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Wiley Reports Fourth Quarter and Fiscal Year 2016 Results

  • Full year revenue and EPS results match guidance for flat revenue and EPS excluding the transitional (non-cash) impact of shifting to time-based journal subscriptions, foreign exchange, and certain charges and credits
  • Percent of full-year revenue from digital products and services increased to 63% from 60% in the prior year. Percent of full-year revenue from print books declined to 23% from 25%
  • Calendar year 2016 Journal Subscriptions up 1% on a constant currency basis with approximately 95% of targeted business under contract
Tuesday, June 14, 2016 8:00 am EDT

Public Company Information:

NYSE:
JWA
NYSE:
JWB
"Our fourth quarter results capped the fiscal year in line with our guidance for revenue and earnings"

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 fourth quarter and twelve months of fiscal year 2016:

               

% Change

$ millions     FY16     FY15     Excluding FX     Including FX

Revenue:

Q4 $434.3 $441.6 (1%) (2%)
Full Year $1,727.0 $1,822.4 (2%) (5%)
 

GAAP EPS:

 

Q4 $0.59 $0.79 (25%)
Full Year $2.48 $2.97 (16%)
 

Adjusted EPS:

Q4 $0.67 $0.81 (19%) (17%)
Full Year $2.70 $3.26 (13%) (17%)
 

Note: Results include transitional adverse impact of shift to time-based journal subscriptions ($8 million revenue and $0.10 of EPS in fourth quarter; $37 million of revenue and $0.42 of EPS in full year. There is no cash impact from the change. Adjusted results exclude restructuring charges and certain tax benefits as more fully described in the attached financial schedules.

 

Management Commentary

“Our fourth quarter results capped the fiscal year in line with our guidance for revenue and earnings,” said Mark Allin, President and CEO. “We continued to make good progress in our transition to a digital knowledge and learning company, with nearly two-thirds of our revenue now generated from digital products and services. Our solutions businesses again delivered double-digit top line growth, notably online test preparation, corporate learning, and online program management, offsetting much of the market-driven revenue decline in traditional book publishing. Finally, our journals business achieved marginal revenue growth for the year, driven by steady subscription results and double digit growth in author-funded access.”

Fiscal Year 2017 Outlook

Operationally, Wiley’s fiscal year 2017 outlook is for revenue to be flat and adjusted EPS to be down by mid single-digits excluding both foreign exchange and the favorable impact from shifting to time-based journal subscription agreements (+$37 million in revenue and +$0.42 in EPS). The revenue projection anticipates continued modest growth in Journals and double-digit growth in Solutions to be largely offset by further declines in Book publishing. The Adjusted EPS projection reflects marginally lower operating income due to the continued book decline and investment in Solutions growth, as well as higher taxes and an anticipated rate hike impact on interest expense.

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 fiscal 2016 were 1.50 and 1.11, respectively. Note that foreign exchange was adverse to full year revenue and EPS by $61 million and $0.13, 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 certain 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.

Fourth Quarter Summary

  • Revenue declined 1% on a constant currency basis to $434.3 million but rose 1% excluding both currency and the shift to time-based journal subscriptions ($8 million transitional impact). Operational performance was driven by growth in journal subscriptions (+1%), and double-digit growth in Corporate Learning (+35%), Author-Funded Access (+30%), WileyPLUS Course Workflow (+26%), and Online Program Management (+18%). The positive operational performance offset a 23% decline in Education textbooks and an 8% decline in Research Books and References. On a US GAAP basis, revenue declined 2% due to the unfavorable impact of foreign exchange and the transitional impact of shifting to time-based journal subscriptions.
  • Adjusted EPS declined 6% excluding both currency and the shift to time-based journal subscriptions ($0.10 transitional impact). Adjusted EPS excludes restructuring charges in the current and prior year related to the outsourcing of US distribution operations, and the implementation of other operational efficiency initiatives. In addition, adjusted EPS excludes a prior year non-recurring tax benefit (+$3.1 million) on the write-up of certain foreign tax assets to fair market value. The adjusted EPS decline was mainly due to higher technology costs and investments to build share in Online Program Management and Corporate Learning. Fourth quarter EPS on a US GAAP basis declined 25% to $0.59.
  • Share Repurchases: Wiley repurchased 216,186 shares this quarter at a cost of $10.3 million, an average of $47.52 per share. Approximately 747,000 shares remain in the current repurchase authorization.

Fiscal Year Summary

  • Revenue declined 2% on a constant currency basis to $1,727.0 million but was flat excluding both currency and the shift to time-based journal subscriptions ($37 million transitional impact). Steady performance in journal subscriptions and double-digit growth in Author-Funded Access (+21%), Online Test Preparation (+27%), Online Program Management (+18%), Corporate Learning (+31%), and WileyPLUS Course Workflow (+10%) offset declines in Education books (-15%), Professional Development books (-4%), and Research Books and References (-1%). Wiley’s percentage of revenue from print books decreased from 25% in FY15 to 23% in FY16. On a US GAAP basis, revenue declined 5% due to the unfavorable impact of foreign exchange and the transitional impact of shifting to time-based journal subscriptions.
  • Adjusted EPS declined 13% on a constant currency basis to $2.70 but was flat excluding both currency and the shift to time-based journal subscriptions ($0.42 transitional impact). Adjusted EPS excludes restructuring charges in the current and prior year related to the books businesses, the outsourcing of US distribution operations, and the implementation of other operational efficiency initiatives. It also excludes a deferred tax benefit (+$5.9 million) recorded in fiscal year 2016 related to a future reduction in the UK income tax rate and a prior year non-recurring tax benefit (+$3.1 million) related to the write-up of certain foreign tax assets to fair market value. Gross profit improvement and cost savings from the restructuring programs were offset by continued investment in Online Program Management and Corporate Learning, an increase in technology expense related to digital product development and the Enterprise Resource Planning (ERP) implementation, and higher employment costs. Full year GAAP EPS declined 16% to $2.48.
  • Adjusted shared services and administrative costs rose 6% for the year to $518 million mainly due to investment in ERP and related systems, which are reported as unallocated shared services costs.
  • Free Cash Flow was $219.0 million for the full year compared to $246.6 million in fiscal 2015 primarily due to the increase in capital investment (+$25 million) related to the ERP deployment and other systems. Cash from operations of $350.0 million was flat as expected. Wiley expects capex to increase again in fiscal 2017 primarily due to the Hoboken office transformation.
  • Share Repurchases: In fiscal year 2016, Wiley repurchased 1.4 million shares for $70 million, an average cost of $48.86. As of April 30, the Company had nearly 747,000 shares remaining in the repurchase program announced in June 2013.
  • Dividend: In June 2015, Wiley increased its quarterly dividend by 3% to $0.30, or $1.20 annualized. It was the 22nd consecutive annual increase.
  • Net Debt and Cash Position: Net debt (long-term debt less cash and cash equivalents) at the end of April was $241.2 million, down from $292.6 million at the end of the prior year. Cash and cash equivalents as of April 30, 2016 were $363.8 million.
  • 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.

RESEARCH

  • Revenue: Fourth quarter revenue of $264.8 million was down 3% on a constant currency basis and flat excluding the $8 million transitional impact from the shift to time-based journal subscriptions. Steady performance in journal subscriptions and double-digit growth in Author-Funded Access (+30%) offset a decline in Books and References (-8%). For the full year, Research revenue was flat to prior year at constant currency and excluding the impact of the shift to time-based journal subscriptions. Full year Journal Subscriptions results were adversely impacted by the trailing effects of the Swets subscription agency bankruptcy (-$3 million).
  • Calendar Year 2016 Journal Subscriptions: At the end of April, calendar year 2016 Journal Subscriptions were up 1% on a constant currency basis, with approximately 95% of targeted business under contract for the 2016 calendar year.
  • Society Business: Two new society contracts were signed in the quarter with combined annual revenue of $4 million; four were renewed with combined annual revenue of $1 million; and two were not renewed with combined annual revenue of $3 million. For calendar year 2016, six new society contracts were signed (+$12 million of annual revenue) and eighteen were not renewed (-$11 million), for a net gain of $1 million in annual revenue. This compares to an annualized revenue loss of $4 million in calendar year 2015. Additionally, calendar year 2016 includes renewals of 87 contracts with combined annual revenue of $54 million.
  • Adjusted Contribution to Profit (CTP): Fourth quarter adjusted CTP of $87.1 million declined 11% on a constant currency basis but was flat excluding currency and the margin impact from shifting to time-based journal subscriptions. CTP performance was adversely impacted by charges for bad debt in Venezuela (-$1 million) and an unfavorable court ruling related to royalty rights in Germany (-$1 million). For the year, adjusted CTP was down 10% at constant currency but up 2% excluding currency and the shift to time-based journal subscriptions. Fourth quarter and full year CTP on a US GAAP basis were down 11% and 14%, respectively.

PROFESSIONAL DEVELOPMENT

  • Revenue: Fourth quarter revenue rose 3% on a constant currency basis to $103.1 million primarily due to double-digit growth in Corporate Learning (+35%), with gains spread broadly across France, the US, and Central and South American markets. Revenue growth in Digital Books (+6%) and Online Test Preparation (+4%) offset a 4% decline in Print Books. For the year, Professional Development revenue grew 2% due to growth in Corporate Learning (+31%) and Online Test Preparation (+27%), offsetting a decline in Books (-4%).
  • Adjusted Contribution to Profit (CTP): Adjusted CTP rose 71% on a constant currency basis to $20.5 million due to continued efficiency gains and restructuring savings. Fourth quarter and full year CTP on a US GAAP basis were up 72% and 95%, respectively.

EDUCATION

  • Revenue: Fourth quarter revenue increased 1% on a constant currency basis to $66.5 million, with double-digit growth in WileyPLUS Course Workflow (+26%) and Online Program Management (+18%) offsetting a decline in Textbooks (-23%). For the year, Education revenue declined 2% at constant currency to $357.5 million.
  • Adjusted Contribution to Profit (CTP): Fourth quarter adjusted CTP improved 6% on a constant currency basis to a seasonal loss of $7.5 million, reflecting cost savings and margin improvement, partially offset by continued investment in new programs for Online Program Management and lower Textbook revenue. For the year, Education CTP was down 17% at constant currency to $37.1 million, reflecting the Textbook revenue decline and investment in Online Program Management. Fourth quarter and full year CTP on a US GAAP basis were down 11% and 23%, respectively.
  • Online Program Management (formerly Deltak): Wiley added four net new degree programs in the quarter. At the end of April, Wiley had 226 online degree programs under contract compared to 200 at the end of the prior year period. Wiley’s partner count stands at 38.
  • WileyPLUS alliance: In March, Wiley and CareerShift announced a collaboration agreement to bring personalized career search resources to business students. This alliance will make searching for jobs easier and more efficient for students who use WileyPLUS platforms with their Wiley business textbooks in accounting and management. Wiley’s association with CareerShift will offer WileyPLUS students free access to CareerShift’s search tools for planning and executing job searches.

Earnings Conference Call

  • Scheduled for today, June 14, 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) 427-9419 and enter the participant code 3051041#.
  • International callers, please dial (719) 325-2495 and enter the participant code 3051041#.
  • 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 digital and print content.

                     
JOHN WILEY & SONS, INC.
UNAUDITED SUMMARY OF OPERATIONS
FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED
APRIL 30, 2016 AND 2015
(in thousands, except per share amounts)
 

 

FOURTH QUARTER ENDED APRIL 30,

 
2016   2015   % Change  
US GAAP  

Adjustments
(A-B)

  Adjusted US GAAP  

Adjustments
(A)

  Adjusted US GAAP

Adjusted
excl. FX

 
Revenue $ 434,301 - 434,301 441,646 - 441,646 -2 % -1 %
 
Costs and Expenses
Cost of Sales 109,198 - 109,198 116,844 - 116,844 -7 % -5 %
Operating and Administrative 261,491 - 261,491 249,459 - 249,459 5 % 6 %
Restructuring Charges (A) 7,779 (7,779 ) - 4,925 (4,925 ) -
Amortization of Intangibles 12,513   -   12,513   12,355   -   12,355   1 % 3 %
 
Total Costs and Expenses 390,981 (7,779 ) 383,202 383,583 (4,925 ) 378,658 2 % 2 %
 
Operating Income 43,320 7,779 51,099 58,063 4,925 62,988 -25 % -20 %
Operating Margin 10.0 % 11.8 % 13.1 % 14.3 %
 
Interest Expense (4,220 ) - (4,220 ) (4,062 ) - (4,062 ) 4 % 4 %
Foreign Exchange Gain (916 ) - (916 ) (1,086 ) - (1,086 )
Interest Income and Other 820   -   820   839   -   839   -2 % -2 %
 
Income Before Taxes 39,004 7,779 46,783 53,754 4,925 58,679 -27 % -21 %
 
Provision for Income Taxes (A-B) 4,797   3,010   7,807   6,857   3,945   10,802   -30 % -26 %
 
Net Income $ 34,207   4,769   38,976   46,897   980   47,877   -27 % -20 %
 
 
Earnings Per Share- Diluted (A-B) $ 0.59 0.08 0.67 0.79 0.02 0.81 -25 % -19 %
 
Average Shares - Diluted 58,089 58,089 58,089 59,368 59,368 59,368
 
 

 

TWELVE MONTHS ENDED APRIL 30,

 
2016 2015 % Change
US GAAP  

Adjustments
(A-B)

  Adjusted US GAAP  

Adjustments
(A)

  Adjusted US GAAP

Adjusted
excl. FX

 
Revenue $ 1,727,037 - 1,727,037 1,822,440 - 1,822,440 -5 % -2 %
 
Costs and Expenses
Cost of Sales 465,917 - 465,917 499,683 - 499,683 -7 % -4 %
Operating and Administrative 994,632 - 994,632 1,005,000 - 1,005,000 -1 % 2 %
Restructuring Charges (Credits) (A) 28,611 (28,611 ) - 28,804 (28,804 ) -
Amortization of Intangibles 49,764   -   49,764   51,214   -   51,214   -3 % 0 %
 
Total Costs and Expenses 1,538,924 (28,611 ) 1,510,313 1,584,701 (28,804 ) 1,555,897 -3 % 0 %
 
Operating Income 188,113 28,611 216,724 237,739 28,804 266,543 -21 % -15 %
Operating Margin 10.9 % 12.5 % 13.0 % 14.6 %
 
Interest Expense (16,707 ) - (16,707 ) (17,077 ) - (17,077 ) -2 % -2 %
Foreign Exchange (Loss) Gain 473 - 473 1,742 - 1,742
Interest Income and Other 2,914   -   2,914   3,057   -   3,057   -5 % -5 %
 
Income Before Taxes 174,793 28,611 203,404 225,461 28,804 254,265 -22 % -16 %
 
Provision for Income Taxes (A-B) 29,011   15,777   44,788   48,593   11,599   60,192   -40 % -21 %
 
Net Income $ 145,782   12,834   158,616   176,868   17,205   194,073   -18 % -14 %
 
 
Earnings Per Share- Diluted (A-B) $ 2.48 0.22 2.70 2.97 0.29 3.26 -16 % -13 %
 
Average Shares - Diluted 58,734 58,734 58,734 59,594 59,594 59,594
 
       

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, 2016 AND 2015
 
 
RECONCILIATION OF US GAAP TO ADJUSTED EPS - DILUTED (UNAUDITED)
 
 

Fourth Quarter Ended
April 30,

Twelve Months Ended
April 30,
2016 2015 2016 2015
 
US GAAP Earnings Per Share - Diluted $ 0.59 $ 0.79 $ 2.48 $ 2.97
Adjusted to exclude the following:
Restructuring Charges (A) (0.08 ) (0.07 ) (0.32 ) (0.34 )
Deferred Income Tax Benefit on UK Rate Change (B) - - 0.10 -
Non-recurring Tax Benefit (C) - 0.05 - 0.05
 
Adjusted Earnings Per Share - Diluted $ 0.67   $ 0.81   $ 2.70   $ 3.26  
 
 

NOTES TO UNAUDITED FINANCIAL STATEMENTS

 
 
Adjustments:
a  

Restructuring Charges: The adjusted results for the three and twelve months ended April 30, 2016 exclude restructuring charges related to the Company's Restructuring and Reinvestment Program of $7.8 million or $0.08 per share, and $28.6 million or $0.32 per share, respectively. The adjusted results for the three and twelve months ended April 30, 2015 exclude a restructuring charge of $4.9 million or $0.07 per share, and $28.8 million or $0.34 per share, respectively.

 
b Deferred Income Tax Benefit on UK Rate Change: The adjusted results for the twelve months ended April 30, 2016 exclude deferred tax benefits of $5.9 million, or $0.10 per share, associated with tax legislation enacted in 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.
 
c NON-RECURRING TAX BENEFIT: The adjusted results for the three and twelve months ended April 30, 2015 reflect a non-recurring tax benefit of $3.1 million or $0.05 per share related to tax deductions claimed on the write-up of certain foreign tax assets to fair market value.
 
 

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, 2016 AND 2015
(in thousands)
 
 

 

FOURTH QUARTER ENDED APRIL 30,

 
2016   2015   % Change  
US GAAP  

Adjustments
(A)

  Adjusted US GAAP  

Adjustments
(A)

    Adjusted US GAAP  

Adjusted
excl. FX

Revenue

Research $ 264,757 - 264,757 274,646 - 274,646 -4 % -3 %
Professional Development 103,051 - 103,051 100,442 - 100,442 3 % 3 %
Education 66,493 - 66,493 66,558 - 66,558 0 % 1 %
             
Total $ 434,301   -   434,301   441,646   -   441,646   -2 % -1 %
 

Direct Contribution to Profit

Research $ 129,877 (279 ) 129,598 140,354 233 140,587 -7 % -7 %
Professional Development 43,798 690 44,488 36,950 552 37,502 19 % 19 %
Education 14,841 (8 ) 14,833 11,625 487 12,112 28 % 25 %
             
Total $ 188,516   403   188,919   188,929   1,272   190,201   0 % 0 %
 

Contribution to Profit (After Allocated Shared Services

and Admin. Costs)

Research $ 87,427 (279 ) 87,148 97,868 233 98,101 -11 % -11 %
Professional Development 19,768 690 20,458 11,508 552 12,060 72 % 71 %
Education (7,479 ) (8 ) (7,487 ) (8,439 ) 487 (7,952 ) -11 % -6 %
             
Total $ 99,716 403 100,119 100,937 1,272 102,209 -1 % -2 %
 
Unallocated Shared Services and Admin. Costs (56,396 ) 7,376 (49,020 ) (42,874 ) 3,653 (39,221 ) 32 % 27 %
             
Operating Income $ 43,320   7,779   51,099   58,063   4,925   62,988   -25 % -20 %
 
 

Total Shared Services and Admin. Costs by Function

Distribution and Operation Services $ (26,673 ) 5,817 (20,856 ) (21,249 ) 131 (21,118 ) 26 % 1 %
Technology and Content Management (67,971 ) 94 (67,877 ) (63,294 ) 1,337 (61,957 ) 7 % 11 %
Finance (13,857 ) 1,159 (12,698 ) (13,571 ) 74 (13,497 ) 2 % -5 %
Other Administration (36,695 ) 306   (36,389 ) (32,752 ) 2,111   (30,641 ) 12 % 20 %
Total $ (145,196 ) 7,376   (137,820 ) (130,866 ) 3,653   (127,213 ) 11 % 10 %
 
 

 

TWELVE MONTHS ENDED APRIL 30,

 
2016   2015   % Change  
US GAAP  

Adjustments
(A)

  Adjusted US GAAP  

Adjustments
(A)

    Adjusted US GAAP  

Adjusted
excl. FX

Revenue

Research $ 965,254 - 965,254 1,040,795 - 1,040,795 -7 % -3 %
Professional Development 404,281 - 404,281 407,023 - 407,023 -1 % 2 %
Education 357,502 - 357,502 374,622 - 374,622 -5 % -2 %
             
Total $ 1,727,037   -   1,727,037   1,822,440   -   1,822,440   -5 % -2 %
 

Direct Contribution to Profit

Research $ 440,301 5,048 445,349 487,285 4,555 491,840 -10 % -6 %
Professional Development 167,023 2,277 169,300 143,157 4,385 147,542 17 % 17 %
Education 118,375 1,206 119,581 127,729 1,571 129,300 -7 % -4 %
             
Total $ 725,699   8,531   734,230   758,171   10,511   768,682   -4 % -1 %
 

Contribution to Profit (After Allocated Shared Services

and Admin. Costs)

Research $ 272,995 5,048 278,043 315,774 4,555 320,329 -14 % -10 %
Professional Development 74,548 2,277 76,825 38,137 4,385 42,522 95 % 84 %
Education 35,868 1,206 37,074 46,644 1,571 48,215 -23 % -17 %
             
Total $ 383,411 8,531 391,942 400,555 10,511 411,066 -4 % -1 %
 
Unallocated Shared Services and Admin. Costs (195,298 ) 20,080 (175,218 ) (162,816 ) 18,293 (144,523 ) 20 % 25 %
             
Operating Income $ 188,113   28,611   216,724   237,739   28,804   266,543   -21 % -15 %
 
 

Total Shared Services and Admin. Costs by Function

Distribution and Operation Services $ (93,246 ) 10,137 (83,109 ) (93,591 ) 4,567 (89,024 ) 0 % -3 %
Technology and Content Management (261,359 ) 3,537 (257,822 ) (247,472 ) 2,622 (244,850 ) 6 % 8 %
Finance (53,272 ) 3,474 (49,798 ) (52,941 ) 145 (52,796 ) 1 % -2 %
Other Administration (129,709 ) 2,932   (126,777 ) (126,428 ) 10,959   (115,469 ) 3 % 13 %
Total $ (537,586 ) 20,080   (517,506 ) (520,432 ) 18,293   (502,139 ) 3 % 6 %
 
 

(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 its Marketing Services functions into a single global shared service function. This newly centralized service group enables 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 Shared Services and Administrative Costs 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 FOURTH QUARTER AND TWELVE MONTHS ENDED
APRIL 30, 2016 AND 2015
(in thousands)
 
 
Fourth Quarter Ended
April 30,
Twelve Months Ended
April 30,
2016 2015

%
Change

 

% Change
excl. FX

2016 2015

%
Change

 

%
Change
excl. FX

 

 

Research:

Direct Contribution to Profit 129,877 140,354 -7 % -7 % 440,301 487,285 -10 % -6 %
Restructuring Charges (Credits) (A) (279 ) 233   5,048   4,555  
Adjusted Direct Contribution to Profit 129,598 140,587 -8 % -7 % 445,349 491,840 -9 % -6 %
 
Allocated Shared Services and Admin. Costs:
Distribution and Operation Services (9,573 ) (10,479 ) -9 % -7 % (39,348 ) (44,620 ) -12 % -7 %
Technology and Content Management (25,272 ) (23,456 ) 8 % 9 % (98,442 ) (96,486 ) 2 % 5 %
Occupancy and Other (7,605 ) (8,551 ) -11 % -10 % (29,516 ) (30,405 ) -3 % 2 %
Adjusted Contribution to Profit (after allocated 87,148   98,101   -11 % -11 % 278,043   320,329   -13 % -10 %
Shared Services and Admin. Costs)
 

Professional Development:

Direct Contribution to Profit 43,798 36,950 19 % 19 % 167,023 143,157 17 % 19 %
Restructuring Charges (A) 690   552   2,277   4,385  
Adjusted Direct Contribution to Profit 44,488 37,502 19 % 19 % 169,300 147,542 15 % 17 %
 
Allocated Shared Services and Admin. Costs:
Distribution and Operation Services (7,544 ) (7,167 ) 5 % 7 % (28,364 ) (30,838 ) -8 % -5 %
Technology and Content Management (10,548 ) (12,334 ) -14 % -14 % (40,951 ) (48,002 ) -15 % -13 %
Occupancy and Other (5,938 ) (5,941 ) 0 % 0 % (23,160 ) (26,180 ) -12 % -8 %
Adjusted Contribution to Profit (after allocated 20,458   12,060   70 % 71 % 76,825   42,522   81 % 84 %
Shared Services and Admin. Costs)
 

Education:

Direct Contribution to Profit 14,841 11,625 28 % 30 % 118,375 127,729 -7 % -3 %
Restructuring Charges (A) (8 ) 487   1,206   1,571  
Adjusted Direct Contribution to Profit 14,833 12,112 22 % 25 % 119,581 129,300 -8 % -4 %
 
Allocated Shared Services and Admin. Costs:
Distribution and Operation Services (3,931 ) (2,977 ) 32 % 35 % (15,207 ) (12,863 ) 18 % 24 %
Technology and Content Management (14,375 ) (13,625 ) 6 % 7 % (51,612 ) (54,272 ) -5 % -3 %
Occupancy and Other (4,014 ) (3,462 ) 16 % 16 % (15,688 ) (13,950 ) 12 % 15 %
Adjusted Contribution to Profit (after allocated (7,487 ) (7,952 ) 6 % 6 % 37,074   48,215   -23 % -17 %
Shared Services and Admin. Costs)
 
Total Adjusted Contribution to Profit (after 100,119 102,209 -2 % -2 % 391,942 411,066 -5 % -1 %
allocated Shared Services and Admin. Costs)
 

Unallocated Shared Services and Admin. Costs:

Unallocated Shared Services and Admin. Costs (56,396 ) (42,874 ) 32 % 33 % (195,298 ) (162,816 ) 20 % 24 %
Restructuring Charges (Credits) (A) 7,376   3,653   20,080   18,293  
Adjusted Unallocated Shared Services and Admin. Costs (49,020 ) (39,221 ) 25 % 27 % (175,218 ) (144,523 ) 21 % 25 %
       
Adjusted Operating Income 51,099   62,988   -19 % -20 % 216,724   266,543   -19 % -15 %
 
 

(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 its Marketing Services functions into a single global shared service function. This newly centralized service group enables 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 Shared Services and Administrative Costs 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 FOURTH QUARTER AND TWELVE MONTHS ENDED
APRIL 30, 2016 AND 2015
(in thousands)
 
                                         
Fourth Quarter
Ended April 30,
    Twelve Months
Ended April 30,
   

% of
Revenue

% Change
excl. FX
% of
Revenue
% Change
excl. FX
  2016   2015       2016   2015    
   
 

RESEARCH

Journal Revenue
Journal Subscriptions $ 168,458 175,568 64 % -3 % $ 611,403 672,218 63 % -6 %
Author-Funded Access 7,370 5,828 3 % 30 % 25,669 22,388 3 % 21 %
Licensing, Reprints, Backfiles, and Other 51,435 51,709 19 % 1 % 178,542 188,326 18 % 0 %
Total Journal Revenue 227,263 233,105 86 % -2 % 815,614 882,932 84 % -4 %
 
Books and References:
Print Books 19,185 21,190 7 % -8 % 90,586 99,746 9 % -6 %
Digital Books 12,111 14,715 5 % -14 % 44,788 42,512 5 % 9 %
Licensing and Other 6,198 5,636 2 % 6 % 14,266 15,605 1 % 0 %
Total Books and References Revenue 37,494 41,541 14 % -8 % 149,640 157,863 16 % -1 %
 
                                           
Total Revenue       $ 264,757   274,646   100 %   -3 %     $ 965,254   1,040,795   100 %   -3 %
 
 

PROFESSIONAL DEVELOPMENT

Knowledge Services:
Print Books $ 41,917 44,082 41 % -4 % $ 192,149 206,086 48 % -4 %
Digital Books 14,171 13,505 14 % 6 % 47,089 49,672 12 % -3 %
Online Test Preparation and Certification 7,186 6,889 7 % 4 % 28,169 22,119 7 % 27 %
Other Knowledge Service Revenue 10,059 9,616 10 % 5 % 28,813 30,094 7 % -2 %
73,333 74,092 71 % 0 % 296,220 307,971 73 % -2 %
 
Talent Solutions:
Assessment 15,224 15,835 15 % -4 % 57,369 57,035 14 % 1 %
Corporate Learning 14,494 10,515 14 % 35 % 50,692 42,017 13 % 31 %
29,718 26,350 29 % 12 % 108,061 99,052 27 % 14 %
                                           
Total Revenue       $ 103,051   100,442   100 %   3 %     $ 404,281   407,023   100 %   2 %
 
 

EDUCATION

Books:
Print Textbooks $ 10,933 17,792 16 % -34 % $ 107,636 144,500 30 % -20 %
Digital Books 8,818 8,840 13 % 0 % 34,462 34,086 9 % 5 %
19,751 26,632 30 % -23 % 142,098 178,586 40 % -15 %
 
Custom Material 509 1,062 1 % -52 % 51,842 50,659 15 % 2 %
 
Course Workflow (WileyPLUS) 17,185 13,645 26 % 26 % 58,551 54,200 16 % 10 %
 
Online Program Management (Deltak) 26,716 22,612 40 % 18 % 96,469 81,593 27 % 18 %
 
Other Education Revenue 2,332 2,607 4 % -11 % 8,542 9,584 2 % -11 %
                                           
Total Revenue       $ 66,493   66,558   100 %   1 %     $ 357,502   374,622   100 %   -2 %
 
 
Note: Segment Revenue Categorization
         
JOHN WILEY & SONS, INC.
UNAUDITED STATEMENTS OF FINANCIAL POSITION
(in thousands)
 
 
 
 
April 30,  
2016   2015  
 
Current Assets
Cash & cash equivalents $ 363,806 457,441
Accounts receivable 167,638 147,183
Inventories 57,779 63,779
Prepaid and other 81,456   72,516  
Total Current Assets 670,679 740,919
Product Development Assets 72,126 69,589
Technology, Property and Equipment 214,770 193,010
Intangible Assets 877,007 917,621
Goodwill 951,663 962,367
Income Tax Deposits 62,912 57,098
Other Assets 71,939   63,639  
Total Assets 2,921,096   3,004,243  
 
Current Liabilities
Short-term debt

-

100,000
Accounts and royalties payable 166,222 161,465
Deferred revenue 426,489 372,051
Accrued employment costs 97,902 93,922
Accrued income taxes 9,450 9,484
Accrued pension liability 5,492 4,594
Other accrued liabilities 76,252   62,167  
Total Current Liabilities 781,807 803,683
Long-Term Debt 605,007 650,090
Accrued Pension Liability 224,170 209,727
Deferred Income Tax Liabilities 189,868 198,947
Other Long-Term Liabilities 83,138 86,756
Shareholders' Equity 1,037,106   1,055,040  
Total Liabilities & Shareholders' Equity $ 2,921,096   3,004,243  
 
       
JOHN WILEY & SONS, INC.
UNAUDITED STATEMENTS OF FREE CASH FLOW
(in thousands)
 
 
Twelve Months Ended
April 30,
2016   2015  
Operating Activities:
Net income $ 145,782 176,868
Amortization of intangibles 49,764 51,214
Amortization of composition costs 39,658 40,639
Depreciation of technology, property and equipment 66,427 62,072
Restructuring charges (credits) 28,611 28,804
Restructuring payments (29,864 ) (32,341 )
Deferred income tax benefit on UK rate change (5,859 ) -
Share-based compensation expense 16,105 13,617
Excess tax benefits from share-based compensation (1,027 ) (3,191 )
Royalty advances (110,135 ) (104,876 )
Earned royalty advances 109,102 110,054
Other non-cash charges and credits 15,786 14,553
Change in deferred revenue 66,983 3,913
Net change in operating assets and liabilities (41,376 ) (6,204 )
Cash Provided by Operating Activities 349,957 355,122
 
Investments in organic growth:
Composition spending (37,272 ) (39,421 )
Additions to technology, property and equipment (93,705 ) (69,121 )
 
Free Cash Flow 218,980 246,580
 
Other Investing and Financing Activities:
Acquisitions, net of cash (20,418 ) (172,229 )
Escrowed proceeds from sale of consumer publishing programs - 1,100
Repayment of long-term debt (460,085 ) (711,654 )
Repayment of short-term debt (150,000 ) -
Borrowings of long-term debt 415,000 659,369
Borrowings of short-term Debt 50,000 100,000
Change in book overdrafts 1,725 (6,711 )
Cash dividends (69,896 ) (68,498 )
Purchase of treasury shares (69,977 ) (61,981 )
Debt Issuance Costs (3,362 ) -
Proceeds from exercise of stock options and other (95 ) 25,326
Excess tax benefits from share-based compensation 1,027   3,191  
Cash Used for Investing and Financing Activities (306,081 ) (232,087 )
   
Effects of Exchange Rate Changes on Cash (6,534 ) (43,429 )
 
Decrease in Cash and Cash Equivalents for Period $ (93,635 ) (28,936 )
 
 
RECONCILIATION TO GAAP PRESENTATION
 
Investing Activities:
Composition spending $ (37,272 ) (39,421 )
Additions to technology, property and equipment (93,705 ) (69,121 )
Acquisitions, net of cash (20,418 ) (172,229 )
Escrowed proceeds from sale of consumer publishing programs -   1,100  
Cash Used for Investing Activities $ (151,395 ) (279,671 )
 
Financing Activities:
Cash Used for Investing and Financing Activities $ (306,081 ) (232,087 )
Excluding:
Acquisitions, net of cash (20,418 ) (172,229 )
Escrowed proceeds from sale of consumer publishing programs -   1,100  
Cash Used for Financing Activities $ (285,663 ) (60,958 )
 
 

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.

 

Contact:

Investors:
John Wiley & Sons, Inc.
Brian Campbell, 201-748-6874
Investor Relations
brian.campbell@wiley.com

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