Wiley Reports Third Quarter Fiscal 2014 Results

  • Adjusted revenue of $458 million, up 1% on a constant currency basis
  • Adjusted revenue change by segment on a constant currency basis and excluding the divested consumer publishing programs: Research +3%, Professional Development -5%, and Education even
  • Journal subscription revenue of $154 million, up 7% over prior year and 4% year-to-date on a constant currency basis
  • Adjusted EPS of $0.93, even with prior year on a constant currency basis
  • Full year financial outlook reaffirmed

HOBOKEN, N.J.--()--John Wiley & Sons, Inc. (NYSE: JWa and JWb), a global provider of knowledge and knowledge-enabled services that improve outcomes in research, professional practice, and education, today announced the following results for the third quarter of fiscal year 2014, ending January 31, 2014:

                 

Change

$ millions       FY14       FY13      

Excluding
FX

     

Including
FX

     

ADJUSTED

Revenue

Q3

$458 $459 1 % 0 %

Nine Months

$1,318 $1,275 4 % 3 %
EPS

Q3

$0.93 $0.93 0 % 0 %
Nine Months $2.28 $2.20 4 % 4 %
 

US GAAP

Revenue

Q3

$458 $472 (2 %) (3 %)

Nine Months

$1,318 $1,315 1 % 0 %
EPS

Q3

$0.88 $0.95 (7 %) (7 %)

Nine Months

$2.10 $2.26 (7 %) (7 %)
 

Please see the attached financial schedules for more detail

Business Summary

“Through three quarters, research journal performance has been favorable, with 4% revenue growth in journal subscriptions, strong revenue growth in author-funded open access, and a solid start to subscription billings for volume year 2014,” said Steve Smith, President and CEO of Wiley. “In addition, professional and education solutions, including talent management, WileyPLUS, and online program management, continue to show strong double-digit revenue growth.”

With one quarter remaining in the fiscal year, the company reaffirmed its full-year guidance for low single-digit adjusted revenue growth and adjusted EPS of $2.85 to $2.95.

Third Quarter Highlights

  • Adjusted revenue on a constant currency basis rose 1% over prior year to $458 million, excluding the prior year operating results of the divested consumer publishing programs ($13.9 million of revenue in Q3 FY13). Revenue in the year-ago period included a $4 million favorable impact from shipments delayed into that quarter due to distribution disruptions caused by Hurricane Sandy. Revenue fell 3% on a US GAAP basis.
  • Adjusted earnings per share (EPS) was even at $0.93. Adjusted EPS for the current quarter excludes restructuring charges of $4.3 million ($0.05/share), and the prior year period excludes the operating results of the divested consumer publishing program of $2.0 million ($0.02/share). Adjusted revenue and margin growth, restructuring and other savings, and lower income taxes were offset by higher incentive compensation accruals, a 4% increase in technology expense, and a lower property tax incentive. US GAAP EPS for the quarter was $0.88 per share compared to $0.95 per share in the prior period.
  • Free Cash Flow of $84.6 million for the first nine months was roughly even with the prior year period. Lower disputed income tax deposits paid to the German government were offset by lower cash collections in the quarter and higher payments related to the restructuring program as compared to the year-ago period.
  • Restructuring update: Wiley recorded restructuring charges of $4.3 million this quarter related to its previously announced restructuring program. Including this charge, Wiley has recorded $51.8 million in restructuring charges since the program was announced in January 2013. The Company expects to record additional restructuring charges in the fourth quarter of approximately $10 million. As of January 31, 2014, Wiley had developed and approved plans to achieve $75 million of its $80 million FY15 run-rate savings goal, with more than half of the $80 million expected to improve earnings in FY15 and the remainder reinvested into the business.
  • Share repurchases: In the quarter, Wiley repurchased 375K shares for $20.0 million, an average price of $53.30 per share. Fiscal year-to-date, the Company has repurchased 810K shares for $38.5 million, an average price of $47.53. As of January 31, Wiley had nearly 3.7 million shares remaining in the program.

Adjusted Results

The Company provides financial measures referred to as “adjusted” revenue, contribution to profit, and EPS, which exclude restructuring charges, operating results from divestitures, impairment charges, gain on the sale of publishing programs, and the deferred tax benefits from the changes in UK income tax rates. Variances to adjusted revenue, contribution to profit, and EPS exclude FX impacts unless otherwise noted. Management believes the exclusion of such items provides additional information to facilitate the analysis of results. These non-GAAP measures are not intended to replace the financial results reported in accordance with GAAP.

Foreign Exchange (“FX”)

Throughout this report, references are made to variances “excluding foreign exchange” or “on a constant currency basis”; such amounts exclude both period-over-period currency translation effects and transactional gains and losses.

RESEARCH

  • Revenue: Third quarter revenue on a constant currency basis rose 3% to $248.8 million, driven by journal subscription revenue growth of 7%, which included favorable impacts from production timing. Also contributing were digital book sales (+12%) and open access (+$3 million). Partially offsetting this growth was a 16% decline in print book revenue. For the first nine months, revenue on a constant currency basis was up 3%, with journal subscription revenue up 4%.
  • Adjusted Contribution to Profit: Third quarter adjusted contribution to profit (after allocated shared services and administrative costs) grew 2% on a constant currency basis to $69.0 million, with higher society royalty costs and accrued incentive compensation partially offsetting revenue growth. For the first nine months, adjusted contribution to profit (after shared services and administrative costs) grew 5% to $210.8 million, excluding the impact of foreign exchange.
  • Calendar Year 2014 Journal Subscriptions: At the end of January, calendar year 2014 journal subscriptions were up 4% with 81% of targeted business closed for the 2014 volume year.
  • Society Business: Two new society journals were signed in the quarter with combined annual revenue of $1.7 million; 50 were renewed worth approximately $19 million annually; and eight journals with combined annual revenue of $5.3 million were not renewed, primarily due to the conclusion of one society relationship.
  • Other Key Developments: In January, Wiley announced a partnership with technology company Knode to provide customized portals to learned societies and other academic organizations worldwide. Wiley’s cloud-based portal is populated with more than 20 million documents and millions of expert profiles. Researchers are using Knode to find experts, identify and connect with collaborators, and promote their expertise to the world. For society executives and institutional research managers, custom analytics provide aggregated views of research expertise and output.

PROFESSIONAL DEVELOPMENT

  • Adjusted Revenue: Third quarter adjusted revenue declined 5% to $94.2 million, excluding FX and revenue from the divested consumer publishing programs ($13.9 million) in the prior year period. Adjusted revenue performance was driven by a decline in print books (-9%), particularly due to lower demand for technology titles and the discontinuation of certain low-margin non-divested consumer titles, which offset solid growth in online training and assessment (+20%) and digital books (+9%). Revenue in the year-ago period included a $2 million favorable impact from shipments delayed into that quarter due to distribution disruptions caused by Hurricane Sandy. For the first nine months, adjusted revenue on a constant currency basis was down 1%.
  • Adjusted Contribution to Profit: Third quarter adjusted contribution to profit (after allocated shared service and administrative costs) grew 21% to $11.9 million due to restructuring savings and higher margin digital revenue, which offset the revenue decline in print books. Adjusted contribution to profit excludes restructuring charges and the operating results from the divested consumer assets in the prior year. For the first nine months, adjusted contribution to profit (after shared services and administrative costs) grew 48% to $22.8 million, excluding the impact of foreign exchange.
  • Acquisitions: In January, Wiley acquired the assets of Elan Guides, an early-stage CFA test preparation company. Elan’s CFA test preparation materials will be incorporated into Wiley’s test preparation platform for business and finance professionals. Terms were not disclosed.

EDUCATION

  • Revenue: Third quarter revenue was $114.9 million, essentially even on a constant currency basis. Revenue growth from WileyPLUS (+20%), Deltak (+12%), and Binder and Custom Products (+3%) offset a decline in both print textbooks (-8%) and digital books (-8%). Note that Deltak’s third quarter 2013 reported results included an extra week carried forward from the acquisition closing date, which occurred just prior to the end of the second quarter 2013. Excluding the impact of that carry-over period, Deltak revenue increased by approximately 20% as compared to the year-ago quarter. Education revenue in the year-ago period also included a $2 million favorable impact from shipments delayed into that quarter due to disruptions caused by Hurricane Sandy, and earlier ordering from Australian schools that benefitted the second quarter of 2014. Digital textbook growth for the period was unfavorably impacted by weakened enrollment at for-profit institutions. For the first nine months, Education revenue overall increased 12% on a constant currency basis to $299.7 million, primarily due to the first half contribution from Deltak ($31 million).
  • Adjusted Contribution to Profit: Third quarter adjusted contribution to profit (after allocated shared service and administrative costs) declined 9% to $30.5 million, reflecting changes in revenue mix and higher accrued incentive costs. For the first nine months, adjusted contribution to profit (after shared services and administrative costs) increased 2% to $59.4 million, excluding the impact of foreign exchange.
  • Online Program Management (OPM): Deltak secured two university partners in the quarter, bringing the total number of institutions under contract to 36. As of January 31, 2014, Deltak had 120 programs generating revenue and 45 programs under contract and in development but not yet generating revenue.

(Please see the attached tables for more information, including Quarter and Year-to-Date Segment Revenue Statistics by Product/Service and Subject Category)

Earnings Conference Call

  • Scheduled for today, March 11, at 10:00 a.m. (EDT)
  • Access the webcast at www.wiley.com> Investor Relations> Events and Presentations, or http://www.wiley.com/WileyCDA/Section/id-370238.html
  • U.S. callers, please dial (888) 337-8198 and enter the participant code 9980621#
  • International callers, please dial (719) 325-2464 and enter the participant code 9980621#
  • An archive of the webcast will be available for a period of up to 14 days

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

This release contains certain forward-looking statements concerning the Company's operations, performance, and financial condition. Reliance should not be placed on forward-looking statements, as actual results may differ materially from those in any forward-looking statements. Any such forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond the control of the Company, and are subject to change based on many important factors. Such factors include, but are not limited to (i) the level of investment in new technologies and products; (ii) subscriber renewal rates for the Company's journals; (iii) the financial stability and liquidity of journal subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and financial stability of key online retailers; (vi) the seasonal nature of the Company's educational business and the impact of the used book market; (vii) worldwide economic and political conditions; (viii) the Company's ability to protect its copyrights and other intellectual property worldwide (ix) the ability of the Company to successfully integrate acquired operations and realize expected opportunities and (x) other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances.

About Wiley

Wiley is a global provider of knowledge and knowledge-enabled services that improve outcomes in areas of research, professional practice, and education. Through the Research segment, the Company provides digital and print scientific, technical, medical, and scholarly journals, reference works, books, database services, and advertising. The Professional Development segment provides digital and print books, online assessment and training services, and test prep and certification. In Education, Wiley provides education solutions including online program management services for higher education institutions and course management tools for instructors and students, as well as print and digital content.

               
JOHN WILEY & SONS, INC.
UNAUDITED SUMMARY OF OPERATIONS
FOR THE THIRD QUARTER AND NINE MONTHS ENDED
JANUARY 31, 2014 AND 2013
(in thousands, except per share amounts)
 

THIRD QUARTER ENDED JANUARY 31,

 
2014 2013 % Change
US GAAP  

Adjustments
(A,B)

  Adjusted US GAAP  

Adjustments
(B-D)

  Adjusted US GAAP

Adjusted
excl. FX

 
Revenue $ 457,933 - 457,933 472,435 (13,858 ) 458,577 -3 % 1 %
 
Costs and Expenses

Cost of Sales

130,563 - 130,563 141,794 (9,143 ) 132,651 -8 % -1 %

Operating and Administrative

238,569 - 238,569 235,857 (2,678 ) 233,179 1 % 3 %

Restructuring Charges (A)

4,256 (4,256 ) - - - -

Amortization of Intangibles

11,165   -   11,165   11,158   -   11,158   0 % 0 %
 

Total Costs and Expenses

384,553 (4,256 ) 380,297 388,809 (11,821 ) 376,988 -1 % 1 %
 
Operating Income 73,380 4,256 77,636 83,626 (2,037 ) 81,589 -12 % -3 %

Operating Margin

16.0 % 17.0 % 17.7 % 17.8 %
 
Interest Expense (3,485 ) - (3,485 ) (3,827 ) - (3,827 ) -9 % -9 %
Foreign Exchange Gain (Loss) 29 - 29 (1,147 ) - (1,147 ) -103 % 2 %
Interest Income and Other 466   -   466   342   -   342   36 % 36 %
 
Income Before Taxes 70,390 4,256 74,646 78,994 (2,037 ) 76,957 -11 % -3 %
 
Provision (Benefit) for Income Taxes (A-D) 17,901   1,347   19,248   21,894   (775 ) 21,119   -18 % -9 %
 
Net Income $ 52,489   2,909   55,398   57,100   (1,262 ) 55,838   -8 % 0 %
 
 
Earnings Per Share- Diluted $ 0.88 0.05 0.93 0.95 (0.02 ) 0.93 -7 % 0 %
 
Average Shares - Diluted 59,713 59,713 59,713 60,254 60,254 60,254
 
 

NINE MONTHS ENDED JANUARY 31,

 
2014 2013 % Change
US GAAP  

Adjustments
(A,B,E)

  Adjusted US GAAP  

Adjustments
(A-E)

  Adjusted US GAAP

Adjusted
excl. FX

 
Revenue $ 1,318,106 - 1,318,106 1,314,924 (40,359 ) 1,274,565 0 % 4 %
 
Costs and Expenses

Cost of Sales

380,706 - 380,706 398,592 (25,505 ) 373,087 -4 % 3 %

Operating and Administrative

713,090 - 713,090 689,833 (12,118 ) 677,715 3 % 6 %

Restructuring Charges (A)

27,327 (27,327 ) - 4,841 (4,841 ) -

Impairment Charges (B)

4,786 (4,786 ) - 15,521 (15,521 ) -

Amortization of Intangibles

33,066   -   33,066   30,404   (53 ) 30,351   9 % 9 %
 

Total Costs and Expenses

1,158,975 (32,113 ) 1,126,862 1,139,191 (58,038 ) 1,081,153 2 % 5 %
 
Gain on Sale of Travel Publishing Program (C) - - - 9,829 (9,829 ) -
 
Operating Income 159,131 32,113 191,244 185,562 7,850 193,412 -14 % 0 %

Operating Margin

12.1 % 14.5 % 14.1 % 15.2 %
 
Interest Expense (10,348 ) - (10,348 ) (9,557 ) - (9,557 ) 8 % 8 %
Foreign Exchange Gain (Loss) 329 - 329 (1,599 ) - (1,599 ) -121 % -2 %
Interest Income and Other 2,095   -   2,095   1,569   -   1,569   34 % 34 %
 
Income Before Taxes 151,207 32,113 183,320 175,975 7,850 183,825 -14 % 0 %
 
Provision (Benefit) for Income Taxes (A-E) 26,588   21,126   47,714   39,701   11,068   50,769   -33 % -5 %
 
Net Income $ 124,619   10,987   135,606   136,274   (3,218 ) 133,056   -9 % 3 %
 
 
Earnings Per Share- Diluted $ 2.10 0.19 2.28 2.26 (0.05 ) 2.20 -7 % 4 %
 
Average Shares - Diluted 59,388 59,388 59,388 60,349 60,349 60,349
 
 

See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.

 
               
JOHN WILEY & SONS, INC.
FOR THE THIRD QUARTER AND NINE MONTHS ENDED
JANUARY 31, 2014 AND 2013
 
 

RECONCILIATION OF US GAAP EPS TO ADJUSTED EPS - DILUTED (UNAUDITED)

 
 
Third Quarter Ended Nine Months Ended
January 31, January 31,
2014 2013 2014 2013
 
US GAAP Earnings Per Share - Diluted $ 0.88 $ 0.95 $ 2.10 $ 2.26
Adjusted to exclude the following:

Restructuring Charges (A)

(0.05 ) - (0.31 ) (0.06 )

Impairment Charges (B)

- - (0.06 ) (0.16 )

Gain on Sale of Travel Publishing Program (C)

- - - 0.10

Operational Results of Divested Consumer Programs (D)

- 0.02 - 0.03

Deferred Income Tax Benefit on UK Rate Change (E)

- - 0.18 0.14
 
Adjusted Earnings Per Share - Diluted $   0.93   $   0.93 $   2.28   $   2.20  
 

NOTES TO UNAUDITED FINANCIAL STATEMENTS

 
Adjustments:
(A)   RESTRUCTURING CHARGES: The adjusted results for the three and nine months ended January 31, 2014 and the nine months ended January 31, 2013 exclude restructuring charges related to the Company's Restructuring and Reinvestment Program of $4.3 million ($2.9 million after tax, $0.05 per share), $27.3 million ($18.3 million after tax, $0.31 per share) and $4.8 million ($3.5 million after tax, $0.06 per share), respectively.
 
(B) Impairment Charges: The adjusted results for the nine months ended January 31, 2014 exclude asset impairment charges related to certain technology investments of $4.8 million ($3.4 million after tax, $0.06 per share). The adjusted results for the nine months ended January 31, 2013 exclude asset impairment charges related to the divested Professional Development consumer publishing programs of $15.5 million ($9.6 million after tax, $0.16 per share).
 
(C) Gain on Sale of Travel Publishing Program: The adjusted results for the nine months ended January 31, 2013 exclude a gain on sale of the travel publishing program of $9.8 million ($6.2 million after tax, $0.10 per share).
 
(D) Operating Results of Divested Consumer Programs: The adjusted results for the three and nine months ended January 31, 2013 exclude the operating results of the divested Professional Development consumer publishing programs sold in fiscal year 2013.
 
(E) Deferred Income Tax Benefit on UK Rate Change: The adjusted results for the nine months ended January 31, 2014 and 2013 exclude deferred tax benefits of $10.6 million ($0.18 per share) and $8.4 million ($0.14 per share), respectively. The tax benefits are associated with tax legislation enacted in the United Kingdom that reduced the U.K. corporate income tax rates by 3% and 2%, respectively. The benefits reflect the remeasurement of the Company's deferred tax balances to the new income tax rates of 21% effective April 1, 2014 and 20% effective April 1, 2015 and had no current cash tax impact.
 

Non-GAAP Financial Measures:

In addition to providing financial results in accordance with GAAP, the Company has provided adjusted financial results that exclude the impact of other nonrecurring items described in more detail throughout this press release. These non-GAAP financial measures are labeled as "Adjusted" and are used for evaluating the results of operations for internal purposes. These non-GAAP measures are not intended to replace the presentation of financial results in accordance with GAAP. Rather, the Company believes the exclusion of such items provides additional information to investors to facilitate the comparison of past and present operations. Unless otherwise noted, adjusted amounts in the attached schedules include foreign exchange.
               
JOHN WILEY & SONS, INC.
UNAUDITED SEGMENT RESULTS
FOR THE THIRD QUARTER AND NINE MONTHS ENDED
JANUARY 31, 2014 AND 2013
(in thousands)
 

THIRD QUARTER ENDED JANUARY 31,

 
2014 2013 % Change
US GAAP  

Adjustments
(A,B)

  Adjusted US GAAP  

Adjustments
(B-D)

Adjusted US GAAP  

Adjusted
excl. FX

Revenue

Research $ 248,797 - 248,797 240,902 - 240,902 3 % 3 %
Professional Development 94,201 - 94,201 113,106 (13,858 ) 99,248 -17 % -5 %
Education 114,935 - 114,935 118,427 - 118,427 -3 % 0 %
           

Total

$ 457,933   -   457,933   472,435   (13,858 ) 458,577   -3 % 1 %
 

Direct Contribution to Profit

Research $ 103,244 (782 ) 102,462 100,369 - 100,369 3 % 2 %
Professional Development 31,740 (833 ) 30,907 30,780 (2,037 ) 28,743 3 % 8 %
Education 44,505 117 44,622 48,376 - 48,376 -8 % -4 %
           

Total

$ 179,489   (1,498 ) 177,991   179,525   (2,037 ) 177,488   0 % 1 %
 

 

Contribution to Profit (After Allocated Shared Services and Admin. Costs)

Research $ 69,799 (782 ) 69,017 67,715 - 67,715 3 % 2 %
Professional Development 12,760 (833 ) 11,927 11,877 (2,037 ) 9,840 - 21 %
Education 30,377 117 30,494 35,055 - 35,055 -13 % -9 %
           

Total

$ 112,936 (1,498 ) 111,438 114,647 (2,037 ) 112,610 -1 % 0 %
 
Unallocated Shared Services and Admin. Costs (39,556 ) 5,754 (33,802 ) (31,021 ) - (31,021 ) 28 % 10 %
           
Operating Income $ 73,380   4,256   77,636   83,626   (2,037 ) 81,589   -12 % -3 %
 
 
 
 

Total Shared Services and Admin. Costs by Function

Distribution

$ (24,384 ) 17 (24,367 ) (25,911 ) - (25,911 ) -6 % -5 %

Technology Services

(46,154 ) 2,283 (43,871 ) (42,381 ) - (42,381 ) 9 % 4 %

Finance

(11,842 ) 882 (10,960 ) (10,273 ) - (10,273 ) 15 % 8 %

Other Administration

(23,729 ) 2,572   (21,157 ) (17,334 ) -   (17,334 ) 37 % 23 %

Total

$ (106,109 ) 5,754   (100,355 ) (95,899 ) -   (95,899 ) 11 % 5 %
 
 
 

NINE MONTHS ENDED JANUARY 31,

 
2014 2013 % Change
US GAAP  

Adjustments
(A,B)

  Adjusted US GAAP  

Adjustments
(A-D)

Adjusted US GAAP  

Adjusted
excl. FX

Revenue

Research $ 747,532 - 747,532 726,679 - 726,679 3 % 3 %
Professional Development 270,832 - 270,832 316,360 (40,359 ) 276,001 -14 % -1 %
Education 299,742 - 299,742 271,885 - 271,885 10 % 12 %
           

Total

$ 1,318,106   -   1,318,106   1,314,924   (40,359 ) 1,274,565   0 % 4 %
 

Direct Contribution to Profit

Research $ 309,832 4,590 314,422 300,624 2,966 303,590 3 % 4 %
Professional Development 76,759 4,834 81,593 71,949 4,263 76,212 7 % 8 %
Education 102,687 375 103,062 99,150 169 99,319 4 % 6 %
           

Total

$ 489,278   9,799   499,077   471,723   7,398   479,121   4 % 5 %
 

 

Contribution to Profit (After Allocated Shared Services and Admin. Costs)

Research $ 206,230 4,590 210,820 199,663 2,966 202,629 3 % 5 %
Professional Development 17,944 4,834 22,778 11,296 4,263 15,559 - 48 %
Education 59,019 375 59,394 60,063 169 60,232 -2 % 2 %
           

Total

$ 283,193 9,799 292,992 271,022 7,398 278,420 4 % 7 %
 
Unallocated Shared Services and Admin. Costs (124,062 ) 22,314 (101,748 ) (85,460 ) 452 (85,008 ) 45 % 21 %
           
Operating Income $ 159,131   32,113   191,244   185,562   7,850   193,412   -14 % 0 %
 
 

Total Shared Services and Admin. Costs by Function

Distribution

$ (75,937 ) 2,591 (73,346 ) (77,589 ) 193 (77,396 ) -2 % -4 %

Technology Services

(147,124 ) 13,243 (133,881 ) (115,162 ) 256 (114,906 ) 28 % 17 %

Finance

(33,174 ) 882 (32,292 ) (31,263 ) - (31,263 ) 6 % 4 %

Other Administration

(73,912 ) 5,598   (68,314 ) (62,147 ) 3   (62,144 ) 19 % 11 %

Total

$ (330,147 ) 22,314   (307,833 ) (286,161 ) 452   (285,709 ) 15 % 8 %
 
 

See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.

 
               

UNAUDITED ADJUSTED CONTRIBUTION TO PROFIT

INCLUDING ALLOCATED SHARED SERVICES AND ADMINISTRATIVE COSTS

FOR THE THIRD QUARTER AND NINE MONTHS ENDED

JANUARY 31, 2014 AND 2013

(in thousands)

 
 
Third Quarter Ended Nine Months Ended
January 31, January 31,
2014 2013 % Change  

%
Change
excl. FX

2014 2013 % Change  

%
Change
excl. FX

 
 

Research:

Direct Contribution to Profit $ 103,244 100,369 3 % 3 % 309,832 300,624 3 % 4 %
Restructuring Charges (Credits) (A) (782 ) -   4,590   2,966  
Adjusted Direct Contribution to Profit 102,462 100,369 2 % 2 % 314,422 303,590 4 % 4 %
 
Allocated Shared Services and Admin. Costs:

Distribution

(11,011 ) (11,495 ) -4 % -4 % (33,714 ) (34,813 ) -3 % -3 %

Technology

(17,727 ) (16,517 ) 7 % 7 % (54,307 ) (49,736 ) 9 % 9 %

Occupancy and Other

(4,707 ) (4,642 ) 1 % 1 % (15,581 ) (16,412 ) -5 % -4 %

Adjusted Contribution to Profit (after allocated Shared Services and Admin. Costs)

$ 69,017   67,715   2 % 2 % 210,820   202,629   4 % 5 %

 

Professional Development:

Direct Contribution to Profit $ 31,740 30,780 3 % 4 % 76,759 71,949 7 % 8 %
Restructuring Charges (Credits) (A) (833 ) - 4,834 1,254
Impairment Charges (B) - - - 15,521
Gain on Sale of Travel Publishing Program (C) - - - (9,829 )
Direct Contribution to profit - Divested Consumer Publishing Programs (D) -   (2,037 ) -   (2,683 )
Adjusted Direct Contribution to Profit 30,907 28,743 8 % 8 % 81,593 76,212 7 % 8 %
 
Allocated Shared Services and Admin. Costs:

Distribution

(9,320 ) (10,196 ) -9 % -7 % (27,861 ) (30,937 ) -10 % -9 %

Technology

(7,543 ) (7,238 ) 4 % 4 % (23,260 ) (21,662 ) 7 % 7 %

Occupancy and Other

(2,117 ) (1,469 ) 44 % 44 % (7,694 ) (8,054 ) -4 % -3 %

Adjusted Contribution to Profit (after allocated Shared Services and Admin. Costs)

$ 11,927   9,840   21 % 21 % 22,778   15,559   46 % 48 %
 

Education:

Direct Contribution to Profit $ 44,505 48,376 -8 % -4 % 102,687 99,150 4 % 6 %
Restructuring Charges (A) 117   -   375   169  
Adjusted Direct Contribution to Profit 44,622 48,376 -8 % -4 % 103,062 99,319 4 % 6 %
 
Allocated Shared Services and Admin. Costs:

Distribution

(4,012 ) (4,074 ) -2 % 1 % (11,755 ) (11,646 ) 1 % 4 %

Technology

(8,429 ) (8,049 ) 5 % 6 % (25,802 ) (22,548 ) 14 % 15 %

Occupancy and Other

(1,687 ) (1,198 ) 41 % 49 % (6,111 ) (4,893 ) 25 % 27 %

Adjusted Contribution to Profit (after allocated Shared Services and Admin. Costs)

$ 30,494   35,055   -13 % -9 % 59,394   60,232   -1 % 2 %
 

Total Adjusted Contribution to Profit (after allocated Shared Services and Admin. Costs)

$ 111,438 112,610 -1 % 0 % 292,992 278,420 5 % 7 %
 

Unallocated Shared Services and Admin. Costs:

Unallocated Shared Services and Admin. Costs (39,556 ) (31,021 ) 28 % 28 % (124,062 ) (85,460 ) 45 % 46 %
Restructuring Charges (A) 5,754 - 17,528 452
Impairment Charges (B) -   -   4,786   -  
Adjusted Unallocated Shared Services and Admin. Costs $ (33,802 ) (31,021 ) 9 % 10 % (101,748 ) (85,008 ) 20 % 21 %
       

Adjusted Operating Income

$ 77,636   81,589   -5 % -3 % 191,244   193,412   -1 % 0 %
 
 

See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.

 
               

JOHN WILEY & SONS, INC.

SEGMENT REVENUE STATISTICS

FOR THE THIRD QUARTER AND NINE MONTHS ENDED

JANUARY 31, 2014 AND 2013

(in millions)

                                     
Third Quarter Nine Months
Ended January 31, % of % Change Ended January 31, % of % Change

RESEARCH

    2014   2013   Revenue   excl. FX     2014   2013   Revenue   excl. FX
 

Revenue by Product/Service:

Journal Subscriptions $ 154,035 143,768 62 % 7 % $ 478,374 461,611 64 % 4 %
Print Books 30,990 37,078 12 % -16 % 89,483 101,279 12 % -11 %
Digital Books 12,636 11,092 5 % 12 % 31,588 25,130 4 % 25 %
Open Access 4,347 1,310 2 % 232 % 11,538 3,691 2 % 213 %
Other (includes Reprints, Backfiles, Rights, Advertising)     46,789   47,654   19 %   -2 %     136,549   134,968   18 %   2 %

Total Revenue

  $ 248,797   240,902   100 %   3 %   $ 747,532   726,679   100 %   3 %
 

Revenue by Subject Category:

Medicine $ 68,264 69,275 27 % -1 % $ 212,926 212,763 28 % 2 %
Physical Sciences & Engineering 71,643 69,788 29 % 1 % 209,469 205,684 28 % 1 %
Life Sciences 61,639 54,128 25 % 13 % 186,533 167,657 25 % 12 %
Social Sciences & Humanities 46,252 46,807 19 % -1 % 135,548 137,760 18 % -1 %
Other     999   904   0 %   11 %     3,056   2,815   0 %   9 %

Total Revenue

  $ 248,797   240,902   100 %   3 %   $ 747,532   726,679   100 %   3 %
 
                                     
Third Quarter Nine Months
Ended January 31, % of % Change Ended January 31, % of % Change

PROFESSIONAL DEVELOPMENT

    2014   2013   Revenue   excl. FX (a)     2014   2013   Revenue   excl. FX (a)
 

Revenue by Product/Service:

Print Books $ 64,757 71,465 69 % -9 % $ 183,392 199,068 68 % -7 %
Digital Books 11,459 10,507 12 % 9 % 34,352 28,801 13 % 20 %
Online Training & Assessment 8,792 7,336 9 % 20 % 26,713 21,047 10 % 27 %
Other (includes Rights, Translations, Advertising) 9,193 9,940 10 % -7 % 26,375 27,085 10 % -2 %
Divested Consumer Publishing Programs     -   13,858             -   40,359        

Total Revenue

  $ 94,201   113,106   100 %   -5 %   $ 270,832   316,360   100 %   -1 %
 

Revenue by Subject Category:

Business $ 42,298 42,048 45 % 1 % $ 123,263 119,360 46 % 4 %
Technology 21,863 24,747 23 % -11 % 57,397 63,945 21 % -10 %
Consumer 10,709 12,642 11 % -15 % 30,467 33,729 11 % -9 %
Professional Education 6,515 5,939 7 % 11 % 22,743 21,295 8 % 7 %
Architecture 6,685 6,764 7 % -1 % 18,286 19,211 7 % -4 %
Psychology 4,576 3,694 5 % 24 % 12,812 10,430 5 % 23 %
Other 1,555 3,414 2 % -52 % 5,864 8,031 2 % -23 %
Divested Consumer Publishing Programs     -   13,858             -   40,359        

Total Revenue

  $ 94,201   113,106   100 %   -5 %   $ 270,832   316,360   100 %   -1 %

Note (a) - Variance excludes the revenue of the divested Professional Development consumer publishing programs sold in fiscal year 2013.

 

 

Third Quarter Nine Months
Ended January 31, % of % Change Ended January 31, % of % Change

EDUCATION

    2014   2013   Revenue   excl. FX     2014   2013   Revenue   excl. FX
 

Revenue by Product/Service:

Print Textbooks $ 54,358 62,395 47 % -8 % $ 140,932 159,875 47 % -9 %
Binder and Custom Products 12,896 12,463 11 % 3 % 43,970 39,260 15 % 12 %
Online Program Management (Deltak) 19,145 17,145 17 % 12 % 50,396 17,145 17 %
Digital Books 7,964 8,803 7 % -8 % 21,524 19,002 7 % 15 %
WileyPLUS 18,578 15,554 16 % 20 % 35,590 29,105 12 % 23 %
Other     1,994   2,067   2 %   1 %     7,330   7,498   2 %   4 %

Total Revenue

  $ 114,935   118,427   100 %   0 %   $ 299,742   271,885   100 %   12 %
 

Revenue by Subject Category:

Business $ 26,259 26,620 23 % 1 % $ 66,355 64,440 22 % 5 %
Sciences 16,587 17,101 14 % -1 % 53,564 53,402 18 % 1 %
Social Sciences 14,444 15,193 13 % -4 % 40,271 41,814 13 % -3 %
Engineering & Computer Science 12,865 14,388 11 % -9 % 32,772 37,479 11 % -11 %
Mathematics & Statistics 6,843 6,981 6 % -2 % 21,899 21,366 7 % 3 %
Schools (Australia K-12) 13,906 17,040 12 % -7 % 24,341 25,174 8 % 9 %
Online Program Management (Deltak) 19,145 17,145 17 % 50,396 17,145 17 %
Other     4,886   3,959   4 %   26 %     10,144   11,065   3 %   -7 %

Total Revenue

  $ 114,935   118,427   100 %   0 %   $ 299,742   271,885   100 %   12 %
 
         
JOHN WILEY & SONS, INC.
UNAUDITED STATEMENTS OF FINANCIAL POSITION
(in thousands)
 
January 31, April 30,
2014 2013 2013
 
Current Assets

Cash & cash equivalents

$ 315,985 285,858 334,140

Accounts receivable

205,796 238,112 161,731

Inventories

79,168 85,999 82,017

Prepaid and other

60,540 53,552 57,083

Total Current Assets

661,489 663,521 634,971
Product Development Assets 89,142 99,186 87,876
Technology, Property and Equipment 181,092 193,856 189,625
Intangible Assets 961,931 989,534 954,957
Goodwill 856,707 844,673 835,540
Income Tax Deposits 61,086 34,055 45,868
Other Assets 61,799 56,059 57,538

Total Assets

2,873,246 2,880,884 2,806,375
 
Current Liabilities

Accounts and royalties payable

205,154 199,621 143,313

Deferred revenue

279,681 287,063 362,970

Accrued employment costs

88,514 57,116 85,306

Accrued income taxes

6,802 15,478 16,093

Accrued pension liability

4,386 3,606 4,359

Other accrued liabilities

48,017 57,843 55,128

Total Current Liabilities

632,554 620,727 667,169
Long-Term Debt 634,000 734,800 673,000
Accrued Pension Liability 195,037 141,855 204,362
Deferred Income Tax Liabilities 199,660 214,480 197,526
Other Long-Term Liabilities 76,005 72,531 75,962
Shareholders' Equity 1,135,990 1,096,491 988,356

Total Liabilities & Shareholders' Equity

$ 2,873,246 2,880,884 2,806,375
 
   

JOHN WILEY & SONS, INC.

UNAUDITED STATEMENTS OF FREE CASH FLOW

(in thousands)

 
 
Nine Months Ended
January 31,
2014 2013

Operating Activities:

Net income $ 124,619 136,274
Amortization of intangibles 33,066 30,404
Amortization of composition costs 33,940 39,047
Depreciation of technology, property and equipment 43,596 41,124
Restructuring charges 27,327 4,841
Impairment charges 4,786 15,521
Gain on sale of travel publishing program - (9,829 )
Deferred tax benefits on U.K. rate changes (10,634 ) (8,402 )
Stock-based compensation expense 10,995 9,998
Excess tax benefits from stock-based compensation 2,880 (1,129 )
Royalty advances (83,237 ) (83,317 )
Earned royalty advances 77,663 69,726
Other non-cash charges and credits 12,547 31,570
Change in deferred revenue (91,174 ) (52,302 )
Income tax deposit (10,433 ) (29,705 )
Net change in operating assets and liabilities, excluding acquisitions (22,144 ) (31,666 )
Cash Provided by Operating Activities 153,797 162,155
 

Investments in organic growth:

Composition spending (30,460 ) (35,599 )
Additions to technology, property and equipment (38,733 ) (41,606 )
 
Free Cash Flow 84,604 84,950
 

Other Investing and Financing Activities:

Acquisitions, net of cash (5,150 ) (258,735 )
Proceeds from sale of consumer publishing programs - 28,600
Repayment of long-term debt (486,600 ) (318,600 )
Borrowings of long-term debt 447,600 578,400
Change in book overdrafts (21,859 ) (20,984 )
Cash dividends (44,182 ) (43,252 )
Purchase of treasury shares (38,533 ) (45,172 )
Proceeds from exercise of stock options and other 48,540 24,232
Excess tax benefits from stock-based compensation (2,880 ) 1,129  
Cash Used for Investing and Financing Activities (103,064 ) (54,382 )
   

Effects of Exchange Rate Changes on Cash

305   (4,540 )
 

(Decrease) Increase in Cash and Cash Equivalents for Period

$ (18,155 ) 26,028  
 
 
 

RECONCILIATION TO GAAP PRESENTATION

 

Investing Activities:

Composition spending $ (30,460 ) (35,599 )
Additions to technology, property and equipment (38,733 ) (41,606 )
Acquisitions, net of cash (5,150 ) (258,735 )
Proceeds from sale of consumer publishing programs -   28,600  
Cash Used for Investing Activities $ (74,343 ) (307,340 )
 

Financing Activities:

Cash Used for Investing and Financing Activities

$ (103,064 ) (54,382 )

Excluding:

Acquisitions, net of cash (5,150 ) (258,735 )
Proceeds from sale of consumer publishing programs -   28,600  
Cash (Used for) Provided by Financing Activities $ (97,914 ) 175,753  
 
Note: The Company’s management evaluates performance using free cash flow. The Company believes free cash flow provides a meaningful and comparable measure of performance. Since free cash flow is not a measure calculated in accordance with GAAP, it should not be considered as a substitute for other GAAP measures, including cash used for or provided by operating activities, investing activities and financing activities, as an indicator of performance.

Contacts

John Wiley & Sons, Inc.
Investors:
Brian Campbell, 201-748-6874
Investor Relations
brian.campbell@wiley.com
or
Media:
Linda Dunbar, 201-748-6390
Corporate Media Relations
ldunbar@wiley.com

Release Summary

John Wiley & Sons, Inc. today announced the results for the third quarter of fiscal year 2014.

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Contacts

John Wiley & Sons, Inc.
Investors:
Brian Campbell, 201-748-6874
Investor Relations
brian.campbell@wiley.com
or
Media:
Linda Dunbar, 201-748-6390
Corporate Media Relations
ldunbar@wiley.com