Building
A better future
through education, skill development and research
Building
through education, skill development and research
HOBOKEN, N.J.--(BUSINESS WIRE)--John Wiley & Sons, Inc. (NYSE: JWa and JWb):
| Change | ||||||||||||||||||||
$ millions | FY13 | FY12 | Excluding FX | Including FX | |||||||||||||||||
U.S. GAAP | |||||||||||||||||||||
Revenue: Q4 Full Year | $446 $1,761 | $455 $1,783 | (0.4%) (0.3%) | (2%) (1%) | |||||||||||||||||
EPS: Q4 Full Year | $0.13 $2.39 | $0.80 $3.47 | (81%) (30%) | (84%) (31%) | |||||||||||||||||
ADJUSTED | |||||||||||||||||||||
Revenue:* Q4 Full Year | $441 $1,715 | $435 $1,710 | 3% 1% | 1% 0.3% | |||||||||||||||||
EPS:** Q4 Full Year | $0.71 $2.92 | $0.77 $3.12 | (5%) (5%) | (8%) (6%) |
* | The Company divested certain consumer publishing programs during fiscal year 2013. The divestment of the consumer publishing programs followed the Company’s announcement in March 2012 to explore opportunities to sell or discontinue consumer publishing programs that no longer align with the Company’s long-term strategy. The divestment of the consumer publishing programs was effectively complete by April 30, 2013. For comparison purposes, revenue from these divested consumer publishing programs of $5.2 million and $45.6 million for the fourth quarter and fiscal year 2013, and $19.1 million and $73.0 million in the fourth quarter and fiscal year 2012, respectively, have been excluded in determining adjusted revenue. | |
** | See attached schedule for calculation of Adjusted Earnings Per Share (EPS). | |
John Wiley & Sons, Inc. (NYSE: JWa and JWb), a global provider of knowledge and knowledge-based services in areas of research, professional development, and education today announced results for the fourth quarter and fiscal year 2013.
Fiscal Year Highlights
As a result, the Company recorded restructuring and impairment charges in the fourth quarter of $39.6 million or $0.46 per share. The charge includes accrued redundancy costs; U.S. defined benefit pension plan termination costs; process reengineering consulting costs and the write off of certain publishing and technology assets. The Company is on track to realize approximately $80 million in cost savings on a run-rate basis by the end of April 2014. The Company is targeting a majority of the cost savings achieved to improve margins and earnings, while some will be reinvested in high growth digital business opportunities.
Fourth Quarter Highlights
Restructuring Update
As previously announced at the end of the third quarter, Wiley recorded a fourth quarter restructuring charge of $24.5 million ($0.27 per share) related to its cost restructuring initiative, which is on track to yield $80 million in run rate net savings by the end of fiscal year 2014. The charge is primarily related to severance and other employee separation-related benefits; process reengineering consulting costs and U.S. defined benefit pension plan termination costs. As previously noted, the Company is targeting more than half of the cost savings achieved to improve financial performance, while the remainder will be reinvested in high growth digital business opportunities. The $24.5 million charge and other actions identified to date will yield approximately $38 million in ongoing savings towards the $80 million overall program objective when fully phased-in over the course of fiscal 2014. Finally, as a result of the restructuring strategies identified, the Company recorded impairment charges on technology and controlled circulation journal assets of $15.2 million ($0.19 per share).
Wiley expects to record an additional charge or charges during fiscal year 2014 as it implements successive phases of the program. Given progress to date, the Company expects that it will be in a position to begin implementation of the next phase of the restructuring initiative mid-fiscal year which will generate a charge for additional employee separation-related benefits of a similar size to that taken at year end fiscal 2013. The Company will endeavor to provide as much forward guidance on such charges and progress on the achievement of savings as feasible over the course of the fiscal year.
Management Commentary
“Although we are disappointed with our revenue and earnings performance this year the positives for the year are noteworthy,” said Stephen M. Smith, President and CEO of Wiley. “We made the largest non-content acquisition in our history with the purchase of Deltak, an online program provider for higher education institutions. It not only transformed our educational institutional services business in a high growth area of the market, it also provided Wiley with a new institutional sales channel, and moved us well along the path towards digital content and services. Our Professional Development business is also more sharply focused on professional communities today than a year ago. We have sold our consumer publishing programs while recently acquiring a workplace assessment provider in Inscape and a test preparatory platform provider in ELS. Finally, in Research, we won the largest society deal in our history, a $23 million contract with the American Geophysical Union (AGU); we experienced outstanding growth in China; and our calendar year 2013 journal billings are up about 3% as of the end of May.”
Mr. Smith continued: “Our Research business was affected this year by the timing of journal publication and subscription orders versus last year, as well as a decline in print book sales and corporate reprints. With that said, the underlying performance of the journals subscription business is solid. While print book sales were anticipated to decline in all three segments, the declines were more significant than anticipated in parts of the business. Under the circumstances we are pleased that Wiley is able to report solid free cash flow for the year, which is the result of underlying performance, some timing benefits, cash collections from journal subscriptions and prudent capital spending. Our recent acquisitions and our digital products also performed strongly.”
“In the last six months we have initiated the largest restructuring and reinvestment program in Wiley’s history, which is on track to realize its goal of $80 million in run rate savings by the end of fiscal 2014; we announced Ellis Cousens’ pending retirement and concluded a search for a new CFO,” said Mr. Smith. “We heartily welcome John Kritzmacher to the Wiley team. John is a former CFO at Lucent Technologies and Global Crossing, a former COO of Services at Alcatel-Lucent, and a former SVP-Business Operations and Organization Planning at WebMD.”
Outlook
Mr. Smith concluded: “FY14 will be a transitional year for Wiley. The significant earnings benefits coming from the restructuring, Deltak, and newly-developed businesses will not be fully realized until FY15. We are expecting adjusted EPS, excluding all fiscal year 2013 and 2014 restructuring and impairment charges, the full impact of our former consumer publishing programs, and one-time tax benefits or charges, to be more or less flat in the range of $2.85 to $2.95. Expected results for fiscal year 2014 include ongoing investments in enabling technology, the year-on-year increase in incentive plan costs to target levels versus FY13 actual accruals, and investments to accelerate growth in Deltak in-line with the extraordinary market opportunity.”
Mr. Smith continued: “We expect a significant lift in FY15 earnings from savings resulting from the completion of the restructuring initiative, contributions from acquired business and new digital products and services. Going forward, we expect the downward trajectory of core-business earnings to moderate as print-related efficiencies take effect. At the same time we expect to see significant earnings contributions coming from new digital products and services and acquisitions.”
Foreign Exchange
As reflected in the attached schedules, for the quarter ended April 30, 2013, earnings were unfavorably affected by $0.02 per share when compared to the same period ended April 30, 2012. Revenue was unfavorably affected by $7 million, while costs and expenses were positively affected by $5 million. For the twelve-month period, earnings were unfavorably affected by $0.04 per share compared to fiscal year 2012. Revenue was unfavorably affected by $17 million, while costs and expenses were positively affected by $13 million. For fiscal year 2013 (FY2012), the weighted average rates for sterling decreased 2% to 1.58 (1.59), and the euro decreased 6% to 1.29 (1.37) against prior year on a U.S. dollar equivalent basis. Unless otherwise noted, amounts referenced in this report are presented excluding the effect of foreign exchange transactions and translations.
RESEARCH
Research revenue for the quarter fell 3% to $283 million, or 1% excluding FX due largely to a sharp decline in print book sales, which offset higher journal revenue. Fourth quarter contribution to profit including allocated shared service and administrative costs fell 16% excluding FX, or 4% excluding restructuring and impairment charges.
For the fiscal year, revenue fell 3% to $1.01 billion, or 2% excluding FX due to timing and phasing issues around journal subscription orders and publication, a decline in print book sales, and a significant drop-off in corporate sales and advertising. Fiscal year contribution to profit including allocated shared service and administrative costs fell 8% excluding FX, or 3% excluding the year to date restructuring and impairment charges and FX, due to top-line results and higher technology costs.
For calendar year 2013, the Company piloted an alternative journal subscription license model for a group of customers. Previously those customer licenses were based on a commitment by the Company to provide a discrete number of online journal issues which provided for recognition of revenue by the Company as issues were published. Under this alternative model, Wiley provides access to all content published in the calendar year and provides for recognition of revenue ratably at 1/12th per calendar month. The new licensing terms result in a $3.0 million shift of revenue from fiscal year 2013 to fiscal year 2014, but will have no impact on current or future calendar year journal revenue.
Restructuring and Impairment Charges
Fourth quarter Research results include restructuring and related impairment charges of $3 million and $10 million, respectively. Full year results also include a $3 million restructuring charge taken in the first quarter of fiscal year 2012. See attached schedules and related notes for further detail.
Journal Subscription Timing
In fiscal year 2013, the Research segment experienced a “perfect storm” of adverse timing and phasing issues around journal subscription orders and publication, which resulted in lower-than-expected subscription revenue. Although calendar year 2012 subscription billings were up 1.6% and calendar year 2013 subscription billings through April 30, 2013 increased approximately 3%, the following phasing and other impacts lowered fiscal year 2013 reported revenue by approximately $15 million offsetting all of the expected 2% growth versus prior year:
Fourth Quarter Revenue by Product/Service (excluding FX):
Journal Renewals
Society Partnerships
PROFESSIONAL DEVELOPMENT (PD)
Adjusted Professional Development revenue for the quarter grew 2% to $95 million, excluding revenue from divested publishing programs in both years and the impact of foreign exchange. Contributions from Inscape and the ELS acquisitions, as well as the test prep and certification partnership with the CFA Institute and ebook revenue were offset by a decline in print book revenue. For the quarter, adjusted contribution to profit including allocated shared service and administrative costs was essentially flat year-over-year at $6 million excluding unusual items top-line results and cost savings initiatives.
For the quarter, digital revenue was 27% of total PD revenue, or $27 million, a roughly 36% increase over prior year excluding FX. Results were driven by online assessment (Inscape), eLearning services (CPA and CFA test prep and certification) and ebooks.
For the fiscal year, adjusted revenue grew 5% to $371 million excluding the operating results of the divested consumer publishing programs. The performance of acquired companies and professional partnerships and ebook revenue offset a decline in print book sales. Adjusted contribution to profit for fiscal year 2013 including allocated shared service and administrative costs grew $4.9 million to $21.5 million excluding FX and unusual items. Growth was driven principally by results from acquired companies and costs savings initiatives.
Unusual items:
Fourth quarter and fiscal year adjusted results exclude the following unusual items:
Fourth Quarter Revenue by Product/Service (excluding FX):
Online Training and Assessment
We merged our Inscape and Pfeiffer business into a single Workplace Learning Solutions group during the quarter. Inscape performance for the full fiscal year 2013 exceeded the Company’s earnings expectations. The results reflect the Company’s successful migration to a new 3rd generation Everything DiSC application. Year-over-year comparative revenue growth from Inscape was 8%. Sales through Inscape’s North American distributor sales channels grew 7.5%, while sales through other global distributor channels increased 8.9%. We added a second product development studio, doubled the number of assessment-related training products under development and added leadership focus and brand management resources to our Everything DiSC and Leadership Challenge Lines.
Test Prep and Certification
Our indigenous test prep program showed solid growth in fiscal year 2013 with the addition of the Certified Managerial Accountant (CMA) exam prep to our historic and growing CPA Test Prep. Total revenue nearly doubled to $6 million. During the year, Wiley also completed the acquisition of ELS, a provider of the full online CPA Review course ‘CPA Excel’, which contributed revenue of $4 million to the Company’s results.
EDUCATION
Fourth quarter Education revenue grew 24% to $63 million, or 25% excluding FX. Excluding Deltak, which contributed $17 million of revenue in the quarter, Education revenue fell 9% due to a sharp decline in print textbooks, which more than offset growth in WileyPLUS and other digital revenue. For the quarter, adjusted contribution to profit including allocated shared service and administrative costs improved $2 million to a loss of $8 million due to top-line results and higher margin digital products. Adjusted contribution to profit for the quarter excludes a $1 million restructuring charge.
For the fiscal year, Education revenue grew 7% to $334 million excluding FX. Online program management revenue from Deltak ($34 million) and digital product revenue were partially offset by lower print textbook sales. Excluding the impact of Deltak, full-year Education revenue declined 4%. Adjusted contribution to profit for fiscal year 2013 including allocated shared service and administrative costs fell 11% to $52 million excluding restructuring charges of $1 million. Performance was due to top-line results.
Fourth Quarter Revenue by Product/Service (excluding FX):
Deltak Update
Deltak, one of the leading Online Program Management (OPM) providers in the United States, contributed $34 million in revenue in its first six months as a Wiley entity, versus $54 million in annual revenue at the time of acquisition. Deltak is a high-growth business that works in close partnership with leading colleges and universities to develop and support fully online degree and certification programs, with tuition revenue being shared by both partners under long-term contracts. The business, founded in 1997, provides technology platforms and services including market research validating program demand, instructional design, marketing, and student recruitment and retention services to leading national and regional colleges and universities throughout the United States.
In the fourth quarter, Deltak added two new university partners to the fold. Since the acquisition closed in October, Deltak has added five new university partners, the American University, Case Western Reserve University, Queens University of Charlotte, Butler University and the University of Dayton for a total of 31. In the fourth quarter Deltak contracted 24 new programs from among new and existing partners. Across Deltak’s partner base as of April 30, 2013 there are approximately 100 revenue-generating programs and 46 programs under contract and in development but not yet generating revenue. During the quarter the Company received a commitment from Queens University of Charlotte for a campus-wide implementation of the Deltak Engage Learning Management system.
Note:
The Company provides cash flow and income measures referred to as adjusted revenue, EPS and free cash flow, which exclude certain items. 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.
Conference Call
"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-based solutions that improve outcomes in research, education, and professional practice. Our core businesses produce scientific, technical, medical, and scholarly journals, reference works, books, database services, and advertising; professional books, subscription products, certification and training services and online applications; and education content and services including integrated online teaching and learning resources for undergraduate and graduate students and lifelong learners. Wiley's global headquarters are located in Hoboken, New Jersey, with operations in the U.S., Europe, Asia, Canada, and Australia. The Company's website can be accessed at http://www.wiley.com.
JOHN WILEY & SONS, INC. | |||||||||||||||||||||||||||||||
UNAUDITED SUMMARY OF OPERATIONS | |||||||||||||||||||||||||||||||
FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED | |||||||||||||||||||||||||||||||
APRIL 30, 2013 AND 2012 | |||||||||||||||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||||||||||||||
FOURTH QUARTER ENDED APRIL 30, | |||||||||||||||||||||||||||||||
2013 | 2012 | % Change | |||||||||||||||||||||||||||||
US GAAP | Adjustments | Adjusted | US GAAP | Adjustments | Adjusted | US GAAP | Adjusted | ||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||
Revenue | $ | 445,854 | (5,196) | 440,658 | 454,577 | (19,088) | 435,489 | -2% | 3% | ||||||||||||||||||||||
Costs and Expenses | |||||||||||||||||||||||||||||||
Cost of Sales | 133,640 | (4,363) | 129,277 | 138,924 | (10,708) | 128,216 | -4% | 2% | |||||||||||||||||||||||
Operating and Administrative | 243,315 | (2,497) | 240,818 | 236,045 | (5,853) | 230,192 | 3% | 6% | |||||||||||||||||||||||
Restructuring Charges (A) | 24,452 | (24,452) | - | - | - | - | |||||||||||||||||||||||||
Impairment Charges (A) | 15,158 | (15,158) | - | - | - | - | |||||||||||||||||||||||||
Amortization of Intangibles | 11,578 | - | 11,578 | 9,785 | (40) | 9,745 | 18% | 21% | |||||||||||||||||||||||
Total Costs and Expenses | 428,143 | (46,470) | 381,673 | 384,754 | (16,601) | 368,153 | 11% | 5% | |||||||||||||||||||||||
Loss on Sale of Consumer Publishing Programs (B) | (3,846) | 3,846 | - | - | - | - | |||||||||||||||||||||||||
Operating Income | 13,865 | 45,120 | 58,985 | 69,823 | (2,487) | 67,336 | -80% | -9% | |||||||||||||||||||||||
Operating Margin | 3.1% | 13.4% | 15.4% | 15.5% | |||||||||||||||||||||||||||
Interest Expense | (3,521) | - | (3,521) | (2,768) | - | (2,768) | 27% | 27% | |||||||||||||||||||||||
Foreign Exchange Loss | (442) | - | (442) | (1,112) | - | (1,112) | -60% | 3% | |||||||||||||||||||||||
Interest Income and Other | 1,045 | - | 1,045 | 681 | - | 681 | 53% | 53% | |||||||||||||||||||||||
Income Before Taxes | 10,947 | 45,120 | 56,067 | 66,624 | (2,487) | 64,137 | -84% | -10% | |||||||||||||||||||||||
Provision for Income Taxes (A-E) | 2,996 | 10,553 | 13,549 | 18,359 | (945) | 17,414 | -84% | -19% | |||||||||||||||||||||||
Net Income | $ | 7,951 | 34,567 | 42,518 | 48,265 | (1,542) | 46,723 | -84% | -6% | ||||||||||||||||||||||
Earnings Per Share- Diluted | $ | 0.13 | 0.58 | 0.71 | 0.80 | (0.03) | 0.77 | -84% | -5% | ||||||||||||||||||||||
Average Shares - Diluted | 59,543 | 59,543 | 59,543 | 60,636 | 60,636 | 60,636 | |||||||||||||||||||||||||
TWELVE MONTHS ENDED APRIL 30, | |||||||||||||||||||||||||||||||
2013 | 2012 | % Change | |||||||||||||||||||||||||||||
US GAAP | Adjustments | Adjusted | US GAAP | Adjustments | Adjusted | US GAAP | Adjusted | ||||||||||||||||||||||||
Revenue | $ | 1,760,778 | (45,555) | 1,715,223 | 1,782,742 | (73,048) | 1,709,694 | -1% | 1% | ||||||||||||||||||||||
Costs and Expenses | |||||||||||||||||||||||||||||||
Cost of Sales | 532,232 | (29,868) | 502,364 | 543,396 | (41,627) | 501,769 | -2% | 1% | |||||||||||||||||||||||
Operating and Administrative | 933,148 | (14,615) | 918,533 | 922,177 | (23,058) | 899,119 | 1% | 3% | |||||||||||||||||||||||
Restructuring Charges (A) | 29,293 | (29,293) | - | - | - | - | |||||||||||||||||||||||||
Impairment Charges (A) | 30,679 | (30,679) | - | - | - | - | |||||||||||||||||||||||||
Amortization of Intangibles | 41,982 | (53) | 41,929 | 36,750 | (282) | 36,468 | 14% | 16% | |||||||||||||||||||||||
| |||||||||||||||||||||||||||||||
Total Costs and Expenses | 1,567,334 | (104,508) | 1,462,826 | 1,502,323 | (64,967) | 1,437,356 | 4% | 3% | |||||||||||||||||||||||
Net Gain on Sale of Consumer Publishing Programs (B) | 5,983 | (5,983) | - | - | - | - | |||||||||||||||||||||||||
Operating Income | 199,427 | 52,970 | 252,397 | 280,419 | (8,081) | 272,338 | -29% | -6% | |||||||||||||||||||||||
Operating Margin | 11.3% | 14.7% | 15.7% | 15.9% | |||||||||||||||||||||||||||
Interest Expense | (13,078) | - | (13,078) | (9,038) | - | (9,038) | 45% | 45% | |||||||||||||||||||||||
Foreign Exchange Loss | (2,041) | - | (2,041) | (2,261) | - | (2,261) | -10% | -1% | |||||||||||||||||||||||
Interest Income and Other | 2,614 | - | 2,614 | 2,975 | - | 2,975 | -12% | -12% | |||||||||||||||||||||||
Income Before Taxes | 186,922 | 52,970 | 239,892 | 272,095 | (8,081) | 264,014 | -31% | -8% | |||||||||||||||||||||||
Provision for Income Taxes (A-E) | 42,697 | 21,621 | 64,318 | 59,349 | 13,222 | 72,571 | -28% | -10% | |||||||||||||||||||||||
Net Income | $ | 144,225 | 31,349 | 175,574 | 212,746 | (21,303) | 191,443 | -32% | -7% | ||||||||||||||||||||||
Earnings Per Share- Diluted | $ | 2.39 | 0.52 | 2.92 | 3.47 | (0.35) | 3.12 | -31% | -5% | ||||||||||||||||||||||
Average Shares - Diluted | 60,224 | 60,224 | 60,224 | 61,272 | 61,272 | 61,272 | |||||||||||||||||||||||||
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, 2013 AND 2012 | ||||||||||||||||||
RECONCILIATION OF US GAAP EPS TO ADJUSTED EPS - DILUTED (UNAUDITED) | ||||||||||||||||||
Fourth Quarter Ended | Twelve Months Ended | |||||||||||||||||
April 30, | April 30, | |||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||
US GAAP Earnings Per Share - Diluted | $ | 0.13 | $ | 0.80 | $ | 2.39 | $ | 3.47 | ||||||||||
Adjusted to exclude the following: | ||||||||||||||||||
Restructuring Charges (A) | (0.27) | - | (0.33) | - | ||||||||||||||
Impairment Charges (A) | (0.19) | - | (0.35) | - | ||||||||||||||
Gain/(Loss) on Sale of Consumer Publishing Programs (B) | (0.06) | - | 0.04 | - | ||||||||||||||
Operational Results of Divested Consumer Programs (C) | (0.02) | 0.03 | 0.01 | 0.09 | ||||||||||||||
One-time Tax Benefit/(Charge) on Recorded Tax Reserves (D) | (0.04) | - | (0.04) | 0.12 | ||||||||||||||
Deferred Income Tax Benefit on UK Rate Change (E) | - | - | 0.14 | 0.14 | ||||||||||||||
Adjusted Earnings Per Share - Diluted | $ | 0.71 | $ | 0.77 | $ | 2.92 | $ | 3.12 | ||||||||||
NOTES TO UNAUDITED FINANCIAL STATEMENTS | ||
Adjustments: | ||
(A) | RESTRUCTURING CHARGES: The adjusted results for the fourth quarter and twelve months ended April 30, 2013 exclude restructuring charges related to the Company's Restructuring and Reinvestment Program of $24.5 million ($16.3 million after tax, $0.27 per share). The twelve months ended April 30, 2013 also exclude a first quarter restructuring charge related to certain activities that will either be discontinued, outsourced, or relocated due to the Company's ongoing transformation to digital products and services of $4.8 million ($3.5 million after tax, $0.06 per share). | |
IMPAIRMENT CHARGES: The adjusted results for the fourth quarter and twelve months ended April 30, 2013 exclude asset impairment charges related to certain controlled circulation publishing programs in the Company's Research business and certain technology investments of $15.2 million ($11.4 million after tax, $0.19 per share). The twelve months ended April 30, 2013 also exclude second quarter asset impairment charges related to the divested Professional Development consumer publishing programs of $15.5 million ($9.6 million after tax, $0.16 per share). | ||
(B) | GAIN/LOSS ON SALE: The adjusted results for the fourth quarter and twelve months ended April 30, 2013 exclude a loss on sale of certain Professional Development consumer publishing programs of $3.8 million ($3.6 million after tax, $0.06 per share). The twelve months ended April 30, 2013 also exclude a $9.8 million gain ($6.2 million after tax, $0.10 per share) on the sale of the Company's travel publishing program. | |
(C) | The adjusted results for the fourth quarter and twelve months ended April 30, 2013 and 2012 exclude the operating results of the divested Professional Development consumer publishing programs sold in fiscal year 2013. | |
(D) | The adjusted results for the fourth quarter and twelve months ended April 30, 2013 exclude a tax charge of $2.1 million ($0.04 per share) due to recently published IRS tax positions related to the Company's ability to take certain deductions in the U.S. The adjusted results for the twelve months ended April 30, 2012 also exclude a tax benefit of $7.5 million ($0.12 per share) related to the reversal of an income tax reserve recorded in conjunction with the Blackwell acquisition. | |
(E) | The adjusted results for the twelve months ended April 30, 2013 and 2012 exclude deferred tax benefits of $8.4 million ($0.14 per share) and $8.8 million ($0.14 per share), respectively. The tax benefits were derived from 2% legislative reductions in the United Kingdom corporate income tax rates for both years. The benefits reflect the remeasurement of the Company's deferred tax liability position and had no current cash tax impact. U.K. deferred tax balances as of April 30, 2013 are reflected at 23%. | |
Changes in Segment Presentation: |
As of May 1, 2012, the Company changed its internal reporting of segment measures for the purposes of assessing performance and making resource allocation decisions. Accordingly, the Company will now report on segment performance after the allocation of certain direct Shared Services and Administrative Costs. Shared Services and Administrative costs were previously reported as independent functional activities and not reflected in each segment's operating results. We will continue to report total shared services and administrative costs by function as management believes they are still useful in understanding the company's overall performance. In addition, management responsibility and reporting of certain Professional Development and Global Education product lines were realigned as of May 1, 2012. Prior year results have been restated for comparative purposes for each of the changes described above. |
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 foreign exchange transactions and translation and certain other 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. |
JOHN WILEY & SONS, INC. | ||||||||||||||||||||||||
UNAUDITED SEGMENT RESULTS | ||||||||||||||||||||||||
FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED | ||||||||||||||||||||||||
APRIL 30, 2013 AND 2012 | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
FOURTH QUARTER ENDED APRIL 30, | ||||||||||||||||||||||||
2013 | 2012 | % Change | ||||||||||||||||||||||
US GAAP | Adjustments | Adjusted | US GAAP | Adjustments | Adjusted | US GAAP | Adjusted | |||||||||||||||||
Revenue | ||||||||||||||||||||||||
Research | $ | 283,146 | - | 283,146 | 291,466 | - | 291,466 | -3% | -1% | |||||||||||||||
Professional Development | 100,135 | (5,196) | 94,939 | 112,599 | (19,088) | 93,511 | -11% | 2% | ||||||||||||||||
Education | 62,573 | - | 62,573 | 50,512 | - | 50,512 | 24% | 25% | ||||||||||||||||
| ||||||||||||||||||||||||
Total | $ | 445,854 | (5,196) | 440,658 | 454,577 | (19,088) | 435,489 | -2% | 3% | |||||||||||||||
Direct Contribution to Profit | ||||||||||||||||||||||||
Research | $ | 120,339 | 12,862 | 133,201 | 139,951 | - | 139,951 | -14% | -3% | |||||||||||||||
Professional Development | 14,729 | 11,793 | 26,522 | 29,743 | (2,487) | 27,256 | -50% | -2% | ||||||||||||||||
Education | 4,678 | 1,119 | 5,797 | 3,810 | - | 3,810 | 23% | 55% | ||||||||||||||||
| ||||||||||||||||||||||||
Total | $ | 139,746 | 25,774 | 165,520 | 173,504 | (2,487) | 171,017 | -19% | -1% | |||||||||||||||
Contribution to Profit (After Allocated Shared Services
| ||||||||||||||||||||||||
Research | $ | 86,844 | 12,862 | 99,706 | 106,117 | - | 106,117 | -18% | -4% | |||||||||||||||
Professional Development | (5,849) | 11,793 | 5,944 | 8,762 | (2,487) | 6,275 | -167% | -4% | ||||||||||||||||
Education | (9,318) | 1,119 | (8,199) | (9,588) | - | (9,588) | -3% | -14% | ||||||||||||||||
Total | $ | 71,677 | 25,774 | 97,451 | 105,291 | (2,487) | 102,804 | -32% | -3% | |||||||||||||||
Unallocated Shared Services and Admin. Costs | (57,812) | 19,346 | (38,466) | (35,468) | - | (35,468) | 63% | 8% | ||||||||||||||||
Operating Income | $ | 13,865 | 45,120 | 58,985 | 69,823 | (2,487) | 67,336 | -80% | -9% | |||||||||||||||
Total Shared Services and Admin. Costs by Function | ||||||||||||||||||||||||
Distribution | $ | (28,989) | 4,307 | (24,682) | (26,568) | - | (26,568) | 9% | -6% | |||||||||||||||
Technology Services | (55,306) | 9,233 | (46,073) | (40,502) | - | (40,502) | 37% | 14% | ||||||||||||||||
Finance | (12,625) | 1,982 | (10,643) | (12,074) | - | (12,074) | 5% | -11% | ||||||||||||||||
Other Administration | (28,961) | 3,824 | (25,137) | (24,537) | - | (24,537) | 18% | 3% | ||||||||||||||||
Total | $ | (125,881) | 19,346 | (106,535) | (103,681) | - | (103,681) | 21% | 4% | |||||||||||||||
TWELVE MONTHS ENDED APRIL 30, | ||||||||||||||||||||||||
2013 | 2012 | % Change | ||||||||||||||||||||||
US GAAP | Adjustments | Adjusted | US GAAP | Adjustments | Adjusted | US GAAP | Adjusted | |||||||||||||||||
Revenue | ||||||||||||||||||||||||
Research | $ | 1,009,825 | - | 1,009,825 | 1,040,727 | - | 1,040,727 | -3% | -2% | |||||||||||||||
Professional Development | 416,495 | (45,555) | 370,940 | 427,562 | (73,048) | 354,514 | -3% | 5% | ||||||||||||||||
Education | 334,458 | - | 334,458 | 314,453 | - | 314,453 | 6% | 7% | ||||||||||||||||
Total | $ | 1,760,778 | (45,555) | 1,715,223 | 1,782,742 | (73,048) | 1,709,694 | -1% | 1% | |||||||||||||||
Direct Contribution to Profit | ||||||||||||||||||||||||
Research | $ | 420,963 | 15,828 | 436,791 | 452,274 | - | 452,274 | -7% | -2% | |||||||||||||||
Professional Development | 86,678 | 16,056 | 102,734 | 108,431 | (8,081) | 100,350 | -20% | 3% | ||||||||||||||||
Education | 103,828 | 1,288 | 105,116 | 107,711 | - | 107,711 | -4% | -2% | ||||||||||||||||
| ||||||||||||||||||||||||
Total | $ | 611,469 | 33,172 | 644,641 | 668,416 | (8,081) | 660,335 | -9% | -1% | |||||||||||||||
Contribution to Profit (After Allocated Shared Services | ||||||||||||||||||||||||
Research | $ | 286,506 | 15,828 | 302,334 | 317,460 | - | 317,460 | -10% | -3% | |||||||||||||||
Professional Development | 5,446 | 16,056 | 21,502 | 25,054 | (8,081) | 16,973 | -78% | 28% | ||||||||||||||||
Education | 50,745 | 1,288 | 52,033 | 58,423 | - | 58,423 | -13% | -11% | ||||||||||||||||
Total | $ | 342,697 | 33,172 | 375,869 | 400,937 | (8,081) | 392,856 | -15% | -3% | |||||||||||||||
Unallocated Shared Services and Admin. Costs | (143,270) | 19,798 | (123,472) | (120,518) | - | (120,518) | 19% | 2% | ||||||||||||||||
Operating Income | $ | 199,427 | 52,970 | 252,397 | 280,419 | (8,081) | 272,338 | -29% | -6% | |||||||||||||||
Total Shared Services and Admin. Costs by Function | ||||||||||||||||||||||||
Distribution | $ | (106,578) | 4,500 | (102,078) | (109,079) | - | (109,079) | -2% | -6% | |||||||||||||||
Technology Services | (168,552) | 9,489 | (159,063) | (144,418) | - | (144,418) | 17% | 11% | ||||||||||||||||
Finance | (45,804) | 1,982 | (43,822) | (45,106) | - | (45,106) | 2% | -2% | ||||||||||||||||
Other Administration | (91,108) | 3,827 | (87,281) | (89,394) | - | (89,394) | 2% | -2% | ||||||||||||||||
Total | $ | (412,042) | 19,798 | (392,244) | (387,997) | - | (387,997) | 6% | 2% | |||||||||||||||
See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment. | ||||||||||||||||||||||||
JOHN WILEY & SONS, INC. | ||||||||||||||||||||||||
UNAUDITED ADJUSTED CONTRIBUTION TO PROFIT | ||||||||||||||||||||||||
INCLUDING ALLOCATED SHARED SERVICES AND ADMINISTRATIVE COSTS | ||||||||||||||||||||||||
FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED | ||||||||||||||||||||||||
APRIL 30, 2013 AND 2012 | ||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Fourth Quarter Ended | Twelve Months Ended | |||||||||||||||||||||||
April 30, | April 30, | |||||||||||||||||||||||
2013 | 2012 | % Change | % | 2013 | 2012 | % Change | % | |||||||||||||||||
| ||||||||||||||||||||||||
Research: | ||||||||||||||||||||||||
Direct Contribution to Profit | $ | 120,339 | 139,951 | -14% | -12% | 420,963 | 452,274 | -7% | -6% | |||||||||||||||
Restructuring Charges (A) | 2,945 | - | 5,911 | - | ||||||||||||||||||||
Impairment Charges (A) | 9,917 | - | 9,917 | - | ||||||||||||||||||||
Adjusted Direct Contribution to Profit | 133,201 | 139,951 | -5% | -3% | 436,791 | 452,274 | -3% | -2% | ||||||||||||||||
Allocated Shared Services and Admin. Costs: | ||||||||||||||||||||||||
Distribution | (11,196) | (11,637) | -4% | -2% | (46,009) | (47,995) | -4% | -3% | ||||||||||||||||
Technology | (16,368) | (16,504) | -1% | 0% | (66,105) | (65,734) | 1% | 1% | ||||||||||||||||
Occupancy and Other | (5,931) | (5,693) | 4% | 6% | (22,343) | (21,085) | 6% | 7% | ||||||||||||||||
Adjusted Contribution to Profit (after allocated | $ | 99,706 | 106,117 | -6% | -4% | 302,334 | 317,460 | -5% | -3% | |||||||||||||||
Professional Development: | ||||||||||||||||||||||||
Direct Contribution to Profit | $ | 14,729 | 29,743 | -50% | -50% | 86,678 | 108,431 | -20% | -20% | |||||||||||||||
Loss/(Gain) on Sale of Consumer Publishing Programs (B) | 3,846 | - | (5,983) | - | ||||||||||||||||||||
Direct Contribution to profit - Divested Consumer Publishing Programs (C) | 1,664 | (2,487) | (1,019) | (8,081) | ||||||||||||||||||||
Restructuring Charges (A) | 6,283 | - | 7,537 | - | ||||||||||||||||||||
Impairment Charges (A) | - | - | 15,521 | - | ||||||||||||||||||||
Adjusted Direct Contribution to Profit | 26,522 | 27,256 | -3% | -2% | 102,734 | 100,350 | 2% | 3% | ||||||||||||||||
Allocated Shared Services and Admin. Costs: | ||||||||||||||||||||||||
Distribution | (9,727) | (10,986) | -11% | -11% | (40,664) | (45,118) | -10% | -9% | ||||||||||||||||
Technology | (7,524) | (6,568) | 15% | 15% | (29,187) | (25,248) | 16% | 16% | ||||||||||||||||
Occupancy and Other | (3,327) | (3,427) | -3% | -3% | (11,381) | (13,011) | -13% | -13% | ||||||||||||||||
Adjusted Contribution to Profit (after allocated | $ | 5,944 | 6,275 | -5% | -4% | 21,502 | 16,973 | 27% | 28% | |||||||||||||||
Shared Services and Admin. Costs) | ||||||||||||||||||||||||
Education: | ||||||||||||||||||||||||
Direct Contribution to Profit | $ | 4,678 | 3,810 | 23% | 25% | 103,828 | 107,711 | -4% | -3% | |||||||||||||||
Restructuring Charges (A) | 1,119 | - | 1,288 | - | ||||||||||||||||||||
Adjusted Direct Contribution to Profit | 5,797 | 3,810 | 52% | 55% | 105,116 | 107,711 | -2% | -2% | ||||||||||||||||
Allocated Shared Services and Admin. Costs: | ||||||||||||||||||||||||
Distribution | (3,631) | (3,960) | -8% | -6% | (15,277) | (15,945) | -4% | -4% | ||||||||||||||||
Technology | (8,179) | (7,700) | 6% | 6% | (30,727) | (27,572) | 11% | 11% | ||||||||||||||||
Occupancy and Other | (2,186) | (1,738) | 26% | 26% | (7,079) | (5,771) | 23% | 23% | ||||||||||||||||
Adjusted Contribution to Profit (after allocated | $ | (8,199) | (9,588) | -14% | -14% | 52,033 | 58,423 | -11% | -11% | |||||||||||||||
Total Adjusted Contribution to Profit (after
| $ | 97,451 | 102,804 | -5% | -3% | 375,869 | 392,856 | -4% | -3% | |||||||||||||||
Unallocated Shared Services and Admin. Costs: | ||||||||||||||||||||||||
Unallocated Shared Services and Admin. Costs | (57,812) | (35,468) | 63% | 63% | (143,270) | (120,518) | 19% | 20% | ||||||||||||||||
Restructuring Charges (A) | 14,105 | - | 14,557 | - | ||||||||||||||||||||
Impairment Charges (A) | 5,241 | - | 5,241 | - | ||||||||||||||||||||
Adjusted Unallocated Shared Services and Admin. Costs | $ | (38,466) | (35,468) | 8% | 9% | (123,472) | (120,518) | 2% | 3% | |||||||||||||||
Adjusted Operating Income | $ | 58,985 | 67,336 | -12% | -9% | 252,397 | 272,338 | -7% | -6% | |||||||||||||||
See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment. | ||||||||||||||||||||||||
JOHN WILEY & SONS, INC. | ||||||
UNAUDITED STATEMENTS OF FINANCIAL POSITION | ||||||
(in thousands) | ||||||
April 30, | ||||||
2013 | 2012 | |||||
Current Assets | ||||||
Cash & cash equivalents | $ | 334,140 | 259,830 | |||
Accounts receivable | 161,731 | 171,561 | ||||
Inventories | 82,017 | 101,237 | ||||
Prepaid and other | 57,083 | 41,972 | ||||
Total Current Assets | 634,971 | 574,600 | ||||
Product Development Assets | 87,876 | 108,414 | ||||
Technology, Property and Equipment | 189,625 | 187,979 | ||||
Intangible Assets | 954,957 | 915,495 | ||||
Goodwill | 835,540 | 690,619 | ||||
Other Assets | 103,406 | 55,839 | ||||
Total Assets | 2,806,375 | 2,532,946 | ||||
Current Liabilities | ||||||
Accounts and royalties payable | 143,313 | 151,350 | ||||
Deferred revenue | 362,970 | 342,034 | ||||
Accrued employment costs | 85,306 | 64,482 | ||||
Accrued income taxes | 16,093 | 18,812 | ||||
Accrued pension liability | 4,359 | 3,589 | ||||
Other accrued liabilities | 55,128 | 60,663 | ||||
Total Current Liabilities | 667,169 | 640,930 | ||||
Long-Term Debt | 673,000 | 475,000 | ||||
Accrued Pension Liability | 204,362 | 145,815 | ||||
Deferred Income Tax Liabilities | 197,526 | 181,716 | ||||
Other Long-Term Liabilities | 75,962 | 71,917 | ||||
Shareholders' Equity | 988,356 | 1,017,568 | ||||
Total Liabilities & Shareholders' Equity | $ | 2,806,375 | 2,532,946 |
JOHN WILEY & SONS, INC. | ||||||
UNAUDITED STATEMENTS OF FREE CASH FLOW | ||||||
(in thousands) | ||||||
Twelve Months Ended | ||||||
April 30, | ||||||
2013 | 2012 | |||||
Operating Activities: | ||||||
Net income | $ | 144,225 | 212,746 | |||
Amortization of intangibles | 41,982 | 36,750 | ||||
Amortization of composition costs | 51,517 | 50,944 | ||||
Depreciation of technology, property and equipment | 56,017 | 50,397 | ||||
Restructuring charges | 29,293 | - | ||||
Impairment charges | 30,679 | - | ||||
Gain, net of losses, on sale of consumer publishing programs | (5,983) | - | ||||
Deferred tax benefits on U.K. rate changes | (8,402) | (8,769) | ||||
One-time tax charge/(benefit) on recorded tax reserves | 2,110 | (7,524) | ||||
Stock-based compensation | 11,928 | 17,262 | ||||
Excess tax benefits from stock-based compensation | (193) | (2,044) | ||||
Royalty advances | (105,335) | (108,716) | ||||
Earned royalty advances | 100,691 | 100,639 | ||||
Other non-cash charges and credits | (6,584) | 6,360 | ||||
Change in deferred revenue | 32,822 | 19,381 | ||||
Income tax deposit | (42,077) | - | ||||
Net change in operating assets and liabilities, excluding acquisitions | 4,347 | 12,222 | ||||
Cash Provided by Operating Activities | 337,037 | 379,648 | ||||
Investments in organic growth: | ||||||
Composition spending | (50,434) | (52,501) | ||||
Additions to technology, property and equipment | (58,704) | (67,377) | ||||
Free Cash Flow | 227,899 | 259,770 | ||||
Other Investing and Financing Activities: | ||||||
Acquisitions, net of cash | (263,272) | (92,174) | ||||
Proceeds from sale of consumer publishing programs | 29,942 | - | ||||
Repayment of long-term debt | (472,500) | (888,411) | ||||
Borrowings of long-term debt | 670,500 | 909,211 | ||||
Change in book overdrafts | (451) | (4,414) | ||||
Cash dividends | (57,426) | (48,257) | ||||
Purchase of treasury shares | (73,721) | (87,072) | ||||
Debt financing costs | (382) | (3,119) | ||||
Proceeds from exercise of stock options and other | 24,188 | 15,303 | ||||
Excess tax benefits from stock-based compensation | 193 | 2,044 | ||||
Cash Used for Investing and Financing Activities | (142,929) | (196,889) | ||||
Effects of Exchange Rate Changes on Cash | (10,660) | (4,904) | ||||
Increase in Cash and Cash Equivalents for Period | $ | 74,310 | 57,977 | |||
RECONCILIATION TO GAAP PRESENTATION | ||||||
Investing Activities: | ||||||
Composition spending | $ | (50,434) | (52,501) | |||
Additions to technology, property and equipment | (58,704) | (67,377) | ||||
Acquisitions, net of cash | (263,272) | (92,174) | ||||
Proceeds from sale of consumer publishing programs | 29,942 | - | ||||
Cash Used for Investing Activities | $ | (342,468) | (212,052) | |||
Financing Activities: | ||||||
Cash Used for Investing and Financing Activities | $ | (142,929) | (196,889) | |||
Excluding: | ||||||
Acquisitions, net of cash | (263,272) | (92,174) | ||||
Proceeds from sale of consumer publishing programs | 29,942 | - | ||||
Cash Provided by (Used for) Financing Activities | $ | 90,401 | (104,715) | |||
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. | ||||||
Investor Contact:
Investor Relations
Brian Campbell, 201-748-6874
brian.campbell@wiley.com
or
Corporate Media Relations
Linda Dunbar, 201-748-6390
ldunbar@wiley.com
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