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Wiley Reports Second Quarter Fiscal Year 2016 Results

  • Revenue of $433 million, down 5% over prior year on a constant currency basis, including the impact of a $10 million journal backfile sale in the prior year period
  • Journal subscription revenue of $163 million, down 1% on a constant currency basis, including the trailing effects of the Swets subscription agency bankruptcy
  • Adjusted EPS of $0.78, down 10% on a constant currency basis, including the $0.10 impact of the large journal backfile sale in the prior year period
  • First half revenue and adjusted EPS down 2% and 1%, respectively, on a constant currency basis
  • Full-year adjusted EPS outlook reaffirmed but revenue growth outlook revised to flat, excluding the impact of foreign exchange and the shift to time-based journal subscription agreements
Tuesday, December 8, 2015 8:00 am EST

Public Company Information:

NYSE:
JWA
NYSE:
JWB
"As anticipated, second quarter results reflect a challenging comparison to the prior-year period due to an unusually large backfile sale in that prior period"

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 second quarter of fiscal year 2016:

                 

% Change

$ millions       FY16       FY15       Excluding FX       Including FX

Revenue:

 
Q2 $433.4 $477.0 (5%) (9%)
6 Months $856.3 $914.9 (2%) (6%)

Adjusted EPS:

Q2 $0.78 $0.90 (10%) (13%)
6 Months $1.36 $1.46 (1%) (7%)

GAAP EPS:

 

Q2 $0.74 $0.90 (18%)
6 Months $1.29 $1.46 (12%)
     

Please see the attached financial schedules for more detail

 

Management Commentary

“As anticipated, second quarter results reflect a challenging comparison to the prior-year period due to an unusually large backfile sale in that prior period,” said Mark Allin, Wiley’s President and CEO. “In addition, the quarter was adversely impacted by substantially weaker demand for college textbooks and custom education material. For the six months, revenue and adjusted EPS were down modestly, with Research journal revenue showing steady performance excluding the prior year backfile sale. Meanwhile, we continue to make good progress in the integration of our books businesses, our continued shift to a more variable cost model and the implementation of our cost benchmarking initiative.”

Fiscal Year 2016 Outlook

Wiley is reaffirming its fiscal year 2016 adjusted EPS outlook for flat performance but lowering its revenue outlook from low-single digit growth to flat; both are on a constant currency basis and exclude the adverse transitional impact of shifting to time-based journal subscription agreements. As previously announced, Wiley is moving to time-based digital journal subscription agreements for calendar year 2016. The change will shift roughly $35 million of revenue and $0.35 of EPS from FY16 to FY17, with recurring effect annually thereafter. Most of the revenue and earnings impact will occur in the third quarter, and the change will not impact cash flow. Included in the FY16 EPS guidance is an incremental expense impact of more than $0.15 for the enterprise resource planning system (ERP) implementation as compared to FY15.

Foreign Exchange (FX)

Wiley generates half of its revenue from outside the United States, and is therefore exposed to a stronger dollar, particularly in relation to the euro and pound sterling. For fiscal year 2015, the weighted average rates for sterling and the euro were 1.60 and 1.25, respectively, on a US dollar equivalent basis. The weighted average rates for the first half of fiscal 2016 were 1.55 and 1.12, 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” revenue, contribution to profit, and EPS, which exclude restructuring charges. Variances to adjusted revenue, 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.

Second Quarter and First Half Summary

  • Second quarter revenue declined 5% on a constant currency basis to $433.4 million due to a $10 million journal backfile sale in the prior year period and declines in book revenue across the three segments. Together, Journal Subscriptions and Author-Funded Access were flat compared to prior year, including the trailing effects of the Swets bankruptcy. Online Program Management and Online Test Preparation grew 18% and 13%, respectively. Second quarter revenue on a US GAAP basis declined 9% primarily due to an adverse currency impact of $19 million. First half revenue declined 2% on a constant currency basis to $856.3 million, or 6% on a US GAAP basis.
  • Second quarter adjusted earnings per share (EPS) declined 10% on a constant currency basis to $0.78 due to the high-margin journal backfile sale in the prior year period, higher technology expense related to ERP planning and deployment, and investment in online program management, partially offset by incremental cost savings from restructuring programs. Adjusted EPS excludes restructuring charges and credits, as further described in the attached reconciliation of US GAAP to Adjusted EPS. Second quarter EPS on a US GAAP basis declined 18% to $0.74. US GAAP EPS includes a $0.03 adverse impact from foreign exchange and a $0.04 per share restructuring charge in the quarter. First half adjusted EPS declined 1% on a constant currency basis to $1.36, or 12% on a US GAAP basis.
  • Free Cash Flow was a use of $192.7 million for the first half of the year as compared to a use of $140.7 million in the prior year period due to lower net income, working capital timing, and higher capital spending related to the ERP and related systems deployment. Note that free cash flow is seasonally negative in the first half of Wiley’s fiscal year principally due to the timing of annual journal subscription cash collections.
  • Restructuring Charge: Wiley recorded a $3.7 million pre-tax restructuring charge in the quarter ($0.04 per share) principally related to process re-engineering consulting costs. After the quarter closed, Wiley completed an agreement to move its US-based print textbook fulfillment operations to Cengage Learning, with the aim of closing its New Jersey distribution facility by April 2016. The exit from the facility will result in near-term restructuring charges as activities progress.
  • Share Repurchases: Wiley repurchased 637,717 shares this quarter at a cost of $32.0 million, an average of $50.15 per share. Approximately 1.3 million shares remain in the current authorization program.

RESEARCH

  • Revenue: Second quarter revenue of $238.4 million was down 5% on a constant currency basis due to the $10 million journal backfile sale in the prior year period and an 11% decline in Books and References revenue, which offset steady performance in Journal Subscriptions and Author-Funded Access, in combination. For the first six months, Research revenue was down 3% at constant currency.
  • Calendar Year 2015 Journal Subscriptions: At the end of October, calendar year 2015 Journal Subscriptions were up 0.3% on a constant currency basis, with nearly all targeted business under contract for the 2015 calendar year. Results were adversely impacted by the Swets bankruptcy and net society publishing losses for the year.
  • Adjusted Contribution to Profit: Second quarter adjusted contribution to profit of $67.6 million declined 11% on a constant currency basis mainly due to the high-margin backfile sale in the prior year, as well as higher allocated marketing and technology shared service costs, partially offset by savings from restructuring and strategic vendor sourcing initiatives. For the six months, adjusted contribution to profit was down 5% at constant currency.
  • Society Business: Seven society journals were renewed during the quarter, worth approximately $9.9 million in combined annual revenue, and one was not renewed, worth $0.3 million annually.

PROFESSIONAL DEVELOPMENT

  • Revenue: Second quarter revenue declined 3% on a constant currency basis to $99.2 million with organic growth in Online Test Preparation (+13%) and Corporate Learning (+7%) offset by a 6% decline in Books. The Assessment business rose 4%, with post-hire assessment growth offsetting an expected decline in pre-hire assessment revenue following portfolio actions to optimize longer-term profitable growth. For the six months, Professional Development revenue grew 3% due to growth in Corporate Learning, which included two additional months of revenue (approximately $5 million) due to a prior-year reporting lag, and strong double-digit growth in Online Test Preparation (+27%).
  • Adjusted Contribution to Profit: Excluding foreign exchange, adjusted contribution to profit rose 95% for the quarter and more than doubled for the year. Performance was impacted by lower revenue offset by efficiency gains from restructuring and cost synergies within the Talent Solutions businesses. Six month performance includes two additional months of operating results from the CrossKnowledge acquisition.
  • Acquisitions: In October, Wiley announced the acquisition of Chartered Financial Analyst (CFA) content and AnalystSuccess.com from The American College of Financial Services. Terms were not disclosed. The acquisition positions Wiley as a market leader for CFA Test Preparation. Wiley runs online CFA Exam Review Courses on its Efficient Learning Systems platform. In addition to the CFA, Wiley provides advanced online test preparation for the CPA, CMA, CIA, and PMP designations.
  • Test Preparation Partnership: Wiley recently announced a partnership with ACT, the nation’s leader in college and career readiness, to enhance our collective test prep product offerings. Wiley will become the exclusive publisher for ACT’s The Real ACT® Prep Guide beginning in January 2016. As producer of the ACT test and ACT WorkKeys®, among other respected assessment programs, ACT is committed to providing insights that help individuals better prepare for success throughout their lives - from education through career.
  • Junior Achievement Program: CrossKnowledge and Junior Achievement USA® recently announced a joint partnership that will bring digital learning solutions to thousands of students and educators. As part of the agreement, CrossKnowledge has donated the use of its Learning Management System (LMS) to Junior Achievement USA for the next five years (starting in 2016) through the CrossKnowledge Foundation. It is estimated that nearly 300,000 Junior Achievement users will access CrossKnowledge programs in 2016, and that figure is expected to reach 1.6 million in 2020.

EDUCATION

  • Revenue: Second quarter revenue declined 8% on a constant currency basis to $95.8 million, with Print Textbooks down 22% and Custom Material down 25%, offsetting strong growth in Online Program Management (+18%) and Digital Books (+12%). The decline in Textbooks and Custom Material reflects lower enrollments, increased market penetration by rental, channel inventory consumption, and fewer adoptions. WileyPLUS grew 2% over prior year. For the six months, Education revenue is down 5% at constant currency.
  • Adjusted Contribution to Profit: Second quarter adjusted contribution to profit declined 19% on a constant currency basis to $15.6 million, reflecting lower revenue and continued investment in Online Program Management.
  • Online Program Management (formerly Deltak): Wiley added one university partner in the quarter – Nottingham Trent University (England) – and six new degree programs spanning business and nursing. Nottingham Trent is one of the largest universities in the UK with over 28,000 students. At the end of October, Wiley had 39 partners under contract and 216 online degree programs.
  • Distribution Partnership: In November, Wiley entered into an agreement to outsource its US-based print textbook fulfillment operations to Cengage Learning, with the aim of creating a more efficient and variable cost model for print products. Under this agreement, the Company plans to exit its New Jersey distribution center in the spring of 2016.

Earnings Conference Call

  • Scheduled for today, December 8, at 10:00 a.m. (EST)
  • 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) 438-5525 and enter the participant code 469774#
  • International callers, please dial (719) 457-1512 and enter the participant code 469774#
  • 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 SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2015 AND 2014
(in thousands, except per share amounts)
   
 

SECOND QUARTER ENDED OCTOBER 31,

 
    2015 2014 % Change  
  US GAAP

Adjustments
(A)

Adjusted US GAAP

Adjustments
(A)

Adjusted US GAAP

Adjusted
excl. FX

 
Revenue $ 433,362 433,362 476,972 476,972 -9 % -5 %
 
Costs and Expenses
Cost of Sales 116,764 116,764 134,541 134,541 -13 % -10 %
Operating and Administrative 239,987 239,987 253,328 253,328 -5 % -1 %
Restructuring Charges (A) 3,694 (3,694 ) - - - -
Amortization of Intangibles     12,652     12,652   13,099     13,099   -3 % 0 %
 
Total Costs and Expenses 373,097 (3,694 ) 369,403 400,968 - 400,968 -7 % -4 %
 
Operating Income 60,265 3,694 63,959 76,004 - 76,004 -21 % -13 %
Operating Margin 13.9 % 14.8 % 15.9 % 15.9 %
 
Interest Expense (4,324 ) (4,324 ) (4,506 ) (4,506 ) -4 % -4 %
Foreign Exchange Gain 38 38 210 210
Interest Income and Other     644     644   1,108     1,108   -42 % -42 %
 
Income Before Taxes 56,623 3,694 60,317 72,816 - 72,816 -22 % -14 %
 
Provision for Income Taxes (A) 13,023   1,348   14,371   19,039     19,039   -32 % -21 %
 
Net Income $     43,600   2,346   45,946   53,777   -   53,777   -19 % -11 %
 
 
Earnings Per Share- Diluted (A) $ 0.74 0.04 0.78 0.90 - 0.90 -18 % -10 %
 
Average Shares - Diluted 58,790 58,790 58,790 59,756 59,756 59,756
 
 

SIX MONTHS ENDED OCTOBER 31,

 
    2015 2014 % Change  
  US GAAP

Adjustments
(A)

Adjusted US GAAP

Adjustments
(A)

Adjusted US GAAP

Adjusted
excl. FX

 
Revenue $ 856,343 856,343 914,889 914,889 -6 % -2 %
 
Costs and Expenses
Cost of Sales 236,493 236,493 258,594 258,594 -9 % -5 %
Operating and Administrative 482,485 482,485 505,062 505,062 -4 % 0 %
Restructuring Charges (Credits) (A) 7,119 (7,119 ) - (155 ) 155 -
Amortization of Intangibles     25,072     25,072   25,754     25,754   -3 % 1 %
 
Total Costs and Expenses 751,169 (7,119 ) 744,050 789,255 155 789,410 -5 % -1 %
 
Operating Income 105,174 7,119 112,293 125,634 (155 ) 125,479 -16 % -6 %
Operating Margin 12.3 % 13.1 % 13.7 % 13.7 %
 
Interest Expense (7,897 ) (7,897 ) (8,650 ) (8,650 ) -9 % -9 %
Foreign Exchange (Loss) Gain (42 ) (42 ) 45 45
Interest Income and Other     1,308     1,308   1,418     1,418   -8 % -8 %
 
Income Before Taxes 98,543 7,119 105,662 118,447 (155 ) 118,292 -17 % -6 %
 
Provision for Income Taxes (A)     22,486   2,767   25,253   31,024   (24 ) 31,000   -28 % -14 %
 
Net Income $     76,057   4,352   80,409   87,423   (131 ) 87,292   -13 % -3 %
 
 
Earnings Per Share- Diluted (A) $ 1.29 0.07 1.36 1.46 - 1.46 -12 % -1 %
 
Average Shares - Diluted 59,090 59,090 59,090 59,777 59,777 59,777
 
See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.
 
 
JOHN WILEY & SONS, INC.
FOR THE SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2015 AND 2014
                                 
 

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

 
 
Second Quarter Ended Six Months Ended
October 31, October 31,
2015 2014 2015 2014
 
US GAAP Earnings Per Share - Diluted $ 0.74 $ 0.90 $ 1.29 $ 1.46
Adjusted to exclude the following:
Restructuring Charges (A) 0.04 - 0.07 -
 
Adjusted Earnings Per Share - Diluted $   0.78 $   0.90 $   1.36 $   1.46
 
 

NOTES TO UNAUDITED FINANCIAL STATEMENTS

 
 

Adjustments:

(A)

RESTRUCTURING CHARGES: The adjusted results for the three and six months ended October 31, 2015 exclude restructuring charges related to the Company's Restructuring and Reinvestment Program of $3.7 million or $0.04 per share, and $7.1 million or $0.07 per share, respectively. The adjusted results for the six months ended October 31, 2014 exclude a restructuring credit of $(0.2) million.

 

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 SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2015 AND 2014
(in thousands)
                                             
 

SECOND QUARTER ENDED OCTOBER 31,

 
2015 2014 % Change  
  US GAAP      

Adjustments
(A)

      Adjusted US GAAP      

Adjustments
(A)

      Adjusted US GAAP      

Adjusted
excl. FX

Revenue

Research $ 238,388 - 238,388 264,825 - 264,825 -10 % -5 %
Professional Development 99,166 - 99,166 105,667 - 105,667 -6 % -3 %
Education 95,808 - 95,808 106,480 - 106,480 -10 % -8 %
               
Total $     433,362   -   433,362   476,972   -   476,972   -9 % -5 %
 

Direct Contribution to Profit

Research $ 110,881 496 111,377 122,744 - 122,744 -10 % -5 %
Professional Development 41,497 195 41,692 37,597 - 37,597 10 % 14 %
Education 35,849 205 36,054 40,741 - 40,741 -12 % -9 %
               
Total $     188,227   896   189,123   201,082   -   201,082   -6 % -2 %
 

Contribution to Profit (After Allocated Shared Services

and Admin. Costs)

Research $ 67,099 496 67,595 80,218 - 80,218 -16 % -11 %
Professional Development 18,757 195 18,952 9,799 - 9,799 91 % 95 %
Education 15,366 205 15,571 19,729 - 19,729 -22 % -19 %
               
Total $ 101,222 896 102,118 109,746 - 109,746 -8 % -3 %
 
Unallocated Shared Services and Admin. Costs (40,957 ) 2,798 (38,159 ) (33,742 ) - (33,742 ) 21 % 19 %
               
Operating Income $     60,265   3,694   63,959   76,004   -   76,004   -21 % -13 %
 
 
 
 

Total Shared Services and Admin. Costs by Function

Distribution and Operation Services $ (22,111 ) 1,208 (20,903 ) (22,706 ) - (22,706 ) -3 % -3 %
Technology and Content Management (62,030 ) (379 ) (62,409 ) (60,181 ) - (60,181 ) 3 % 8 %
Finance (11,318 ) (496 ) (11,814 ) (12,644 ) - (12,644 ) -10 % -2 %
Other Administration     (32,503 ) 2,465   (30,038 ) (29,547 ) -   (29,547 ) 10 % 6 %
Total $     (127,962 ) 2,798   (125,164 ) (125,078 ) -   (125,078 ) 2 % 4 %
 
 

SIX MONTHS ENDED OCTOBER 31,

 
2015 2014 % Change  
  US GAAP      

Adjustments
(A)

      Adjusted US GAAP      

Adjustments
(A)

      Adjusted US GAAP      

Adjusted
excl. FX

Revenue

Research $ 475,778 - 475,778 519,695 - 519,695 -8 % -3 %
Professional Development 197,831 - 197,831 197,994 - 197,994 0 % 3 %
Education 182,734 - 182,734 197,200 - 197,200 -7 % -5 %
               
Total $     856,343   -   856,343   914,889   -   914,889   -6 % -2 %
 

Direct Contribution to Profit

Research $ 217,694 866 218,560 237,478 (185 ) 237,293 -8 % -3 %
Professional Development 82,778 205 82,983 70,509 245 70,754 17 % 20 %
Education 59,137 194 59,331 69,304 51 69,355 -15 % -11 %
               
Total $   359,609   1,265   360,874   377,291   111   377,402   -5 % 0 %
 

Contribution to Profit (After Allocated Shared Services

and Admin. Costs)

Research $ 132,668 866 133,534 150,177 (185 ) 149,992 -12 % -5 %
Professional Development 37,766 205 37,971 17,322 245 17,567 118 % 119 %
Education 20,067 194 20,261 28,425 51 28,476 -29 % -25 %
               
Total $ 190,501 1,265 191,766 195,924 111 196,035 -3 % 3 %
 
Unallocated Shared Services and Admin. Costs (85,327 ) 5,854 (79,473 ) (70,290 ) (266 ) (70,556 ) 21 % 19 %
               
Operating Income $     105,174   7,119   112,293   125,634   (155 ) 125,479   -16 % -6 %
 
 
 
 

Total Shared Services and Admin. Costs by Function

Distribution and Operation Services $ (43,341 ) 1,965 (41,376 ) (46,924 ) 384 (46,540 ) -8 % -6 %
Technology and Content Management (123,967 ) 773 (123,194 ) (121,571 ) (557 ) (122,128 ) 2 % 5 %
Finance (24,067 ) (425 ) (24,492 ) (26,215 ) (93 ) (26,308 ) -8 % -2 %
Other Administration     (63,060 ) 3,541   (59,519 ) (56,947 ) -   (56,947 ) 11 % 9 %
Total $     (254,435 ) 5,854   (248,581 ) (251,657 ) (266 ) (251,923 ) 1 % 3 %
 
  (A) See the accompanying Notes to Unaudited Financial Statements for a description the Adjustment.
 
Note: As part of Wiley’s restructuring and reorganization program the Company consolidated certain decentralized business functions (Sales Support, Marketing Services, etc.) into global shared service functions. These newly centralized service groups enable significant cost reduction opportunities, including efficiencies gained from standardized technology and centralized management. The cost of these functions were previously reported as direct operating expenses in each business segment but are now reported within the shared service functions and then allocated to each business segment above. Prior year amounts have been restated to reflect the same reporting methodology.
 
       
JOHN WILEY & SONS, INC.
SEGMENT REVENUE by PRODUCT/SERVICE
FOR THE SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2015 AND 2014
(in thousands)
                                           
    Second Quarter               Six Months        
Ended October 31, % of % Change Ended October 31, % of % Change
      2015     2014     Revenue     excl. FX         2015     2014     Revenue     excl. FX
       
 

RESEARCH

Journal Revenue
Journal Subscriptions $ 162,796 172,146 68% -1% $ 320,004 340,970 67% -1%
Author-Funded Access 6,180 5,067 3% 30% 11,872 10,496 2% 22%
Licensing, Reprints, Backfiles, and Other 36,484 49,056 15% -20% 75,797 92,554 16% -12%
Total Journal Revenue 205,460 226,269 86% -4% 407,673 444,020 86% -2%
 
Books and References:
Print Books 23,065 26,161 10% -8% 46,560 51,162 10% -5%
Digital Books 7,750 9,800 3% -18% 16,537 19,056 3% -7%
Licensing and Other 2,113 2,595 1% -15% 5,008 5,457 1% 1%
Total Books and References Revenue 32,928 38,556 14% -11% 68,105 75,675 14% -5%
 
                                                                 
Total Revenue       $     238,388     264,825     100%       -5%   $     475,778     519,695     100%       -3%
 
 

PROFESSIONAL DEVELOPMENT

Knowledge Services:
Print Books $ 49,246 53,028 50% -4% $ 97,958 105,891 50% -4%
Digital Books 11,938 14,120 12% -13% 22,571 24,974 11% -8%
Online Test Preparation and Certification 6,269 5,538 6% 13% 14,175 11,200 7% 27%
Other Knowledge Service Revenue 5,467 6,541 6% -15% 10,905 12,313 6% -9%
72,920 79,227 74% -5% 145,609 154,378 74% -3%
 
Talent Solutions:
Assessment 15,758 15,187 16% 4% 28,985 28,309 15% 2%
Corporate Learning 10,488 11,253 11% 7% 23,237 15,307 12% 67%
26,246 26,440 26% 5% 52,222 43,616 26% 25%
                                                                 
Total Revenue       $     99,166     105,667     100%       -3%   $     197,831     197,994     100%       3%
 
 

EDUCATION

Books:
Print Textbooks $ 31,059 41,700 32% -22% $ 65,603 86,235 36% -20%
Digital Books 8,889 8,500 9% 12% 14,643 14,204 7% 9%
39,948 50,200 42% -16% 80,246 100,439 44% -16%
 
Custom Material 12,290 16,400 13% -25% 35,033 35,972 19% -3%
 
Course Workflow (WileyPLUS) 18,446 18,400 19% 2% 19,466 19,714 11% 2%
 
Online Program Management (Deltak) 23,195 19,699 24% 18% 43,697 35,936 24% 22%
 
Other Education Revenue 1,929 1,781 2% 8% 4,292 5,139 2% -16%
                                                                 
Total Revenue       $     95,808     106,480     100%       -8%   $     182,734     197,200     100%       -5%
 
 
Note: Segment Revenue Categorization
 
                                           
UNAUDITED ADJUSTED CONTRIBUTION TO PROFIT
INCLUDING ALLOCATED SHARED SERVICES AND ADMINISTRATIVE COSTS
FOR THE SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2015 AND 2014
(in thousands)
     
 
Second Quarter Ended Six Months Ended
October 31, October 31,
2015   2014  

%
Change

% Change
excl. FX

2015   2014  

%
Change

%
Change
excl. FX

 
 

Research:

Direct Contribution to Profit 110,881 122,744 -10 % -5 % 217,694 237,478 -8 % -3 %
Restructuring Charges (Credits) (A) 496   -   866   (185 )
Adjusted Direct Contribution to Profit 111,377 122,744 -9 % -5 % 218,560 237,293 -8 % -3 %
 
Allocated Shared Services and Admin. Costs:
Distribution and Operation Services (10,085 ) (11,441 ) -12 % -7 % (20,264 ) (23,419 ) -13 % -7 %
Technology and Content Management (25,749 ) (24,632 ) 5 % 7 % (49,805 ) (49,575 ) 0 % 4 %
Occupancy and Other (7,948 ) (6,453 ) 23 % 31 % (14,957 ) (14,307 ) 5 % 12 %
Adjusted Contribution to Profit (after allocated 67,595   80,218   -16 % -11 % 133,534   149,992   -11 % -5 %
Shared Services and Admin. Costs)
 

Professional Development:

Direct Contribution to Profit 41,497 37,597 10 % 13 % 82,778 70,509 17 % 20 %
Restructuring Charges (A) 195   -   205   245  
Adjusted Direct Contribution to Profit 41,692 37,597 11 % 14 % 82,983 70,754 17 % 20 %
 
Allocated Shared Services and Admin. Costs:
Distribution and Operation Services (6,783 ) (7,969 ) -15 % -11 % (13,656 ) (16,270 ) -16 % -12 %
Technology and Content Management (10,254 ) (12,227 ) -16 % -14 % (20,058 ) (23,172 ) -13 % -11 %
Occupancy and Other (5,703 ) (7,602 ) -25 % -21 % (11,298 ) (13,745 ) -18 % -14 %
Adjusted Contribution to Profit (after allocated 18,952   9,799   93 % 95 % 37,971   17,567   116 % 119 %
Shared Services and Admin. Costs)
 

Education:

Direct Contribution to Profit 35,849 40,741 -12 % -10 % 59,137 69,304 -15 % -11 %
Restructuring Charges (A) 205   -   194   51  
Adjusted Direct Contribution to Profit 36,054 40,741 -12 % -9 % 59,331 69,355 -14 % -11 %
 
Allocated Shared Services and Admin. Costs:
Distribution and Operation Services (3,740 ) (3,213 ) 16 % 26 % (7,165 ) (6,545 ) 9 % 16 %
Technology and Content Management (12,592 ) (14,197 ) -11 % -10 % (23,810 ) (27,536 ) -14 % -11 %
Occupancy and Other (4,151 ) (3,602 ) 15 % 18 % (8,095 ) (6,798 ) 19 % 22 %
Adjusted Contribution to Profit (after allocated 15,571   19,729   -21 % -19 % 20,261   28,476   -29 % -25 %
Shared Services and Admin. Costs)
 
Total Adjusted Contribution to Profit (after 102,118 109,746 -7 % -3 % 191,766 196,035 -2 % 3 %
allocated Shared Services and Admin. Costs)
 

Unallocated Shared Services and Admin. Costs:

Unallocated Shared Services and Admin. Costs (40,957 ) (33,742 ) 21 % 28 % (85,327 ) (70,290 ) 21 % 28 %
Restructuring Charges (Credits) (A) 2,798   -   5,854   (266 )
Adjusted Unallocated Shared Services and Admin. Costs (38,159 ) (33,742 ) 13 % 19 % (79,473 ) (70,556 ) 13 % 19 %
       
Adjusted Operating Income 63,959   76,004   -16 % -13 % 112,293   125,479   -11 % -6 %
 
(A) See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.
 
Note: As part of Wiley’s restructuring and reorganization program the Company consolidated certain decentralized business functions (Sales Support, Marketing Services, etc.) into global shared service functions. These newly centralized service groups enable significant cost reduction opportunities, including efficiencies gained from standardized technology and centralized management. The cost of these functions were previously reported as direct operating expenses in each business segment but are now reported within the shared service functions and then allocated to each business segment above. Prior year amounts have been restated to reflect the same reporting methodology.
 
                   
JOHN WILEY & SONS, INC.
UNAUDITED STATEMENTS OF FINANCIAL POSITION
(in thousands)
 
October 31, April 30,
2015 2014 2015
 
Current Assets
Cash & cash equivalents $ 308,235 198,912 457,441
Accounts receivable 183,447 204,424 147,183
Inventories 58,154 70,941 63,779
Prepaid and other 68,951 66,233 72,516
Total Current Assets 618,787 540,510 740,919
Product Development Assets 55,432 58,851 69,589
Technology, Property and Equipment 205,362 190,811 193,010
Intangible Assets 915,174 992,618 917,621
Goodwill 965,571 1,003,290 962,367
Income Tax Deposits 59,810 64,036 57,098
Other Assets 62,691 62,659 63,639
Total Assets 2,882,827 2,912,775 3,004,243
 
Current Liabilities
Short-term debt 150,000 50,000 100,000
Accounts and royalties payable 161,282 180,033 161,465
Deferred revenue 150,716 163,902 372,051
Accrued employment costs 61,790 66,737 93,922
Accrued income taxes 9,654 10,127 9,484
Accrued pension liability 4,602 4,625 4,594
Other accrued liabilities 55,355 52,976 62,167
Total Current Liabilities 593,399 528,400 803,683
Long-Term Debt 739,051 749,513 650,090
Accrued Pension Liability 196,094 155,497 209,727
Deferred Income Tax Liabilities 203,499 234,685 198,947
Other Long-Term Liabilities 83,111 82,278 86,756
Shareholders' Equity 1,067,673 1,162,402 1,055,040
Total Liabilities & Shareholders' Equity $ 2,882,827 2,912,775 3,004,243
 
 
JOHN WILEY & SONS, INC.
UNAUDITED STATEMENTS OF FREE CASH FLOW
(in thousands)
               
 
Six Months Ended
October 31,
2015   2014  
Operating Activities:
Net income

 

$

76,057 87,423
Amortization of intangibles 25,072 25,754
Amortization of composition costs 19,967 20,810
Depreciation of technology, property and equipment 32,820 30,510
Restructuring charges (credits) 7,119 (155 )
Restructuring payments (18,339 ) (16,267 )
Share-based compensation expense 8,112 8,118
Excess tax benefits from share-based compensation (527 ) (1,774 )
Royalty advances (45,553 ) (47,997 )
Earned royalty advances 60,163 64,939
Other non-cash charges and credits 18,115 20,436
Change in deferred revenue (225,115 ) (223,731 )
Net change in operating assets and liabilities (84,410 ) (62,202 )
Cash Used for Operating Activities (126,519 ) (94,136 )
 
Investments in organic growth:
Composition spending (20,033 ) (16,934 )
Additions to technology, property and equipment (46,177 ) (29,584 )
 
Free Cash Flow (192,729 ) (140,654 )
 
Other Investing and Financing Activities:
Acquisitions, net of cash (16,681 ) (172,145 )
Escrowed proceeds from sale of consumer publishing programs - 1,100
Repayment of long-term debt (112,641 ) (228,051 )
Borrowings of long-term debt 201,600 325,070
Borrowings of short-term Debt 50,000 -
Change in book overdrafts 285 (8,123 )
Cash dividends (35,166 ) (34,402 )
Purchase of treasury shares (44,703 ) (41,534 )
Proceeds from exercise of stock options and other 465 18,876
Excess tax benefits from share-based compensation 527   1,774  
Cash Provided by (Used for) Investing and Financing Activities 43,686 (137,435 )
   
Effects of Exchange Rate Changes on Cash (163 ) (9,376 )
 
Decrease in Cash and Cash Equivalents for Period

 

$

(149,206 ) (287,465 )
 
 
 
RECONCILIATION TO GAAP PRESENTATION
 
Investing Activities:
Composition spending

 

$

(20,033 ) (16,934 )
Additions to technology, property and equipment (46,177 ) (29,584 )
Acquisitions, net of cash (16,681 ) (172,145 )
Escrowed proceeds from sale of consumer publishing programs -   1,100  
Cash Used for Investing Activities

 

$

(82,891 ) (217,563 )
 
Financing Activities:
Cash Used for Investing and Financing Activities

 

$

43,686 (137,435 )
Excluding:
Acquisitions, net of cash (16,681 ) (172,145 )
Escrowed proceeds from sale of consumer publishing programs -   1,100  
Cash Provided by Financing Activities

 

$

60,367   33,610  
 
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:

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