FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: April 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the transition period from ___________ to ______________
Commission file number 1-11507
JOHN WILEY & SONS, INC.
(Exact name of Registrant as specified in its charter)
NEW YORK 13-5593032
State or other jurisdiction of I.R.S. Employer
incorporation or organization identification No.
605 Third Avenue, New York, NY 10158-0012
Address of principal executive offices Zip Code
offices
Registrant's telephone number (212) 850-6000
including area code
Securities registered pursuant to Section
12(b) of the Act:
Class A Common Stock, par value $1.00 per share
Title of Class
Class B Common Stock, par value $1.00 per share
Title of Class
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-
K or any amendment to this Form 10-K
The number of shares outstanding of the Registrant's Class A
and Class B Common Stock, par value $1.00 per share as of May 31,
1995, was 6,314,492 and 1,646,150 respectively, and the
aggregate market value of such shares of Common Stock held by
non-affiliates of the Registrant as of such date was
$359,982,873 based upon the market price of $57 per share of
Class A and Class B Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's Definitive proxy Statement to be filed with
the Commission on or about August 8, 1995 for the Annual
Meeting of Shareholders to be held on September 21, 1995,
(the "1995 Proxy Statement") is, to the extent noted below,
incorporated by reference in Part III.
PART I
Item 1. Business
The Company is a New York corporation incorporated on
January 15, 1904. (As used herein the term "Company" means John
Wiley & Sons, Inc., and its subsidiaries and affiliated
companies, unless the context indicates otherwise).
The Company operates in one business segment, namely
publishing, which develops, publishes, and markets products
in print and electronic formats including textbooks, professional and
reference works, consumer books, journals, and other
subscription-based products, for the educational, scientific,
technical, professional and trade markets in the United States
and internationally.
Textbooks are produced primarily for use in formal
instruction in the college and university markets, as well as
the secondary school market in Australia, while professional
and reference books, encyclopedias, dictionaries, and
periodicals are intended primarily for practicing and research
professionals and for libraries. Some of these, as well as
nonfiction consumer publications, are also marketed to the
general public. In addition, the Company markets and
distributes books from other publishers. The Company also
develops and markets electronic versions of certain of its print
products, as well as computer software and electronic data
bases for educational use and professional research and
training. Book publications are primarily in the areas of
pure and applied science, engineering, architecture, the
social sciences, biomedicine, accounting, law, computer
science and business administration. Journal publications are
primarily in the scientific and technical, and biomedical
research areas.
In fiscal 1995, the Company acquired the publishing
business of Executive Enterprises, Inc., consisting of
books, journals and newsletters for environmental management,
accounting, law and human resource professionals; ValuSource,
which produces specialized business valuation software for
accountants, entrepreneurs and corporations; the college engineering
list of Houghton Mifflin; the book publishing program of Oliver
Wight Publications, Inc. consisting of general management and
manufacturing/quality titles; and the OS/2 computer-book
list of Van Nostrand Reinhold. Early in fiscal 1996, the Company
entered into an agreement in principle to acquire Preservation
Press consisting of architectural heritage books, technical
preservation guides and children's architecture books.
The company is on the Internet with a World Wide Web
site located at http://www.wiley.com.
Domestic Publishing Operations
Adopted textbooks (i.e., textbooks prescribed for course
use) are sold primarily to bookstores serving educational institutions
in the United States (i.e., college bookstores). The Company
employs college sales representatives who call upon
faculty members responsible for selecting books to be used in
courses, and upon the college bookstores which serve such
institutions and their students. Approximately 3,000 college
bookstores are active customers. Textbook sales are generally
made on a fully returnable basis.
The textbook business is seasonal with the majority of
textbook sales occurring during June through August and November through
January. Significant amounts of inventory are acquired prior
to those periods in order to meet customer delivery requirements.
There is an active used textbook market which negatively affects
the sales of new textbooks.
Professional and consumer book sales consist of sales to
trade bookstores serving the general public, to wholesalers who
supply such bookstores, to certain college bookstores for
their non-textbook requirements, to individual professional
practitioners, and to research institutions, jobbers,
libraries (including public, professional, academic, and
other special libraries), industrial organizations, and
governmental agencies. The Company employs sales
representatives who call upon independent bookstores, along
with national and regional chain bookstores, wholesalers and
jobbers in the United States. Trade sales to bookstores,
wholesalers and jobbers are generally made on a fully returnable
basis.
Sales of professional and consumer books also result from
direct mail campaigns, telemarketing, and advertising and
reviews in periodicals. The mailings and advertising are intended
to promote sales through bookstores and jobbers, as well as to solicit
sales directly.
Journal subscriptions result primarily from direct mail
and other advertising and promotional campaigns, renewals which are
solicited annually either directly or by companies commonly
referred to as independent subscription agents, and
memberships in the professional societies for those journals
that are sponsored by such societies.
The Company also receives licensing revenues from
photocopies and electronic reproductions of journal articles and
other materials.
Domestic publishing products, other than journals,
are distributed from a Company operated warehouse located in
Somerset, New Jersey. Journals are mailed to subscribers directly
from the independent printers.
International Publishing Operations
The Company's publications are sold throughout most of the
world through subsidiaries located in Europe, Canada, Australia,
and Asia, or through agents, or directly from New York.
These subsidiaries market their own indigenous publications, as
well as publications produced by the domestic operations and
other subsidiaries and affiliates.
The Export Sales Department in New York markets the
Company's publications through agents as well as foreign sales
representatives in countries not served by a foreign
subsidiary. The International Rights Department sells foreign
reprint and translations rights. The Company publishes, or
licenses others to publish, its products which are distributed
throughout the world in 40 foreign languages.
Approximately 40% of the Company's fiscal 1995 revenues
were derived from non-U.S. markets.
Publishing Procedures
The Company usually enters into agreements with authors
which state the terms and conditions under which the respective
authors' materials will be published and under which other
related rights may be exercised, the name in which the copyright
will be registered, the basis for any royalties, and other
matters. The Company continues to add new titles, revise
existing titles, and discontinue the sale of others in the
normal course of its business.
Most of the authors of the books and other products
published are compensated by royalties which vary with the
nature of the product and its anticipated sales potential. In
general, royalties for textbooks and consumer books are
higher than royalties for research and reference works. The
Company makes advances against future royalties to authors of
certain of its publications.
Materials for publication are obtained from authors
throughout most of the world through the efforts of an editorial
staff, outside editorial advisors, and advisory boards. Most
materials originate with their authors, but many are prepared
as a result of suggestions or solicitations by editors or
advisors. The Company's general practice is to revise its basic
textbooks every three to five years, if
warranted, and to revise other titles as appropriate.
Approximately 35% of the Company's fiscal 1995 domestic
book publishing revenues were from titles published or revised
in that fiscal year. Subscription-based products, other than
journals, are updated more frequently on a regular schedule.
Most journals are owned by the Company, in which case they
may or may not be sponsored by a professional society. Some are
owned by such societies and published by the Company under
an agreement. Societies which sponsor or own such journals
generally receive a royalty and/or other consideration which
varies with the nature of the relationship. The Company
usually enters into agreements with the editors of journals
which state the duties of the editors, and the fees and
expenses for their services. Contributions of journal articles
transfer publication rights to the Company or professional
society, as applicable. Journal revenues represented
approximately 29% of the Company's fiscal 1995 revenues.
The Company's publishing business is not dependent upon a
single customer, the loss of whom could have a material
adverse effect. Approximately 90% of the Company's journal
subscription business is sourced through independent
subscription agents, and represents approximately 25% of total
consolidated revenues. These companies facilitate the journal
ordering process by consolidating
the subscription orders/billings of each subscriber. Monies
are collected in advance from subscribers by the subscription agents
and are remitted to the journal publishers, including the
Company, generally prior to the commencement of the
subscription. Cash receipts from subscription agents are
highly dependent on their financial position and liquidity.
No one agent accounts for more than 6% of total consolidated
revenues.
The Company performs marketing and distribution services
for other publishers under agency arrangements. It also engages
in copublishing of titles with foreign publishers and in
publication of adaptations of works from other publishers for
particular markets.
Like most other publishers, the Company generally
contracts with independent printers and binderies for their services.
The Company purchases its paper from printers and from independent
suppliers. Paper prices have increased steadily over the past year. The
Company believes that adequate printing and binding facilities,
and sources of paper and other required materials are available
to it, and that it is not dependent upon any single supplier.
The Company produces electronic versions of some of its
products including software, video, CD-ROM, and through on-
line services. Approximately 170 products are available in
electronic formats. The Company believes that the demand for
new electronic technology products will increase steadily.
Accordingly, to properly service its customers and to remain
competitive, the Company anticipates it will be necessary to
increase its expenditures related to such new technologies over the
next several years.
Copyrights, Patents, Trademarks, and Environment
Substantially all of the Company's publications are
protected by copyright, either in its own name, in the name of
the author of the work, or in the name of the sponsoring
professional society. Such copyrights protect the Company's
exclusive right to publish the work in the United States and
in many countries abroad for specified periods: in most cases
the author's life plus 50 years, but in any event a minimum of
28 years for works published prior to 1978 and 35 years for
works published thereafter.
The Company does not own any other material patents,
franchises, or concessions, but does have registered trademarks
and service marks in connection with its publishing businesses.
The Company's operations are generally not affected by environmental
legislation.
Competition Within the Publishing Industry
The sectors of the publishing industry in which the Company
is engaged are highly competitive. The principal competitive
criteria for the publishing industry are believed to be
product quality, suitability of format and subject matter,
author reputation, price, timely availability of both new
titles and revisions of existing texts and, for textbooks and
certain trade books, timely delivery of products to retail
outlets. Recent years have seen a consolidation trend within
the publishing industry, with several publishing companies
having been acquired by larger publishers and other
companies.
Based upon currently available industry statistics, the
Company believes that of books published and sold in the United
States, it accounts for approximately 3% of the total sales of
such university and college textbooks, and approximately 3% of
the total sales of such professional books.
The Company knows of no reliable industry statistics which
would enable it to determine its share of the various foreign
markets in which its operates. The Company believes that the
percentage of its total book publishing sales in markets
outside the United States is higher than that of most of the
United States publishers. The Company also believes
it is one of the four largest publishers of scientific and
technical journals worldwide, and one of
the two largest such domestic publishers, and one of the
four largest publishers of university and college textbooks for
the "hardside" disciplines, i.e. engineering, sciences and
mathematics.
Employees
As of April 30, 1995, the Company employed approximately
1,770 persons on a full-time basis worldwide, none of whom are
unionized. Management considers relations with its employees to
be generally satisfactory.
Financial Information About Industry Segments
The note entitled - "Segment Information" of the Notes
to Consolidated Financial Statements listed in the attached
index is incorporated herein by reference.
Financial Information about Foreign and
Domestic Operations and Export Sales
The note entitled - "Segment Information" of the Notes to
Consolidated Financial Statements listed in the attached index
is incorporated herein by reference.
Executive Officers
Set forth below are the names and ages of all executive officers
of the Company, the period during which they have been officers,
and the offices presently held by each of them.
Name and Age Officer Present Office
Since
Bradford Wiley II 1993 Chairman of the Board since January 1993
54 and a Director (previously Editor,
College Division)
Charles R. Ellis 1988 President and Chief Executive Officer
60 and a Director since June 1990
(previously Executive Vice
President/Group President
Publishing)
Stephen A. Kippur 1986 Senior Vice President, Professional,
48 Reference & Trade Publishing Group since
July 1990 (previously Group Vice
President, Professional & Trade)
William J. Pesce 1989 Senior Vice President, Educational
44 Publishing Group since July 1990
(previously Group Vice President,
Educational Group)
Richard S. Rudick 1978 Senior Vice President, General Counsel
56 since June 1989 (previously Vice
President, General Counsel and
Secretary)
Robert D. Wilder 1986 Senior Vice President, Chief Financial
47 Officer since June 1990 (previously Vice
President, Publishing Financial &
Administrative Services)
William Arlington 1990 Vice President, Human Resources since
46 June 1990 (previously Director, Human
Resources, Publishing Group)
Peter W. Clifford 1989 Vice President, Finance and Controller
49 since November 1991 (previously Vice
President, Controller)
Deborah E. Wiley 1982 Vice President and Director of Corporate
49 Communications since June 1994 and a
Director (previously Vice Chairman
of the Board)
Each of the officers listed above will serve until the next
organizational meeting of the Board of Directors of the Company and
until each of the respective successors is duly elected and
qualified. Deborah E. Wiley is the sister of Bradford Wiley II.
There is no other family relationship among any of the aforementioned
individuals.
Item 2. Properties
The Company's publishing businesses occupy office, warehouse,
and distribution centers in various parts of the world, as
listed below (excluding those locations with less than 10,000
square feet of floor area, none of which is considered material
property).
Location Purpose Approx. Sq. Lease Expiration
Ft. Date
Leased-
Domestic:
New York, Executive and 230,000 2003
New York Editorial
Offices
Somerset, Distribution 170,000 1998
New Jersey Center and
Office
Somerset, Warehouse 50,000 2000
New Jersey
Colorado Office 15,000 2000
Springs,
Colorado
Leased-
Foreign:
Brisbane, Office 16,000 1998
Australia Warehouse 26,000 1996
Toronto, Office 14,000 2001
Canada Warehouse 41,000 1996
Chichester, Office 52,000 2009
England Warehouse 70,000 2012
Singapore Office 53,000 1997
and Warehouse
All of the buildings and the equipment owned or leased
are believed to be in good condition and are generally fully
utilized. The Company considers its facilities overall to be
adequate for its present and near-term anticipated needs.
Item 3. Legal Proceedings
The Company is involved in routine litigation in the
ordinary course of its business. In the opinion of management,
the ultimate resolution of all pending litigation will not have
a material effect upon the financial condition or results of
operations of the Company.
Item 4. Submission of Matters to a
Vote of Security Holders
No matters were submitted to the Company's security
holders during the last quarter of the fiscal year ended April,
30, 1995.
PART II
Item 5. Market for the Company's Common
Equity and Related Stockholder Matters
The Quarterly Share Prices, Dividends and Related
Stockholder Matters listed in the attached index are
incorporated herein by reference.
Item 6. Selected Financial Data
The Selected Financial Data listed in the attached
index is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Management's Discussion and Analysis of Financial
Condition and Results of Operations listed in the attached
index is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data listed
in the attached index are incorporated herein by reference.
Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers
The information regarding the Board of Directors on pages 3
to 11 of the 1995 Proxy Statement is incorporated herein by
reference, and information regarding Executive Officers appears
in Part I of this report.
Item 11. Executive Compensation
The information on pages 11 to 18 of the 1995 Proxy
Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain
Beneficial Owners and Management
The information on pages 2 to 9 of the 1995 Proxy Statement
is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information on pages 11 to 18 of the 1995 Proxy
Statement is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K
(a) Financial Statements and Schedules
(1) List of Financial Statements filed.
The financial statements listed in the attached
index are filed as part of this Report.
(2) List of Financial Statement Schedules filed.
The financial statement schedules listed in the attached
index are filed as part of this Report.
(b) Reports on Form 8-K.
The Company filed a Form 8-K on April 28, 1995 related
to the prepayment of the remaining balance of its 10.31% Notes
in the amount of $26 million.
(c) Exhibits
3.1 Restated Certificate of Incorporation (incorporated by
reference to the Company's report of Form 10-K for the
year ended April 30, 1992).
3.2 Restated By-Laws as of July 1994.
4.1 Form of agreement between the Company and certain employees
restricting transfer of Class B Common Stock
(incorporated by reference to the Company's Report on Form 10-Q
for the quarterly period ended January 31, 1986).
10.1 Credit Agreement dated as of March 30, 1995 among the
Company, Morgan Guaranty Trust Company of New York,
Chemical Bank, Corestates Bank, N.A., and Morgan
Guaranty Trust Company of New York, as Agent.
10.2 1991 Key Employee Stock Plan (incorporated by reference to
the Company's Definitive Proxy Statement dated August 8, 1991).
10.3 1982 and 1987 Incentive Stock Option and Performance Stock
Plans (incorporated by reference to the Company's
Definitive Proxy Statements dated July 30, 1982 and August
10, 1987).
10.4 Amendment to 1982 Stock Option and Performance Stock Plan
dated as of September 19, 1985 (incorporated by
reference to the Company's Report on Form 8-K dated as of
September 19, 1985).
10.5 Amendment to 1982 Incentive Stock Option and Performance
Stock Plan dated as of March 2, 1989 (incorporated by
reference to the Company's Report on Form 10-K
for the year ended April 30, 1989).
10.6 Amendment to 1987 Incentive Stock Option and Performance
Stock Plan dated as of March 2, 1989
(incorporated by reference to the Company's
Report on 10-K for the year ended April 30, 1989).
10.7 1990 Director Stock Plan (incorporated by reference to the
Company's Definitive Proxy Statement dated August 7, 1990).
10.8 1989 Supplemental Executive Retirement Plan (incorporated by
reference to the Company's Report on Form 10-K for
the year ended April 30, 1989).
10.9 Agreement of Lease dated as of May 16, 1985 between Fisher
40th & 3rd Company and Hawaiian Realty, Inc.,
Landlord, and the Company, Tenant (incorporated by reference
to the Company's Report on Form 10-K for the year ended April
30, 1985).
10.10 Form of the Fiscal Year 1995 Executive Long-Term Incentive
Plan (incorporated by reference to the Company's Report on
Form 10-K for the year ended April 30, 1994).
10.11 Form of the Fiscal Year 1995 Executive Annual Incentive Plan
(incorporated by reference to the Company's Report on
Form 10-K for the year ended April 30, 1994).
10.12 Form of the Fiscal Year 1996 Executive Annual Incentive Plan.
10.13 Form of the Fiscal Year 1996 Executive Long-Term Incentive Plan.
10.14 Senior Executive Employment Agreement amended as of March 29,
1995 between Charles R. Ellis and the Company.
10.15 Restricted Stock Award Agreement dated as of June 23, 1994
between Charles R. Ellis and the Company.
(incorporated by reference to the Company's Report on
Form 10-Q for the quarterly period ended July 31, 1994).
10.16 Senior Executive Employment Agreement dated as of
July 1, 1994 between Stephen A. Kippur and the
Company. (incorporated by reference to the Company's Report on
Form 10-Q for the quarterly period ended July 31, 1994).
10.17 Amendment No. 1 to Stephen A. Kippur's Senior Executive
Employment Agreement. (incorporated by reference to
the Company's Report on Form 10-Q for the quarterly
period ended July 31, 1994).
10.18 Restricted Stock Award Agreement dated as of June 23, 1994
between Stephen A. Kippur and the Company. (incorporated by
reference to the Company's Report on Form 10-Q for the
quarterly period ended July 31, 1994).
10.19 Senior Executive Employment Agreement dated as of July 1,
1994 between William J. Pesce and the Company.
(incorporated by reference to the Company's Report on
Form 10-Q for the quarterly period ended July 31, 1994).
10.20 Amendment No. 1 to William J. Pesce's Senior Executive
Employment Agreement. (incorporated by reference to the Company's
Report on Form 10-Q for the quarterly period ended July 31, 1994).
10.21 Restricted Stock Award Agreement dated as of June 23, 1994
between William J. Pesce and the Company.
(incorporated by reference to the Company's Report on
Form 10-Q for the quarterly period ended July 31, 1994).
10.22 Senior Executive Employment Agreement dated as of
July 1, 1994 between Robert D. Wilder and
the Company. (incorporated by reference to the
Company's Report on Form 10-Q for the quarterly
period ended July 31, 1994).
10.23 Amendment No. 1 to Robert D. Wilder's Senior Executive
Employment Agreement. (incorporated by reference to
the Company's Report on Form 10-Q for the quarterly
period ended July 31, 1994).
10.24 Restricted Stock Award Agreement dated as of June 23, 1994
between Robert D. Wilder and the Company.
(incorporated by reference to the Company's Report on Form 10-
Q for the quarterly period ended July 31, 1994).
10.25 Agreement dated as of January 1, 1993 between W. Bradford
Wiley, a former Director, and the Company
(incorporated by reference to the Company's Report on
Form 10-K for the year ended April 30, 1993).
13-P Annual Report to Shareholders for Fiscal Year Ended April 30,
1995 (to be filed by amendment on or about July 26, 1995).
22 List of Subsidiaries of the Company.
24 Consent of Independent Public Accountants (included in
this report as listed in the attached index).
27 Financial Data Schedule.
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
The following financial statements and information
are filed as part of this Report:
Report of Independent Public Accountants and
Consent of Independent Public Accountants
Consolidated Statements of Financial Position
as of April 30, 1995 and 1994
Consolidated Statements of Income and Retained Earnings
for the years ended April 30, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for
the years ended April 30, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results by Quarter (Unaudited)
Quarterly Share Prices, Dividends and Related
Stockholders Matters
Selected Financial Data
Schedule II - Valuation and Qualifying Accounts
Other schedules are omitted because of absence of
conditions under which they apply or because the
information required is included in the Notes to the
Consolidated Financial Statements.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and the Shareholders
of John Wiley & Sons, Inc.:
We have audited the accompanying consolidated statements
of financial position of John Wiley & Sons, Inc. (a New
York corporation), and subsidiaries as of April 30, 1995 and
1994, and the related consolidated statements of income and
retained earnings and cash flows for each of the three years in
the period ended April 30, 1995. These financial statements
and the schedule referred to below aret the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and the schedule based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the financial
position of John Wiley & Sons, Inc., and subsidiaries as of
April 30, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the
period ended April 30, 1995 in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion
on the basic financial statements taken as a whole. The schedule
listed in the Index to Consolidated Financial Statements and
Schedules is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected
to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
New York, New York
June 7, 1995
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to
the incorporation of our report included in the John Wiley &
Sons, Inc. Form 10-K for the year ended April 30, 1995, into
the Company's previously filed Registration Statement File Nos.
3360268, 2-65296, 2-95104 and 33-29372.
ARTHUR ANDERSEN LLP
New York, New York
July 18, 1995
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
April 30
-----------------
John Wiley & Sons, Inc. and Subsidiaries Dollars in thousands 1995 1994
=====================================================================================
Assets
Current Assets
Cash and cash equivalents.......................................$ 34,410 $ 57,457
Accounts receivable............................................. 52,562 45,998
Inventories..................................................... 41,535 37,281
Deferred income tax benefits.................................... 8,004 9,246
Prepaid expenses................................................ 4,680 3,642
-----------------
Total Current Assets............................................ 141,191 153,624
-----------------
Product Development Assets.......................................... 24,509 20,433
Property and Equipment.............................................. 21,244 19,623
Intangible Assets................................................... 53,351 43,701
Other Assets........................................................ 7,186 6,559
-----------------
Total Assets....................................................$247,481 $ 243,940
=================
Liabilities and Shareholders' Equity
Current Liabilities
Notes payable and current portion of long-term debt.............$ 621 $ 6,079
Accounts and royalties payable................................... 34,273 25,619
Deferred subscription revenues................................... 65,749 56,420
Accrued income taxes............................................. 4,227 4,607
Other accrued liabilities........................................ 25,080 25,840
-----------------
Total Current Liabilities........................................129,950 118,565
-----------------
Long-Term Debt...................................................... - 26,000
Other Long-Term Liabilities......................................... 13,818 12,953
Deferred Income Taxes............................................... 4,881 4,092
Shareholders' Equity
Common stock issued
Class A (8,086,635 and 8,045,212 shares)......................... 8,087 8,045
Class B (2,084,230 and 2,091,002 shares)......................... 2,084 2,091
Additional paid-in capital....................................... 35,616 33,008
Retained earnings................................................ 87,541 74,024
Cumulative translation adjustment................................ (2,411) (3,805)
Unearned deferred compensation................................... (1,547) -
-----------------
129,370 113,363
Less Treasury shares at cost (Class A-1,775,941 and 1,826,636;
Class B-435,512 and 434,640)................................(30,538) (31,033)
-----------------
Total Shareholders' Equity....................................... 98,832 82,330
-----------------
Total Liabilities and Shareholders' Equity......................$247,481 $ 243,940
=================
=====================================================================================
The accompanying notes are an integral part of the
consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS
For the years ended April 30
----------------------------
John Wiley & Sons, Inc. and Subsidiaries Dollars in thousands except per share data 1995 1994 1993
===============================================================================================================
Revenues...........................................................................$331,091 $ 294,289 $ 272,894
Costs and Expenses
Cost of sales....................................................................113,142 99,683 92,234
Operating and administrative expenses............................................186,984 170,000 162,422
Amortization of intangibles...................................................... 4,086 5,723 5,222
---------------------------
Total Costs and Expenses.........................................................304,212 275,406 259,878
---------------------------
Operating Income.................................................................... 26,879 18,883 13,016
Interest Income and Other........................................................... 1,768 1,821 1,551
Interest Expense.................................................................... (2,854) (3,638) (3,996)
---------------------------
Interest Income (Expense)-Net....................................................... (1,086) (1,817) (2,445)
---------------------------
Income Before Taxes................................................................. 25,793 17,066 10,571
Provision for Income Taxes.......................................................... 7,482 4,949 2,853
---------------------------
Net Income.......................................................................... 18,311 12,117 7,718
---------------------------
Retained Earnings at Beginning of Year.............................................. 74,024 66,080 62,468
Cash Dividends
Class A Common ($.62, $.55 and $.55 per share)................................... 3,885 3,358 3,288
Class B Common ($.55, $.49 and $.49 per share)................................... 909 815 818
---------------------------
Total Dividends.................................................................. 4,794 4,173 4,106
---------------------------
Retained Earnings at End of Year...................................................$ 87,541 $ 74,024 $ 66,080
===========================
Income Per Share
Primary.........................................................................$ 2.25 $ 1.52 $ 1.00
Fully Diluted...................................................................$ 2.23 $ 1.51 $ 0.99
===============================================================================================================
The accompanying notes are an integral part of the
consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended April 30
---------------------------
John Wiley & Sons, Inc. and Subsidiaries Dollars in thousands 1995 1994 1993
===============================================================================================
Operating Activities
Net Income.........................................................$ 18,311 $ 12,117 $ 7,718
Non-cash Items
Amortization of intangibles...................................... 4,086 5,723 5,222
Amortization of composition costs................................ 12,285 11,979 10,997
Depreciation of property and equipment........................... 6,589 6,075 5,266
Reserves for returns, doubtful accounts and obsolescence......... 4,321 3,679 4,932
Deferred income taxes............................................ 2,094 (1,499) (1,321)
Other............................................................ 5,155 3,295 3,200
Changes in Operating Assets and Liabilities
Increase in receivables.......................................... (8,337) (11,863) (1,860)
Decrease (increase) in inventories............................... (3,962) 758 (3,709)
Increase (decrease) in accounts and royalties payable............ 6,951 5,594 (2,019)
Increase in deferred subscription revenues....................... 7,596 6,132 5,468
Net change in other operating assets and liabilities............. (3,198) (2,256) 2,801
---------------------------
Cash Provided by Operating Activities............................ 51,891 39,734 36,695
---------------------------
Investing Activities
Additions to product development assets..........................(19,705) (16,827) (16,596)
Additions to property and equipment.............................. (7,876) (6,504) (7,072)
Proceeds from sale of publishing lines........................... - 9,210 1,900
Acquisition of publishing assets.................................(12,268) (8,305) (416)
---------------------------
Cash Used for Investing Activities...............................(39,849) (22,426) (22,184)
---------------------------
Financing Activities
Purchase of treasury shares...................................... (212) - -
Repayment of long-term debt......................................(32,000) (4,000) (4,000)
Net borrowings (repayments) of short-term debt................... 522 (21) 33
Cash dividends................................................... (4,794) (4,173) (4,106)
Proceeds from exercise of stock options.......................... 590 2,815 1,157
---------------------------
Cash Used for Financing Activities...............................(35,894) (5,379) (6,916)
---------------------------
Effects of Exchange Rate Changes on Cash......................... 805 (787) (1,314)
---------------------------
Cash and Cash Equivalents
Increase (Decrease) for Year.....................................(23,047) 11,142 6,281
Balance at Beginning of Year..................................... 57,457 46,315 40,034
---------------------------
Balance at End of Year..........................................$ 34,410 $ 57,457 $ 46,315
===========================
Cash Paid During the Year for
Interest........................................................$ 3,807 $ 3,674 $ 4,092
Income Taxes....................................................$ 6,886 $ 3,715 $ 3,007
===============================================================================================
The accompanying notes are an integral part of the
consolidated financial statements.
Notes to Consolidated Financial Statements
Summary of Significant Accounting Policies
Principles of Consolidation: The consolidated financial
statements include the accounts of John Wiley & Sons, Inc., and
its majority owned subsidiaries ("the Company"). All significant
intercompany items have been eliminated. Certain prior year
amounts have been reclassified to conform to the current year's
presentation.
Sales Returns and Doubtful Accounts: The Company provides an
estimated allowance for doubtful accounts and for future returns
on sales made during the year. The allowance for doubtful
accounts and returns (estimated returns net of inventory and
royalty costs) is shown as a reduction of receivables in the
accompanying consolidated balance sheets and amounted to $22.6
and $19.9 million at April 30, 1995 and 1994, respectively.
Depreciation and Amortization: Furniture and equipment is
depreciated principally on the straight-line method over
estimated useful lives ranging from 3 to 10 years. Leasehold
improvements and capital leases are amortized over the lesser of
the estimated useful lives of the assets or the duration of the
various leases, using the straight-line method. Composition
costs representing the costs incurred to bring an edited
manuscript to publication including typesetting, proofreading,
design and illustration, etc. are capitalized and amortized over
estimated useful lives representative of product revenue
patterns, generally 3 years.
Intangible Assets: Intangible assets consist of: acquired
publication rights, which are principally amortized based on the
projected revenues of titles acquired; non-compete agreements,
which are amortized over the term of such agreements; and
goodwill and other intangibles, which are amortized on a straight-
line basis over periods ranging from 10 to 40 years. If facts
and circumstances indicate that intangible assets may be
permanently impaired, it is the Company's policy to assess the
carrying value and recoverability of such assets based on an
analysis of undiscounted future cash flows of the related operations. Any
resulting reduction in carrying value would be charged to
operating results.
Income Per Share: Income per share is determined by dividing
income by the weighted average number of common shares
outstanding and common stock equivalents resulting from the
assumed exercise of outstanding dilutive stock options and other
stock awards less shares assumed to be repurchased with the
related proceeds at the average market price for the period for
primary earnings per share, and at the higher of the average or
end of period market price for fully diluted earnings per share.
Subscription Revenues: Subscription revenues are generally
collected in advance. These revenues are deferred and recognized
as earned when the related issue is shipped to the subscriber.
Foreign Exchange Contracts: The Company, from time to time,
enters into forward exchange contracts as a hedge against its
overseas subsidiaries' non-functional currency asset, liability,
and commitment exposures. Such exposures include anticipated
annual journal subscription revenues, as well as that portion of
the revenues and related receivables on sales of book products,
that are denominated in U.S. dollars, while the foreign
subsidiaries' expense structure is denominated in their own
functional currencies. Realized and unrealized gains and losses
are deferred and taken into income over the lives of the hedged
items if permitted by generally accepted accounting principles;
otherwise the contracts are marked to market with any gains and
losses reflected in operating expenses. There were no open foreign
exchange contracts, and no gains or losses were deferred at
April 30, 1995 or 1994.
Cash Equivalents: Cash equivalents consist primarily of highly
liquid investments with a maturity of three months or less and
are stated at cost plus accrued interest which approximates
market value.
Adoption of New Accounting Standards: The Company adopted the
following Statements of Financial Accounting Standards (SFAS)
effective as of the beginning of fiscal 1994:
- - Employer's Accounting for Postretirement Benefits Other Than
Pensions - SFAS No. 106
- - Accounting for Income Taxes - SFAS No. 109
- - Employer's Accounting for Postemployment Benefits - SFAS No.
112
The Postretirement Benefits standard changed the method of
accounting for retiree life insurance and health care benefits
from the current practice of expensing the cost of such benefits
on a pay as-you-go, cash basis to expensing the cost over the
years the employees render service. The cumulative effect of
adopting this standard amounted to a charge of approximately $.2
million, or $.1 million after taxes, in fiscal 1994.
The Income Tax standard changed the method of accounting for
income taxes from the deferred method to the liability method,
under which deferred tax assets and liabilities are now measured
based on the enacted tax rates and laws that will be in effect
when the deferred tax items are expected to reverse. The change
had the effect of increasing net deferred tax benefits, resulting
in a cumulative effect of approximately $1.3 million of income in
fiscal 1994.
The Postemployment Benefit standard requires the accrual of
costs related to health care benefits provided to former or
inactive employees prior to retirement. The cumulative effect of
adopting this standard amounted to a charge of approximately $1.6
million, or $1.1 million after taxes, in fiscal 1994.
The net cumulative effect of adopting these new standards as
of the beginning of fiscal 1994 was not material. Prior period
financial statements have not been restated.
Acquisitions
In fiscal 1995, the Company acquired the publishing business of
Executive Enterprises, Inc., consisting of books, journals and
newsletters for environmental management, accounting, law and
human resource professionals; ValuSource, which produces
specialized business valuation software for accountants,
entrepreneurs and corporations; the college engineering list of
Houghton Mifflin; the book publishing program of Oliver Wight
Publications, Inc., consisting of general management and
manufacturing/quality titles; the OS/2 computer-book list of Van
Nostrand Reinhold, Inc., and other smaller publishing lists, for
purchase prices aggregating $12.3 million in cash plus assumed
liabilities of $2.9 million. The excess of cost over the fair
value of the tangible assets acquired amounted to approximately
$13.5 million, of which $6.7 million related to acquired
publication rights, $.5 million related to non-compete
agreements, and $6.3 million represented goodwill and other
intangibles which are being amortized over 10 to 15 years.
In fiscal 1994, the Company acquired the professional computer
book line of QED Information Services in the United States;
Belhaven Press, which publishes earth and environmental science
titles in the United Kingdom; and the Company's joint venture
partner's 30% minority interest in Protocols, which publishes
life science continuity products, for purchase prices aggregating
$8.3 million. The excess of cost over the fair value of the
tangible assets acquired amounted to approximately $6.9 million,
of which $.5 million related to acquired publication rights, $.3
million related to noncompete agreements, and $6.1 million
represented goodwill and other intangibles which are being
amortized over 15 years.
These acquisitions have been accounted for by the purchase
method, and the accompanying financial statements include their
results of operations since their respective dates of
acquisition. The pro forma effects on the results of operations
for these acquisitions were not material.
Divested and Restructured Operations
In fiscal 1994, the Company divested its Canadian high school
and Australian primary school and certain agency lines for
aggregate proceeds of $9.2 million, resulting in a gain of $1.8
million, or $1.3 million after taxes. In addition, in a cost
saving initiative, the Company restructured and consolidated
certain distribution and information technology support functions
which resulted in an unusual charge of $1.8 million, or $1.1
million after taxes. The net effect of the divestitures and
restructurings amounted to an after-tax gain of $.2 million, or
$.03 per share, in fiscal 1994.
Inventories
Inventories at April 30 were as follows:
Dollars in thousands 1995 1994
Finished Goods $ 36,467 $31,536
Work-in-Process 5,762 6,795
Paper, Cloth and Other 2,769 1,539
44,998 39,870
LIFO Reserve (3,463) (2,589)
Total $ 41,535 $37,281
Domestic book inventories aggregating $29.0 and $25.6
million at April 30, 1995 and 1994, respectively, are stated at
cost or market, whichever is lower, using the last-in, first-out
method. All other inventories are stated at cost or market,
whichever is lower, using the first-in, first-out method.
Product Development Assets
Product development assets consisted of the following at April 30:
Dollars in thousands 1995 1994
Composition Costs $ 16,685 $ 13,796
Royalty Advances 7,824 6,637
Total $ 24,509 $ 20,433
Composition costs are net of accumulated amortization of $23,014
in 1995 and $21,654 in 1994.
Property and Equipment
Property and equipment consisted of the following at April 30:
Dollars in thousands 1995 1994
Furniture and Equipment $ 42,974 $ 36,642
Leasehold Improvements 11,382 9,877
54,356 $ 46,519
Accumulated Depreciation (33,112) (26,896)
Total $ 21,244 $ 19,623
Intangible Assets
Intangible assets are stated at cost, net of
accumulated amortization, and consisted of the
following at April 30:
Dollars in thousands 1995 1994
Goodwill and Other Intantibles $ 43,273 $ 38,773
Acquired Publication Rights 9,037 3,537
Noncompete Agreements 1,041 1,391
Total $ 53,351 $ 43,701
Other Accrued Liabilities
Included in other accrued liabilities is accrued compensation
of approximately $13.3 and $12.1 million for 1995 and 1994,
respectively.
Income Taxes
The provision for income taxes was as follows:
Dollars in thousands 1995 1994 1993
Currently Payable
Federal $ 1,184 $ 1,471 $ 708
Foreign 3,675 4,772 2,943
State and local 314 115 515
Total Current Provision 5,173 6,358 4,166
Deferred Provision
Federal 1,716 (174) 59
Foreign 451 (1,277) (1,372)
State and Local 142 42 _
Total Deferred Provision
(Benefit) 2,309 (1,409) (1,313)
Total Provision $ 7,482 $ 4,949 $ 2,853
The Company's effective income tax rate as a percent of pretax
income differed from the U.S. federal statutory rate as shown
below:
1995 1994 1993
U.S. Federal Statutory Rate 35.0% 35.0% 34.0%
State and Local Income Taxes
Net of Federal Income Tax Benefit .8 .4 3.2
Tax Benefit Derived from FSC Income (6.1) (4.8) (6.1)
Foreign Source Earnings Taxed at
Other than U.S. Statutory Rate (1.0) (2.1) (5.6)
Nondeductible Amortization
of Intangibles 1.1 1.7 2.6
Other-Net (.8) (1.2) (1.1)
Effective Income Tax Rate 29.0% 29.0% 27.0%
Deferred taxes result from timing differences in the
recognition of revenue and expense for tax and financial
reporting purposes. The components of the provision for deferred
taxes were as follows:
Dollars in thousands 1995 1994 1993
Depreciation and Amortization $1,451 $6 $(251)
Accrued Expenses 1,197 715 (921)
Circulation Costs 1,614 (1,800) 1,177
Provision for Sales Returns
and Doubtful Accounts (255) 547 (779)
Inventory (1,150) 1,076 69
Retirement Benefits (224) 116 (615)
Alternative Minimum Tax Credit
and Other Carryforwards (722) (1,770) 1,129
Tax Law Rate Change _ (470) _
Other-Net 398 171 (1,122)
Total Deferred Provision (Benefit) $2,309 $(1,409) $(1,313)
The significant components of deferred tax assets and liabilities
were as follows:
1995 1994
Dollars in thousands Current Long-Term Current Long-Term
Deferred Tax Assets
Reserve for sales returns
and doubtful accounts $5,603 $ _ $5,455 $ _
Circulation and other costs
capitalized for taxes _ 3,624 _ 4,865
Retirement and post-
employment benefits _ 2,510 _ 2,337
Alternative minimum
tax credit and other
carryforwards 1,315 _ 827 _
Accrued compensation 1,592 2,005 _
Accrued liabilities and other 213 1,568
Total Deferred Tax Assets 8,723 6,134 9,855 7,202
Deferred Tax Liabilities
Depreciation and amortization _ (6,954) _ (5,487)
Divested operations _ (2,156) _ (2,400)
Long-term liabilities and other (719) (1,905) (609) (3,407)
Total Deferred Tax liabilities (719) (11,015) (609) (11,294)
Net Deferred Tax Asset
(Liability) $8,004 $(4,881) $9,246 $(4,092)
The Company has filed amended U.S. federal income tax
returns for prior years primarily related to timing differences
and resulting in potential refund claims, which are subject to
Internal Revenue Service approval.
In general, the Company plans to continue to invest the
undistributed earnings of its foreign subsidiaries in those
businesses and therefore, no provision is made for taxes which
would be payable if such earnings were distributed. At April 30,
1995, the undistributed earnings of foreign subsidiaries
approximated $22.4 million and, if remitted currently, would
result in additional taxes approximating $1.5 million.
Notes Payable and Debt
Long-term debt consisted of the following at April 30:
Dollars in thousands 1995 1994
10.31% unsecured notes due
Through July 1998 $ _ $ 32,000
Less current maturities _ (6,000)
Long-term debt $ _ $ 26,000
In fiscal 1995, the Company prepaid the remaining $26
million of the 10.31% notes outstanding. Although the Company
incurred prepayment costs of $1.6 million, which is included in
interest income and other, the Company benefits by eliminating
the negative interest rate spread between the higher interest
rate on the debt retired compared with the current interest rates
being earned on short-term investments. Also included in
interest income and other is a gain of $1.5 million related to
the sale of shares of Nippon Wilson Learning which were received
in connection with the sale of the Company's training business in
fiscal 1991.
The Company has a new revolving credit agreement with three
banks providing a line of credit of $50 million until March 30,
2000. The Company has the option of borrowing Eurodollars at a
rate based on the London Interbank Offered Rate (LIBOR) or
dollars at the banks' prime rate or at a rate based on the
current certificate of deposit rate. A facility fee ranging from
.125% to .25% depending on certain coverage ratios is charged on
the total commitment. In the event of a change of control,
as defined, the banks have the option to terminate the agreement
and require repayment of any amounts outstanding. The Company and
its subsidiaries also have other short term lines of credit
aggregating $51 million at various interest rates. Information
relating to short-term lines of credit follows:
Dollars in thousands 1995 1994 1993
End of Year
Amount outstanding $ 621 $ 79 $ 97
Weighted average interest rate 8.5% 7.3% 10.0%
During the Year
Maximum amount outstanding $ 1,351 $ 7,390 $ 960
Average amount outstanding $ 529 $ 1,184 $ 394
Weighted average interest rate 8.7% 7.0% 9.6%
The Company's revolving credit agreement contains certain
restrictive covenants related to minimum net worth, funded debt
levels, financial ratios, restricted payments, including a
cumulative limitation for dividends paid. Under the most
restrictive covenant, approximately $36 million was available for
the payment of future dividends.
Retirement Plans
The Company and its principal subsidiaries have contributory
and noncontributory retirement plans which cover substantially
all employees. The plans generally provide for employee
retirement between the ages of 60 to 65 and benefits based on
length of service and final average compensation, as defined. In
fiscal 1995, the domestic plan was amended to provide that final
average compensation be based on the highest three consecutive
years ended December 31, 1993. The Company may, but is not
required to, update from time to time the ending date for the
three-year period used to determine final average compensation.
The amendment had the effect of increasing pension expense for
fiscal 1995 by approximately $.2 million. Funds are contributed
as necessary to provide for current service and for a portion of
any unfunded projected benefit obligation. To the extent these
requirements are exceeded by plan assets, a contribution may not
be made in a particular year. Plan assets consist principally of
investments in corporate stocks and bonds and government
obligations.
Pension costs for the defined benefit plans were as follows:
Dollars in thousands 1995 1994 1993
Service Cost $ 2,418 $ 2,095 $ 2,008
Interest Cost on Projected
Benefit Obligation 3,440 3,073 2,978
Return on Assets (2,937) (3,685) (3,584)
Net Amortization and Deferral (1,764) (731) (800)
Net Periodic Pension Expense $ 1,157 $ 752 $ 602
The net pension expense included above for the international
plans amounted to approximately $1.0 million for 1995, 1994, and
1993, respectively.
The following table sets forth the status of the plans and the
amounts recognized in the Company's consolidated statements of
financial position.
1995 1994
Domestic Int'l Domestic Int'l.
Dollars in thousands Plan Plans Plan Plans
Fair Value of Plan Assets $ 37,340 $15,978 $ 36,083 $14,350
Accumulated Benefit Obligation
Vested Benefits (29,758) (11,579) (26,804) (10,518)
Nonvested Benefits (2,456) (91) (2,183) (76)
(32,214) (11,670) (28,987) (10,594)
Projected Compensation Increases (728) (2,696) (172) (2,738)
Projected Benefit Obligation (32,942) (14,366) (29,159) (13,332)
Funded Status 4,398 1,612 6,924 1,018
Unrecognized Net Asset (3,590) (1,737) (4,189) (1,877)
Unrecognized Prior Service Cost 105 1,456 (270) 1,489
Unrecognized Net Loss (Gain) 362 (2,408) (1,111) (1,954)
Prepaid (Accrued) Pension Cost $ 1,275 $(1,077) $1,354 $(1,324)
The range of assumptions used in 1995 and 1994 were:
1995 1994
Domestic Int'l. Domestic Int'l.
Plan Plans Plan Plans
Discount Rate 7.5% 8.5% 7.5% 8.5%
Expected Long-Term Rate of
Return on Plan Assets 8.0% 7.0-8.0% 8.0% 7.0-8.0%
Rate of Increase in
Compensation Levels -% 5.5-7.0% -% 5.5-7.0%
The Company has agreements with certain officers and senior
management personnel that provide for the payment of
supplemental retirement benefits during each of the 10 years after the
termination of employment. Under certain circumstances, including
a change of control as defined, the payment of such amounts could
be accelerated on a present value basis. The cost of these
benefits is being charged to expense on a present value basis
over the estimated term of employment and amounted to
approximately $.9, $.7 and $.7 million in 1995, 1994 and 1993,
respectively.
The Company provides life insurance and health care
benefits, subject to certain dollar limitations and retiree
contributions, for substantially all of its retired domestic
employees. The cost of such benefits is expensed over the years
that the employees render service and are funded on a pay-as-you-
go, cash basis. The accumulated postretirement benefit
obligation amounted to $.2 million at April 30, 1995 and 1994 and
the amount expensed in fiscal 1995 and prior years was not
material.
Commitments and Contingencies
The following schedule shows the composition of rent expense
for operating leases:
Dollars in thousands 1995 1994 1993
Minimum Rental $12,202 $11,885 $11,009
Lease Escalation 1,848 1,756 1,156
Less: Sublease Rentals (63) (55) (43)
Total $13,987 $13,586 $12,122
Future minimum payments under operating leases aggregated
$111.1 million at April 30, 1995. Annual payments under these
leases are $14.4, $14.2, $13.2, $12.9 and $12.7 million for
fiscal years 1996 through 2000, respectively. The Company is
guarantor through 1998 of certain lease obligations assumed by
the buyer of the domestic training operations which were divested
in fiscal 1991, aggregating approximately $4.2 million, which is
net of the 50% guarantee provided by the parent of the buyer.
The Company is involved in routine litigation in the ordinary
course of its business. In the opinion of management, the
ultimate resolution of all pending litigation will not have a
material effect upon the financial condition or results of
operations of the Company.
Segment Information
The Company operates in one business segment, namely
publishing, and develops, publishes and markets products in print
and electronic formats including textbooks, professional and
reference works, consumer books, and periodicals including
journals and other subscription-based products, for the
educational, scientific, technical, professional and trade
markets around the world.
The Company's international operations are located in Europe,
Canada, Australia and Asia. The following table presents
revenues, operating income and identifiable assets for the
domestic and international operations.
Dollars in thousands 1995 1994 1993
Revenues
Domestic $258,464 $229,061 $208,787
International 102,907 89,235 87,170
Interarea transfers (30,280) (24,007) (23,063)
Total $331,091 $294,289 $272,894
Operating Income(1)
Domestic $15,242 $ 8,957 $ 8,898
International 11,637 9,926 4,396
Interarea profit
elimination _ _ (278)
Total $26,879 $18,883 $13,016
Identifiable Assets
Domestic $166,478 $144,624 $127,490
International 46,593 41,859 46,788
Corporate 34,410 57,457 46,315
Total $247,481 $243,940 $220,593
(1) Includes pretax unusual items gain of $1,819 in
international operations and a pretax unusual items charge of
$1,768 in domestic operations for 1994.
Transfers between geographic areas are generally made at a fixed
discount from list price and principally represent sales from the
United States to the Company's international operations. Export
sales from the United States to unaffiliated international
customers amounted to approximately $41.2, $33.9 and $28.2
million in 1995, 1994 and 1993, respectively. The pretax income
for consolidated international operations was approximately
$11.6, $10.0 and $3.8 million in 1995, 1994 and 1993,
respectively.
Included in operating and administrative expenses were net
foreign exchange gains (losses) of approximately $(.2), $.2 and
$.1 million in 1995, 1994 and 1993, respectively.
Changes in the cumulative translation adjustment account
were as follows:
Dollars in thousands 1995 1994
Balance, May 1 $ (3,805) $ (2,734)
Aggregate Translation Adjustments
for the Year 1,394 (1,071)
Balance, April 30 $ (2,411) $ (3,805)
Stock Option and Other Plans
Options were granted on the Company's Class A Common stock
and are exercisable, in part or in full, over a maximum period of
10 years from the date of grant under various stock option plans.
Outstanding options were granted at prices not less than 100% of
the fair market value of the stock at the date the options were
granted. Under certain circumstances relating to a change of
control, as defined, the right to exercise options outstanding
could be accelerated.
Option activity under existing plans was as follows:
1995 1994
Outstanding at Beginning of Year 439,096 587,936
Granted 142,900 28,076
Exercised (34,701) (161,114)
Canceled (12,276) (15,802)
Outstanding at End of Year 535,019 439,096
Exercisable at End of Year 297,877 272,382
Available for Future Grant 678,284 808,908
Price Range of Options Exercised $14.00 to 41.38 $14.00 to 24.50
Price Range of Options
Outstanding $13.50 to 52.50 $13.50 to 30.00
Under the terms of the Company's executive long-term
incentive plans, upon the achievement of certain three-year
financial performance based targets, awards will be payable in
cash and/or restricted shares of the Company's Class A Common
stock based on the market value at the end of the plan cycle. The
restricted shares vest equally as to 50% on the first and second
anniversary date after the date of the award. The amount charged
to expense for such plans was approximately $.8, $.7 and $.8
million in 1995, 1994 and 1993, respectively. Restricted shares
issued under the plans amounted to 5,542, 16,820 and 10,966 in
1995, 1994 and 1993, respectively.
In fiscal 1995, the Company granted a total of 45,000
restricted shares of the Company's Class A Common stock to four
key executive officers in connection with their employment
agreements. The restricted shares vest one-third at the end of
the third, fourth and fifth years, respectively, following the
date of the grant. Under certain circumstances relating to a change
of control or termination, as defined, the restrictions would lapse
and shares would vest earlier. Compensation expense aggregating $1.9
million will be charged to earnings ratably over five years, or
sooner if vesting is accelerated, from the date of grant, and
amounted to $.3 million in fiscal 1995. A second grant of an
additional 45,000 restricted shares with similar terms and
conditions was made subsequent to the fiscal 1995 year-end.
Under the terms of the Company's Director Stock Plan, each
member of the Board of Directors who is not an employee of the
Company is awarded Class A Common stock equal to 50% of the board
member's cash compensation, based on the market value of the
stock on the date of the shareholders' meeting. The compensation
cost related to this plan and charged to expense amounted to
approximately $.2, $.2 and $.1 million in 1995, 1994 and 1993,
respectively. Under this plan 4,331, 6,846 and 4,068 shares were
issued in 1995, 1994 and 1993, respectively.
Capital Stock and Changes in Capital Accounts
Preferred stock consists of 2,000,000 authorized shares with
$1 par value. To date, no preferred shares have been issued. The
Common stock consists of 10,000,000 authorized shares of Class A
Common, $1 par value, and 4,000,000 authorized shares of Class B
Common, $1 par value.
Each share of the Company's Class B Common stock is convertible
into one share of Class A Common stock. The holders of Class A
stock are entitled to elect 30% of the entire Board of Directors
and the holders of Class B stock are entitled to elect the
remainder. On all other matters, each share of Class A stock is
entitled to one-tenth of one vote and each share of Class B stock
is entitled to one vote.
In fiscal 1995, the Board of Directors declared a 2-for-1 stock
split of its Class A and Class B Common stock to shareholders of
record as of July 6, 1994.
Changes in selected capital accounts were as follows:
Additional
Common Stock Paid-In Treasury
Dollars in thousands Class A Class B Capital Stock
Balance
May 1, 1992 $3,907 $1,053 $32,694 $(31,280)
Director Stock Plan Issuance _ _ 36 63
Executive Long-Term
Incentive Plan Issuance _ _ 71 150
Proceeds from Exercise
of Stock Options 30 1 1,218 (92)
Other (1) (3) 83 _
Retroactive effect of
2 for 1 stock split $3,937 $1,051 $(4,988) _
Balance
April 30, 1993 $7,873 $2,102 $29,114 $(31,159)
Director Stock Plan Issuance _ _ 64 94
Executive Long-Term
Incentive Plan Issuance _ _ 174 230
Proceeds from Exercise
of Stock Options 161 _ 2,852 (198)
Other 11 (11) 804 _
Balance
April 30, 1994 $8,045 $2,091 $33,008 $(31,033)
Restricted Share Issuance _ _ 1,266 618
Director Stock Plan Issuance _ _ 124 59
Executive Long-Term
Incentive Plan Issuance _ _ 162 76
Proceeds from Exercise
of Stock Options 35 _ 601 (46)
Purchase of Treasury Shares _ _ _ (212)
Other 7 (7) 455 _
Balance
April 30, 1995 $8,087 $2,084 $35,616 $(30,538)
Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Results of Operations:
Fiscal 1995 Compared to Fiscal 1994
In 1995, the Company continued to grow its core businesses
through a combination of internal development and acquisitions,
while at the same time improving its profitability and return on
investment.
The Company invested $12.3 million during the year to
acquire: the publishing business of Executive Enterprises, Inc.,
consisting of books, journals and newsletters for environmental
management, accounting, law and human resource professionals;
ValuSource, which produces specialized business valuation
software for accountants, entrepreneurs and corporations; the
college engineering list of Houghton Mifflin; the book publishing
program of Oliver Wight Publications, Inc., consisting of general
management and manufacturing/quality titles; and the OS/2
computer-book list of Van Nostrand Reinhold, Inc.
Revenues for the year advanced 13% to $331.1 million led by
the domestic professional and trade division, where revenues
increased 20% based on the strength of the business and computer
book lines. The domestic scientific, technical and medical
division registered a 10% improvement attributable to increased
journal revenues. The domestic college division increased its
market share and outperformed the industry as a whole in what was
considered a difficult market environment. International
revenues reflected significant increases over the prior year led
by the Company's European and Asian operations.
Cost of sales as a percentage of revenues was 34.2% in 1995
compared with 33.9% in the prior year primarily reflecting
increased paper costs.
Operating and administrative expenses as a percentage of
revenues declined to 56.5% in 1995 from 57.8% as the rate of
growth in expenses was contained at less than the revenue growth
rate. This improvement was offset to some degree by unfavorable
foreign exchange rates.
Operating income increased 43% over the prior year to $26.9
million primarily due to the effects of the higher revenue base
coupled with a cost contained infrastructure.
Interest expense declined by $.8 million due to the
repayment of long-term debt. The effective tax rate was 29% in
both years due to the benefits derived from lower taxed foreign
source earnings.
Net income increased 51% over 1994 due to the operating income
gains and lower interest expense.
Results of Operations:
Fiscal 1994 Compared to Fiscal 1993
The Company acquired several publishing businesses during the
year, for purchase prices aggregating $8.3 million including: the
professional computer book line of QED Information Services; the
Belhaven Press, which publishes earth and environmental science
titles in the United Kingdom; and the Protocols joint venture
partner's 30% minority interest, thereby giving the Company total
ownership of this publisher of life science continuity products.
During fiscal 1994, the Company divested its Canadian high
school and Australian primary school and certain agency lines for
$9.2 million in aggregate proceeds, which resulted in a net gain
after taxes of $1.3 million. In addition, in a cost-saving
initiative, certain distribution and information technology
support functions were restructured and consolidated, resulting
in an after tax charge of $1.1 million. The net effect of the
above amounted to an after-tax gain of $.2 million, or $.03 per
share.
Revenues of $294.3 million for 1994 increased 8% over the
prior year. The domestic college division achieved revenue
growth of 13% over the prior year by increasing market share
through the publication of new and revised editions in its key
disciplines, as well as through sales of a stronger backlist.
The domestic professional and trade division registered a 13%
increase paced by increased sales and marketing efforts both here
and abroad, expansion of its continuity product base in
accounting and architecture books, acquisition of a computer book
line, and the publication of tax guides resulting from the new
tax law, as well as new business and investment books. The domestic
scientific, technical and medical division posted an 8% increase in revenues
attributable to higher journal revenues. Revenue improvement was
also noteworthy in our Asian operations due to expanded marketing
efforts in that region, and in the United Kingdom due to higher
journal revenues.
Cost of sales as a percentage of revenues was 33.9% in 1994,
approximately the same as the prior year.
Operating and administrative expenses as a percentage of
revenues declined to 57.8% in 1994 from 59.5% due mainly to cost
containment measures as well as favorable foreign exchange
effects.
Operating income of $18.9 million was approximately 45%
higher than the prior year, as the revenue growth mentioned above
more than compensated for the planned increases in the expense
structure.
Interest expense declined $.4 million due to repayments on
long term debt. Interest income increased by $.3 million from the
prior year due to higher cash balances, offset to some degree by
lower rates.
The effective tax rate was 29% in 1994, compared with 27% in
1993. The increase is primarily due to higher domestic tax rates
and a lower proportion of foreign source income in 1994, which is
taxed at rates lower than the U.S. federal statutory rate.
Net income increased 57% over the prior year, as operating
income gains and increases in net interest income more than
offset a slightly higher effective tax rate.
Effective as of the beginning of fiscal 1994, the Company,
adopted SFAS No. 106 - Employer's Accounting for Postretirement
Benefits Other Than Pensions, SFAS No. 109 - Accounting for
Income Taxes and SFAS No. 112 - Employer's Accounting for
Postemployment Benefits. The net cumulative effect of adopting
these new standards and the ongoing effect on fiscal 1994 results
of operations was not material.
Liquidity and Capital Resources
The Company's cash and cash equivalents balance was $34.4
million at the end of fiscal 1995, compared with $57.5 at the end
of the prior year. The decrease is primarily attributable to the
prepayment of the outstanding balance of long-term debt, which
benefits the Company by eliminating the negative interest rate
spread between the higher interest rate on the debt retired
compared with the current interest rates being earned on short-
term investments. Cash provided by operating activities was $51.9
million in fiscal 1995, an increase of $12.2 million over the
prior year.
The Company's operating cash flow is strongly affected by the
seasonality of its domestic college business and receipts from
its journal subscriptions. Receipts from journal subscriptions
occur primarily during November and December from companies
commonly referred to as independent subscription agents. These
companies facilitate the journal ordering process by
consolidating the subscription orders/billings of each
subscriber. Monies are collected in advance from subscribers by
the subscription agents and are remitted to the journal
publishers, including the Company, generally prior to the
commencement of the subscription. Remittances are highly
dependent upon the financial position and liquidity of such
companies.
Sales to the domestic college market tend to be concentrated in
June through August, and again in November through January. Cash
disbursements for inventory are relatively large during the
spring in anticipation of these college sales. The Company
normally requires increased funds for working capital from the
beginning of the fiscal year into September. Subject to
variations that may be caused by fluctuations in inventory
accumulation or in patterns of customer payments, the Company's
normal operating cash flow is not expected to vary materially in
the near term.
To finance its short-term seasonal working capital requirements
and its growth opportunities, the Company has adequate cash and
cash equivalents available, as well as both domestic and foreign
shortterm lines of credit, as more fully described in the note to
the consolidated financial statements entitled "Notes Payable and
Debt".
The capital expenditures of the Company consist primarily of
investments in product development and property and equipment.
Capital expenditures for fiscal 1996 are expected to increase
approximately 25% over 1995, primarily representing increased
investments in product development, including electronic media
products, and computer equipment upgrades to support the higher
volume of business to ensure efficient quality-driven customer
service. These investments will be funded primarily from internal
cash generation or from the liquidation of cash equivalents.
Effects of Inflation and Cost Increases
Although the impact of inflation is somewhat minimized, as
the business does not require a high level of investment in
property and equipment, the Company does experience continuing
cost increases reflecting, in part, general inflationary factors.
Fiscal 1995 witnessed an increase in paper prices ranging from
10% to 100% depending on the grade, after years of a stable to
decreasing price environment. Although results for fiscal 1995
were slightly affected, it is anticipated that these increases
will have a greater impact on fiscal 1996 results. To mitigate
the effects of paper and other cost increases, the Company has
taken a number of initiatives including various steps to lower
overall production and manufacturing costs including substitution
of paper grades. In addition, selling prices have been
selectively increased as competitive conditions permit. The
Company anticipates that it will be able to continue this
approach in the future.
Results by Quarter (Unaudited)
John Wiley & Sons, Inc. and Subsidiaries
Dollars in thousands except per share data 1995 1994
Revenues
First quarter $80,787 $74,608
Second quarter 78,558 67,682
Third quarter 91,930 79,480
Fourth quarter 79,816 72,519
Fiscal year $331,091 $ 294,289
Operating Income (Loss)
First quarter $10,450 $8,951
Second quarter(1) 5,652 5,335
Third quarter(2) 10,240 5,377
Fourth quarter 537 (780)
Fiscal year $26,879 $18,883
Net Income
First quarter $6,067 $5,051
Second quarter(1) 3,082 2,796
Third quarter(2) 6,530 3,503
Fourth quarter 2,632 767
Fiscal year $18,311 $ 12,117
Income Per Share
Primary
First quarter $ .75 $ .65
Second quarter(1) .38 .36
Third quarter(2) .80 .44
Fourth quarter .32 .10
Fiscal year $2.25 $ 1.52
Fully Diluted
First quarter $.75 $ .65
Second quarter(1) .38 .35
Third quarter (2) .80 .44
Fourth quarter .32 .10
Fiscal year $2.23 $ 1.51
(1) Includes pretax unusual items gain of $2,075, or $1,285 after
taxes, equal to $.16 per share in 1994.
(2) Includes pretax unusual items charge of $1,901, or $1,085
after taxes, equal to $.13 per share in 1994.
Effective July 12, 1995, the Company's Class A and Class B
shares are listed on the New York Stock Exchange under the symbols
JW.A and JW.B, respectively. Prior to that, the Company's Class A
shares were listed on the Nasdaq Stock Market's National Market
under the symbol WILLA; Class B shares were listed on the Nasdaq
Stock Market's SmallCap Market under the symbol WILLB. Dividends
per share and the market price range by fiscal quarter for the past two
fiscal years were as follows:
Class A Common Stock Class B Common Stock
Divi- Market Price Divi- Market Price
dends High Low dends High Low
1995
First quarter $.155 $43.25 $41.00 $.1375 $42.50 $41.00
Second quarter .155 44.25 40.25 .1375 43.50 40.75
Third quarter .155 51.50 42.75 .1375 51.25 42.75
Fourth quarter .155 56.00 50.25 .1375 55.50 50.50
1994
First quarter $.1375 $24.13 $21.00 $.1225 $24.63 $23.00
Second quarter .1375 31.25 21.38 .1225 31.25 24.00
Third quarter .1375 38.00 31.50 .1225 37.00 31.25
Fourth quarter .1375 46.00 37.50 .1225 46.50 37.00
As of April 30, 1995, the approximate number of holders of
the Company's Class A and Class B Common Stock were 1,460 and 400,
respectively, based on the holders of record and other information
available to the Company.
The Company's revolving credit agreements contain certain restrictive
covenants related to the payment of dividends. Under the most
restrictive covenant, approximately $36 million was available for the
payment of future dividends. Subject to the foregoing, the Board of
Directors considers quarterly the payment of cash dividends based
upon its review of earnings, the financial position of the Company
and other relevant factors. In fiscal 1995, the Board of Directors
approved a 2 for 1 stock split.
Selected Financial Data
John Wiley & Sons, Inc. and Subsidiaries
Dollars in thousands except per share data
For the years ended April 30
_________________________________________________
1995 1994 1993 1992 1991
Revenues $331,091 $294,289 $272,894 $248,151 $236,859
Income From Continuing
Operations(1) 18,311 12,117 7,718 3,576 3,567
Net Gain from Discontinued
Operation _ _ _ _ 484
Extraordinary Item _ _ _ (495) _
Net Income 18,311 12,117 7,718 3,081 4,051
Working Capital 11,241 35,059 31,804 30,800 70,273
Total Assets 247,481 243,940 220,593 213,744 251,318
Long-Term Debt _ 26,000 32,000 36,000 40,000
Shareholders' Equity 98,832 82,330 71,276 69,552 94,905
___________________________________________________________________________
Per Share Data
Income From Continuing Operations(1)
Primary 2.25 1.52 1.00 .46 .41
Fully diluted 2.23 1.51 .99 .46 .41
Net Income
Primary 2.25 1.52 1.00 .39 .46
Fully diluted 2.23 1.51 .99 .39 .46
Cash Dividends
Class A Common .62 .55 .55 .55 .55
Class B Common .55 .49 .49 .49 .49
Book Value-End of Year 12.42 10.46 9.26 9.12 10.79
___________________________________________________________________________
(1) Includes after-tax unusual items gain of $324, or $.04 per share, in 1991.
Schedule II
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED APRIL 30, 1995, 1994 AND 1993
(Dollars in Thousands)
Balance at Additions Deductions Balance
Beginning Charged to From at End of
Description of Period Income Reserves Period
Year Ended April 30, 1995
Allowance for sales returns(1) $15,558 $16,110 $14,149 $17,519
Allowance for doubtful accounts $ 4,385 $ 4,014 $ 3,285(2) $ 5,114
Year Ended April 30, 1994
Allowance for sales returns(1) $13,424 $13,470 $11,336 $15,558
Allowance for doubtful accounts $ 3,409 $ 4,081 $ 3,105(2) $ 4,385
Year Ended April 30, 1993
Allowance for sales returns(1) $11,969 $12,963 $11,508 $13,424
Allowance for doubtful accounts $ 2,512 $ 3,603 $ 2,706(2) $ 3,409
________________________________________
(1) Allowance for sales returns represents anticipated returns
and royalty costs.
(2) Accounts written off, less recoveries.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
JOHN WILEY & SONS, INC.
(Company)
By: /s/ Charles R. Ellis
Charles R. Ellis
President and Chief Executive Officer
By: /s/ Robert D. Wilder
Robert D. Wilder
Senior Vice President and
Chief Financial Officer
By: /s/ Peter W. Clifford
Peter W. Clifford
Vice President, Finance and
Controller and Chief Accounting Officer
Dated: June 22, 1995
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons constituting all the directors of the Company on June 22,
1995.
/s/ Franklin E. Agnew /s/ Chester O. Macey
Franklin E. Agnew Chester O. Macey
/s/ Warren J. Baker /s/ William R. Sutherland
Warren J. Baker William R. Sutherland
/s/ Charles R. Ellis /s/ Thomas M. Taylor
Charles R. Ellis Thomas M. Taylor
/s/ H. Allen Fernald /s/ Leo J. Thomas
H. Allen Fernald Leo J. Thomas
/s/ Gary J. Fernandes /s/ Bradford Wiley II
Gary J. Fernandes Bradford Wiley II
/s/ Larry D. Franklin /s/ Deborah E. Wiley
Larry D. Franklin Deborah E. Wiley
/s/ John S. Herrington /s/ Peter Booth Wiley
John S. Herington Peter Booth Wiley
/s/ Nils A. Kindwall
Nils A. Kindwall
Exhibit 22
SUBSIDIARIES OF JOHN WILEY & SONS, INC.(1)
Jurisdiction Percent
In Which Of Voting
Incorporated Control
Wiley Europe Limited England 100%
Wiley Heyden Limited England 100% (2)
John Wiley & Sons Limited England 100% (2)
Chancery Law Publishing Limited England 100% (2)
Jacaranda Wiley Limited Australia 100%
Jacaranda Wiley (H.K.) Limited Hong Kong 100%
Wiley Intersciences, Inc. New York 100%
John Wiley & Sons International Rights, Inc. Delaware 100%
Wiley-Liss, Inc. Delaware 100%
Wiley Publishing Services, Inc. Delaware 100%
Wiley Subscription Services, Inc. Delaware 100%
John Wiley & Sons Canada Limited Canada 100%
Wiley Foreign Sales Corporation Barbados 100%
John Wiley & Sons, (SEA) Pte Ltd. Singapore 100%
Scripta Technica, Inc. District of Columbia 100%
_______________________________________
(1) The name of other subsidaries which would not constitute a
significant subsidary in the aggregate have been omitted.
(2) Wholly-owned subsidiary of Wiley Europe Limited.