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
March 8, 2007
(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.
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 March 8, 2007, John Wiley & Sons Inc., a New York corporation
(the "Company"), issued a press release announcing the Company's
financial results for the third quarter 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 March 8, 2007 titled "John Wiley and Sons,
Inc., Reports 7% Third Quarter Revenue Growth and Reaffirms
Revenue and EPS Guidance for Fiscal Year 2007" (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 7% Third Quarter Revenue Growth and Reaffirms
Revenue and EPS Guidance for Fiscal Year 2007
Hoboken, N.J. March 8, 2007. John Wiley & Sons, Inc. (NYSE:JWa) (NYSE:JWb)
announced that third quarter revenue of $297 million increased 7% from $278
million in the previous year's third quarter, or 5% excluding favorable foreign
exchange. Adjusted earnings per diluted share was $0.55 for the third quarter,
excluding an income tax benefit of $1 million, or $0.02 per diluted share.
Adjusted earnings for the quarter include incremental stock option expense due
to the adoption of SFAS 123R of $3 million, or $0.03 per diluted share, and a
bad debt provision of $5 million, or $0.05 per diluted share related to the
bankruptcy of Advanced Marketing Services, a distributor to warehouse clubs.
For the first nine-months of fiscal year 2007, Wiley's revenue advanced 9% to
$845 million from $778 million in the comparable prior year period. Adjusted
earnings per diluted share for the nine-month period was $1.37, excluding an
income tax benefit of $5 million. Adjusted earnings were adversely affected by
incremental stock option expense due to the adoption of SFAS 123R of $8 million,
or $0.09 per diluted share, and the aforementioned bad debt provision. On a
basis comparable to prior year, i.e., excluding the effect of SFAS 123R and the
tax benefits, adjusted EPS increased 7% over prior year. The estimated full year
effect of SFAS 123R is $0.12 per diluted share.
"Wiley had another solid quarter, as reflected in top-line growth of 7%. While
all of Wiley's businesses contributed to the year-on-year growth, our Global STM
business had a particularly strong quarter," said William J. Pesce, President
and Chief Executive Officer. "Results for the nine months are consistent with
our expectations; therefore, we reaffirm our guidance for fiscal year 2007
revenue growth in the mid-to-high single digits and EPS growth in the high
single digits, excluding the impact of SFAS 123R; the aforementioned tax
benefits; and the dilutive effect of the recently completed acquisition of
Blackwell Publishing (Holdings) Ltd."
On February 2, 2007, Wiley completed its previously announced acquisition of all
of the outstanding shares of Blackwell Publishing (Holdings) Ltd for $1.1
billion ((pound)572 million). Blackwell revenue is projected to be approximately
$100 million in the fourth quarter. As expected, the acquisition will have a
dilutive effect in the fourth quarter of $0.40 - $0.45 per share, including an
estimated $11 million increase in after-tax interest expense and the estimated
effects of the non-cash acquisition accounting adjustments. The Company entered
into a new $1.35 billion credit facility to finance the acquisition and to
provide for seasonal cash requirements.
Mr. Pesce remarked, "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. Blackwell is in the process of being merged
with Wiley's global scientific, technical, and medical business to form the
largest of Wiley's three businesses. While it is early in the process, we are
very pleased with our progress and quite impressed with the capabilities,
commitment and professionalism of our new colleagues."
In January, Wiley announced that it has reached its bicentennial year. "Founded
in 1807, during the presidency of Thomas Jefferson, Wiley has endured the War of
1812, the Civil War, two World Wars, and many other conflicts, as well as the
Great Depression and the ups and downs of many economic cycles, to become one of
the world's most respected publishers," said Mr. Pesce. "As we celebrate our
bicentennial, we look forward to collaborating with our authors, partners,
shareholders and colleagues to write the next chapter in Wiley's remarkable
history. Together, we will make a lasting difference in the lives of the people
we serve."
During the quarter, Deborah E. Wiley, Chairman of The Wiley Foundation and
Senior Vice President, Corporate Communications, announced that the sixth annual
Wiley Prize in Biomedical Sciences will be awarded jointly to Dr. F. Ulrich
Hartl, Director at the Max-Planck Institute of Biochemistry in Munich, Germany,
and Dr. Arthur L. Horwich, Eugene Higgins Professor of Cellular and Molecular
Physiology at the Yale University School of Medicine and Investigator, Howard
Hughes Medical Institute. Dr. Hartl and Dr. Horwich were chosen for their
elucidation of the molecular machinery that guides proteins into their proper
functional shape, thereby preventing the accumulation of protein aggregates that
underlie many diseases, such as Alzheimer's and Parkinson's.
Segment Highlights
As reported in 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)
- ------------------------
Wiley's U.S. P/T revenue for the third quarter of fiscal year 2007 advanced 2%
over the prior year to $103 million. For the nine-months, revenue increased 7%
to $293 million. Direct contribution to profit for the third quarter and
nine-month period decreased $5 million and $1 million, respectively, primarily
due to a $5 million bad debt provision related to the bankruptcy of Advanced
Marketing Services and stock option costs associated with the adoption of SFAS
123R.
Adjusting for the effect of the change in inter-segment product prices, revenue
for the third quarter and nine-month period increased 4% and 9%, respectively.
The increases were driven primarily by backlist sales through all major accounts
and sales channels, as well as a number of new publication releases at the end
of the quarter. The strong performance of technology publishing, the sale of
electronic rights and lower sales returns contributed positively to these
results. Globally, P/T sales increased 7% for the quarter and 10% for the
nine-month period.
Third quarter highlights include the successful publication of The Only Three
Questions That Count: Investing by Knowing What Others Don't by Ken Fisher, a
long-time Forbes columnist, and founder, Chairman, and CEO of Fisher
Investments, an independent global money management firm with over $30 billion
in assets. The publication of a number of titles was timed to coincide with the
release of Microsoft's new VISTA software, resulting in robust sales.
During the quarter, P/T published Second Life: The Official Guide by Michael
Rymaszewski, et al. Wiley is the official publisher of Linden Labs, the owners
of the popular virtual world known as Second Life.
Our first book derived from a popular blog, LifeHacker by Gina Trapani, rose to
the top of Amazon's bestseller list for computers, after it was featured in The
Wall Street Journal and Newsweek. Two new releases on health and nutrition, The
Cure by Tim Brantley and Reverse Diet by Heidi Skolnick, have also generated
considerable interest among customers and the media.
Barbara Fairchild's The Bon Appetit Cookbook, Weight Watchers New Complete
Cookbook, the 8th edition of The Culinary Institute of America's Professional
Chef and Marcus Samuelson's Soul of a New Cuisine all delivered excellent
results.
P/T's online business had an active quarter with the launch of new products,
such as TheraScribe 5.0, TheraScribe Essentials, Wiley's highly regarded
treatment planning and clinical record management system; Wiley CPA Examination
Review for Windows, 12.0; and an annual update to LPI Online, Wiley's leading
online management assessment tool. New interactive mapping functionality for
points of interest in U.S. cities was added to Frommers.com, allowing users to
set up their own maps and populate them with Frommer's recommended hotels,
restaurants and attractions. P/T's branded websites continue to generate new
advertising and licensing revenue through co-promotions with major corporations
and the launch of Podcasts to promote books.
Several P/T books continue to enjoy bestseller status on the BusinessWeek, The
Wall Street Journal, The New York Times, and USA Today lists, including The Five
Dysfunctions of a Team, The Little Book That Beats the Market, The Little Book
of Value Investing, J.K. Lasser's Income Tax 2007, SuDoku For Dummies, The Sales
Bible and The Leadership Challenge.
Several P/T titles were honored with awards during the third quarter. The
Chicago Tribune named Soul of a New Cuisine by Marcus Samuelson its "Book of the
Year." Peter Meltzer's Keys to the Cellar won the "2006 Georges Duboeuf Award
for Wine Book of the Year". The prestigious North American Travel Journalists
Association named Pauline Frommer's New York City the "Best Travel Guide of
2006". Landscape Architectural Graphic Standards won a Merit Award at the 2007
New York Book Show in the category of "Scholarly & Reference, One-Color Book."
Scientific, Technical, and Medical (STM)
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U.S. STM revenue for the third quarter and nine-months increased 9% to $54
million and $161 million, respectively. The improvement was driven by all of
STM's major programs, including journal subscription revenue, non-subscription
revenue, such as advertising and the sale of journal reprints, and STM reference
books. New businesses and publications acquired during the past year, such as
InfoPOEMs, Dialysis & Transplantation, The Hospitalist, the Journal of
Orthopaedic Research, Clinical Cardiology, and the Carpe Diem publications,
contributed $1 million of the revenue growth in the quarter and $3 million for
the nine-months. Globally, STM revenue increased 7% for the quarter and 8% for
the nine-month period.
Direct contribution to profit for the third quarter was $24 million, up 13% from
the same period in the previous year. The improvement was mainly due to lower
costs associated with the delivery of electronic products, lower vendor costs
and timing. Direct contribution to profit for the nine-month period improved 4%
to $72 million. Revenue growth and lower vendor costs were offset by additional
expenses associated with new businesses, royalties 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 during the third quarter increased by 20% over the same period of last
year. There was an approximate 60% increase in the number of online book
chapters downloaded, the result of a broader selection of online books.
Wiley signed an agreement during the quarter with the New York Public Library to
provide public online access to over 300 peer-reviewed journals that until now
have been available principally through academic or corporate collections. The
Library patrons will be able to electronically access the full-text of journal
articles online via Wiley InterScience. Journals featured in this program
include titles such as Advanced Engineering Materials, American Journal of
Physical Anthropology, Cancer, Flavour and Fragrance, Journal of Field Robotics,
and International Journal of Imaging Systems & Technology. The objectives of
this pilot project are to accumulate usage data on high level journal content in
a public library setting. This is Wiley's first license for journal content with
a major public library in North America.
During the quarter, Wiley and The Society of Hospital Medicine extended their
agreement to launch POEMs for Hospitalists and began to syndicate evidence-based
medicine content in print and online for the growing hospitalist market. The
Journal of Hospital Medicine, which Wiley publishes for the Society, was
accepted by the National Library of Medicine for inclusion in MEDLINE. In
addition, the Company and The American Society for Lasers in Surgery and
Medicine renewed a multi-year agreement to publish Lasers in Surgery and
Medicine. The first issue of Biochemistry and Molecular Biology Education
published during the third quarter. This journal is published by Wiley on behalf
of the International Union of Biochemistry and Molecular Biology Education and
is edited by Donald Voet and Judith G. Voet, authors of the Wiley Higher
Education textbook, Biochemistry.
Higher Education
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U.S. Higher Education revenue for the third quarter of $48 million increased 4%
over the prior year. Year-to-date revenue increased 3% from prior year to $138
million. Adjusting for the effect of the change in inter-segment product prices,
revenue for the third quarter and nine-month period improved 6% and 5%,
respectively. Growth in accounting and business, bolstered by WileyPLUS, and
sales of Microsoft Official Academic Course (MOAC) titles were partially offset
by sluggish sales in mathematics, sciences and engineering. Globally, Higher
Education revenue increased 6% for the both the quarter and the nine-month
period.
Direct contribution to profit for the third quarter and nine-months, after
adjusting for the effect of the change in inter-segment product prices,
increased 9% and 8%, respectively. Improvement due to cost reduction initiatives
in composition, paper and printing were partially offset by costs associated
with WileyPLUS.
Year-to-date WileyPLUS sales were up 90% over the prior year. Usage continued on
an upward trend around the world. WileyPLUS sales are deferred and the revenue
recognized over the course of the semester. As of January 31st, nearly $2
million of revenue from current WileyPLUS sales were deferred until the final
quarter of fiscal year 2007.
The accounting and social sciences programs continued their strong results,
particularly new editions of Kimmel/Financial Accounting 4e; Kieso/Intermediate
Accounting 12e; deBlij/Regions 12e and Human Geography 8e; and
Huffman/Psychology 8e. Although engineering sales were generally soft, a number
of mechanical engineering titles performed quite well, including
Callister/Materials 7e; Incropera/Heat Transfer 6e; and Meriam/Statistics
Dynamics 6e.
Europe
- ------
Wiley Europe's third quarter revenue of $75 million increased 3% over prior
year, but declined 3% excluding favorable foreign exchange. Revenue for the
first nine-months of the year increased 7% to $228 million, or 4% excluding
favorable foreign exchange. Adjusting for the effect of the change in
inter-segment product prices, as well as foreign exchange, Wiley Europe's
revenue for the third quarter decreased slightly. The anticipated reduction in
SuDoku for Dummies sales and lower STM reference books and journal backfile
sales were partially offset by higher journal subscription revenue. On the same
basis, revenue for the nine-months of fiscal year 2007 grew 5%, driven by strong
journal subscriptions, higher P/T sales and the sale of electronic rights.
Direct contribution to profit for the third quarter and nine-month period
improved over prior year by 3% and 14%, respectively. Adjusting for the effect
of the change in inter-segment product prices, as well as foreign exchange,
direct contribution to profit for the third quarter declined 6%, but improved 5%
for the nine-months. The decline in the third quarter was principally driven by
lower revenue and higher employment costs, while the year-to-date growth was
consistent with top-line growth.
In November, Wiley Europe completed the acquisition of Health Economics
Evaluation Database (HEED). HEED is a UK-based online provider of health
economics information and evaluation developed as a joint initiative between the
Office of Health Economics and the International Federation. The acquisition
complements Wiley's expanding health economics and database portfolio, which
includes the world's leading health economics journal. During the quarter Wiley
Europe also acquired the journal European Transactions on Telecommunications,
which it has been publishing for years.
Wiley and the British Journal of Surgery Society renewed their contract, while
our company in Germany launched a number of new journals in the life sciences
and physics. The first webinar on SpectroscopyNOW has been scheduled for March,
with Perkin Elmer as sponsor. This represents a new revenue stream for the
analytic chemistry portals and for Microscopy & Analysis.
Asia, Australia, and Canada
- ---------------------------
Wiley's revenue in Asia, Australia and Canada advanced 9% to $43 million, or 6%
excluding favorable foreign exchange. For the first nine-months of fiscal year
2007, revenue advanced 10% to $104 million, or 7% excluding foreign exchange.
Growth was driven by P/T in Asia and Canada and the sale of reprint licenses in
Australia. Lower STM reference book sales in Asia and Higher Education sales in
Canada partially offset the revenue gains in other areas.
Excluding the effect of foreign exchange and the change in inter-segment product
prices, direct contribution to profit decreased 6% for the third quarter and 13%
for the nine-months, principally due to product mix and higher sales, marketing
and composition costs associated with new business development. Compared to the
prior year period, foreign exchange favorably affected the year-to-date direct
contribution to profit by approximately $1 million.
Wiley Asia published several key P/T titles during the quarter including the
English language edition of the official Chinese government annual report,
China's Banking and Financial Markets: The Internal Research Report of the
Chinese Government by Robert Kuhn and Li Yang; Islamic Finance: The Regulatory
Challenge, by two of the world's leading practitioners in this area - Professors
Rifaat and Archer; and Mutual Funds in the Mark Mobius Master Class series.
Warren Buffett: An Illustrated Biography of the World's Most Successful Investor
was selected by Warren Buffett as one of only two books to be presented at this
year's Berkshire Hathaway shareholders' meeting.
WileyPLUS continued to gain momentum, particularly in Malaysia, where the
government is funding new universities. Microsoft Official Academic Course books
are eliciting much interest, especially in Malaysia and India.
In Australia, WileyPLUS related titles were successfully rolled out during the
third quarter. A new partnership with the Association of Professional Engineers,
Scientists and Managers (APESMA), the largest national non-profit organization
representing professional employees in Australia, was formed. APESMA's agreement
with Wiley Australia will provide its 40,000+ professional and student members a
link to johnwiley.com.au to purchase books. Sales of Frommer's travel books into
the Australian market have doubled year-to-date due to increased promotion of
the brand.
Wiley Canada's P/T growth was driven by demand for local real estate titles and
frontlist releases, as well as strong demand for For Dummies titles. An
indigenous title, Beyond the Crease by hockey player Martin Brodeur, has been
selling well globally. Sales of WileyPLUS have exceeded expectations in Canada.
Tax Benefits
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The Company recognized a tax benefit of $1.3 million in the third quarter of
fiscal year 2007 and $5.5 million for the nine-month period mainly due to the
favorable resolution of certain tax matters.
The Company recognized a tax benefit of $6.8 million in the third quarter of
fiscal year 2006 and $14.3 million for the nine-month period. The third quarter
benefit reflected the favorable settlement of tax matters with tax authorities.
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 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.
None of the tax adjustments had a cash impact to the Company in the current
period. 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, Thursday, March 8, 2007, at 10:30 a.m.
(ET) to discuss its financial results for the third 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) 262-1292
International callers may participate by dialing: (719) 457-2680
A replay of the call will be available from 1:30 p.m. (ET) on Thursday, March 8
through midnight on Thursday, March 15, by dialing (888) 203-1112 or (719)
457-0820 and entering Pass code: 4477282.
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. has been a valued source of information
and understanding for 200 years, helping people around the world meet their
needs and fulfill their aspirations. Our 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's global headquarters are located in Hoboken, New Jersey with
operations in the U.S., Europe, Asia, Canada, and Australia. The Company's Web
site is www.wiley.com. Wiley is listed on the New York Stock Exchange under the
symbols JWa and JWb.
JOHN WILEY & SONS, INC.
SUMMARY OF OPERATIONS
FOR THE THIRD QUARTER AND NINE MONTHS ENDED
JANUARY 31, 2007 AND 2006
(in thousands, except per share amounts)
Third Quarter Ended Nine Months Ended
Adjusted - For Tax Benefits January 31, January 31,
- --------------------------- ----------------------------------- ----------------------------------
2007 2006 % Change 2007 2006 % Change
--------- --------- ----------- --------- --------- -----------
Revenue $ 296,808 278,189 7% 844,742 777,621 9%
Costs and Expenses
Cost of Sales 96,823 91,207 6% 275,293 254,617 8%
Operating and Administrative Expenses 145,351 129,007 13% 430,641 383,286 12%
Amortization of Intangibles 3,972 3,874 3% 11,151 9,990 12%
--------- --------- --------- --------- -----------
Total Costs and Expenses 246,146 224,088 10% 717,085 647,893 11%
--------- --------- --------- --------- -----------
Operating Income 50,662 54,101 -6% 127,657 129,728 -2%
Operating Margin 17.1% 19.4% 15.1% 16.7%
Interest Expense and Other, Net 2,644 3,407 7,347 7,238
--------- --------- --------- --------- -----------
Income Before Taxes 48,018 50,694 -5% 120,310 122,490 -2%
Adjusted Provision for Income Taxes 15,882 16,521 40,530 40,932
--------- --------- ---------- ---------- -----------
Adjusted Net Income $ 32,136 34,173 -6% 79,780 81,558 -2%
========= ========= ========== ========== -----------
Adjusted Income Per Share - Diluted $ 0.55 0.57 -4% 1.37 1.36 1%
- Basic $ 0.56 0.59 1.40 1.40
Average Shares - Diluted 58,306 59,459 58,051 60,187
- Basic 56,913 57,711 56,812 58,400
Reconciliation of Non-GAAP Adjusted Financial Disclosure (Tax Benefit)
- ----------------------------------------------------------------------
Adjusted Net Income $ 32,136 34,173 79,780 81,558
Tax Benefit (A) 1,275 6,776 5,468 14,252
--------- --------- ---------- ---------- -----------
Net Income - GAAP $ 33,411 40,949 -18% 85,248 95,810 -11%
========= ========= ========== ========= -----------
Adjusted Income Per Diluted Share $ 0.55 0.57 1.37 1.36
Tax Benefit (A) 0.02 0.11 0.09 0.24
Income Per Diluted Share - GAAP $ 0.57 0.69 -17% 1.47 1.59 -8%
========= ========= ========== ========= -----------
(A) The second and third quarters of fiscal year 2007 exclude a $4.2 million
tax benefit, or $0.07 per diluted share, and a $1.3 million tax benefit, or
$0.02 per diluted share, respectively. The third quarter ending January 31,
2006 excludes a tax benefit of $6.8 million, or $0.11 per diluted share.
These benefits coincide with the resolution and settlements of certain tax
matters with authorities in the U.S.and abroad.
The nine month period ending January 31, 2006 also 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
benefit nor the corresponding tax accrual had a cash impact on the Company.
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 THIRD QUARTER AND NINE MONTHS ENDED
JANUARY 31, 2007 AND 2006
(in thousands, except per share amounts)
Third Quarter Ended Nine Months Ended
January 31, January 31,
--------------------------------------------------------------------------------
2007 2006 % Change 2007 2006 % Change
----------- ----------- ------------ ----------- ----------- ------------
Revenue
- -------
US Segment
Professional/Trade $ 103,382 101,177 2% 293,317 274,636 7%
Scientific, Technical and Medical 54,302 49,925 9% 160,762 148,033 9%
Higher Education 48,037 46,356 4% 137,755 133,698 3%
----------- ----------- ----------- -----------
Total US 205,721 197,458 4% 591,834 556,367 6%
European Segment 75,267 72,870 3% 228,023 212,778 7%
Asia, Australia & Canada Segment 43,336 39,756 9% 103,638 94,091 10%
Intersegment Sales Eliminations (27,516) (31,895) -14% (78,753) (85,615) -8%
----------- ----------- ----------- -----------
Total Revenue $ 296,808 278,189 7% 844,742 777,621 9%
=========== =========== =========== ===========
Direct Contribution to Profit
- -----------------------------
US Segment
Professional/Trade $ 27,767 32,606 -15% 76,090 77,009 -1%
Scientific, Technical and Medical 23,632 20,839 13% 71,680 68,856 4%
Higher Education 15,450 14,935 3% 44,472 43,655 2%
----------- ----------- ----------- -----------
Total US 66,849 68,380 -2% 192,242 189,520 1%
European Segment 23,290 22,506 3% 75,568 66,398 14%
Asia, Australia & Canada Segment 13,130 12,558 5% 22,586 22,479 0%
----------- ----------- ----------- -----------
Total Direct Contribution to Profit 103,269 103,444 0% 290,396 278,397 4%
Shared Services and Administrative Costs
- ----------------------------------------
Distribution (12,939) (11,878) 9% (38,418) (36,335) 6%
Information Technology & Development (15,647) (14,822) 6% (46,148) (44,952) 3%
Finance (8,626) (7,369) 17% (26,406) (23,672) 12%
Other Administration (15,395) (15,274) 1% (51,767) (43,710) 18%
----------- ----------- ----------- -----------
Total Shared Services and Admin. Costs (52,607) (49,343) 7% (162,739) (148,669) 9%
Operating Income $ 50,662 54,101 127,657 129,728
=========== =========== =========== ===========
JOHN WILEY & SONS, INC.
CONDENSED STATEMENTS OF FINANCIAL POSITION
(in thousands)
January 31,
---------------------------------- April 30,
2007 2006 2006
---------------- -------------- ----------------
Current Assets
Cash & cash equivalents $ 25,024 75,301 60,757
Accounts receivable 186,506 177,118 158,275
Inventories 95,033 88,318 88,578
Deferred income tax benefit 8,427 9,815 5,536
Other current assets 12,571 12,670 13,162
---------------- -------------- ----------------
Total Current Assets 327,561 363,222 326,308
Product Development Assets 66,835 63,402 65,641
Property, Equipment and Technology 108,420 102,594 102,123
Intangible Assets 308,211 304,541 302,384
Goodwill 206,600 197,380 198,416
Deferred Income Tax Benefit 11,440 5,356 3,809
Other Assets 29,713 27,351 27,328
---------------- -------------- ----------------
Total Assets 1,058,780 1,063,846 1,026,009
================ ============== ================
Current Liabilities
Accounts and royalties payable 107,893 99,449 97,231
Deferred revenue 156,075 150,614 143,923
Accrued income taxes 23,811 31,140 24,226
Other accrued liabilities 72,235 73,521 96,729
---------------- -------------- ----------------
Total Current Liabilities 360,014 354,724 362,109
Long-Term Debt 82,073 190,000 160,496
Accrued Pension Liability 62,216 67,614 56,068
Other Long-Term Liabilities 33,635 35,291 35,627
Deferred Income Taxes 17,554 10,057 9,869
Shareholders' Equity 503,288 406,160 401,840
---------------- -------------- ----------------
Total Liabilities & Shareholders' Equity $ 1,058,780 1,063,846 1,026,009
================ ============== ================
JOHN WILEY & SONS, INC.
STATEMENTS OF FREE CASH FLOW
(in thousands)
Nine Months Ended
January 31,
--------------------------------
2007 2006
------------ -----------
Operating Activities:
Net income $ 85,248 95,810
Amortization of intangibles 11,152 9,990
Amortization of composition costs 28,004 26,688
Depreciation of property, equipment and technology 20,895 24,301
Special non-cash tax benefits (5,468) (14,252)
Stock-based compensation (net of tax) 9,177 2,729
Non-cash charges and other 44,141 50,926
Change in deferred revenue 10,058 7,008
Net change in operating assets and liabilities (48,286) (35,796)
------------ -----------
Cash Used for Operating Activities, excluding acquisitions 154,921 167,404
Investments in organic growth:
Additions to product development assets (53,537) (52,156)
Additions to property, equipment and technology (22,904) (14,084)
------------ -----------
Free Cash Flow 78,480 101,164
Other Investing and Financing Activities:
Acquisitions, net of cash (17,313) (29,055)
Sale of marketable securities - 10,000
Repayment of long-term debt (129,536) (282,809)
Borrowings of long-term debt 48,579 279,842
Purchase of treasury shares (7,278) (82,549)
Cash dividends (17,092) (15,870)
Proceeds from issuance of stock on option exercises and other 7,864 5,460
------------ -----------
Cash Provided by (Used for) in Investing and Financing Activities (114,776) (114,981)
------------ -----------
Effects of Exchange Rate Changes on Cash 563 (283)
------------ -----------
Decrease in Cash and Cash Equivalents for Period $ (35,733) (14,100)
============ ===========
RECONCILIATION TO GAAP PRESENTATION
Investing Activities:
Additions to product development assets $ (53,537) (52,156)
Additions to property, equipment and technology (22,904) (14,084)
Acquisitions, net of cash (17,313) (29,055)
Sale (Purchase) of marketable securities - 10,000
------------ ------------
Cash Used for Investing Activities $ (93,754) (85,295)
============ ============
Financing Activities:
Cash Provided by (Used for) Investing and Financing Activities $ (114,776) (114,981)
Less:
Acquisitions, net of cash (17,313) (29,055)
Sale (Purchase) of marketable securities - 10,000
Cash Provided by (Used for) Financing Activities $ (97,463) (95,926)
============ ============
Note: The Company's management evaluates cash flow performance using free cash
flow. The Company believes free cash flow provides a more effective and
comparable measure of performance. 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, including cash used for investing activities and
financing activities, as reported, as an indicator of cash flow performance.
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: March 8, 2007