Wiley Reports Third Quarter Fiscal Year 2016 Results

Revenue of $436 million, up 3% over prior year on a constant currency basis and excluding a $29 million transitional (non-cash) impact of shifting to time-based journal subscriptions
Journal revenue of $181 million, up 5% on a constant currency basis and excluding the transitional (non-cash) impact of shifting to time-based journal subscriptions
Adjusted EPS of $0.67, up 6% on a constant currency basis and excluding a $0.32 transitional (non-cash) impact of shifting to time-based journal subscriptions. GAAP EPS for the quarter was $0.61 compared to $0.72 reported in the prior year period
Revenue for the nine months essentially flat and adjusted EPS up 2% on a constant currency basis and excluding the impact of shifting to time-based journal subscriptions
Reaffirming full-year outlook of flat revenue and flat adjusted EPS, excluding the impact of foreign exchange and the shift to time-based journal subscriptions

March 08, 2016 08:00 AM Eastern Standard Time

HOBOKEN, N.J.--(BUSINESS WIRE)--John Wiley & Sons, Inc. (NYSE:JWa and JWb), a global provider of knowledge and learning solutions that improve outcomes in research, professional practice, and education, today announced the following results for the third quarter of fiscal year 2016:

% Change

$ millions

FY16

FY15

Excluding FX

Including FX

Revenue:

$436.4

$465.9

(3%)

(6%)

9 Months

$1,292.7

$1,380.8

(2%)

(6%)

Adjusted EPS:

$0.67

$0.99

(26%)

(32%)

9 Months

$2.04

$2.45

(11%)

(17%)

GAAP EPS:

$0.61

$0.72

(15%)

9 Months

$1.90

$2.18

(13%)


	_{Note: Results include transitional impact of shift to time-based journal subscriptions ($29 million revenue and $0.32 EPS). There is no cash impact from the change. Adjusted results exclude restructuring charges in the current and prior year periods and a deferred tax benefit in the current year period. Please see the attached financial schedules.}

Management Commentary

“We are pleased with our solid progress this quarter,” said Mark Allin, President and CEO. “Operationally, our journals business achieved five percent revenue growth in the quarter, buoyed by a large backfile sale and steady subscription results. Our solutions businesses, including test preparation, corporate learning, and online program management, continued to post double-digit revenue growth rates. The Research segment was also lifted by strong digital book sales, while Education saw solid growth in the key areas of Custom Material and WileyPLUS Course Workflow.”

Fiscal Year 2016 Outlook

Wiley is reaffirming its fiscal year 2016 outlook of flat revenue and flat adjusted earnings per share (EPS) on a constant currency basis and excluding the adverse transitional impact of shifting to time-based journal subscriptions. As previously announced, Wiley is moving from issue-based journal subscriptions to time-based digital journal subscription agreements for calendar year 2016. The change will shift roughly $37 million of revenue and $0.40 of EPS from FY16 to FY17, with recurring effect annually thereafter. We previously estimated these impacts to be $35 million of revenue and $0.35 of EPS. The shift to time-based subscriptions will not impact cash flow for the year. Included in the FY16 EPS guidance is an incremental expense impact of more than $0.15 as compared to FY15 for the enterprise resource planning (ERP) and related systems implementations.

Foreign Exchange (FX)

Wiley generates half of its revenue from outside the United States, and is therefore exposed to foreign exchange rate fluctuations, particularly in relation to the euro and pound sterling. For fiscal year 2015, the weighted average rates for sterling and the euro were 1.60 and 1.25, respectively, on a US dollar equivalent basis. The weighted average rates for the first nine months of fiscal 2016 were 1.53 and 1.11, respectively. Throughout this report, references are made to variances “excluding foreign exchange” or “on a constant currency basis”; such amounts exclude both currency translation effects and transactional gains and losses.

Adjusted Results

The Company provides financial measures referred to as “adjusted” contribution to profit and EPS, which exclude restructuring charges and deferred tax benefits. Variances to adjusted contribution to profit and EPS are on a constant currency basis 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.

Third Quarter Summary

Third quarter revenue declined 3% on a constant currency basis to $436.4 million but rose 3% excluding both currency and the shift to time-based journal subscriptions ($29 million transitional impact). Performance was driven by a $10 million journal backfile sale to a national consortium, and double-digit growth in Research Books and References (+13%), Author-Funded Access (+11%), Online Test Preparation (+69%), Online Program Management (+13%), and Custom Education Material (+20%). The positive performance offset an unfavorable reporting comparison with prior year for Corporate Learning (three months reported vs. five months in the year-ago period due to a prior year CrossKnowledge reporting lag, -$5 million) and a double-digit revenue decline in Education books (-12%). Nine month revenue of $1,293 million declined 2% on a constant currency basis but was essentially flat excluding currency impacts and the shift to time-based journal subscriptions.
Third quarter adjusted EPS declined 26% on a constant currency basis but rose 6% excluding both currency and the shift to time-based journal subscriptions ($0.32 transitional impact). Adjusted EPS excludes a $13.7 million restructuring charge in the quarter related to the restructuring of our books businesses, the outsourcing of US distribution operations, and the implementation of other shared services efficiency initiatives. It also excludes a deferred tax benefit (+$5.9 million) related to a future reduction in the UK income tax rate that was enacted in the quarter. Adjusted EPS performance was driven by revenue growth, including the high-margin backfile sale and restructuring savings, partially offset by an increase in technology expense related to our ERP implementation and other systems development, as well as higher legal provisions. Third quarter EPS on a US GAAP basis declined 15% to $0.61, including an adverse currency impact of $0.06. Nine month adjusted EPS declined 11% on a constant currency basis to $2.04, but was up 2% excluding both currency and the shift to time-based journal subscriptions. On a US GAAP basis, EPS for the nine months declined 13%, including an adverse currency impact of $0.14.
Free Cash Flow was $18.9 million for the first nine months of the year compared to $80.0 million in the prior year period. Lower cash from operations (-$38 million) reflected lower cash earnings and less favorable timing of cash collections. Higher capital spending (+$22 million) reflected investment in the ERP deployment and other systems, as well as the global headquarters office transformation.
Credit Facility: On March 1, Wiley amended its existing revolving credit agreement, increasing its capacity to $1.1 billion and extending the term by five years to March 2021. The proceeds of the amended facility will be used for general corporate purposes, including seasonal operating cash requirements and strategic acquisitions. At the end of January, Wiley’s net debt to EBITDA ratio was 1:1.
Share Repurchases: Wiley repurchased 347,961 shares this quarter at a cost of $15.0 million, an average of $43.11 per share. Approximately 963,000 shares remain in the current repurchase authorization.

RESEARCH

Revenue: Third quarter revenue of $224.7 million was down 5% on a constant currency basis but rose 7% excluding the $29 million transitional impact from the shift to time-based journal subscriptions. Steady performance in journal subscriptions (flat excluding impact of currency and the shift to time-based journal subscriptions) and double-digit growth in Licensing, Reprints, and Backfiles (+22%), Author-Funded Access (+11%), and Books and References (+13%) all contributed to revenue growth. Results included a large journal backfile sale ($10 million) to a national consortium. As background, a journal backfile sale provides perpetual access to a historical collection of Wiley journals. Digital Books also had a strong quarter (+84%), primarily due to a large digital book sale ($4 million) to another government sponsor. For the nine months, Research revenue was even compared to prior year at constant currency and excluding the impact of the shift to time-based journal subscriptions.
Transition to Time-Based Subscriptions: As previously announced, Wiley is transitioning from issue-based to time-based digital journal subscription agreements for calendar year 2016 in order to simplify the contracting and administration of such agreements. The change in subscriber agreements will shift roughly $37 million of revenue and $0.40 of EPS from FY16 to FY17, with recurring effect annually thereafter. We previously estimated these impacts to be $35 million of revenue and $0.35 of EPS. The shift to time-based subscriptions will not impact cash flow.
Calendar Year 2016 Journal Subscriptions: At the end of January, calendar year 2016 Journal Subscriptions were up 1% on a constant currency basis, with 79% of targeted business under contract for the 2016 calendar year.
Adjusted Contribution to Profit (CTP): Third quarter adjusted CTP of $57.4 million declined 17% on a constant currency basis but rose 18% excluding currency and the CTP margin impact from shifting to time-based journal subscriptions ($25 million). CTP growth was driven by revenue performance, including a high margin contribution from the $10 million journal backfile sale, as well as restructuring savings. Third quarter CTP on a US GAAP basis was $52.9 million compared to $67.7 million in the prior year period. For the nine months, adjusted CTP was down 9% at constant currency but up 2% excluding currency and the shift to time-based journal subscriptions.
Society Business: 56 society journals were renewed during the quarter, worth approximately $27.5 million in combined annual revenue, and six were not renewed, worth $4.8 million annually. For calendar year 2016 publishing contracts, society publishing wins vs. losses are modestly net positive.

PROFESSIONAL DEVELOPMENT

Revenue: Third quarter revenue declined 1% on a constant currency basis to $103.4 million primarily due to an unfavorable reporting comparison with the prior year, when Corporate Learning (CrossKnowledge) reported five months of results. Excluding the two additional months for Corporate Learning in the prior year period (-$5 million), Professional Development revenue grew 4%. Online Test Preparation had a very strong quarter (+69%), with performance driven by CFA, CMA, and CPAexcel® products. Book revenue was down 5%. For the nine months, Professional Development revenue grew 2% due to growth in Corporate Learning (+30%) and strong double-digit growth in Online Test Preparation (+38%), offsetting a decline in Books (-5%).
Adjusted Contribution to Profit (CTP): Adjusted CTP rose 47% on a constant currency basis to $18.4 million. Excluding the two extra months for Corporate Learning in the prior year period, Professional Development adjusted CTP grew 19%. Performance reflected efficiency gains and restructuring savings. Third quarter CTP on a US GAAP basis was $17.0 million compared to $9.3 million in the prior year period. Nine month adjusted CTP was up 89% over prior year on a constant currency basis.
CrossKnowledge/L’Oréal platform: In February, CrossKnowledge announced the launch of MySalon-Edu.com, an online platform that focuses on salon education, in conjunction with L’Oréal group. The e-cademy massive online open course (MOOC) was created for professional hairdressers and beauticians.

EDUCATION

Revenue: Third quarter revenue rose 1% on a constant currency basis to $108.3 million, with Custom Material (+20%), Online Program Management (+13%), and WileyPLUS Course Workflow (+6%) more than offsetting a decline in Print Textbooks (-16%). For the nine months, Education revenue declined 3% at constant currency to $291 million.
Adjusted Contribution to Profit (CTP): Third quarter adjusted CTP declined 7% on a constant currency basis to $24.3 million, reflecting continued investment in new programs for Online Program Management and lower Print Textbook revenue, partially offset by cost savings. Third quarter CTP on a US GAAP basis was $23.3 million compared to $26.7 million in the prior year period. For the nine months, Education CTP was down 16% at constant currency to $44.6 million, reflecting the Print Textbook revenue decline and investment in Online Program Management.
Online Program Management (formerly Deltak): Wiley added six degree programs and retired one non-revenue generating partner in the quarter. At the end of January, Wiley had 38 partners and 222 online degree programs under contract.

Earnings Conference Call

Scheduled for today, March 8, 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) 364-3108 and enter the participant code 8846731#.
International callers, please dial (719) 325-2354 and enter the participant code 8846731#.
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 preparation 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, 2016 AND 2015

(in thousands, except per share amounts)

THIRD QUARTER ENDED JANUARY 31,

2016

2015

% Change

US GAAP

Adjustments
(A-B)

Adjusted

US GAAP

Adjustments
(A)

Adjusted

US GAAP

Adjusted
excl. FX

Revenue

436,393

465,905

-6

-3

Costs and Expenses

Cost of Sales

120,226

124,245

-3

Operating and Administrative

250,656

250,479

Restructuring Charges (A)

13,713

(13,713

)

24,034

(24,034

)

Amortization of Intangibles

12,179

13,105

-7

-4

Total Costs and Expenses

396,774

(13,713

)

383,061

411,863

(24,034

)

387,829

-4

Operating Income

39,619

13,713

53,332

54,042

24,034

78,076

-27

Operating Margin

9.1

12.2

11.6

16.8

Interest Expense

(4,590

)

(4,590

)

(4,365

)

(4,365

)

Foreign Exchange Gain

1,431

2,783

Interest Income and Other

786

800

-2

Income Before Taxes

37,246

13,713

50,959

53,260

24,034

77,294

-30

-28

Provision for Income Taxes (A-B)

1,728

10,000

11,728

10,712

7,678

18,390

-84

-29

Net Income

35,518

3,713

39,231

42,548

16,356

58,904

-17

-27

Earnings Per Share- Diluted (A-B)

0.61

0.06

0.67

0.72

0.28

0.99

-15

-26

Average Shares - Diluted

58,204

59,343

NINE MONTHS ENDED JANUARY 31,

2016

2015

% Change

US GAAP

Adjustments
(A-B)

Adjusted

US GAAP

Adjustments
(A)

Adjusted

US GAAP

Adjusted
excl. FX

Revenue

1,292,736

1,380,794

-6

-2

Costs and Expenses

Cost of Sales

356,719

382,839

-7

-3

Operating and Administrative

733,141

755,541

-3

Restructuring Charges (Credits) (A)

20,832

(20,832

)

23,879

(23,879

)

Amortization of Intangibles

37,251

38,859

-4

-1

Total Costs and Expenses

1,147,943

(20,832

)

1,127,111

1,201,118

(23,879

)

1,177,239

-4

Operating Income

144,793

20,832

165,625

179,676

23,879

203,555

-19

-14

Operating Margin

11.2

12.8

13.0

14.7

Interest Expense

(12,487

)

(12,487

)

(13,015

)

(13,015

)

-4

Foreign Exchange (Loss) Gain

1,389

2,828

Interest Income and Other

2,094

2,218

-6

Income Before Taxes

135,789

20,832

156,621

171,707

23,879

195,586

-21

-14

Provision for Income Taxes (A-B)

24,214

12,767

36,981

41,736

7,654

49,390

-42

-20

Net Income

111,575

8,065

119,640

129,971

16,225

146,196

-14

-12

Earnings Per Share- Diluted (A-B)

1.90

0.14

2.04

2.18

0.27

2.45

-13

-11

Average Shares - Diluted

58,711

59,632

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, 2016 AND 2015

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

Third Quarter Ended

Nine Months Ended

January 31,

2016

2015

2016

2015

US GAAP Earnings Per Share - Diluted

0.61

0.72

1.90

2.18

Adjusted to exclude the following:

Restructuring Charges (A)

(0.16

)

(0.28

)

(0.24

)

(0.27

)

Deferred Income Tax Benefit on UK Rate Change (B)

0.10

Adjusted Earnings Per Share - Diluted

0.67

0.99

2.04

2.45

	NOTES TO UNAUDITED FINANCIAL STATEMENTS

	Adjustments:
	a		Restructuring Charges: The adjusted results for the three and nine months ended January 31, 2016 exclude restructuring charges related to the Company's Restructuring and Reinvestment Program of $13.7 million or $0.16 per share, and $20.8 million or $0.24 per share, respectively. The adjusted results for the three and nine months ended January 31, 2015 exclude a restructuring charge of $24.0 million or $0.28 per share, and $23.9 or $0.27 per share, respectively.

	b		Deferred Income Tax Benefit on UK Rate Change: The adjusted results for the three and nine months ended January 31, 2016 exclude deferred tax benefits of $5.9 million, or $0.10 per share, associated with tax legislation enacted in the third quarter of fiscal year 2016 in the United Kingdom that reduced the U.K. corporate income tax rates by 2%. The benefits reflect the remeasurement of the Company's deferred tax balances to the new income tax rates of 19% effective April 1, 2017 and 18% effective April 1, 2020 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, 2016 AND 2015

(in thousands)

THIRD QUARTER ENDED JANUARY 31,

2016

2015

% Change

US GAAP

Adjustments
(A)

Adjusted

US GAAP

Adjustments
(A)

Adjusted

US GAAP

Adjusted
excl. FX

Revenue

Research

224,719

246,454

-9%

-5%

Professional Development

103,399

108,587

-5%

-1%

Education

108,275

110,864

-2%

Total

436,393

465,905

-6%

-3%

Direct Contribution to Profit

Research

92,730

4,461

97,191

109,453

4,507

113,960

-15%

-11%

Professional Development

40,447

1,382

41,829

35,698

3,588

39,286

13%

10%

Education

44,397

1,020

45,417

46,800

1,033

47,833

-5%

-1%

Total

177,574

6,863

184,437

191,951

9,128

201,079

-7%

-5%

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

Research

52,900

4,461

57,361

67,729

4,507

72,236

-22%

-17%

Professional Development

17,014

1,382

18,396

9,307

3,588

12,895

83%

47%

Education

23,280

1,020

24,300

26,658

1,033

27,691

-13%

-7%

Total

93,194

6,863

100,057

103,694

9,128

112,822

-10%

-7%

Unallocated Shared Services and Admin. Costs

(53,575)

6,850

(46,725)

(49,652)

14,906

(34,746)

37%

Operating Income

39,619

13,713

53,332

54,042

24,034

78,076

-27%

Total Shared Services and Admin. Costs by Function

Distribution and Operation Services

(23,232)

2,355

(20,877)

(25,418)

4,052

(21,366)

-9%

Technology and Content Management

(69,421)

2,670

(66,751)

(62,607)

1,842

(60,765)

11%

12%

Finance

(15,348)

2,740

(12,608)

(13,155)

164

(12,991)

17%

Other Administration

(29,954)

(915)

(30,869)

(36,729)

8,848

(27,881)

-18%

14%

Total

(137,955)

6,850

(131,105)

(137,909)

14,906

(123,003)

NINE MONTHS ENDED JANUARY 31,

2016

2015

% Change

US GAAP

Adjustments
(A)

Adjusted

US GAAP

Adjustments
(A)

Adjusted

US GAAP

Adjusted
excl. FX

Revenue

Research

700,497

766,149

-9%

-4%

Professional Development

301,230

306,581

-2%

Education

291,009

308,064

-6%

-3%

Total

1,292,736

1,380,794

-6%

-2%

Direct Contribution to Profit

Research

310,424

5,327

315,751

346,931

4,322

351,253

-11%

-5%

Professional Development

123,225

1,587

124,812

106,207

3,833

110,040

16%

17%

Education

103,534

1,214

104,748

116,104

1,084

117,188

-11%

-7%

Total

537,183

8,128

545,311

569,242

9,239

578,481

-6%

-1%

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

Research

185,568

5,327

190,895

217,906

4,322

222,228

-15%

-9%

Professional Development

54,780

1,587

56,367

26,629

3,833

30,462

106%

89%

Education

43,347

1,214

44,561

55,083

1,084

56,167

-21%

-16%

Total

283,695

8,128

291,823

299,618

9,239

308,857

-5%

-1%

Unallocated Shared Services and Admin. Costs

(138,902)

12,704

(126,198)

(119,942)

14,640

(105,302)

16%

25%

Operating Income

144,793

20,832

165,625

179,676

23,879

203,555

-19%

-14%

Total Shared Services and Admin. Costs by Function

Distribution and Operation Services

(66,573)

4,320

(62,253)

(72,342)

4,436

(67,906)

-8%

-4%

Technology and Content Management

(193,388)

3,443

(189,945)

(184,178)

1,285

(182,893)

Finance

(39,415)

2,315

(37,100)

(39,370)

(39,299)

-1%

Other Administration

(93,014)

2,626

(90,388)

(93,676)

8,848

(84,828)

-1%

11%

Total

(392,390)

12,704

(379,686)

(389,566)

14,640

(374,926)


		(A) See the accompanying Notes to Unaudited Financial Statements for a description of the Adjustment.

		Note: As part of Wiley’s Restructuring and Reinvestment Program, the Company consolidated certain decentralized business functions (Sales Support, Marketing Services, etc.) into global shared service functions. These newly centralized service groups enable significant cost reduction opportunities, including efficiencies gained from standardized technology and centralized management. The cost of these functions were previously reported as direct operating expenses in each business segment but are now reported within the shared service functions and then allocated to each business segment above. Prior year amounts have been restated to reflect the same reporting methodology.


UNAUDITED ADJUSTED CONTRIBUTION TO PROFIT
INCLUDING ALLOCATED SHARED SERVICES AND ADMINISTRATIVE COSTS
FOR THE THIRD QUARTER AND NINE MONTHS ENDED
JANUARY 31, 2016 AND 2015
(in thousands)


			Third Quarter Ended								Nine Months Ended
			January 31,								January 31,
			2016		2015		% Change		% Change excl. FX		2016		2015		% Change		% Change excl. FX


Research:
	Direct Contribution to Profit		92,730		109,453		-15	%	-12	%	310,424		346,931		-11	%	-6	%
	Restructuring Charges (Credits) (A)		4,461		4,507						5,327		4,322
	Adjusted Direct Contribution to Profit		97,191		113,960		-15	%	-11	%	315,751		351,253		-10	%	-5	%

	Allocated Shared Services and Admin. Costs:
		Distribution and Operation Services	(9,511	)	(10,722	)	-11	%	-8	%	(29,775	)	(34,141	)	-13	%	-8	%
		Technology and Content Management	(23,365	)	(23,455	)	0	%	1	%	(73,170	)	(73,030	)	0	%	3	%
		Occupancy and Other	(6,954	)	(7,547	)	-8	%	-3	%	(21,911	)	(21,854	)	0	%	7	%
	Adjusted Contribution to Profit (after allocated		57,361		72,236		-21	%	-17	%	190,895		222,228		-14	%	-9	%
		Shared Services and Admin. Costs)

Professional Development:
	Direct Contribution to Profit		40,447		35,698		13	%	17	%	123,225		106,207		16	%	19	%
	Restructuring Charges (A)		1,382		3,588						1,587		3,833
	Adjusted Direct Contribution to Profit		41,829		39,286		6	%	10	%	124,812		110,040		13	%	17	%

	Allocated Shared Services and Admin. Costs:
		Distribution and Operation Services	(7,164	)	(7,401	)	-3	%	0	%	(20,820	)	(23,671	)	-12	%	-9	%
		Technology and Content Management	(10,345	)	(12,496	)	-17	%	-16	%	(30,403	)	(35,668	)	-15	%	-13	%
		Occupancy and Other	(5,924	)	(6,494	)	-9	%	-4	%	(17,222	)	(20,239	)	-15	%	-10	%
	Adjusted Contribution to Profit (after allocated		18,396		12,895		43	%	47	%	56,367		30,462		85	%	89	%
		Shared Services and Admin. Costs)

Education:
	Direct Contribution to Profit		44,397		46,800		-5	%	-1	%	103,534		116,104		-11	%	-7	%
	Restructuring Charges (A)		1,020		1,033						1,214		1,084
	Adjusted Direct Contribution to Profit		45,417		47,833		-5	%	-1	%	104,748		117,188		-11	%	-7	%

	Allocated Shared Services and Admin. Costs:
		Distribution and Operation Services	(4,111	)	(3,341	)	23	%	29	%	(11,276	)	(9,886	)	14	%	20	%
		Technology and Content Management	(13,427	)	(13,111	)	2	%	5	%	(37,237	)	(40,647	)	-8	%	-6	%
		Occupancy and Other	(3,579	)	(3,690	)	-3	%	0	%	(11,674	)	(10,488	)	11	%	14	%
	Adjusted Contribution to Profit (after allocated		24,300		27,691		-12	%	-7	%	44,561		56,167		-21	%	-16	%
		Shared Services and Admin. Costs)

Total Adjusted Contribution to Profit (after			100,057		112,822		-11	%	-7	%	291,823		308,857		-6	%	-1	%
	allocated Shared Services and Admin. Costs)

Unallocated Shared Services and Admin. Costs:
	Unallocated Shared Services and Admin. Costs		(53,575	)	(49,652	)	8	%	10	%	(138,902	)	(119,942	)	16	%	20	%
	Restructuring Charges (Credits) (A)		6,850		14,906						12,704		14,640
	Adjusted Unallocated Shared Services and Admin. Costs		(46,725	)	(34,746	)	34	%	37	%	(126,198	)	(105,302	)	20	%	25	%

Adjusted Operating Income			53,332		78,076		-32	%	-27	%	165,625		203,555		-19	%	-14	%


			(A) See the accompanying Notes to Unaudited Financial Statements for a description of the Adjustment.
	Note: As part of Wiley’s Restructuring and Reinvestment Program, the Company consolidated certain decentralized business functions (Sales Support, Marketing Services, etc.) into global shared service functions. These newly centralized service groups enable significant cost reduction opportunities, including efficiencies gained from standardized technology and centralized management. The cost of these functions were previously reported as direct operating expenses in each business segment but are now reported within the shared service functions and then allocated to each business segment above. Prior year amounts have been restated to reflect the same reporting methodology.

JOHN WILEY & SONS, INC.

SEGMENT REVENUE by PRODUCT/SERVICE

FOR THE THIRD QUARTER AND NINE MONTHS ENDED

JANUARY 31, 2016 AND 2015

(in thousands)

Third Quarter

Nine Months

Ended January 31,

% of

% Change

Ended January 31,

% of

% Change

2016

2015

Revenue

excl. FX

2016

2015

Revenue

excl. FX

RESEARCH

Journal Revenue

Journal Subscriptions

122,941

155,680

55%

-19%

442,945

496,650

63%

-6%

Author-Funded Access

6,427

6,064

11%

18,299

16,560

18%

Licensing, Reprints, Backfiles, and Other

51,310

44,063

23%

22%

127,107

136,617

18%

-1%

Total Journal Revenue

180,678

205,807

80%

-9%

588,351

649,827

84%

-5%

Books and References:

Print Books

24,841

27,394

11%

-6%

71,401

78,556

10%

-5%

Digital Books

16,140

8,741

84%

32,677

27,797

21%

Licensing and Other

3,060

4,512

-10%

8,068

9,969

-4%

Total Books and References Revenue

44,041

40,647

20%

13%

112,146

116,322

16%

Total Revenue

224,719

246,454

100%

-5%

700,497

766,149

100%

-4%

PROFESSIONAL DEVELOPMENT

Knowledge Services:

Print Books

52,274

56,113

51%

-5%

150,232

162,004

50%

-5%

Digital Books

10,347

11,193

10%

-6%

32,918

36,167

11%

-7%

Online Test Preparation and Certification

6,808

4,030

69%

20,983

15,230

38%

Other Knowledge Service Revenue

7,849

8,165

-1%

18,754

20,478

-6%

77,278

79,501

75%

-1%

222,887

233,879

74%

-2%

Talent Solutions:

Assessment

13,160

12,891

13%

42,145

41,200

14%

Corporate Learning

12,961

16,195

13%

-5%

36,198

31,502

12%

30%

26,121

29,086

25%

-2%

78,343

72,702

26%

14%

Total Revenue

103,399

108,587

100%

-1%

301,230

306,581

100%

EDUCATION

Books:

Print Textbooks

31,100

40,473

29%

-16%

96,703

126,708

33%

-18%

Digital Books

11,001

11,042

10%

25,644

25,246

42,101

51,515

39%

-12%

122,347

151,954

42%

-14%

Custom Material

16,300

13,625

15%

20%

51,333

49,597

18%

Course Workflow (WileyPLUS)

21,900

20,841

20%

41,366

40,555

14%

Online Program Management (Deltak)

26,056

23,045

24%

13%

69,753

58,981

24%

18%

Other Education Revenue

1,919

1,838

6,211

6,977

-11%

Total Revenue

108,275

110,864

100%

291,009

308,064

100%

-3%

Note: Segment Revenue Categorization

JOHN WILEY & SONS, INC.

UNAUDITED STATEMENTS OF FINANCIAL POSITION

(in thousands)

January 31,

April 30,

2016

2015

Current Assets

Cash & cash equivalents

535,859

260,215

457,441

Accounts receivable

242,390

220,311

147,183

Inventories

53,747

65,027

63,779

Prepaid and other

71,529

68,369

72,516

Total Current Assets

903,525

613,922

740,919

Product Development Assets

73,906

71,124

69,589

Technology, Property and Equipment

207,515

187,643

193,010

Intangible Assets

872,224

933,299

917,621

Goodwill

938,796

964,818

962,367

Income Tax Deposits

59,591

60,133

57,098

Other Assets

58,851

63,069

63,639

Total Assets

3,114,408

2,894,008

3,004,243

Current Liabilities

Short-term debt

150,000

100,000

Accounts and royalties payable

205,724

202,173

161,465

Deferred revenue

305,541

307,783

372,051

Accrued employment costs

82,400

79,063

93,922

Accrued income taxes

10,023

9,450

9,484

Accrued pension liability

4,590

4,567

4,594

Other accrued liabilities

68,658

61,025

62,167

Total Current Liabilities

826,936

764,061

803,683

Long-Term Debt

814,728

588,111

650,090

Accrued Pension Liability

185,976

144,818

209,727

Deferred Income Tax Liabilities

192,220

222,922

198,947

Other Long-Term Liabilities

78,465

89,016

86,756

Shareholders' Equity

1,016,083

1,085,080

1,055,040

Total Liabilities & Shareholders' Equity

3,114,408

2,894,008

3,004,243


JOHN WILEY & SONS, INC.
UNAUDITED STATEMENTS OF FREE CASH FLOW
(in thousands)


		Nine Months Ended
		January 31,
		2016		2015
Operating Activities:
Net income	$	111,575		129,971
Amortization of intangibles		37,251		38,859
Amortization of composition costs		30,047		30,695
Depreciation of technology, property and equipment		50,820		46,225
Restructuring charges (credits)		20,832		23,879
Restructuring payments		(24,809	)	(25,473	)
Deferred income tax benefit on UK rate change		(5,859	)	-
Share-based compensation expense		12,292		11,778
Excess tax benefits from share-based compensation		(517	)	(2,487	)
Royalty advances		(79,026	)	(77,265	)
Earned royalty advances		71,761		77,755
Other non-cash charges and credits		15,492		30,407
Change in deferred revenue		(57,959	)	(62,822	)
Net change in operating assets and liabilities		(65,289	)	(67,371	)
Cash Provided by Operating Activities		116,611		154,151

Investments in organic growth:
Composition spending		(28,627	)	(26,872	)
Additions to technology, property and equipment		(69,048	)	(47,293	)

Free Cash Flow		18,936		79,986

Other Investing and Financing Activities:
Acquisitions, net of cash		(17,972	)	(172,661	)
Escrowed proceeds from sale of consumer publishing programs		-		1,100
Repayment of long-term debt		(158,861	)	(550,083	)
Borrowings of long-term debt		323,500		435,700
Borrowings of short-term Debt		50,000		100,000
Change in book overdrafts		(3,287	)	(8,742	)
Cash dividends		(52,612	)	(51,491	)
Purchase of treasury shares		(59,704	)	(61,981	)
Proceeds from exercise of stock options and other		556		24,492
Excess tax benefits from share-based compensation		517		2,487
Cash Provided by (Used for) Investing and Financing Activities		82,137		(281,179	)

Effects of Exchange Rate Changes on Cash		(22,655	)	(24,969	)

Increase (Decrease) in Cash and Cash Equivalents for Period	$	78,418		(226,162	)



RECONCILIATION TO GAAP PRESENTATION

Investing Activities:
Composition spending	$	(28,627	)	(26,872	)
Additions to technology, property and equipment		(69,048	)	(47,293	)
Acquisitions, net of cash		(17,972	)	(172,661	)
Escrowed proceeds from sale of consumer publishing programs		-		1,100
Cash Used for Investing Activities	$	(115,647	)	(245,726	)

Financing Activities:
Cash Used for Investing and Financing Activities	$	82,137		(281,179	)
Excluding:
Acquisitions, net of cash		(17,972	)	(172,661	)
Escrowed proceeds from sale of consumer publishing programs		-		1,100
Cash Provided by (Used For) Financing Activities	$	100,109		(109,618	)


	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
Brian Campbell, 201-748-6874
Investor Relations
brian.campbell@wiley.com

Wiley Reports Third Quarter Fiscal Year 2016 Results

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