John Wiley & Sons, Inc. Reports 7% Third Quarter Revenue Growth and Reaffirms Revenue and EPS Guidance for Fiscal Year 2007

HOBOKEN, N.J.--(BUSINESS WIRE)--John Wiley & Sons, Inc. (NYSE:JWa) (NYSE:JWb), announced that third quarter revenue of $297 million increased 7% from $278 million in the previous years third quarter, or 5% excluding favorable foreign exchange. Adjusted earnings per diluted share was $0.55 for the third quarter, excluding an income tax benefit of $1 million, or $0.02 per diluted share. Adjusted earnings for the quarter include incremental stock option expense due to the adoption of SFAS 123R of $3 million, or $0.03 per diluted share, and a bad debt provision of $5 million, or $0.05 per diluted share related to the bankruptcy of Advanced Marketing Services, a distributor to warehouse clubs.

“2006 Georges Duboeuf Award for Wine Book of the Year.”

For the first nine-months of fiscal year 2007, Wileys revenue advanced 9% to $845 million from $778 million in the comparable prior year period. Adjusted earnings per diluted share for the nine-month period was $1.37, excluding an income tax benefit of $5 million. Adjusted earnings were adversely affected by incremental stock option expense due to the adoption of SFAS 123R of $8 million, or $0.09 per diluted share, and the aforementioned bad debt provision. On a basis comparable to prior year, i.e., excluding the effect of SFAS 123R and the tax benefits, adjusted EPS increased 7% over prior year. The estimated full year effect of SFAS 123R is $0.12 per diluted share.

Wiley had another solid quarter, as reflected in top-line growth of 7%. While all of Wileys businesses contributed to the year-on-year growth, our Global STM business had a particularly strong quarter, said William J. Pesce, President and Chief Executive Officer. Results for the nine months are consistent with our expectations; therefore, we reaffirm our guidance for fiscal year 2007 revenue growth in the mid-to-high single digits and EPS growth in the high single digits, excluding the impact of SFAS 123R; the aforementioned tax benefits; and the dilutive effect of the recently completed acquisition of Blackwell Publishing (Holdings) Ltd.

On February 2, 2007, Wiley completed its previously announced acquisition of all of the outstanding shares of Blackwell Publishing (Holdings) Ltd. for $1.1 billion (£572 million). Blackwell revenue is projected to be approximately $100 million in the fourth quarter. As expected, the acquisition will have a dilutive effect in the fourth quarter of $0.40 - $0.45 per share, including an estimated $11 million increase in after-tax interest expense and the estimated effects of the non-cash acquisition accounting adjustments. The Company entered into a new $1.35 billion credit facility to finance the acquisition and to provide for seasonal cash requirements.

Mr. Pesce remarked, The combination of Blackwell and Wiley, two of the worlds most respected global publishers, is a rare opportunity with highly favorable, long-term strategic implications. Blackwell is in the process of being merged with Wileys global scientific, technical, and medical business to form the largest of Wileys three businesses. While it is early in the process, we are very pleased with our progress and quite impressed with the capabilities, commitment and professionalism of our new colleagues.

In January, Wiley announced that it has reached its bicentennial year. Founded in 1807, during the presidency of Thomas Jefferson, Wiley has endured the War of 1812, the Civil War, two World Wars, and many other conflicts, as well as the Great Depression and the ups and downs of many economic cycles, to become one of the worlds most respected publishers, said Mr. Pesce. As we celebrate our bicentennial, we look forward to collaborating with our authors, partners, shareholders and colleagues to write the next chapter in Wileys remarkable history. Together, we will make a lasting difference in the lives of the people we serve.

During the quarter, Deborah E. Wiley, Chairman of The Wiley Foundation and Senior Vice President, Corporate Communications, announced that the sixth annual Wiley Prize in Biomedical Sciences will be awarded jointly to Dr. F. Ulrich Hartl, Director at the Max-Planck Institute of Biochemistry in Munich, Germany, and Dr. Arthur L. Horwich, Eugene Higgins Professor of Cellular and Molecular Physiology at the Yale University School of Medicine and Investigator, Howard Hughes Medical Institute. Dr. Hartl and Dr. Horwich were chosen for their elucidation of the molecular machinery that guides proteins into their proper functional shape, thereby preventing the accumulation of protein aggregates that underlie many diseases, such as Alzheimers and Parkinsons.

Segment Highlights

As reported in the first quarter of fiscal year 2007, the Company finalized a review of certain product prices used to settle inter-segment sales. While the modification has no effect on consolidated financial results, it does impact individual segment operating results. The impact of the change, where significant to segment results, is described below.

Professional/Trade (P/T)

Wileys U.S. P/T revenue for the third quarter of fiscal year 2007 advanced 2% over the prior year to $103 million. For the nine-months, revenue increased 7% to $293 million. Direct contribution to profit for the third quarter and nine-month period decreased $5 million and $1 million, respectively, primarily due to a $5 million bad debt provision related to the bankruptcy of Advanced Marketing Services and stock option costs associated with the adoption of SFAS 123R.

Adjusting for the effect of the change in inter-segment product prices, revenue for the third quarter and nine-month period increased 4% and 9%, respectively. The increases were driven primarily by backlist sales through all major accounts and sales channels, as well as a number of new publication releases at the end of the quarter. The strong performance of technology publishing, the sale of electronic rights and lower sales returns contributed positively to these results. Globally, P/T sales increased 7% for the quarter and 10% for the nine-month period.

Third quarter highlights include the successful publication of The Only Three Questions That Count: Investing by Knowing What Others Dont by Ken Fisher, a long-time Forbes columnist, and founder, Chairman, and CEO of Fisher Investments, an independent global money management firm with over $30 billion in assets. The publication of a number of titles was timed to coincide with the release of Microsofts new VISTA software, resulting in robust sales.

During the quarter, P/T published Second Life: The Official Guide by Michael Rymaszewski, et al. Wiley is the official publisher of Linden Labs, the owners of the popular virtual world known as Second Life. Our first book derived from a popular blog, LifeHacker by Gina Trapani, rose to the top of Amazons bestseller list for computers, after it was featured in The Wall Street Journal and Newsweek. Two new releases on health and nutrition, The Cure by Tim Brantley and Reverse Diet by Heidi Skolnick, have also generated considerable interest among customers and the media.

Barbara Fairchilds The Bon Appetit Cookbook, Weight Watchers New Complete Cookbook, the 8th edition of The Culinary Institute of Americas Professional Chef and Marcus Samuelsons Soul of a New Cuisine all delivered excellent results.

P/Ts online business had an active quarter with the launch of new products, such as TheraScribe 5.0, TheraScribe Essentials, Wileys highly regarded treatment planning and clinical record management system; Wiley CPA Examination Review for Windows, 12.0; and an annual update to LPI Online, Wileys leading online management assessment tool. New interactive mapping functionality for points of interest in U.S. cities was added to Frommers.com, allowing users to set up their own maps and populate them with Frommers recommended hotels, restaurants and attractions. P/Ts branded Web sites continue to generate new advertising and licensing revenue through co-promotions with major corporations and the launch of Podcasts to promote books.

Several P/T books continue to enjoy bestseller status on the BusinessWeek, The Wall Street Journal, The New York Times, and USA Today lists, including The Five Dysfunctions of a Team, The Little Book That Beats the Market, The Little Book of Value Investing, J.K. Lassers Income Tax 2007, SuDoku For Dummies, The Sales Bible and The Leadership Challenge.

Several P/T titles were honored with awards during the third quarter. The Chicago Tribune named Soul of a New Cuisine by Marcus Samuelson its Book of the Year. Peter Meltzers Keys to the Cellar won the 2006 Georges Duboeuf Award for Wine Book of the Year. The prestigious North American Travel Journalists Association named Pauline Frommers New York City the Best Travel Guide of 2006. Landscape Architectural Graphic Standards won a Merit Award at the 2007 New York Book Show in the category of Scholarly & Reference, One-Color Book.

Scientific, Technical, and Medical (STM)

U.S. STM revenue for the third quarter and nine-months increased 9% to $54 million and $161 million, respectively. The improvement was driven by all of STMs major programs, including journal subscription revenue, non-subscription revenue, such as advertising and the sale of journal reprints, and STM reference books. New businesses and publications acquired during the past year, such as InfoPOEMs, Dialysis & Transplantation, The Hospitalist, the Journal of Orthopaedic Research, Clinical Cardiology, and the Carpe Diem publications, contributed $1 million of the revenue growth in the quarter and $3 million for the nine-months. Globally, STM revenue increased 7% for the quarter and 8% for the nine-month period.

Direct contribution to profit for the third quarter was $24 million, up 13% from the same period in the previous year. The improvement was mainly due to lower costs associated with the delivery of electronic products, lower vendor costs and timing. Direct contribution to profit for the nine-month period improved 4% to $72 million. Revenue growth and lower vendor costs were offset by additional expenses associated with new businesses, royalties on society-owned journals and stock option costs associated with the adoption of SFAS 123R.

Customers continue to take advantage of Wiley InterSciences content. The number of visits during the third quarter increased by 20% over the same period of last year. There was an approximate 60% increase in the number of online book chapters downloaded, the result of a broader selection of online books.

Wiley signed an agreement during the quarter with the New York Public Library to provide public online access to over 300 peer-reviewed journals that until now have been available principally through academic or corporate collections. The Library patrons will be able to electronically access the full-text of journal articles online via Wiley InterScience. Journals featured in this program include titles such as Advanced Engineering Materials, American Journal of Physical Anthropology, Cancer, Flavour and Fragrance, Journal of Field Robotics, and International Journal of Imaging Systems & Technology. The objectives of this pilot project are to accumulate usage data on high level journal content in a public library setting. This is Wileys first license for journal content with a major public library in North America.

During the quarter, Wiley and The Society of Hospital Medicine extended their agreement to launch POEMs for Hospitalists and began to syndicate evidence-based medicine content in print and online for the growing hospitalist market. The Journal of Hospital Medicine, which Wiley publishes for the Society, was accepted by the National Library of Medicine for inclusion in MEDLINE. In addition, the Company and The American Society for Lasers in Surgery and Medicine renewed a multi-year agreement to publish Lasers in Surgery and Medicine. The first issue of Biochemistry and Molecular Biology Education published during the third quarter. This journal is published by Wiley on behalf of the International Union of Biochemistry and Molecular Biology Education and is edited by Donald Voet and Judith G. Voet, authors of the Wiley Higher Education textbook, Biochemistry.

Higher Education

U.S. Higher Education revenue for the third quarter of $48 million increased 4% over the prior year. Year-to-date revenue increased 3% from prior year to $138 million. Adjusting for the effect of the change in inter-segment product prices, revenue for the third quarter and nine-month period improved 6% and 5%, respectively. Growth in accounting and business, bolstered by WileyPLUS, and sales of Microsoft Official Academic Course (MOAC) titles were partially offset by sluggish sales in mathematics, sciences and engineering. Globally, Higher Education revenue increased 6% for the both the quarter and the nine-month period.

Direct contribution to profit for the third quarter and nine-months, after adjusting for the effect of the change in inter-segment product prices, increased 9% and 8%, respectively. Improvement due to cost reduction initiatives in composition, paper and printing were partially offset by costs associated with WileyPLUS.

Year-to-date WileyPLUS sales were up 90% over the prior year. Usage continued on an upward trend around the world. WileyPLUS sales are deferred and the revenue recognized over the course of the semester. As of January 31st, nearly $2 million of revenue from current WileyPLUS sales were deferred until the final quarter of fiscal year 2007.

The accounting and social sciences programs continued their strong results, particularly new editions of Kimmel/Financial Accounting 4e; Kieso/Intermediate Accounting 12e; deBlij/Regions 12e and Human Geography 8e; and Huffman/Psychology 8e. Although engineering sales were generally soft, a number of mechanical engineering titles performed quite well, including Callister/Materials 7e; Incropera/Heat Transfer 6e; and Meriam/Statistics Dynamics 6e.

Europe

Wiley Europes third quarter revenue of $75 million increased 3% over prior year, but declined 3% excluding favorable foreign exchange. Revenue for the first nine-months of the year increased 7% to $228 million, or 4% excluding favorable foreign exchange. Adjusting for the effect of the change in inter-segment product prices, as well as foreign exchange, Wiley Europes revenue for the third quarter decreased slightly. The anticipated reduction in SuDoku for Dummies sales and lower STM reference books and journal backfile sales were partially offset by higher journal subscription revenue. On the same basis, revenue for the nine-months of fiscal year 2007 grew 5%, driven by strong journal subscriptions, higher P/T sales and the sale of electronic rights.

Direct contribution to profit for the third quarter and nine-month period improved over prior year by 3% and 14%, respectively. Adjusting for the effect of the change in inter-segment product prices, as well as foreign exchange, direct contribution to profit for the third quarter declined 6%, but improved 5% for the nine-months. The decline in the third quarter was principally driven by lower revenue and higher employment costs, while the year-to-date growth was consistent with top-line growth.

In November, Wiley Europe completed the acquisition of Health Economics Evaluation Database (HEED). HEED is a UK-based online provider of health economics information and evaluation developed as a joint initiative between the Office of Health Economics and the International Federation. The acquisition complements Wileys expanding health economics and database portfolio, which includes the worlds leading health economics journal. During the quarter Wiley Europe also acquired the journal European Transactions on Telecommunications, which it has been publishing for years.

Wiley and the British Journal of Surgery Society renewed their contract, while our company in Germany launched a number of new journals in the life sciences and physics. The first webinar on SpectroscopyNOW has been scheduled for March, with Perkin Elmer as sponsor. This represents a new revenue stream for the analytic chemistry portals and for Microscopy & Analysis.

Asia, Australia, and Canada

Wileys revenue in Asia, Australia, and Canada advanced 9% to $43 million, or 6% excluding favorable foreign exchange. For the first nine-months of fiscal year 2007, revenue advanced 10% to $104 million, or 7% excluding foreign exchange. Growth was driven by P/T in Asia and Canada and the sale of reprint licenses in Australia. Lower STM reference book sales in Asia and Higher Education sales in Canada partially offset the revenue gains in other areas.

Excluding the effect of foreign exchange and the change in inter-segment product prices, direct contribution to profit decreased 6% for the third quarter and 13% for the nine-months, principally due to product mix and higher sales, marketing and composition costs associated with new business development. Compared to the prior year period, foreign exchange favorably affected the year-to-date direct contribution to profit by approximately $1 million.

Wiley Asia published several key P/T titles during the quarter including the English language edition of the official Chinese government annual report, Chinas Banking and Financial Markets: The Internal Research Report of the Chinese Government by Robert Kuhn and Li Yang; Islamic Finance: The Regulatory Challenge, by two of the worlds leading practitioners in this area Professors Rifaat and Archer; and Mutual Funds in the Mark Mobius Master Class series. Warren Buffett: An Illustrated Biography of the Worlds Most Successful Investor was selected by Warren Buffett as one of only two books to be presented at this years Berkshire Hathaway shareholders meeting.

WileyPLUS continued to gain momentum, particularly in Malaysia, where the government is funding new universities. Microsoft Official Academic Course books are eliciting much interest, especially in Malaysia and India.

In Australia, WileyPLUS related titles were successfully rolled out during the third quarter. A new partnership with the Association of Professional Engineers, Scientists and Managers (APESMA), the largest national non-profit organization representing professional employees in Australia, was formed. APESMAs agreement with Wiley Australia will provide its 40,000+ professional and student members a link to johnwiley.com.au to purchase books. Sales of Frommers travel books into the Australian market have doubled year-to-date due to increased promotion of the brand.

Wiley Canadas P/T growth was driven by demand for local real estate titles and frontlist releases, as well as strong demand for For Dummies titles. An indigenous title, Beyond the Crease by hockey player Martin Brodeur, has been selling well globally. Sales of WileyPLUS have exceeded expectations in Canada.

Tax Benefits

The Company recognized a tax benefit of $1.3 million in the third quarter of fiscal year 2007 and $5.5 million for the nine-month period mainly due to the favorable resolution of certain tax matters.

The Company recognized a tax benefit of $6.8 million in the third quarter of fiscal year 2006 and $14.3 million for the nine-month period. The third quarter benefit reflected the favorable settlement of tax matters with tax authorities.

As previously discussed in the Companys Annual Report filed on Form 10-K for fiscal year 2006, pursuant to guidance issued by the Internal Revenue Service in May 2005, the Company recorded a tax benefit of approximately $7.5 million in the first quarter of fiscal year 2006 and reduced income taxes due on the fiscal year 2005 repatriation of earnings from its European subsidiaries. The tax benefit offsets a tax charge recorded in the fourth quarter of fiscal year 2005.

None of the tax adjustments had a cash impact to the Company in the current period. The Company has excluded these tax items for comparative purposes so as not to distort the underlying performance of the Company.

Conference Call

Wiley will hold a conference call today, Thursday, March 8, 2007, at 10:30 a.m. (ET) to discuss its financial results for the third quarter of fiscal year 2007. The call will include a brief management presentation followed by a question and answer session.

To participate in the conference call, please dial the following number approximately ten minutes prior to the scheduled starting time: (800) 262-1292

International callers may participate by dialing: (719) 457-2680

A replay of the call will be available from 1:30 p.m. (ET) on Thursday, March 8 through midnight on Thursday, March 15, by dialing (888) 203-1112 or (719) 457-0820 and entering Pass code: 4477282.

A live audio webcast will be accessible at http://www.wiley.com/go/communications. A replay of the webcast will be accessible for 14 days afterwards.

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

This report contains certain forward-looking statements concerning the Companys 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 Companys 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 Companys educational business and the impact of the used book market; (vii) worldwide economic and political conditions; (viii) the Companys ability to protect its copyrights and other intellectual property worldwide and (ix) other factors detailed from time to time in the Companys 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

Founded in 1807, John Wiley & Sons, Inc. has been a valued source of information and understanding for 200 years, helping people around the world meet their needs and fulfill their aspirations. Our core businesses include scientific, technical, and medical journals; encyclopedias, books, and online products and services; professional and consumer books and subscription services; and educational materials for undergraduate and graduate students and lifelong learners. Wileys global headquarters are located in Hoboken, New Jersey with operations in the U.S., Europe, Asia, Canada, and Australia. The Companys Web site is www.wiley.com. Wiley is listed on the New York Stock Exchange under the symbols JWa and JWb.

JOHN WILEY & SONS, INC.
SUMMARY OF OPERATIONS
FOR THE THIRD QUARTER AND NINE MONTHS ENDED
JANUARY 31, 2007 AND 2006
(in thousands, except per share amounts)

Third Quarter Ended
January 31,

Nine Months Ended
January 31,

Adjusted - For Tax Benefits
2007  2006 

%
Change 

2007  2006 

%
Change 

 
Revenue $ 296,808  278,189  7% 844,742  777,621  9%
 
Costs and Expenses
Cost of Sales 96,823  91,207  6% 275,293  254,617  8%
Operating and Administrative Expenses 145,351  129,007  13% 430,641  383,286  12%
Amortization of Intangibles 3,972  3,874  3% 11,151  9,990  12%
 
Total Costs and Expenses 246,146  224,088  10% 717,085  647,893  11%
 
Operating Income 50,662  54,101  -6% 127,657  129,728  -2%
Operating Margin 17.1% 19.4% 15.1% 16.7%
 
Interest Expense and Other, Net 2,644  3,407  7,347  7,238 
 
Income Before Taxes 48,018  50,694  -5% 120,310  122,490  -2%
 
Adjusted Provision for Income Taxes 15,882  16,521  40,530  40,932 
 
Adjusted Net Income $ 32,136  34,173  -6% 79,780  81,558  -2%
 
 

Adjusted Income Per Share - Diluted

$ 0.55  0.57  -4% 1.37  1.36  1%

- Basic

$ 0.56  0.59  1.40  1.40 
 
Average Shares - Diluted 58,306  59,459  58,051  60,187 
- Basic 56,913  57,711  56,812  58,400 
 
 
Reconciliation of Non-GAAP Adjusted Financial Disclosure (Tax Benefit)
Adjusted Net Income $ 32,136  34,173  79,780  81,558 
Tax Benefit (A) 1,275  6,776  5,468  14,252 
Net Income - GAAP $ 33,411  40,949  -18% 85,248  95,810  -11%
 
Adjusted Income Per Diluted Share $ 0.55  0.57  1.37  1.36 
Tax Benefit (A) 0.02  0.11  0.09  0.24 
Income Per Diluted Share - GAAP $ 0.57  0.69  -17% 1.47  1.59  -8%
 
 
(A)

The second and third quarters of fiscal year 2007 exclude a $4.2 million tax benefit, or $0.07 per diluted share, and a $1.3 million tax benefit, or $0.02 per diluted share, respectively. The third quarter ending January 31, 2006 excludes a tax benefit of $6.8 million, or $0.11 per diluted share. These benefits coincide with the resolution and settlements of certain tax matters with authorities in the U.S. and abroad.

 
The nine month period ending January 31, 2006 also excludes a $7.5 million, or $0.12 per diluted share tax benefit associated with the reversal of a tax accrual recorded on the repatriation of dividends from European subsidiaries in the fourth quarter of fiscal year 2005. On May 10, 2005, the US Internal Revenue Service issued Notice 2005-38. The notice provided for a tax benefit that fully offset the tax accrued by the Company on foreign divideds in the fourth quarter of fiscal year 2005. Neither tax benefit nor the corresponding tax accrual had a cash impact on the Company.
 
Note: The Companys management evaluates operating performance excluding unusual and/or nonrecurring events. The Company believes excluding such events provides a more effective and comparable measure of performance. Since the adjusted amounts are not measures calculated in accordance with GAAP, they should not be considered as a substitute for other GAAP measures, including net income and earnings per share, as reported, as an indicator of operating performance.
JOHN WILEY & SONS, INC.
SEGMENT RESULTS
FOR THE THIRD QUARTER AND NINE MONTHS ENDED
JANUARY 31, 2007 AND 2006
(in thousands, except per share amounts)
 
 
Third Quarter Ended Nine Months Ended
January 31, January 31,
2007 2006 % Change 2007  2006  % Change 
Revenue
US Segment
Professional/Trade $ 103,382  101,177  2% 293,317  274,636  7%
Scientific, Technical and Medical 54,302  49,925  9% 160,762  148,033  9%
Higher Education 48,037  46,356  4% 137,755  133,698  3%
Total US 205,721  197,458  4% 591,834  556,367  6%
European Segment 75,267  72,870  3% 228,023  212,778  7%
Asia, Australia & Canada Segment 43,336  39,756  9% 103,638  94,091  10%
Intersegment Sales Eliminations (27,516) (31,895) -14% (78,753) (85,615) -8%
Total Revenue $ 296,808  278,189  7% 844,742  777,621  9%
 
Direct Contribution to Profit
US Segment
Professional/Trade $ 27,767  32,606  -15% 76,090  77,009  -1%
Scientific, Technical and Medical 23,632  20,839  13% 71,680  68,856  4%
Higher Education 15,450  14,935  3% 44,472  43,655  2%
Total US 66,849  68,380  -2% 192,242  189,520  1%
European Segment 23,290  22,506  3% 75,568  66,398  14%
Asia, Australia & Canada Segment 13,130  12,558  5% 22,586  22,479  0%
Total Direct Contribution to Profit 103,269  103,444  0% 290,396  278,397  4%
 
Shared Services and Administrative Costs
Distribution (12,939) (11,878) 9% (38,418) (36,335) 6%
Information Technology & Development (15,647) (14,822) 6% (46,148) (44,952) 3%
Finance (8,626) (7,369) 17% (26,406) (23,672) 12%
Other Administration (15,395) (15,274) 1% (51,767) (43,710) 18%
Total Shared Services and Admin. Costs (52,607) (49,343) 7% (162,739) (148,669) 9%
 
Operating Income $ 50,662  54,101  127,657  129,728 
JOHN WILEY & SONS, INC.
CONDENSED STATEMENTS OF FINANCIAL POSITION
(in thousands)
 
January 31, April 30, 2006
2007  2006 
 
Current Assets
Cash & cash equivalents $ 25,024  75,301  60,757 
Accounts receivable 186,506  177,118  158,275 
Inventories 95,033  88,318  88,578 
Deferred income tax benefit 8,427  9,815  5,536 
Other current assets 12,571  12,670  13,162 
Total Current Assets 327,561  363,222  326,308 
Product Development Assets 66,835  63,402  65,641 
Property, Equipment and Technology 108,420  102,594  102,123 
Intangible Assets 308,211  304,541  302,384 
Goodwill 206,600  197,380  198,416 
Deferred Income Tax Benefit 11,440  5,356  3,809 
Other Assets 29,713  27,351  27,328 
Total Assets 1,058,780  1,063,846  1,026,009 
 
Current Liabilities
Accounts and royalties payable 107,893  99,449  97,231 
Deferred revenue 156,075  150,614  143,923 
Accrued income taxes 23,811  31,140  24,226 
Other accrued liabilities 72,235  73,521  96,729 
Total Current Liabilities 360,014  354,724  362,109 
Long-Term Debt 82,073  190,000  160,496 
Accrued Pension Liability 62,216  67,614  56,068 
Other Long-Term Liabilities 33,635  35,291  35,627 
Deferred Income Taxes 17,554  10,057  9,869 
Shareholders' Equity 503,288  406,160  401,840 
Total Liabilities & Shareholders' Equity $ 1,058,780  1,063,846  1,026,009 
JOHN WILEY & SONS, INC.
STATEMENTS OF FREE CASH FLOW
(in thousands)
 
Nine Months Ended
January 31,
2007  2006 
Operating Activities:
Net income $ 85,248  95,810 
Amortization of intangibles 11,152  9,990 
Amortization of composition costs 28,004  26,688 
Depreciation of property, equipment and technology 20,895  24,301 
Special non-cash tax benefits (5,468) (14,252)
Stock-based compensation (net of tax) 9,177  2,729 
Non-cash charges and other 44,141  50,926 
Change in deferred revenue 10,058  7,008 
Net change in operating assets and liabilities (48,286) (35,796)
Cash Used for Operating Activities, excluding acquisitions 154,921  167,404 
 
Investments in organic growth:
Additions to product development assets (53,537) (52,156)
Additions to property, equipment and technology (22,904) (14,084)
 
Free Cash Flow 78,480  101,164 
 
Other Investing and Financing Activities:
Acquisitions, net of cash (17,313) (29,055)
Sale of marketable securities -  10,000 
Repayment of long-term debt (129,536) (282,809)
Borrowings of long-term debt 48,579  279,842 
Purchase of treasury shares (7,278) (82,549)
Cash dividends (17,092) (15,870)
Proceeds from issuance of stock on option exercises and other 7,864  5,460 
Cash Provided by (Used for) in Investing and Financing Activities (114,776) (114,981)
   
Effects of Exchange Rate Changes on Cash 563  (283)
 
Decrease in Cash and Cash Equivalents for Period $ (35,733) (14,100)
 
 
 
RECONCILIATION TO GAAP PRESENTATION
 
Investing Activities:
Additions to product development assets $ (53,537) (52,156)
Additions to property, equipment and technology (22,904) (14,084)
Acquisitions, net of cash (17,313) (29,055)
Sale (Purchase) of marketable securities -  10,000 
Cash Used for Investing Activities $ (93,754) (85,295)
 
Financing Activities:
Cash Provided by (Used for) Investing and Financing Activities $ (114,776) (114,981)
Less:
Acquisitions, net of cash (17,313) (29,055)
Sale (Purchase) of marketable securities -  10,000 
Cash Provided by (Used for) Financing Activities $ (97,463) (95,926)
 
 
Note: The Companys management evaluates cash flow performance using free cash flow. The Company believes free cash flow provides a more effective and comparable measure of performance. Since free cash flow is not a measure calculated in accordance with GAAP, it should not be considered as a substitute for other GAAP measures, including cash used for investing activities and financing activities, as reported, as an indicator of cash flow performance.

Contacts

John Wiley & Sons, Inc.
Ellis E. Cousens, 201-748-6534
Executive Vice President,
Chief Financial & Operations Officer

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