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Wiley Reports First Quarter Fiscal Year 2017 Results

  • Revenue of $404 million, down 2% over prior year on a constant currency basis (-4% US GAAP)
  • Journal revenue up 2% on a constant currency basis and excluding the favorable impact of shifting to time-based subscriptions
  • Adjusted EPS of $0.52, down 9% on a constant currency basis (-4% US GAAP)
  • Signed agreement to acquire Atypon, an industry-leading provider of software and services that enable scholarly societies to publish and manage their content on the web
Wednesday, September 7, 2016 8:00 am EDT

Public Company Information:

NYSE:
JWA
NYSE:
JWB
"Our largest and most profitable business, Research journals, delivered 2% revenue growth for the quarter, excluding the impact of moving to time-based subscriptions in calendar year 2016"

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 first quarter of fiscal year 2017:

     

% Change

$ millions

 

Q117

 

 

Q116

 

Excluding FX

 

Including FX

Revenue

$404.3

$423.0

(2%)

 

(4%)

EPS:

GAAP

$0.53

$0.55

(4%)

Adjusted

$0.52

$0.58

(9%)

(10%)

 

Note: Results include a favorable transitional impact of shift to time-based journal subscriptions ($4 million revenue and $0.05 of EPS). There is no cash impact from the change. Adjusted results exclude restructuring charges and credits as more fully described in the attached financial schedules.

 

Management Commentary

“Our largest and most profitable business, Research journals, delivered 2% revenue growth for the quarter, excluding the impact of moving to time-based subscriptions in calendar year 2016,” said Mark Allin, Wiley’s President and CEO. “To further enhance our position in Research journals, we signed an agreement to acquire Atypon, a leading provider of research publishing software and services. The acquisition will enable us to immediately accelerate our technology roadmap and provide advanced service offerings to scholarly societies and publishers. Meanwhile, our digital solutions businesses continued to post double-digit revenue growth rates, while traditional book publishing remained under considerable market pressure, particularly in Education.”

Fiscal Year 2017 Outlook

Wiley reaffirms its fiscal year 2017 operational outlook of flat revenue and a mid-single digit decline in adjusted EPS excluding foreign exchange, the favorable impact from shifting to time-based journal subscription agreements (+$37 million in revenue and +$0.42 in EPS), and the partial year revenue contribution (approximately +$20 million) and EPS dilution (approximately -$0.15) of the Atypon acquisition. The Atypon-related dilution includes the impacts of acquisition accounting (partial write-down of deferred revenue, amortization of acquired intangibles) and costs associated with initiating the migration of Wiley Online Library to Atypon’s Literatum platform.

Income Tax Appeal in Germany

A hearing was conducted in the German Federal Court today regarding Wiley’s 2014 tax appeal, and a final judgement is expected over the coming weeks. The appeal is related to a 2003 merger of several of German subsidiaries into one operating entity, which enabled the Company to increase (“step-up”) the tax deductible net asset basis of the merged subsidiaries to fair market value. In May 2012, the German tax authorities filed a challenge to this tax position. Under the rules for the appeal, Wiley has been required to make deposits totaling $62 million to-date, including related interest. If Wiley is successful in defending its position, the tax deposits will be returned with 6% simple interest. If Wiley’s tax position is denied, deposited funds will not be returned and a related charge of approximately $60 million, predominantly non-cash, will be incurred. No further appeals are available beyond the current proceedings.

Foreign Exchange (FX)

Note that foreign exchange was adverse to first quarter revenue and EPS by $9 million and $0.01, respectively. 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. The weighted average rates for fiscal 2016 were 1.50 and 1.11, respectively. Throughout this report, references are made to variances “excluding foreign exchange” or “on a constant currency basis”; such amounts exclude both currency translation effects and transactional gains and losses.

Adjusted Results

The Company provides financial measures referred to as “adjusted” contribution to profit and EPS, which exclude restructuring charges and 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.

First Quarter Summary

  • First quarter revenue declined 4% on a US GAAP basis to $404.3 million. Revenue decline 2% excluding the unfavorable impact of foreign exchange. Performance was driven by growth in Journal Revenue (+2% excluding a $4 million favorable impact from the shift to time-based journal subscriptions), Online Program Management (+13%), Corporate Learning (+20%), Online Test Preparation (+23%), and Author-Funded Access (+39%), which was offset by weakness in Books across all three business segments (-16%).
  • First quarter EPS declined 4% on a US GAAP basis to $0.53. Adjusted EPS declined 9% on a constant currency basis. Adjusted EPS excludes restructuring charges and credits as further described in the attached reconciliation of US GAAP to Adjusted EPS. The decrease in Adjusted EPS was due to the revenue decline and higher technology costs (+$10 million), including investment in Wiley’s ERP deployment and related systems, partially offset by one-time favorable items related to certain employee benefit plans (+$8 million).
  • Wiley Signs Definitive Agreement to Acquire Atypon for $120 million. Atypon, a publishing-software and service provider based in Santa Clara, California, enables scholarly societies and publishers to deliver, host, enhance, market, and manage their content on the web. Atypon’s Literatum platform hosts nearly 9,000 journals, 13 million journal articles, and more than 1,800 publication web sites for over 200 societies and publishers. Atypon generated over $31 million in calendar year 2015 revenue. The transaction is expected to close with an effective date of October 1.
  • Net Debt and Cash Position: Net debt (long-term debt less cash and cash equivalents) at the end of July was $467.1 million, down from $481.1 million at the end of the prior year period. Cash and cash equivalents as of July 31, 2016 were $185.9 million.
  • Free Cash Flow was a use of $165.5 million for the quarter compared to a use of $154.6 million in the prior year period mainly due to lower cash earnings from operations and higher incentive payments. Note that free cash flow is seasonally negative in the first half of Wiley’s fiscal year principally due to the timing of cash collections for annual journal subscriptions.
  • Share Repurchases: Wiley repurchased 221,305 shares this quarter at a cost of $11.3 million, an average of $51.01 per share. Over 4.5 million shares remain in authorized repurchase programs, including a 4 million share repurchase program approved in June.
  • Dividend: In June, the Board of Directors increased Wiley’s quarterly cash dividend by 3.3% to $0.31 per share on its Class A and Class B Common Stock. It was the 23rd consecutive annual increase and raised the annualized dividend payout to $1.24 per share.

RESEARCH

  • Revenue: First quarter revenue of $234.4 million rose 2% on a constant currency basis. Results were driven by 4% growth in Journal Revenue, with 3% growth in Journal Subscriptions (primarily due to a $4 million favorable impact from the shift to time-based journal subscriptions) and 39% growth in Author-Funded Access. Books and References revenue was down 12%. Overall, Research revenue on a US GAAP basis declined 1% reflecting the unfavorable impact of currency.
  • Adjusted Contribution to Profit: First quarter adjusted contribution to profit of $63.2 million was essentially flat on a constant currency basis. Contributions from revenue growth were offset by higher technology costs and other spending to support society journals. Excluding the favorable impact of time-based subscriptions, adjusted contribution to profit declined 6%. Contribution to profit on a US GAAP basis declined 3% reflecting the unfavorable impact of currency.
  • Calendar Year 2016 Journal Subscriptions: As of the end of July, calendar year 2016 Journal Subscriptions increased 1% on a constant currency basis, with 98% of targeted business contracted for the 2016 calendar year.
  • Society Business: Three new society contracts were signed in the quarter with combined annual revenue of $2.9 million; 13 were renewed with combined annual revenue of $13.2 million; and four with combined annual revenue of $1.3 million were not renewed.
  • Journal Impact Index: In July 2016, Wiley announced an increase in impact factors across more than half of its indexed titles. According to the 2015 Journal Citation Reports (JCR), recently released by Thomson Reuters, 58% of Wiley journals increased their impact factor from 2014 to 2015. Wiley had 1,204 journals indexed (73% of the Wiley portfolio), an increase on the previous year, with 11 Wiley titles receiving their first impact factor in this year’s JCR release. In addition, 26 Wiley journals achieved a top-category rank, including CA-A Cancer Journal for Clinicians (Impact Factor of 131.7, ranked #1 in Oncology), World Psychiatry (Impact Factor of 20.2, ranked #1 in Psychiatry), and Biological Reviews (Impact Factor of 10.7, ranked #1 in Biology). The Thomson Reuters index is a barometer of journal influence across the research community.

PROFESSIONAL DEVELOPMENT

  • Revenue: First quarter revenue declined 2% on a constant currency basis to $96.1 million with growth in Corporate Learning (+20%), Online Test Preparation (+23%), and Assessment (+2%) more than offset by the decline in Books (10%). Revenue on a US GAAP basis fell 3% with results impacted by unfavorable foreign exchange.
  • Adjusted Contribution to Profit: First quarter adjusted contribution rose 7% due to continued efficiency gains. Contribution to Profit on a US GAAP basis grew 3%.
  • Partnerships: In August, Wiley announced a publishing agreement with Amazon Web Services (AWS) to introduce official study guide learning tools for the AWS Certification Program. The AWS Certification Program recognizes IT professionals that possess the skills and technical knowledge necessary for building and maintaining applications and services on the AWS Cloud. To earn an AWS Certification, individuals must demonstrate their proficiency in a particular area by passing an AWS Certification Exam.

EDUCATION

  • Revenue: First quarter revenue declined 14% on a constant currency basis to $73.8 million as declines in Books (-28%) and Custom Material (-15%) offset growth in Online Program Management (+13%). The decline in textbooks and other course materials reflects the continued weakness in overall textbook demand and further share gain in textbook rental. Revenue on a US GAAP basis fell 15%.
  • Contribution to Profit: First quarter contribution to profit on an adjusted and US GAAP basis declined to a loss of $2 million, driven by the revenue decline.
  • Online Program Management: As of July 31, 2016, Wiley had 37 university partners and 232 programs under contract, compared to 38 partners and 226 programs at the end of last quarter. Ten (10) new programs were contracted with existing partners in the quarter; one partnership and four programs expired in the quarter.

Earnings Conference Call

  • Scheduled for today, September 7, 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) 430-8669 and enter the participant code 6085207#
  • International callers, please dial (719) 457-2695 and enter the participant code 6085207#
  • 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 FIRST QUARTER ENDED
JULY 31, 2016 AND 2015
(in thousands, except per share amounts)
                       
 

FIRST QUARTER ENDED JULY 31,

 
2016 2015 % Change
US GAAP

Adjustments
(A)

 

Adjusted US GAAP

Adjustments
(A)

Adjusted US GAAP

Adjusted
excl. FX

 
Revenue $ 404,285 404,285 422,981 422,981 -4 % -2 %
 
Costs and Expenses
Cost of Sales 113,169 113,169 119,729 119,729 -5 % -3 %
Operating and Administrative 235,649 235,649 242,498 242,498 -3 % -1 %
Restructuring (Credits) Charges (A) (920 ) 920 - 3,425 (3,425 ) -
Amortization of Intangibles 12,573     12,573   12,420     12,420   1 % 5 %
 
Total Costs and Expenses 360,471 920 361,391 378,072 (3,425 ) 374,647 -5 % -1 %
 
Operating Income 43,814 (920 ) 42,894 44,909 3,425 48,334 -2 % -9 %
Operating Margin 10.8 % 10.6 % 10.6 % 11.4 %
 
Interest Expense (4,071 ) (4,071 ) (3,573 ) (3,573 ) 14 % 14 %
Foreign Exchange Gain 221 221 (80 ) (80 )
Interest Income and Other 377     377   664     664   -43 % -43 %
 
Income Before Taxes 40,341 (920 ) 39,421 41,920 3,425 45,345 -4 % -11 %
 
Provision for Income Taxes (A) 9,327   (263 ) 9,064   9,463   1,419   10,882   -1 % -15 %
 
Net Income $ 31,014   (657 ) 30,357   32,457   2,006   34,463   -4 % -10 %
 
 
Earnings Per Share- Diluted (A) $ 0.53 (0.01 ) 0.52 0.55 0.03 0.58 -4 % -9 %
 
Average Shares - Diluted 58,176 58,176 58,176 59,366 59,366 59,366
 
 
See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.
 
 
JOHN WILEY & SONS, INC.
FOR THE FIRST QUARTER ENDED
JULY 31, 2016 AND 2015
 
 

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

 
 
First Quarter Ended
July 31,
  2016     2015
 
US GAAP Earnings Per Share - Diluted $ 0.53 $ 0.55
Adjusted to exclude the following:
Restructuring (Credits) Charges (A) (0.01 ) 0.03
 
Adjusted Earnings Per Share - Diluted $ 0.52   $ 0.58
 
 
 
 

NOTES TO UNAUDITED FINANCIAL STATEMENTS

 
 
Adjustments:
a Restructuring (Credits) Charges: The adjusted results for the three months ended July 31, 2016 and 2015 exclude restructuring (credits) charges related to the Company's Restructuring and Reinvestment Program of $(0.9) million or $(0.01) per share, and $3.4 million or $0.03 per share, respectively. The first quarter of fiscal year 2017 credit reflects the true-up of facility lease reserves.
 

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 FIRST QUARTER ENDED
JULY 31, 2016 AND 2015
(in thousands)
   
 

FIRST QUARTER ENDED JULY 31,

 
2016 2015 % Change  
US GAAP

Adjustments
(A)

Adjusted US GAAP

Adjustments
(A)

Adjusted   US GAAP

Adjusted
excl. FX

Revenue

Research $ 234,441 - 234,441 237,390 - 237,390 -1 % 2 %
Professional Development 96,066 - 96,066 98,665 - 98,665 -3 % -2 %
Education 73,778 - 73,778 86,926 - 86,926 -15 % -14 %
           
Total $ 404,285   -   404,285   422,981   -   422,981   -4 % -2 %
 

Direct Contribution to Profit

Research $ 106,417 (69 ) 106,348 106,614 370 106,984 0 % 2 %
Professional Development 39,884 352 40,236 41,281 10 41,291 -3 % -1 %
Education 17,716 1 17,717 23,289 (11 ) 23,278 -24 % -23 %
           
Total $ 164,017   284   164,301   171,184   369   171,553   -4 % -2 %
 

Contribution to Profit (After Allocated Shared Services

and Admin. Costs)

Research $ 63,310 (69 ) 63,241 65,078 370 65,448 -3 % 0 %
Professional Development 19,618 352 19,970 19,013 10 19,023 3 % 7 %
Education (1,992 ) 1 (1,991 ) 5,033 (11 ) 5,022 -140 % -138 %
           
Total $ 80,936 284 81,220 89,124 369 89,493 -9 % -7 %
 
Unallocated Shared Services and Admin. Costs (37,122 ) (1,204 ) (38,326 ) (44,215 ) 3,056 (41,159 ) -16 % -4 %
           
Operating Income $ 43,814   (920 ) 42,894   44,909   3,425   48,334   -2 % -9 %
 
 
 
 

Total Shared Services and Admin. Costs by Function

Distribution and Operation Services $ (19,542 ) 13 (19,529 ) (20,649 ) 757 (19,892 ) -5 % 2 %
Technology and Content Management (70,140 ) 70 (70,070 ) (61,944 ) 1,152 (60,792 ) 13 % 17 %
Finance (11,404 ) (155 ) (11,559 ) (13,470 ) 71 (13,399 ) -15 % -12 %
Other Administration (19,117 ) (1,132 ) (20,249 ) (30,212 ) 1,076   (29,136 ) -37 % -29 %
Total $ (120,203 ) (1,204 ) (121,407 ) (126,275 ) 3,056   (123,219 ) -5 % 0 %
 
 
 
 
(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 FIRST QUARTER ENDED
JULY 31, 2016 AND 2015
(in thousands)
   
 
First Quarter Ended
July 31,
2016 2015

%
Change

% Change
excl. FX

 
 

Research:

Direct Contribution to Profit $ 106,417 106,614 0% 2%
Restructuring Charges (Credits) (A) (69) 370
Adjusted Direct Contribution to Profit 106,348 106,984 -1% 2%
 
Allocated Shared Services and Admin. Costs:
Distribution and Operation Services (9,386) (10,245) -8% -5%
Technology and Content Management (28,272) (24,056) 18% 20%
Occupancy and Other (5,449) (7,235) -25% -25%
Adjusted Contribution to Profit (after allocated $ 63,241 65,448 -3% 0%
Shared Services and Admin. Costs)
 

Professional Development:

Direct Contribution to Profit $ 39,884 41,281 -3% -2%
Restructuring Charges (A) 352 10
Adjusted Direct Contribution to Profit 40,236 41,291 -3% -1%
 
Allocated Shared Services and Admin. Costs:
Distribution and Operation Services (5,842) (6,871) -15% -12%
Technology and Content Management (9,856) (9,804) 1% 1%
Occupancy and Other (4,568) (5,593) -18% -18%
Adjusted Contribution to Profit (after allocated $ 19,970 19,023 5% 7%
Shared Services and Admin. Costs)
 

Education:

Direct Contribution to Profit $ 17,716 23,289 -24% -24%
Restructuring Charges (A) 1 (11)
Adjusted Direct Contribution to Profit 17,717 23,278 -24% -23%
 
Allocated Shared Services and Admin. Costs:
Distribution and Operation Services (3,270) (3,425) -5% -5%
Technology and Content Management (12,952) (10,887) 19% 19%
Occupancy and Other (3,486) (3,944) -12% -12%
Adjusted Contribution to Profit (after allocated $ (1,991) 5,022 140% 138%
Shared Services and Admin. Costs)
 
Total Adjusted Contribution to Profit (after $ 81,220 89,493 -9% -7%
allocated Shared Services and Admin. Costs)
 

Unallocated Shared Services and Admin. Costs:

Unallocated Shared Services and Admin. Costs $ (37,122) (44,215) -16% -13%
Restructuring Charges (Credits) (A) (1,204) 3,056
Adjusted Unallocated Shared Services and Admin. Costs $ (38,326) (41,159) -7% -4%
   
Adjusted Operating Income $ 42,894 48,334 -11% -9%
 

 

(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 FIRST QUARTER ENDED
JULY 31, 2016 AND 2015
(in thousands)
                       
First Quarter    
Ended July 31, % of % Change
  2016   2015   Revenue   excl. FX
 
 

RESEARCH

Journal Revenue
Journal Subscriptions $ 160,081 159,068 68 % 3 %
Author-Funded Access 7,513 5,692 3 % 39 %
Licensing, Reprints, Backfiles, and Other 37,362 37,626 16 % 3 %
Total Journal Revenue 204,956 202,386 87 % 4 %
 
Books and References:
Print Books 18,568 23,382 8 % -17 %
Digital Books 8,441 8,827 4 % 0 %
Licensing and Other 2,476 2,795 1 % -4 %
Total Books and References Revenue 29,485 35,004 13 % -12 %
 
                       
  Total Revenue     $ 234,441   237,390   100 %   2 %
 
 

PROFESSIONAL DEVELOPMENT

Knowledge Services:
Print Books $ 41,513 48,712 43 % -13 %
Digital Books 11,194 10,633 12 % 7 %
Online Test Preparation and Certification 9,707 7,906 10 % 23 %
Other Knowledge Service Revenue 4,724 5,391 5 % -11 %
67,138 72,642 70 % -6 %
 
Talent Solutions:
Assessment 13,522 13,275 14 % 2 %
Corporate Learning 15,406 12,748 16 % 20 %
28,928 26,023 30 % 11 %
                       
  Total Revenue     $ 96,066   98,665   100 %   -2 %
 
 

EDUCATION

Books:
Print Textbooks $ 23,489 34,544 32 % -31 %
Digital Books 4,836 5,754 7 % -14 %
28,325 40,298 38 % -28 %
 
Custom Material 19,398 22,743 26 % -15 %
 
Course Workflow (WileyPLUS) 866 1,020 1 % -15 %
 
Online Program Management (Deltak) 23,172 20,502 31 % 13 %
 
Other Education Revenue 2,017 2,363 3 % -10 %
                       
  Total Revenue     $ 73,778   86,926   100 %   -14 %
 
 
Note: Segment Revenue Categorization
 
       

JOHN WILEY & SONS, INC.

UNAUDITED STATEMENTS OF FINANCIAL POSITION
(in thousands)
 
July 31, April 30,
2016 2015 2016
 
Current Assets
Cash & cash equivalents $ 185,894 369,413 363,806
Accounts receivable 213,968 202,570 167,638
Inventories 54,822 58,680 57,779
Prepaid and other 119,392 76,276 81,456
Total Current Assets 574,076 706,939 670,679
Product Development Assets 64,122 61,623 72,126
Technology, Property and Equipment 214,740 198,889 214,770
Intangible Assets 831,249 919,996 877,007
Goodwill 916,690 971,407 951,663
Income Tax Deposits 62,200 58,877 62,912
Other Assets 80,185 63,869 71,939
Total Assets 2,743,262 2,981,600 2,921,096
 
Current Liabilities
Short-term debt - 100,000 -
Accounts and royalties payable 138,397 142,741 166,222
Deferred revenue 321,616 281,136 426,489
Accrued employment costs 55,241 59,910 97,902
Accrued income taxes 3,368 9,605 9,450
Accrued pension liability 5,467 4,603 5,492
Other accrued liabilities 69,042 61,839 76,252
Total Current Liabilities 593,131 659,834 781,807
Long-Term Debt 653,000 750,473 605,007
Accrued Pension Liability 206,814 202,230 224,170
Deferred Income Tax Liabilities 191,388 205,004 189,868
Other Long-Term Liabilities 82,521 83,395 83,138
Shareholders' Equity 1,016,408 1,080,664 1,037,106
Total Liabilities & Shareholders' Equity $ 2,743,262 2,981,600 2,921,096
 
       
JOHN WILEY & SONS, INC.
UNAUDITED STATEMENTS OF FREE CASH FLOW
(in thousands)
 
 
Three Months Ended
July 31,
2016   2015  
Operating Activities:
Net income $ 31,014 32,457
Amortization of intangibles 12,573 12,420
Amortization of composition costs 9,731 9,650
Depreciation of technology, property and equipment 17,125 16,491
Restructuring charges (credits) (920 ) 3,425
Restructuring payments (6,461 ) (9,022 )
Share-based compensation expense 224 3,898
Excess tax benefits from share-based compensation (260 ) (503 )
Royalty advances (26,166 ) (24,811 )
Earned royalty advances 30,555 32,060
Other non-cash charges and credits 16,798 14,447
Change in deferred revenue (88,434 ) (95,940 )
Net change in operating assets and liabilities (132,491 ) (118,654 )
Cash Used for Operating Activities (136,712 ) (124,082 )
 
Investments in organic growth:
Composition spending (7,989 ) (8,284 )
Additions to technology, property and equipment (20,778 ) (22,283 )
 
Free Cash Flow (165,479 ) (154,649 )
 
Other Investing and Financing Activities:
Acquisitions, net of cash (8,600 ) (2,221 )
Repayment of long-term debt (153,707 ) (33,717 )
Borrowings of long-term debt 201,700 134,100
Change in book overdrafts (12,261 ) (5,671 )
Cash dividends (17,914 ) (17,609 )
Purchase of treasury shares (11,289 ) (12,723 )
Proceeds from exercise of stock options and other 13,429 375
Excess tax benefits from share-based compensation 260   503  
Cash Provided by Investing and Financing Activities 11,618 63,037
   
Effects of Exchange Rate Changes on Cash (24,051 ) 3,584  
 
Decrease in Cash and Cash Equivalents for Period $ (177,912 ) (88,028 )
 
 
 
RECONCILIATION TO GAAP PRESENTATION
 
Investing Activities:
Composition spending $ (7,989 ) (8,284 )
Additions to technology, property and equipment (20,778 ) (22,283 )
Acquisitions, net of cash (8,600 ) (2,221 )
Cash Used for Investing Activities $ (37,367 ) (32,788 )
 
Financing Activities:
Cash Used for Investing and Financing Activities $ 11,618 63,037
Excluding:
Acquisitions, net of cash (8,600 ) (2,221 )
Cash Provided by Financing Activities $ 20,218   65,258  
 

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