 10%
=========== ============ =========== ===========
Direct Contribution to Profit
- ----------------------------------------
US Segment
Professional/Trade $ 29,163 25,561 14% 48,323 44,403 9%
Scientific, Technical and Medical 23,114 23,472 -2% 48,048 48,017 0%
Higher Education 11,969 11,701 2% 29,022 28,720 1%
----------- ------------ ----------- -----------
Total US 64,246 60,734 6% 125,393 121,140 4%
European Segment 28,160 25,265 11% 52,278 43,892 19%
Asia, Australia & Canada Segment 5,930 6,464 -8% 9,456 9,921 -5%
----------- ------------ ----------- -----------
Total Direct Contribution to Profit 98,336 92,463 6% 187,127 174,953 7%
Shared Services and Administrative Costs
- ----------------------------------------
Distribution (13,092) (12,609) 4% (25,479) (24,457) 4%
Information Technology & Development (15,318) (15,106) 1% (30,501) (30,130) 1%
Finance (9,299) (8,284) 12% (17,780) (16,303) 9%
Other Administration (18,594) (12,993) 43% (36,372) (28,436) 28%
----------- ------------ ----------- -----------
Total Shared Services and Admin. Costs (56,303) (48,992) 15% (110,132) (99,326) 11%
Operating Income $ 42,033 43,471 76,995 75,627
=========== ============ =========== ===========
JOHN WILEY & SONS, INC.
CONDENSED STATEMENTS OF FINANCIAL POSITION
(in thousands)
October 31, April 30,
-------------------------------------------------------
2006 2005 2006
---------------- ------------------ -----------------
Current Assets
Cash & cash equivalents $ 16,574 17,564 60,757
Accounts receivable 173,682 161,553 158,275
Inventories 90,433 87,329 88,578
Deferred income tax benefit 7,508 5,921 5,536
Other current assets 10,904 11,360 13,162
---------------- ------------------ -----------------
Total Current Assets 299,101 283,727 326,308
Product Development Assets 65,942 63,148 65,641
Property, Equipment and Technology 104,006 104,897 102,123
Intangible Assets 304,681 303,416 302,384
Goodwill 205,090 196,938 198,416
Deferred Income Tax Benefit 8,961 4,359 3,809
Other Assets 29,289 27,231 27,328
---------------- ------------------ -----------------
Total Assets 1,017,070 983,716 1,026,009
================ ================== =================
Current Liabilities
Accounts and royalties payable 85,215 95,901 97,231
Deferred revenue 67,381 56,416 143,923
Accrued income taxes 20,762 31,334 24,226
Other accrued liabilities 68,320 70,369 96,729
---------------- ------------------ -----------------
Total Current Liabilities 241,678 254,020 362,109
Long-Term Debt 207,794 232,190 160,496
Accrued Pension Liability 59,846 65,160 56,068
Other Long-Term Liabilities 33,573 35,565 35,627
Deferred Income Taxes 13,350 3,895 9,869
Shareholders' Equity 460,829 392,886 401,840
Total Liabilities & Shareholders' Equity $ 1,017,070 983,716 1,026,009
================ ================== =================
JOHN WILEY & SONS, INC.
STATEMENTS OF FREE CASH FLOW
(in thousands)
Six Months Ended
October 31,
-----------------------------------
2006 2005
------------- -------------
Operating Activities:
Net income $ 51,837 54,861
Amortization of intangibles 7,179 6,116
Amortization of composition costs 18,375 17,346
Depreciation of property, equipment and technology 13,894 16,367
Special non-cash tax benefit (4,193) (7,476)
Stock-based compensation (net of tax) 6,198 2,026
Non-cash charges and other 32,048 28,883
Change in deferred revenue (77,945) (86,973)
Net change in operating assets and liabilities (59,064) (24,556)
------------- -------------
Cash Used for Operating Activities, excluding acquisitions (11,671) 6,594
Investments in organic growth:
Additions to product development assets (34,837) (33,371)
Additions to property, equipment and technology (13,019) (9,018)
------------- -------------
Free Cash Flow (59,527) (35,795)
Other Investing and Financing Activities:
Acquisitions, net of cash (13,480) (24,562)
Sale of marketable securities - 10,000
Repayment of long-term debt - (50,000)
Borrowings of long-term debt 45,245 89,842
Purchase of treasury shares (7,278) (54,896)
Cash dividends (11,354) (10,686)
Proceeds from issuance of stock on option exercises and other 1,954 4,595
------------- -------------
Cash Provided by (Used for) in Investing and Financing Activities 15,087 (35,707)
------------- -------------
Effects of Exchange Rate Changes on Cash 257 (335)
------------- -------------
Decrease in Cash and Cash Equivalents for Period $ (44,183) (71,837)
============= =============
RECONCILIATION TO GAAP PRESENTATION
Investing Activities:
Additions to product development assets $ (34,837) (33,371)
Additions to property, equipment and technology (13,019) (9,018)
Acquisitions, net of cash (13,480) (24,562)
Sale (Purchase) of marketable securities - 10,000
------------- ------------
Cash Used for Investing Activities $ (61,336) (56,951)
============= ============
Financing Activities:
Cash Provided by (Used for) Investing and Financing Activities $ 15,087 (35,707)
Less:
Acquisitions, net of cash (13,480) (24,562)
Sale (Purchase) of marketable securities - 10,000
------------- -----------
Cash Provided by (Used for) Financing Activities $ 28,567 (21,145)
============= ===========
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
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
Dated: December 6, 2006