Wiley Reports Fourth Quarter and Fiscal Year 2014 Results

  • Fourth quarter adjusted revenue of $457 million, up 2% on a constant currency basis
  • Fiscal year adjusted revenue of $1,775 million, up 4% on a constant currency basis
  • Percent of revenue in Fiscal Year 2014 (FY14) from digital knowledge and knowledge-enabled services increased to 55% from 51% a year earlier
  • Fourth quarter adjusted EPS of $0.77, up 4% on a constant currency basis
  • Fiscal year adjusted EPS of $3.05, up 4% on a constant currency basis
  • Fiscal Year 2015 outlook of mid-single-digit revenue growth and EPS in a range of $3.25 to $3.35, including a 10-cent per share dilutive earnings impact from recently acquired CrossKnowledge and Profiles International

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 fourth quarter and fiscal year 2014, ending April 30, 2014:

             

Change

$ millions       FY14     FY13     Excluding FX     Including FX

ADJUSTED

   
Revenue

Q4

$457 $441 2% 4%

Full Year

$1,775 $1,715 4% 3%
EPS

Q4

$0.77 $0.71 4% 8%

Full Year

$3.05 $2.92 4% 4%

US GAAP

Revenue

Q4

$457 $446 1% 3%

Full Year

$1,775 $1,761 1% 1%
EPS

Q4

$0.60 $0.13 338% 362%

Full Year

$2.70 $2.39 12% 13%
 

Please see the attached financial schedules for more detail

Management Commentary

“We are very pleased with our operational performance this year, including our continued progress in expanding Wiley’s depth and breadth as a provider of knowledge-enabled solutions,” said Steve Smith, President and CEO of Wiley. “We exceeded our annual guidance for adjusted revenue growth and earnings, successfully executed on our restructuring plans to achieve a lower and more flexible cost structure, and recently acquired two companies that position Wiley to become a solutions leader in professional learning and development. Our share of revenue from print books is down to 29%, and through organic investment and targeted acquisitions, and by integrating content, technology, and services, we have accelerated our strategy to provide professionals, students, and researchers with valued solutions that serve their needs from education through employment.”

Fiscal Year 2015 Outlook

Wiley’s fiscal year 2015 outlook is for mid-single-digit revenue growth and EPS in a range of $3.25 to $3.35, including a 10-cent per share dilutive earnings impact from recently acquired CrossKnowledge and Profiles International.

Fourth Quarter Summary

  • Adjusted revenue on a constant currency basis rose 2% to $457 million. Adjusted revenue excludes $5 million of revenue from the divested consumer publishing programs in the prior year. Education (+10%) and Research (+2%) drove results, offsetting a 2% decline in Professional Development. Revenue grew 1% on a US GAAP basis excluding foreign exchange.
  • Adjusted earnings per share (EPS) on a constant currency basis grew 4% to $0.77. Adjusted EPS excludes certain one-time or unusual items in both years as further described in the attached reconciliation of US GAAP to Adjusted EPS. The divested consumer publishing programs did not have a material impact on EPS in the prior year period. US GAAP EPS for the fourth quarter was $0.60 vs. $0.13 in the prior year.
  • Wiley acquired Profiles International in the quarter for $51 million. After the quarter closed, Wiley acquired CrossKnowledge for $175 million. Profiles International, a pre-hire assessment and talent management provider, reported $27 million of revenue and over $5 million of EBITDA in its fiscal year ending December 31, 2013. CrossKnowledge, a learning solutions provider focused on leadership and managerial skills development, reported over $37 million of revenue and $9 million of EBITDA in its fiscal year ending June 30, 2013. The acquisitions were financed with cash-on-hand and capacity available under our revolving credit facility.
  • Wiley recorded an additional restructuring charge of $15.4 million ($0.17 per share) this quarter related to its previously announced restructuring program. Including this charge, Wiley has recorded $67.2 million in restructuring charges since the program was announced in January 2013. Plans have been completed to achieve $80 million in run rate savings, beginning in FY15. Approximately half of these savings will be reinvested in the business.
  • Share repurchases: In the quarter, Wiley repurchased 437,800 shares for $24.8 million, an average cost of $56.79 per share.

Fiscal Year Summary

  • Adjusted revenue on a constant currency basis grew 4% over prior year to $1,775 million. Adjusted revenue excludes the prior year revenue of the divested consumer publishing programs ($45.6 million of revenue in FY13). Education (+12%) and Research (+3%) drove results, offsetting a 2% decline in Professional Development. Revenue grew 1% on a US GAAP basis.
  • Adjusted EPS on a constant currency basis grew 4% to $3.05. Adjusted EPS excludes certain one-time or unusual items in both years further described in the attached reconciliation of US GAAP to Adjusted EPS. The divested consumer publishing programs did not have a material impact on EPS in the prior year period. US GAAP EPS for fiscal year 2014 was $2.70 vs. $2.39 in the prior year.
  • Adjusted shared services and administrative costs grew 7% for the year to $420.2 million, driven primarily by higher investment in technology (+13%). Higher incentive compensation accruals offset savings from the restructuring program.
  • Free Cash Flow of $250 million was $22 million (+10%) ahead of the prior year. Improved earnings and lower disputed income tax deposits paid to the German government more than offset cash payments related to restructuring. In addition, higher accrued incentive compensation in the current period (reflected in Other Liabilities) offset the benefit from accelerated collections in the prior period (reflected in Deferred Revenue).
  • Net Debt and Cash Position: Net debt (long-term debt less cash and cash equivalents) at the end of April was $214 million, down from $339 million at the end of the prior year. Net debt to EBITDA was at 0.5x on a trailing twelve month (ttm) basis. Cash and cash equivalents as of April 30, 2014, were $486 million. Note that the CrossKnowledge acquisition ($175 million purchase price) closed on May 1.
  • Share repurchases: In fiscal year 2014, Wiley repurchased 1.25 million shares for $63.4 million, an average cost of $50.79. As of April 30, the Company had nearly 3.3 million shares remaining in the repurchase program announced in June 2013.
  • Dividend: In June 2013, Wiley increased its quarterly dividend by 4% to $0.25. It was the 20th consecutive annual increase, and followed a 20% increase in June 2012.

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 certain one-time tax benefits and charges. 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: Fourth quarter revenue on a constant currency basis rose 2% to $296.8 million, driven by journal subscription revenue growth (+2%), author-funded open access (+$3.6 million), and digital books (+32%). Partially offsetting this growth was a 9% decline in print book revenue and 5% decline in other revenue, which includes corporate reprints, backfiles, rights income, and advertising. For the year, revenue on a constant currency basis was up 3% to $1,044 million, driven by journal subscriptions (+4%), open access (+$11.5 million), and digital books (+27%).
  • Adjusted Contribution to Profit: Fourth quarter adjusted contribution to profit (after allocated shared services and administrative costs) grew 3% on a constant currency basis to $104.8 million, with revenue growth and restructuring savings offsetting higher accrued incentive compensation and additional operating costs related to business growth. Adjusted contribution to profit excludes restructuring charges. For the year, adjusted contribution to profit (after shared services and administrative costs) grew 4% to $315.7 million, excluding the impact of foreign exchange.
  • Calendar Year 2014 Journal Subscriptions: At the end of April, calendar year 2014 journal subscriptions were up 2% on a constant currency basis, with 96% of targeted business closed for the 2014 volume year.
  • Society Business: 16 society journals were renewed in the quarter with combined annual revenue of $7.9 million; there were no new signings or journals lost. In the fiscal year, Wiley signed 7 new journals worth $10.6 million annually, renewed 85 journals with combined annual revenue of $39.7 million, and lost 11 journals worth $6.9 million annually.

PROFESSIONAL DEVELOPMENT

  • Adjusted Revenue: Fourth quarter adjusted revenue declined 2% to $93.0 million. Adjusted revenue excludes revenue from the divested consumer publishing programs ($5 million) in the prior year period. Adjusted revenue performance was driven by a decline in print books (-10%) and digital books (-8%), which offset growth in online training and assessment. Revenue performance was aided by a one-month revenue contribution of $1.9 million from the April 1 acquisition of Profiles International, a pre-hire assessment provider. Excluding that contribution, online training and assessment grew 31%. Within book revenue, weakness in the Technology and Consumer categories offset growth in Business and Finance. For the year, adjusted revenue on a constant currency basis was down 2% to $363.9 million.
  • Adjusted Contribution to Profit: Fourth quarter adjusted contribution to profit (after allocated shared service and administrative costs) grew 58% to $9.5 million due to restructuring savings and higher margin solutions revenue, offsetting the decline in the combined revenues for print and digital books. Adjusted contribution to profit excludes restructuring charges and the operating results, gains/ losses, and impairment charges from the divestment of the consumer publishing program in the prior year. For the year, adjusted contribution to profit (after shared services and administrative costs) grew 50% to $32.2 million, excluding the impact of foreign exchange.
  • Acquisitions: In fiscal year 2014, Wiley acquired Elan Guides, an early-stage CFA test preparation company (terms undisclosed), and Profiles International, a provider of employment assessment and talent management solutions (for $51 million). On May 1, 2014, Wiley acquired CrossKnowledge, a learning solutions provider focused on leadership and managerial skills development, for $175 million.

EDUCATION

  • Revenue: Fourth quarter revenue rose 10% on a constant currency basis to $67.2 million. Revenue growth from online program management (+19%), digital books (+40%), and WileyPLUS (+18%) offset a decline in print textbooks (-5%). In fiscal year 2014, Education revenue increased 12% on a constant currency basis to $367.0 million, due primarily to the mid-year acquisition of Deltak in fiscal year 2013. For the year, strong growth in WileyPLUS, digital books, and binder and custom products mostly offset a decline in print textbooks.
  • Adjusted Contribution to Profit: Fourth quarter adjusted contribution to profit (after allocated shared service and administrative costs) declined slightly to a seasonal loss of $8.6 million, reflecting higher accrued incentive costs. Adjusted contribution to profit excludes restructuring charges. For the year, adjusted contribution to profit (after shared services and administrative costs) increased 2% to $50.8 million, excluding the impact of foreign exchange. Revenue growth and restructuring savings were offset by higher accrued incentive costs and dilution from Deltak.
  • Online Program Management (OPM): Deltak secured one new university partner in the quarter (George Washington University), bringing the total number of institutions under contract to 37. As of April 30, 2014, Deltak had 122 programs generating revenue and 52 programs under contract and in development but not yet generating revenue. As of April 30, 2013, Deltak had 31 university partners, 100 revenue-producing programs, and 46 programs in development.

(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, June 17, 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) 481-2877 and enter the participant code 8811232#
  • International callers, please dial (719) 325-2323 and enter the participant code 8811232#
  • 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 FOURTH QUARTER AND TWELVE MONTHS ENDED
APRIL 30, 2014 AND 2013
(in thousands, except per share amounts)
                   

FOURTH QUARTER ENDED APRIL 30,

 
2014 2013 % Change
US GAAP  

Adjustments

(A)

  Adjusted US GAAP  

Adjustments

(A-D)

  Adjusted US GAAP

Adjusted

excl. FX

 
Revenue $ 457,089 - 457,089 445,854 (5,196 ) 440,658 3 % 2 %
 
Costs and Expenses
Cost of Sales 126,173 - 126,173 133,640 (4,363 ) 129,277 -6 % -4 %
Operating and Administrative 256,366 - 256,366 243,315 (2,497 ) 240,818 5 % 5 %
Restructuring Charges (A) 15,395 (15,395 ) 24,452 (24,452 ) -
Impairment Charges (B) - - - 15,158 (15,158 ) -
Amortization of Intangibles 11,613   -   11,613   11,578   -   11,578   0 % -2 %
 
Total Costs and Expenses 409,547 (15,395 ) 394,152 428,143 (46,470 ) 381,673 -4 % 2 %
 
Loss on Sale of Consumer Publishing Programs (C) -   -   -   (3,846 ) 3,846   -  
 
Operating Income 47,542 15,395 62,937 13,865 45,120 58,985 243 % 3 %
Operating Margin 10.4 % 13.8 % 3.1 % 13.4 %
 
Interest Expense (3,568 ) - (3,568 ) (3,521 ) - (3,521 ) 1 % 1 %
Foreign Exchange Gain (Loss) (337 ) - (337 ) (442 ) - (442 ) -24 % -1 %
Interest Income and Other 690   -   690   1,045   -   1,045   -34 % -34 %
 
Income Before Taxes 44,327 15,395 59,722 10,947 45,120 56,067 305 % 2 %
 
Provision (Benefit) for Income Taxes (A-D) 8,436   5,331   13,767   2,996   10,553   13,549   182 % -3 %
 
Net Income $ 35,891   10,064   45,955   7,951   34,567   42,518   351 % 4 %
 
 
Earnings Per Share- Diluted $ 0.60 0.17 0.77 0.13 0.58 0.71 362 % 4 %
 
Average Shares - Diluted 59,925 59,925 59,925 59,543 59,543 59,543
 
 

TWELVE MONTHS ENDED APRIL 30,

 
2014 2013 % Change
US GAAP  

Adjustments

(A,B,E)

  Adjusted US GAAP  

Adjustments

(A-E)

  Adjusted US GAAP

Adjusted

excl. FX

 
Revenue $ 1,775,195 - 1,775,195 1,760,778 (45,555 ) 1,715,223 1 % 4 %
 
Costs and Expenses
Cost of Sales 506,879 - 506,879 532,232 (29,868 ) 502,364 -5 % 1 %
Operating and Administrative 969,456 - 969,456 933,148 (14,615 ) 918,533 4 % 6 %
Restructuring Charges (A) 42,722 (42,722 ) - 29,293 (29,293 ) -
Impairment Charges (B) 4,786 (4,786 ) - 30,679 (30,679 ) -
Amortization of Intangibles 44,679   -   44,679   41,982   (53 ) 41,929   6 % 6 %
 
Total Costs and Expenses 1,568,522 (47,508 ) 1,521,014 1,567,334 (104,508 ) 1,462,826 0 % 4 %
 
Net Gain on Sale of Consumer Publishing Programs (C) - - - 5,983 (5,983 ) -
 
Operating Income 206,673 47,508 254,181 199,427 52,970 252,397 4 % 1 %
Operating Margin 11.6 % 14.3 % 11.3 % 14.7 %
 
Interest Expense (13,916 ) - (13,916 ) (13,078 ) - (13,078 ) 6 % 6 %
Foreign Exchange Gain (Loss) (8 ) - (8 ) (2,041 ) - (2,041 ) -100 % -2 %
Interest Income and Other 2,785   -   2,785   2,614   -   2,614   7 % 7 %
 
Income Before Taxes 195,534 47,508 243,042 186,922 52,970 239,892 5 % 1 %
 
Provision (Benefit) for Income Taxes (A-E) 35,024   26,457   61,481   42,697   21,621   64,318   -18 % -5 %
 
Net Income $ 160,510   21,051   181,561   144,225   31,349   175,574   11 % 3 %
 
 
Earnings Per Share- Diluted $ 2.70 0.35 3.05 2.39 0.52 2.92 13 % 4 %
 
Average Shares - Diluted 59,514 59,514 59,514 60,224 60,224 60,224
 
 
See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.
 
 
JOHN WILEY & SONS, INC.
FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED
APRIL 30, 2014 AND 2013
         
 

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

 
 
Fourth Quarter Ended Twelve Months Ended
April 30, April 30,
2014 2013 2014 2013
 
US GAAP Earnings Per Share - Diluted $ 0.60 $ 0.13 $ 2.70 $ 2.39
Adjusted to exclude the following:
Restructuring Charges (A) (0.17 ) (0.27 ) (0.48 ) (0.33 )
Impairment Charges (B) - (0.19 ) (0.06 ) (0.35 )
Gain (Loss) on Sale of Consumer Publishing Programs (C) - (0.06 ) - 0.04
Operational Results of Divested Consumer Programs (D) - (0.02 ) - 0.01
One-time Tax Charge on Recorded Tax Reserves (E) - (0.04 ) - (0.04 )
Deferred Income Tax Benefit on UK Rate Change (E) - - 0.18 0.14
 
Adjusted Earnings Per Share - Diluted $ 0.77   $ 0.71   $ 3.05   $ 2.92  
 

NOTES TO UNAUDITED FINANCIAL STATEMENTS

 
 
Adjustments:
(A) RESTRUCTURING CHARGES: The adjusted results for the fourth quarter of fiscal years 2014 and 2013 exclude restructuring charges related to the Company's Restructuring and Reinvestment Program of $15.4 million ($10.1 million after tax, $0.17 per share) and $24.5 million ($16.3 million after tax, $0.27 per share), respectively. The adjusted results for the twelve months ended April 30, 2014 and 2013 exclude restructuring charges related to the Restructuring and Reinvestment Program of $42.7 million ($28.3 million after tax, $0.48 per share) and $29.3 million ($19.8 million, $0.33 per share), respectively.
(B) Impairment Charges: The adjusted results for the fourth quarter and twelve months ended April 30, 2013 exclude asset impairment charges related to certain controlled circulation publishing programs in the Company's Research business and certain technology investments of $15.2 million ($11.4 million after tax, $0.19 per share). In addition, the twelve months ended April 30, 2014 exclude asset impairment charges related to certain technology investments of $4.8 million ($3.4 million after tax, $0.06 per share) and the twelve months ended April 30, 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/Loss on Sale of Consumer Publishing Programs: The adjusted results for the fourth quarter and twelve months ended April 30, 2013 exclude a loss on sale of certain Professional Development consumer publishing programs of $3.8 million ($3.6 million after tax, $0.06 per share). The twelve months ended April 30, 2013 also exclude a $9.8 million gain ($6.2 million after tax, $0.10 per share) on the sale of the Company's travel publishing program.

(D)

Operating Results of Divested Consumer Programs: The adjusted results for the fourth quarter and twelve months ended April 30, 2013 exclude the operating results of the divested Professional Development consumer publishing programs sold in fiscal year 2013.

(E)

One-time Tax Charge on Recorded Tax Reserves: The adjusted results for the fourth quarter and twelve months ended April 30, 2013 exclude a tax charge of $2.1 million ($0.04 per share) due to published IRS tax positions related to the Company's ability to take certain deductions in the U.S.
Deferred Income Tax Benefit on UK Rate Change: The adjusted results for the twelve months ended April 30, 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 FOURTH QUARTER AND TWELVE MONTHS ENDED
APRIL 30, 2014 AND 2013
(in thousands)
                   

FOURTH QUARTER ENDED APRIL 30,

 
2014 2013 % Change
US GAAP  

Adjustments

(A)

  Adjusted US GAAP  

Adjustments

(A-D)

  Adjusted US GAAP  

Adjusted

excl. FX

Revenue

Research $ 296,817 - 296,817 283,146 - 283,146 5% 2%
Professional Development 93,037 - 93,037 100,135 (5,196) 94,939 -7% -2%
Education 67,235 - 67,235 62,573 - 62,573 7% 10%
           
Total $ 457,089 - 457,089 445,854 (5,196) 440,658 3% 2%
 

Direct Contribution to Profit

Research $ 137,307 3,184 140,491 120,339 12,862 133,201 14% 3%
Professional Development 21,966 7,026 28,992 14,729 11,793 26,522 49% 9%
Education 5,269 516 5,785 4,678 1,119 5,797 13% 8%
           
Total $ 164,542 10,726 175,268 139,746 25,774 165,520 18% 4%
 

Contribution to Profit (After Allocated Shared Services

and Admin. Costs)

Research $ 101,663 3,184 104,847 86,844 12,862 99,706 17% 3%
Professional Development 2,438 7,026 9,464 (5,849) 11,793 5,944 - 58%
Education (9,151) 516 (8,635) (9,318) 1,119 (8,199) 2% -3%
           
Total $ 94,950 10,726 105,676 71,677 25,774 97,451 32% 6%
 
Unallocated Shared Services and Admin. Costs (47,408) 4,669 (42,739) (57,812) 19,346 (38,466) -18% 11%
           
Operating Income $ 47,542 15,395 62,937 13,865 45,120 58,985 243% 3%
 
 
 
 

Total Shared Services and Admin. Costs by Function

Distribution $ (26,202) 3,421 (22,781) (28,989) 4,307 (24,682) -10% -9%
Technology Services (50,165) 777 (49,388) (55,943) 9,233 (46,710) -10% 5%
Finance (12,087) (321) (12,408) (11,988) 1,982 (10,006) 1% 23%
Other Administration (28,546) 792 (27,754) (28,961) 3,824 (25,137) -1% 10%
Total $ (117,000) 4,669 (112,331) (125,881) 19,346 (106,535) -7% 5%
 
 
 

TWELVE MONTHS ENDED APRIL 30,

 
2014 2013 % Change
US GAAP  

Adjustments

(A,B)

  Adjusted US GAAP  

Adjustments

(A-D)

  Adjusted US GAAP  

Adjusted

excl. FX

Revenue

Research $ 1,044,349 - 1,044,349 1,009,825 - 1,009,825 3% 3%
Professional Development 363,869 - 363,869 416,495 (45,555) 370,940 -13% -2%
Education 366,977 - 366,977 334,458 - 334,458 10% 12%
           
Total $ 1,775,195 - 1,775,195 1,760,778 (45,555) 1,715,223 1% 4%
 

Direct Contribution to Profit

Research $ 447,139 7,774 454,913 420,963 15,828 436,791 6% 4%
Professional Development 98,725 11,860 110,585 86,678 16,056 102,734 14% 8%
Education 107,956 891 108,847 103,828 1,288 105,116 4% 7%
           
Total $ 653,820 20,525 674,345 611,469 33,172 644,641 7% 5%
 

Contribution to Profit (After Allocated Shared Services

and Admin. Costs)

Research $ 307,893 7,774 315,667 286,506 15,828 302,334 7% 4%
Professional Development 20,382 11,860 32,242 5,446 16,056 21,502 - 50%
Education 49,868 891 50,759 50,745 1,288 52,033 -2% 2%
           
Total $ 378,143 20,525 398,668 342,697 33,172 375,869 10% 6%
 
Unallocated Shared Services and Admin. Costs (171,470) 26,983 (144,487) (143,270) 19,798 (123,472) 20% 18%
           
Operating Income $ 206,673 47,508 254,181 199,427 52,970 252,397 4% 1%
 
 
 
 

Total Shared Services and Admin. Costs by Function

Distribution $ (102,139) 6,012 (96,127) (106,578) 4,500 (102,078) -4% -5%
Technology Services (197,289) 14,020 (183,269) (171,105) 9,489 (161,616) 15% 13%
Finance (45,261) 561 (44,700) (43,251) 1,982 (41,269) 5% 9%
Other Administration (102,458) 6,390 (96,068) (91,108) 3,827 (87,281) 12% 11%
Total $ (447,147) 26,983 (420,164) (412,042) 19,798 (392,244) 9% 7%
 
 
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 FOURTH QUARTER AND TWELVE MONTHS ENDED
APRIL 30, 2014 AND 2013
(in thousands)
                     
 
Fourth Quarter Ended Twelve Months Ended
April 30, April 30,
2014 2013 % Change  

%

Change

excl. FX

2014 2013 % Change  

%

Change

excl. FX

 
 

Research:

Direct Contribution to Profit $ 137,307 120,339 14% 11% 447,139 420,963 6% 6%
Restructuring Charges (Credits) (A) 3,184 2,945 7,774 5,911
Impairment Charges (B) - 9,917 - 9,917
Adjusted Direct Contribution to Profit 140,491 133,201 5% 3% 454,913 436,791 4% 4%
 
Allocated Shared Services and Admin. Costs:
Distribution (10,515) (11,196) -6% -9% (44,229) (46,009) -4% -4%
Technology (18,931) (16,368) 16% 11% (73,238) (66,105) 11% 10%
Occupancy and Other (6,198) (5,931) 5% 3% (21,779) (22,343) -3% -3%
Adjusted Contribution to Profit (after allocated $ 104,847 99,706 5% 3% 315,667 302,334 4% 4%
Shared Services and Admin. Costs)
 

Professional Development:

Direct Contribution to Profit $ 21,966 14,729 49% 48% 98,725 86,678 14% 14%
Restructuring Charges (Credits) (A) 7,026 6,283 11,860 7,537
Impairment Charges (B) - - - 15,521
Loss (Gain) on Sale of Consumer Publishing Programs (C) - 3,846 - (5,983)
Direct Contribution to profit - Divested Consumer Publishing Programs (D) - 1,664 - (1,019)
Adjusted Direct Contribution to Profit 28,992 26,522 9% 9% 110,585 102,734 8% 8%
 
Allocated Shared Services and Admin. Costs:
Distribution (8,297) (9,727) -15% -15% (36,158) (40,664) -11% -10%
Technology (8,339) (7,524) 11% 11% (31,599) (29,187) 8% 8%
Occupancy and Other (2,892) (3,327) -13% -13% (10,586) (11,381) -7% -6%
Adjusted Contribution to Profit (after allocated $ 9,464 5,944 59% 58% 32,242 21,502 50% 50%
Shared Services and Admin. Costs)
 

Education:

Direct Contribution to Profit $ 5,269 4,678 13% 23% 107,956 103,828 4% 7%
Restructuring Charges (A) 516 1,119 891 1,288
Adjusted Direct Contribution to Profit 5,785 5,797 0% 8% 108,847 105,116 4% 7%
 
Allocated Shared Services and Admin. Costs:
Distribution (3,531) (3,631) -3% 0% (15,286) (15,277) 0% 3%
Technology (8,599) (8,179) 5% 6% (34,401) (30,727) 12% 13%
Occupancy and Other (2,290) (2,186) 5% 9% (8,401) (7,079) 19% 22%
Adjusted Contribution to Profit (after allocated $ (8,635) (8,199) -5% -3% 50,759 52,033 -2% 2%
Shared Services and Admin. Costs)
 
Total Adjusted Contribution to Profit (after $ 105,676 97,451 8% 6% 398,668 375,869 6% 6%
allocated Shared Services and Admin. Costs)
 

Unallocated Shared Services and Admin. Costs:

Unallocated Shared Services and Admin. Costs (47,408) (57,812) -18% -18% (171,470) (143,270) 20% 20%
Restructuring Charges (A) 4,669 14,105 22,197 14,557
Impairment Charges (B) - 5,241 4,786 5,241
Adjusted Unallocated Shared Services and Admin. Costs $ (42,739) (38,466) 11% 11% (144,487) (123,472) 17% 18%
       
Adjusted Operating Income $ 62,937 58,985 7% 3% 254,181 252,397 1% 1%
 
 
See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.
 
 
JOHN WILEY & SONS, INC.
SEGMENT REVENUE STATISTICS
FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED
APRIL 30, 2014 AND 2013
(in millions)
                                       
    Fourth Quarter       Twelve Months    
Ended April 30, % of % Change Ended April 30, % of % Change
RESEARCH   2014   2013   Revenue   excl. FX     2014   2013   Revenue   excl. FX
   
Revenue by Product/Service:
Journal Subscriptions $ 188,939 179,973 64% 2% $ 667,313 641,584 64% 4%
Print Books 24,652 26,615 8% -9% 114,135 127,894 11% -11%
Digital Books 16,105 11,726 5% 32% 47,693 36,856 5% 27%
Open Access 6,135 2,530 2% 142% 17,673 6,221 2% 184%
 

Other (Advertising, Backfiles, Rights)

  60,986   62,302   21%   -5%     197,535   197,270   18%   0%
    Total Revenue $ 296,817   283,146   100%   2%   $ 1,044,349   1,009,825   100%   3%
 
Revenue by Subject Category:
Medicine $ 84,849 85,478 29% -3% $ 297,775 298,241 29% 0%
Physical Sciences & Engineering 84,123 77,942 28% 5% 293,592 283,626 28% 2%
Life Sciences 75,496 71,303 25% 3% 262,029 238,960 25% 9%
Social Sciences & Humanities 51,544 47,595 18% 4% 187,092 185,355 18% 1%
  Other   805   828   0%   -3%     3,861   3,643   0%   6%
    Total Revenue $ 296,817   283,146   100%   2%   $ 1,044,349   1,009,825   100%   3%
 
                                       
Fourth Quarter Twelve Months
Ended April 30, % of % Change Ended April 30, % of % Change
PROFESSIONAL DEVELOPMENT   2014   2013   Revenue   excl. FX (a)   2014   2013   Revenue   excl. FX (a)
 
Revenue by Product/Service:
Print Books $ 52,925 58,774 57% -10% $ 236,317 257,842 65% -8%
Digital Books 13,395 14,450 14% -8% 47,747 43,251 13% 10%
Online Training & Assessment 13,488 8,807 14% 53% 40,201 29,854 11% 35%
Other (Rights, Advertising, etc) 13,229 12,908 15% 3% 39,604 39,993 11% 0%
  Divested Consumer Publishing Programs   -   5,196             -   45,555        
    Total Revenue $ 93,037   100,135   100%   -2%   $ 363,869   416,495   100%   -2%
 
Revenue by Subject Category:
Business and Finance $ 47,607 44,642 51% 6% $ 170,870 162,602 47% 5%
Technology 19,832 22,486 21% -12% 77,229 86,431 21% -10%
Consumer 10,400 12,246 11% -15% 40,867 45,675 11% -10%
Professional Education 6,466 6,427 7% 1% 29,209 27,722 8% 6%
Architecture 4,079 4,073 4% -2% 22,365 23,284 6% -4%
Psychology 3,478 3,584 4% -3% 16,290 17,014 4% -4%
Other 1,175 1,481 2% -14% 7,039 8,212 3% -9%
  Divested Consumer Publishing Programs   -   5,196             -   45,555        
    Total Revenue $ 93,037   100,135   100%   -2%   $ 363,869   416,495   100%   -2%
Note (a) - Variance excludes the revenue of the divested Professional Development consumer publishing programs sold in fiscal year 2013.
 
                                       
Fourth Quarter Twelve Months
Ended April 30, % of % Change Ended April 30, % of % Change
EDUCATION   2014   2013   Revenue   excl. FX     2014   2013   Revenue   excl. FX
 
 
Print Textbooks $ 22,221 24,256 33% -5% $ 163,153 184,131 44% -9%
Binder and Custom Products (414) 55 -1% -853% 43,556 39,315 12% 11%
Online Program Management (Deltak) 19,792 16,600 29% 19% 70,188 33,745 19%
Digital Books 8,612 6,357 13% 40% 30,136 25,359 8% 21%
WileyPLUS 13,867 11,884 21% 18% 49,457 40,989 13% 22%
  Other   3,157   3,421   5%   -5%     10,487   10,919   4%   2%
    Total Revenue $ 67,235   62,573   100%   10%   $ 366,977   334,458   100%   12%
 
Revenue by Subject Category:
Business $ 16,486 14,159 25% 19% $ 82,841 78,599 23% 7%
Sciences 8,499 8,838 13% -2% 62,063 62,240 17% 1%
Social Sciences 7,292 7,380 11% 0% 47,563 49,194 13% -2%
Engineering & Computer Science 5,087 5,768 8% -10% 37,859 43,247 10% -11%
Mathematics & Statistics 2,821 2,265 4% 25% 24,720 23,631 7% 5%
Schools (Australia K-12) 2,888 2,907 4% 13% 27,229 28,081 7% 9%
Online Program Management (Deltak) 19,792 16,600 29% 19% 70,188 33,745 19%
  Other   4,370   4,656   6%   0%     14,514   15,721   4%   -4%
    Total Revenue $ 67,235   62,573   100%   10%   $ 366,977   334,458   100%   12%
 
 
JOHN WILEY & SONS, INC.
UNAUDITED STATEMENTS OF FINANCIAL POSITION
(in thousands)
         
April 30,
2014 2013
 
Current Assets
Cash & cash equivalents $ 486,377 334,140
Accounts receivable 149,733 161,731
Inventories 75,495 82,017
Prepaid and other 79,457 57,083
Total Current Assets 791,062 634,971
Product Development Assets 82,940 87,876
Technology, Property and Equipment 188,718 189,625
Intangible Assets 984,661 954,957
Goodwill 903,665 835,540
Income Tax Deposits 64,037 45,868
Other Assets 63,682 57,538
Total Assets 3,078,765 2,806,375
 
Current Liabilities
Accounts and royalties payable 142,534 143,313
Deferred revenue 385,654 362,970
Accrued employment costs 118,503 85,306
Accrued income taxes 13,324 16,093
Accrued pension liability 4,671 4,359
Other accrued liabilities 64,901 55,128
Total Current Liabilities 729,587 667,169
Long-Term Debt 700,100 673,000
Accrued Pension Liability 164,634 204,362
Deferred Income Tax Liabilities 223,882 197,526
Other Long-Term Liabilities 78,314 75,962
Shareholders' Equity 1,182,248 988,356
Total Liabilities & Shareholders' Equity $ 3,078,765 2,806,375
 
 
JOHN WILEY & SONS, INC.
UNAUDITED STATEMENTS OF FREE CASH FLOW
(in thousands)
         
 
Twelve Months Ended
April 30,
2014 2013
Operating Activities:
Net income $ 160,510 144,225
Amortization of intangibles 44,679 41,982
Amortization of composition costs 45,097 51,517
Depreciation of technology, property and equipment 58,321 56,017
Restructuring and impairment charges 47,508 59,972
Gain, net of losses, on sale of consumer publishing programs - (5,983)
Deferred tax benefits on U.K. rate changes (10,634) (8,402)
Share-based compensation expense 12,851 11,928
Excess tax benefits from stock-based compensation 1,466 (193)
Employee retirement plan expense 30,454 35,938
Royalty advances (107,639) (105,335)
Earned royalty advances 107,529 100,691
Other non-cash charges and credits (2,468) (3,708)
Income tax deposit (11,968) (42,077)
Change in deferred revenue (750) 32,822
Restructuring payments (28,276) (5,641)
Net change in operating assets and liabilities, excluding acquisitions 1,544 (26,716)
Cash Provided by Operating Activities 348,224 337,037
 
Investments in organic growth:
Composition spending (40,568) (50,434)
Additions to technology, property and equipment (57,564) (58,704)
 
Free Cash Flow 250,092 227,899
 
Other Investing and Financing Activities:
Acquisitions, net of cash (54,515) (263,272)
Proceeds from sale of consumer publishing programs 3,300 29,942
Repayment of long-term debt (658,224) (472,500)
Borrowings of long-term debt 685,324 670,500
Change in book overdrafts (12,354) (451)
Cash dividends (58,953) (57,426)
Purchase of treasury shares (63,393) (73,721)
Proceeds from exercise of stock options and other 55,532 23,806
Excess tax benefits from stock-based compensation (1,466) 193
Cash Used for Investing and Financing Activities (104,749) (142,929)
   
Effects of Exchange Rate Changes on Cash 6,894 (10,660)
 
Increase in Cash and Cash Equivalents for Period $ 152,237 74,310
 
 
 
RECONCILIATION TO GAAP PRESENTATION
 
Investing Activities:
Composition spending $ (40,568) (50,434)
Additions to technology, property and equipment (57,564) (58,704)
Acquisitions, net of cash (54,515) (263,272)
Proceeds from sale of consumer publishing programs 3,300 29,942
Cash Used for Investing Activities $ (149,347) (342,468)
 
Financing Activities:
Cash Used for Investing and Financing Activities $ (104,749) (142,929)
Excluding:
Acquisitions, net of cash (54,515) (263,272)
Proceeds from sale of consumer publishing programs 3,300 29,942
Cash (Used for) Provided by Financing Activities $ (53,534) 90,401
 
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.
Investor:
Brian Campbell, Investor Relations
201-748-6874
brian.campbell@wiley.com
or
Media:
Linda Dunbar, Media Relations
201-748-6390
ldunbar@wiley.com

Release Summary

John Wiley & Sons, Inc. (NYSE: JWa and JWb) today announced results for the fourth quarter and fiscal year 2014.

Contacts

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