SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT 1934
For the quarterly period ended July 31, 1997Commission File No. 1-11507
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES ACT OF 1934
For the transition period from to
JOHN WILEY & SONS, INC.
(Exact name of Registrant as specified in its charter)
NEW YORK 13-5593032
- --------------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
605 THIRD AVENUE, NEW YORK, NY 10158-0012
- --------------------------------------- ------------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, (212) 850-6000
including area code ------------------------------------
NOT APPLICABLE
Former name, former address, and former fiscal year,
if changed since last report
Indicate by check mark, whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
The number of shares outstanding of each of the Registrant's classes of common
stock as of July 31, 1997 were:
Class A, par value $1.00 - 12,799,812
Class B, par value $1.00 - 3,155,258
This is the first of a nine page document.
JOHN WILEY & SONS, INC.
INDEX
PART I - FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements.
Condensed Consolidated Statements of Financial Position-Unaudited
as of July 31, 1997 and 1996 and April 30, 1997 .................. 3
Condensed Consolidated Statements of Income - Unaudited
for the Three Months ended July 31, 1997 and 1996 ................ 4
Condensed Consolidated Statements of Cash Flow - Unaudited
for the Three Months ended July 31, 1997 and 1996 ................ 5
Notes to Unaudited Condensed Consolidated Financial
Statements ....................................................... 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations .............................. 7
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K ................................. 8
"Safe Harbor" Statement under the
Private Securities Litigation Reform Act of 1995 ......................... 8
SIGNATURES ................................................................. 9
EXHIBITS
27 Financial Data Schedule
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands)
(UNAUDITED)
July 31,
---------------------- April 30,
1997 1996 1997
---------------------------------
Assets
Current Assets
Cash and cash equivalents $ 49,905 8,163 79,116
Accounts receivable 74,721 81,406 61,841
Inventories 49,355 58,079 49,100
Deferred income tax benefits 7,146 7,674 7,143
Prepaid expenses 7,390 6,224 6,935
---------------------------------
Total Current Assets 188,517 161,546 204,135
Product Development Assets 33,155 30,059 31,683
Property and Equipment 32,346 28,698 32,699
Intangible Assets 159,830 171,244 165,147
Deferred income tax benefits 16,898 13,308 13,004
Other Assets 11,253 12,478 11,276
---------------------------------
Total Assets $441,999 417,333 457,944
=================================
Liabilities & Shareholders' Equity
Current Liabilities
Notes payable and current portion of $ 62 106,524 172
Accounts and royalties payable 44,068 44,067 30,988
Deferred subscription revenues 62,535 59,769 94,419
Accrued income taxes 6,186 8,142 3,825
Other accrued liabilities 28,551 35,604 34,948
---------------------------------
Total Current Liabilities 141,402 254,106 164,352
Long-Term Debt 125,000 -- 125,000
Other Long-Term Liabilities 24,708 26,184 24,907
Deferred Income Taxes 15,238 12,249 14,702
Shareholders' Equity 135,651 124,794 128,983
---------------------------------
Total Liabilities & Shareholders' Equity $441,999 417,333 457,944
=================================
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
JOHN WILEY & SONS, INC. AND SUBSIDARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands except per share information)
Three Months
Ended July 31,
-------------------------
1997 1996
--------------------------
Revenues $ 112,086 99,217
Costs and Expenses
Cost of sales 38,150 33,682
Operating and administrative expenses 58,161 52,328
Amortization of intangibles 2,064 1,491
--------------------------
Total Costs and Expenses 98,375 87,501
--------------------------
Operating Income 13,711 11,716
Interest Income and Other 877 323
Interest Expense (1,960) (744)
--------------------------
Interest Income (Expense) - Net (1,083) (421)
--------------------------
Income Before Taxes 12,628 11,295
Provision For Income Taxes 4,546 4,066
--------------------------
Net Income $ 8,082 7,229
==========================
Net Income Per Share
Primary $ 0.50 0.44
Fully Diluted $ 0.50 0.44
Cash Dividends Per Share
Class A Common $ 0.1125 0.1000
Class B Common $ 0.1000 0.0875
Average Shares
Primary 16,292 16,518
Fully Diluted 16,292 16,526
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW - UNAUDITED
(In thousands)
Three Months
Ended July 31,
---------------------
1997 1996
---------------------
Operating Activities
Net income $ 8,082 7,229
Non-cash items 11,385 10,226
Net change in operating assets and liabilities (37,400) (47,613)
---------------------
Cash Used for Operating Activities (17,933) (30,158)
---------------------
Investing Activities
Additions to product development assets (7,327) (5,078)
Additions to property and equipment (1,826) (2,220)
Acquisition of publishing assets (447) (102,569)
---------------------
Cash Used for Investing Activities (9,600) (109,867)
---------------------
Financing Activities
Purchase of treasury shares (559) (552)
Net borrowings (repayments) of short-term debt (104) 94,683
Cash dividends (1,751) (1,574)
Proceeds from exercise of stock options 587 141
---------------------
Cash Provided by (Used for) Financing Activities (1,827) 92,698
---------------------
Effects of Exchange Rate Changes on Cash 149 206
---------------------
Cash and Cash Equivalents
Decrease for Period (29,211) (47,121)
Balance at Beginning of Period 79,116 55,284
---------------------
Balance at End of Period $ 49,905 8,163
=====================
Cash Paid During the Period for
Interest $ 2,497 214
Income taxes $ 1,587 1,355
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1997
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting only
of normal recurring adjustments, necessary to present fairly the Company's
consolidated financial position as of July 31, 1997 and 1996, and April 30,
1997, and results of operations and cash flows for the periods ended July
31, 1997 and 1996. These statements should be read in conjunction with the
most recent audited financial statements contained in the Company's Form
10-K for the fiscal year ended April 30, 1997. Certain prior year amounts
have been reclassified to conform to the current year's presentation.
2. The results for the three months ended July 31, 1997 are not necessarily
indicative of the results to be expected for the full year.
3. 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.
4. Inventories were as follows:
July 31, April 30,
-------------------------------- ----------
1997 1996 1997
-------------------------------- ----------
(Thousands)
Finished goods $ 38,507 $ 48,148 $ 40,859
Work-in-process 8,180 8,785 7,475
Paper, cloth and other 4,560 4,837 2,559
---------------------------------------------
51,247 61,770 50,893
LIFO reserve (1,892) (3,691) (1,793)
---------------------------------------------
Total inventories $ 49,355 $ 58,079 $ 49,100
---------------------------------------------
5. The Company has signed a letter of intent to sell its Wiley Law
Publications division which had annual revenues of approximately $11
million in fiscal year 1997. The sale will allow the Company to concentrate
its resources on core businesses which have greater market growth
potential.
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JULY 31, 1997
FINANCIAL CONDITION
During this seasonal period of cash usage, operating activities used $17.9
million of cash, or $12.2 million less than the prior year's comparable
quarter. The decrease was primarily due to lower net working capital levels.
The use of cash during this period is consistent with the seasonality of the
journal subscription and the educational sector's receipts cycle which occur,
for the most part, later in the fiscal year.
Investing activities used $9.6 million during the current quarter, or $100.3
million less than the comparable prior year's quarter, which included the
acquisition of WILEY-VCH and Technical Insights.
Financing activities primarily reflect dividend payments during the quarter.
RESULTS OF OPERATIONS
FIRST QUARTER ENDED JULY 31, 1997
Revenues for the first quarter advanced 13% to $112.1 million compared with
$99.2 million in the prior year. Operating income for the current quarter was
$13.7 million, compared with $11.7 million in the prior year. Net income
advanced 12% to $8.1 million. Results for the current year include a full
quarter of operations for WILEY-VCH, which was acquired midway though the
prior year's first quarter. WILEY-VCH was a positive contributor to operating
income in the current year's quarter, but was dilutive to earnings by
approximately $.8 million, or $0.05 per share, due to interest costs related
to the acquisition.
Revenue and operating income gains reflected improvement in all of the
Company's core businesses the college division, the professional and trade
division, and the worldwide scientific, technical and medical journals
program, including WILEY-VCH.
Cost of sales as a percentage of revenues increased from 33.9% in the prior
year to 34.0%. Operating expenses as a percentage of revenues were 51.9% in
the current quarter compared with 52.7% in the prior year's first quarter.
Interest expense increased by $1.2 million due to a full quarter of interest
costs related to the WILEY-VCH acquisition. The effective tax rate of 36% was
the same for both years.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------
(a) Exhibits
------
27 - Financial Data Schedule
(b) Reports on Form 8-K
----------------
No reports on Form 8-K were filed during the quarter ended July
31, 1997.
"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. Actual results may differ
materially from those in any forward-looking statements because any such
statements are based upon a number of assumptions and estimates which 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 pace, acceptance,
and level of investment in emerging new electronic technologies and products;
(ii) the consolidation of the retail book trade market; (iii) the seasonal
nature of the Company's educational business and the impact of the used book
market; (iv) worldwide economic and political conditions; and (v) other factors
detailed from time to time in the Company's filings with the Securities and
Exchange Commission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JOHN WILEY & SONS, INC.
Registrant
By /s/Charles R. Ellis
--------------
Charles R. Ellis
President and
Chief Executive Officer
By /s/Robert D. Wilder
--------------
Robert D. Wilder
Executive Vice President and
Chief Financial Officer
Dated: September 11, 1997