UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 8-K

CURRENT REPORT


Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934


June 13, 2017
(Date of Report)
(Date of earliest event reported)

JOHN WILEY & SONS, INC.
(Exact name of registrant as specified in its charter)

New York
(State or jurisdiction of incorporation)

 
0-11507
13-5593032
 
----------------------------------------------------
---------------------------------------------
 
Commission File Number
IRS Employer Identification Number
 
111 River Street, Hoboken NJ
07030
 
----------------------------------------------------
---------------------------------------------
 
Address of principal executive offices
Zip Code
 
Registrant’s telephone number, including area code:
(201) 748-6000
   
---------------------------------------------


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
  [ ] Written communications pursuant to Rule 425 under the Securities Act(17 CFR 230.425)
  [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act(17 CFR 240.14a-12)
  [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
       (17 CFR 240.14d-2(b))
  [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
      (17 CFR   240.13e-4(c))
 
 
 
 

 

ITEM 2.02:          RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On June 13, 2017, John Wiley & Sons Inc., a New York corporation (the “Company”), issued a press release announcing the Company’s financial results for the fourth quarter of fiscal year 2017. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. 

The information in this report, including the exhibits hereto, (x) shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section and (y) shall not be incorporated by reference into any filing of the Company with the Securities and Exchange Commission, whether made before or after the date hereof, regardless of any general incorporation language in such filings (unless the Company specifically states that the information or exhibits in this particular report are incorporated by reference). The furnishing of the information set forth in this report is not intended to, and does not, constitute a determination or admission as to the materiality or completeness of such information.


ITEM 9.01:
FINANCIAL STATEMENTS AND EXHIBITS

 
Exhibit No.     Description

99.1           Press release dated June 13, 2017 titled “Wiley Reports Fourth Quarter and Fiscal 2017 Results” (furnished and not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and not deemed incorporated by reference in any filing under the Securities Act of 1934, as amended).
 
 
 
 
 

 
 
 
 
 
 
Investor Contact:
Brian Campbell
Investor Relations
201.748.6874
brian.campbell@wiley.com

Wiley Reports Fourth Quarter and Fiscal 2017 Results

·  
Full year revenue of $1,719 million, up 2% at constant currency and down 1% excluding the impacts of foreign exchange, shifting to time-based journal subscriptions, and contributions from acquisitions.  GAAP revenue flat including a $43 million unfavorable foreign exchange impact.
·  
Full year adjusted EPS of $3.00, up 13% at constant currency or up 1% (favorable to guidance of mid-single digit decline) excluding the impacts of foreign exchange, the journal subscription shift, dilution from acquisitions, and unusual charges and credits. GAAP EPS down 21% primarily due to an unfavorable tax decision in Germany.
·  
Revenue from digital products and services now 68% of total revenue, up from 63% in the prior year.
·  
Calendar year 2017 Journal Subscriptions up 1% on a constant currency basis with approximately 97% of targeted business under contract.

June 13, 2017 (Hoboken, NJ) – John Wiley & Sons, Inc. (NYSE: JWa and JWb), a global research and learning company, today announced the following results for the fourth quarter and fiscal year 2017, ending April 30:

 
                   % Change
$ millions
FY17
FY16
 
Excluding FX
Including FX
 
Revenue:
         
   Q4
$452.2
$434.3
 
6%
4%
   Full Year
$1,718.5
$1,727.0
 
2%
0%
 
GAAP EPS:
         
   Q4
$0.81
$0.59
   
38%
   Full Year
$1.95
$2.48
   
(21%)
 
Adjusted EPS:
         
   Q4
$0.82
$0.67
 
19%
22%
   Full Year
$3.00
$2.70
 
13%
11%
 
Adjusted EPS exclude tax charges and credits, restructuring charges and credits, and pension settlement as more fully described in the attached financial schedules.
 
 
 
Management Commentary
“We posted stronger revenue and earnings growth this quarter, largely due to growth in our Solutions business and the favorable timing of sales in Publishing,” said Matthew Kissner, Wiley’s Interim CEO and Chairman.  “For the year, Research revenue growth was marginally positive and in line with expectations.  The Solutions business, in addition to posting double-digit revenue growth, also reported substantial profit improvement.  Overall, we ended the year with favorable operating momentum, a strong balance sheet, and reliable cash flow that will enable us to continue investing for growth while returning cash to shareholders through dividends and share repurchases.”
 
 
 
 

 
 
Fiscal Year 2018 Outlook
Wiley’s financial outlook anticipates low-single digit revenue growth in Research and low-double digit revenue growth in Solutions offset by a high-single digit revenue decline in Publishing due to further erosion of print book markets.
·  
Revenue at constant currency to be approximately even with FY17.  In addition, at current FX rates, Wiley would report a FY18 positive FX variance of approximately $25 million in revenue due to functional currency gains.
·  
Operating income at constant currency to be approximately even with FY17 primarily due to flat revenue.  In addition, at current rates, Wiley would report a positive FX variance of approximately $20 million in operating income.
·  
Adjusted EPS performance at constant currency down low-single digits mostly due to $0.12 in EPS non-recurring tax benefits in FY17.  The positive FX variance mentioned above would be approximately $0.25 in EPS.
·  
Cash from Operations expected to improve to $350 million or higher, from $315 million in FY17.
·  
Capex (TP&E + Composition and Product Development Spend) projected to be slightly lower than FY17.

Wiley will continue investing for revenue growth across its business segments.  In FY18, the Company will near the completion of its ERP implementation and headquarters office transformation.  Wiley is also in the process of a multi-year operational excellence initiative that focuses on achieving competitive benchmarks for quality, speed and customer service.  Through organization simplification and process optimization, standardization and automation, the Company expects to meaningfully improve operating income, EPS, and Free Cash Flow in Fiscal Years 2019 and 2020.  In the first quarter of fiscal 2018, Wiley will record a restructuring charge of approximately $25 million related to these activities, which will yield around $45 million in run rate savings starting in FY19, with roughly half of that realized in FY18.  About half of the $45 million will be reinvested.

Adjusted Results
The Company provides financial measures referred to as “adjusted” contribution to profit and EPS, which exclude tax charges, restructuring charges, pension settlement charges related to voluntary lump sum buyouts, and certain deferred tax benefits as more fully described in the attached financial schedules.  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.

Foreign Exchange (FX)
Note that foreign exchange was adverse to FY17 revenue and EPS by $43 million and $0.04, respectively.  Wiley generates approximately 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 2017 were 1.09 and 1.30, 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.

 
 

 
 
CEO Announcement
In May, the Company announced the resignation of President and CEO Mark Allin. Matthew Kissner, Chairman of the Board, was named interim CEO. The Board has begun a search for Mr. Allin’s successor.

Fourth Quarter Summary
·  
Revenue grew 4% on a US GAAP basis to $452.2 million, or 6% excluding the impact of currency.   Year-over-year performance at constant currency was driven by growth in Solutions (+$8 million) and Publishing (+$10 million), and the revenue contribution from Atypon (+$9 million).  Excluding that contribution, fourth quarter revenue on a constant currency basis was up 4% due to continued growth in Solutions and growth in Publishing, due to favorable timing of orders and lower returns.
·  
EPS increased 38% on a US GAAP basis to $0.81, or 19% on an adjusted basis.  Adjusted EPS excludes restructuring credits in the current quarter ($0.02) and charges in the prior year period ($0.08).  The year-over-year increase is attributed to significant improvement in Contribution to Profit for Publishing (+117%) and Solutions (+27%), partially offset by dilution from the recent Atypon and Ranku acquisitions ($0.03).  Excluding that dilution, fourth quarter adjusted EPS was up 24%.
·  
Adjusted shared services and administrative costs of $135.8 million were flat for the quarter with Distribution and Operation Services declining 3% and Technology and Content Management even with the prior year.
·  
Share Repurchases: Wiley repurchased 282,728 shares this quarter at a cost of $15.0 million, an average of $52.90 per share.  Nearly 3.8 million shares remain in the current authorized repurchase program announced in June 2016.

 
Fiscal Year Summary
·  
Revenue of $1,719 million was consistent with the prior year on a US GAAP basis, or up 2% excluding the adverse impact of foreign exchange (-$43 million).  Performance was driven by the favorable impact of the shift to time-based Journal Subscriptions (+$34 million) and a partial year contribution from the Atypon acquisition (+$19 million).  Excluding these items and the impact of currency, revenue was down 1% as steady performance in Journal Subscriptions and double-digit growth in Author-Funded Access (+26%), Online Test Preparation (+27%), and our Solutions segment (14%) did not fully offset declines in Education Books (-13%) and STM and Professional Development Books (-9%).  Wiley’s percentage of revenue from digital content and services increased to 68% in FY17 (from 63% in FY16).
·  
EPS declined 21% on a US GAAP basis to $1.95, or rose 13% on an adjusted basis to $3.00.  Adjusted EPS excludes $1.04 and $0.22 in the current and prior year, respectively, to remove the impacts of currency, restructuring charges or credits, and unusual items.  Details for these items can be found in the accompanying tables.  Adjusted EPS growth is attributed to the favorable transitional impact of the shift to time-based journal subscriptions (+$0.38) and tax credits recorded in the third quarter (+$0.12), which offset dilution from the Atypon and Ranku acquisitions (-$0.08).  Excluding the impact of the subscription revenue shift and the dilution of the acquisitions, adjusted EPS was up 1% primarily due to the aforementioned tax benefits and efficiency gains.
·  
Adjusted shared services and administrative costs were down 2% on a US GAAP basis to $507 million, or flat on a constant currency basis.  The performance is mainly due to declines in Other Administration (-9%) and Distribution and Operations (-1%), which offset a 5% increase in Technology and Content Management related to ERP and other systems development and integration.
·  
Cash from Operations of $314.5 million down from $350.0 million primarily due to unfavorable timing around working capital and an unbudgeted $7 million contribution to our UK pension just before year-end.  The adverse working capital performance included the timing of end-of-year payments in fiscal 2017 as compared to fiscal 2016. Collections also lagged due to unexpectedly strong book sales in April.  These impacts will unwind in fiscal 2018.
 
 
 
 

 
 
 
·  
Free Cash Flow less Composition and Product Development Spend (identical FCF metric that has been reported previously) decreased to $166.2 million from $219.0 million primarily due to lower cash from operations and higher capex (+$17 million) primarily related to the office transformation.
·  
Net Debt and Cash Position: Net debt (debt less cash and cash equivalents) at the end of April was $306.5 million compared to $241.2 million as of April 30, 2016.  During fiscal year 2017, the company used approximately $120 million of cash to acquire Atypon.  Cash and cash equivalents were $58.5 million compared to $363.8 million at end of the prior year primarily due to the repayment of debt with proceeds from the Company’s actions to efficiently repatriate cash from foreign entities.  The repatriation initiative also included $60 million in proceeds related to an associated inter-company transfer of GPB to USD, received in the fourth quarter.
·  
Share Repurchases: In fiscal year 2017, Wiley repurchased 953K shares for approximately $50.3 million, an average cost of $52.80.  As of April 30, the Company had nearly 3.8 million shares remaining in the repurchase program announced in June 2016.
·  
Dividend: In June 2016, Wiley increased its quarterly dividend by 3.3% to $0.31 per share. It was the 23rd consecutive annual increase and raised the annualized dividend payout to $1.24 per share.

 
RESEARCH (JOURNALS AND ATYPON)
·  
Revenue:  Fourth quarter revenue of $234.5 million rose 2% on a US GAAP basis, or 3% on a constant currency basis.  Performance was driven by the contribution from the Atypon acquisition (+$9 million), and double-digit growth in Author-Funded Access (+26%), which offset a timing-related decline in Journal Subscription revenue.  For the year, revenue on a GAAP basis rose 3% to $853.5 million, or 7% at constant currency.  Excluding the subscription shift ($34 million) and the Atypon contribution ($19 million), Research revenue for the year was up modestly at constant currency.  Results were mainly driven by steady performance from Journal Subscriptions and strong growth in Author-Funded Access, which offset an unusually large backfile sale of $10 million in the prior year.
·  
Contribution to Profit:  Fourth quarter contribution to profit (CTP) of $80.3 million was down 2% on a US GAAP basis and down 3% on an adjusted basis primarily due to costs associated with the Atypon acquisition (-$2 million) and other spending to support society journals.  For the year, GAAP CTP was flat and adjusted was up 2% including the benefit from the shift to time-based journal subscriptions (+$29 million) and costs associated with the Atypon acquisition (-$4 million).  Excluding those items, adjusted CTP was down 8% attributed to revenue performance, higher content and royalty costs and investment in new technology.
·  
Calendar Year 2017 Journal Subscriptions:  As of the end of April, calendar year 2017 Journal Subscriptions were up 1% on a constant currency basis with 97% of business contracted.
·  
Society Publishing Agreements: Two new society contracts were signed in the quarter with combined annual revenue of $1.7 million; fifteen were renewed with combined annual revenue of $17.3 million; and one was not renewed with annual revenue of $0.4 million, for a net gain of $1.3 million.  Note: the revenue cited in quarterly society contract signings is typically not achieved until the following calendar year.  For calendar year 2017, six new society contracts were signed (+$9 million annual) and fifteen were not renewed (-$9 million).  Additionally, calendar year 2017 includes renewals of 91 contracts with combined annual revenue of $67 million.

 
PUBLISHING (BOOKS, COURSE WORKFLOW, ONLINE TEST PREPARATION)
·  
Revenue:  Fourth quarter revenue increased 5% on a US GAAP basis to $153.7 million, or 7% at constant currency due to growth in Education Books (+28%), Online Test Preparation and Certification (+52%), and Course Workflow/WileyPLUS (+6%), offsetting a 2% decline in STM and Professional Books and a 2% decline in Licensing, Distribution, Advertising and Other.   Education Books improved due to favorable timing of orders, lower returns, and growth in digital books.  Publishing revenue for the year declined 9% on a GAAP basis or 7% on a constant currency basis, with declines in Books and Reference Material (-11%) offsetting growth in Online Test Preparation (+27%), Course Workflow/WileyPLUS (+7%), and Licensing, Distribution, Advertising, and Other (+3%).
·  
Contribution to Profit:  Fourth quarter CTP grew 111% on a US GAAP basis to $31.1 million, or 117% on an adjusted basis.  Strong growth was driven by revenue performance and restructuring savings, including facility closures and expense rationalization.  For the year, CTP was flat on both a US GAAP and adjusted basis.
 
 
 

 

 
SOLUTIONS (ONLINE PROGRAM MANAGEMENT, CORPORATE LEARNING AND ASSESSMENT)
·  
Revenue: Fourth quarter revenue rose 13% on a US GAAP basis to $64.0 million, or 14% at constant currency.  Solid growth occurred across all product areas, including Online Program Management (+14%), Corporate Learning (+21%), and Professional Assessment (+9%).  For the year, Solutions revenue of $232 million was up 13% on a US GAAP basis, or 14% at constant currency.
·  
Contribution to Profit:  Fourth quarter CTP on a US GAAP basis rose 49% to $5.7 million, or 27% on an adjusted basis.  Growth at constant currency was due to revenue growth and improved operating efficiency.  For the year, CTP on a US GAAP basis was $14.8 million, or $16.6 million adjusted, as compared to $4.0 million and $5.0 million, respectively, in the prior year.
·  
Online Program Management: In the quarter, Wiley signed eleven new programs and discontinued five.  As of April 30, 2017, Wiley had 39 university partners (one partnership retired this quarter) and 250 programs under contract. In the year, Wiley signed important new partners – including George Mason (VA), Seton Hall (NJ), St. John’s (NY), and Vlerick (Belgium) – and added 24 net new programs.

 
Earnings Conference Call
·  
Scheduled for today, June 13, at 10:00 a.m. (ET)
·  
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) 397-5350 and enter the participant code 1528095#.
·  
International callers, please dial (719) 325-2142 and enter the participant code 1528095#.
·  
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 research and learning company.  Through the Research segment, the Company provides scientific, technical, medical, and scholarly journals, as well as related content and services, for academic, corporate, and government libraries, learned societies, and individual researchers and other professionals.   The Publishing segment provides scientific (STM), professional development, and education books and related content, as well as test preparation services and course workflow tools, to libraries, corporations, students, professionals, and researchers.  In Solutions, Wiley provides online program management services for higher education institutions, and learning, development, and assessment services for businesses and professionals.
 
 
 
 

 
 
 
JOHN WILEY & SONS, INC.
UNAUDITED SUMMARY OF OPERATIONS
FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED
APRIL 30, 2017 AND 2016
(in thousands, except per share amounts)
                                     
                                     
FOURTH QUARTER ENDED APRIL 30,
                                     
       
2017
 
2016
 
% Change
        US GAAP   Adjustments   Adjusted   US GAAP   Adjustments   Adjusted   US GAAP   Adjusted
excl. FX
                                     
Revenue
$
      452,201
 
                     -
 
     452,201
 
      434,301
 
                    -
 
       434,301
 
4%
 
6%
                                     
Costs and Expenses
                               
 
Cost of Sales
 
      119,299
 
                     -
 
     119,299
 
      109,820
 
                    -
 
       109,820
 
9%
 
10%
 
Operating and Administrative (B)
 
      258,822
 
                     -
 
     258,822
 
      260,869
 
                    -
 
       260,869
 
-1%
 
2%
 
Restructuring (Credits) Charges (A)
        (1,690)
 
               1,690
 
              -
 
          7,779
 
            (7,779)
 
                -
       
 
Amortization of Intangibles
 
        12,348
 
                     -
 
       12,348
 
        12,513
 
                    -
 
         12,513
 
-1%
 
3%
                                     
 
Total Costs and Expenses
 
      388,779
 
               1,690
 
     390,469
 
      390,981
 
            (7,779)
 
       383,202
 
-1%
 
4%
                                     
Operating Income
 
        63,422
 
             (1,690)
 
       61,732
 
        43,320
 
              7,779
 
         51,099
 
46%
 
16%
 
Operating Margin
 
14.0%
     
13.7%
 
10.0%
     
11.8%
       
                                     
Interest Expense
 
        (3,576)
 
                     -
 
       (3,576)
 
        (4,220)
 
                    -
 
         (4,220)
 
-15%
 
-15%
Foreign Exchange (Loss) Gain
 
        (1,558)
 
                     -
 
       (1,558)
 
           (916)
 
                    -
 
            (916)
       
Interest Income and Other
 
             115
 
                     -
 
            115
 
             820
 
                    -
 
              820
 
-86%
 
-86%
                                     
Income Before Taxes
 
        58,403
 
             (1,690)
 
       56,713
 
        39,004
 
              7,779
 
         46,783
 
50%
 
18%
                                     
Provision for Income Taxes (C,D)
 
        11,728
 
             (2,355)
 
         9,373
 
          4,797
 
              3,010
 
           7,807
 
144%
 
15%
                                     
Net Income
$
        46,675
 
                  665
 
       47,340
 
        34,207
 
              4,769
 
         38,976
 
36%
 
18%
                                     
                                     
Earnings Per Share- Diluted (A)
$
            0.81
 
                 0.01
 
           0.82
 
            0.59
 
                0.08
 
             0.67
 
38%
 
19%
                                     
Average Shares - Diluted
 
        57,943
 
             57,943
 
       57,943
 
        58,089
 
            58,089
 
         58,089
       
                                     
                                     
TWELVE MONTHS ENDED APRIL 30,
                                     
       
2017
 
2016
 
% Change
        US GAAP   Adjustments   Adjusted   US GAAP   Adjustments   Adjusted   US GAAP   Adjusted
excl. FX
                                     
Revenue
$
   1,718,530
 
                     -
 
  1,718,530
 
   1,727,037
 
                    -
 
    1,727,037
 
0%
 
2%
                                     
Costs and Expens
                               
 
Cost of Sales
 
      460,756
 
                     -
 
     460,756
 
      466,177
 
                    -
 
       466,177
 
-1%
 
2%
 
Operating and Administrative (B)
 
      988,597
 
             (8,842)
 
     979,755
 
      994,372
 
                    -
 
       994,372
 
-1%
 
1%
 
Restructuring Charges (A)
 
        13,355
 
           (13,355)
 
              -
 
        28,611
 
          (28,611)
 
                -
       
 
Amortization of Intangibles
 
        49,669
 
                     -
 
       49,669
 
        49,764
 
                    -
 
         49,764
 
0%
 
4%
                                     
 
Total Costs and Expenses
 
   1,512,377
 
           (22,197)
 
  1,490,180
 
   1,538,924
 
          (28,611)
 
    1,510,313
 
-2%
 
1%
                                     
Operating Income
 
      206,153
 
             22,197
 
     228,350
 
      188,113
 
            28,611
 
       216,724
 
10%
 
7%
 
Operating Margin
 
12.0%
     
13.3%
 
10.9%
     
12.5%
       
                                     
Interest Expense
 
      (16,938)
 
                     -
 
     (16,938)
 
      (16,707)
 
                    -
 
       (16,707)
 
1%
 
1%
Foreign Exchange Gain (Loss)
 
             421
 
                     -
 
            421
 
             473
 
                    -
 
              473
       
Interest Income and Other
 
          1,480
 
                     -
 
         1,480
 
          2,914
 
                    -
 
           2,914
 
-49%
 
-49%
                                     
Income Before Taxes
 
      191,116
 
             22,197
 
     213,313
 
      174,793
 
            28,611
 
       203,404
 
9%
 
6%
                                     
Provision for Income Taxes (C,D)
 
        77,473
 
           (38,599)
 
       38,874
 
        29,011
 
            15,777
 
         44,788
 
167%
 
-12%
                                     
Net Income
$
      113,643
 
             60,796
 
     174,439
 
      145,782
 
            12,834
 
       158,616
 
-22%
 
11%
                                     
                                     
Earnings Per Share- Diluted (A)
$
            1.95
 
                 1.05
 
           3.00
 
            2.48
 
                0.22
 
             2.70
 
-21%
 
13%
                                     
Average Shares - Diluted
 
        58,199
 
             58,199
 
       58,199
 
        58,734
 
            58,734
 
         58,734
       
                                     
                                     
                                     
                                     
   
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, 2017 AND 2016
                         
 
                       
RECONCILIATION OF US GAAP TO ADJUSTED EPS - DILUTED (UNAUDITED)
                         
                         
   
 Fourth Quarter Ended
 Twelve Months Ended
   
 April 30,
 
 April 30,
    2017   2016  
2017
 
2016
                         
 US GAAP Earnings Per Share - Diluted
 $
         0.81
 
 $
           0.59
 
 $
          1.95
 
 $
         2.48
 Adjusted to exclude the following:
                     
 
 Restructuring (Credits) Charges (A)
 
        (0.02)
   
           0.08
   
          0.15
   
         0.32
 
 One-time - Pension Settlement (B)
 
              -
   
                -
   
          0.09
   
             -
 
 Unfavorable Tax Settlement (C)
 
         0.03
   
                -
   
          0.85
   
             -
 
 Deferred Income Tax Benefit on UK Rate Change (D)
              -
   
                -
   
         (0.04)
   
       (0.10)
                         
 Adjusted Earnings Per Share - Diluted
 $
         0.82
 
 $
           0.67
 
 $
          3.00
 
 $
         2.70
                         
                         
                         
                         
NOTES TO UNAUDITED FINANCIAL STATEMENTS
                         
                         
 Adjustments:
                     
 A
Restructuring Charges: The adjusted results for the three and twelve months ended April 30, 2017 exclude restructuring (credits) charges related to the Company's Restructuring and Reinvestment Program of $(1.7) million or $(0.02) per share, and $13.4 million or $0.15 per share, respectively.  The adjusted results for the three and twelve months ended April 30, 2016 exclude restructuring charges of $7.8 million or $0.08 per share, and $28.6 million or $0.32 per share, respectively.
 
 B
In fiscal year 2017, the Company announced a voluntary, limited-time opportunity for terminated vested employees who were participants in the U.S. defined benefit retirement plan to elect a single lump sum payment of accumulated benefits.  The aggregate amount of payments made under this one time election was $28.3 million. The total charge, recorded in the second quarter of fiscal year 2017, including a prorata portion of the unamortized net actuarial loss was $8.8 milion or $0.09 per share.
 
 C
As previously disclosed and as reported in the Company's SEC filings, the Company was appealing an unfavorable tax ruling in Germany related to tax benefits obtained through an increase in the tax deductible basis of certain merged German subsidiaries.  In September 2016, the German Federal Fiscal Court issued an unfavorable final judgement in Wiley's longstanding tax appeal. As a consequence, the Company reported a $49.1 million charge, or $0.85 per share in fiscal year 2017.
 
 D
Deferred Income Tax Benefit on UK Rate Change: The adjusted results exclude deferred tax benefits of $2.6 million, or $0.04 per share, for the twelve months ended April 30, 2017, and $5.9 million, or $0.10 per share for the twelve months ended April 30, 2016. The benefits in these periods are associated with changes in tax legislation enacted in the United Kingdom which reduced the U.K. corporate income tax rates. The benefits reflect the remeasurement of the Company's deferred tax balances to the new income tax rates and had no current cash tax impact. The fiscal year 2016 legislation reduced the U.K. income tax rates to 19% effective April 1, 2017 and 18% effective April 1, 2020, and the fiscal year 2017 legislation further reduced the April 1, 2020 statutory income tax rate to 17%.
 
                         
Non-GAAP Financial Measures:
                     
In addition to providing financial results in accordance with GAAP, the Company has provided adjusted financial results that exclude the impact of other nonrecurring items described in more detail throughout this press release.  These non-GAAP financial measures are labeled as "Adjusted" and are used for evaluating the results of operations for internal purposes.  These non-GAAP measures are not intended to replace the presentation of financial results in accordance with GAAP.  Rather, the Company believes the exclusion of such items provides additional information to investors to facilitate the comparison of past and present operations. Unless otherwise noted, adjusted amounts in the attached schedules include foreign exchange.
 
 
 
 
 

 
 
 
JOHN WILEY & SONS, INC.
UNAUDITED SEGMENT RESULTS
FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED
APRIL 30, 2017 AND 2016
(in thousands)
                                     
                                     
FOURTH QUARTER ENDED APRIL 30,
                                     
       
2017
 
2016
 
% Change
    US GAAP   Adjustments
(A)
  Adjusted   US GAAP  
Adjustments
(A)
  Adjusted   US GAAP   Adjusted
excl. FX
Revenue
                               
Research
$
      234,502
 
                -
 
      234,502
 
       230,846
 
                -
 
    230,846
 
2%
 
3%
Publishing
 
      153,748
 
                -
 
      153,748
 
       147,072
 
                -
 
    147,072
 
5%
 
7%
Solutions
 
        63,951
 
                -
 
        63,951
 
        56,383
 
                -
 
      56,383
 
13%
 
14%
                                     
 
Total
$
      452,201
 
                -
 
      452,201
 
       434,301
 
                -
 
    434,301
 
4%
 
6%
                                     
Direct Contribution to Profit
                               
Research
$
      112,578
 
           1,272
 
      113,850
 
       113,884
 
            (381)
 
    113,503
 
-1%
 
-1%
Publishing
 
        70,720
 
                -
 
        70,720
 
        62,345
 
             127
 
      62,472
 
13%
 
16%
Solutions
 
        12,811
 
              168
 
        12,979
 
        12,121
 
             657
 
      12,778
 
6%
 
1%
                                     
 
Total
$
      196,109
 
           1,440
 
      197,549
 
       188,350
 
             403
 
    188,753
 
4%
 
5%
                                     
Contribution to Profit (After Allocated Shared Services and Admin. Costs)
                   
Research
$
        78,993
 
           1,272
 
        80,265
 
        80,753
 
            (381)
 
      80,372
 
-2%
 
-3%
Publishing
 
        31,064
 
                -
 
        31,064
 
        14,713
 
             127
 
      14,840
 
111%
 
117%
Solutions
 
         5,725
 
              168
 
         5,893
 
          3,832
 
             657
 
        4,489
 
49%
 
27%
                                     
 
Total
$
      115,782
 
           1,440
 
      117,222
 
        99,298
 
             403
 
      99,701
 
17%
 
16%
                                     
Unallocated Shared Services and Admin. Costs
       (52,360)
 
          (3,130)
 
       (55,490)
 
       (55,978)
 
           7,376
 
     (48,602)
 
-6%
 
16%
                                     
Operating Income
$
        63,422
 
          (1,690)
 
        61,732
 
        43,320
 
           7,779
 
      51,099
 
46%
 
16%
                                     
                                     
                                     
Total Shared Services and Admin. Costs by Function
                   
 
Distribution and Operation Services
$
       (15,754)
 
          (3,113)
 
       (18,867)
 
       (25,921)
 
           5,817
 
     (20,104)
 
-39%
 
-3%
 
Technology and Content Management
       (66,839)
 
             (204)
 
       (67,043)
 
       (68,156)
 
               94
 
     (68,062)
 
-2%
 
0%
 
Finance
 
       (12,437)
 
                  2
 
       (12,435)
 
       (13,140)
 
           1,159
 
     (11,981)
 
-5%
 
6%
 
Other Administration
 
       (37,657)
 
              185
 
       (37,472)
 
       (37,813)
 
             306
 
     (37,507)
 
0%
 
2%
 
Total
$
     (132,687)
 
          (3,130)
 
     (135,817)
 
      (145,030)
 
           7,376
 
   (137,654)
 
-9%
 
0%
                                     
                                     
TWELVE MONTHS ENDED APRIL 30,
                                     
       
2017
 
2016
 
% Change
    US GAAP  
Adjustments
(A)
  Adjusted   US GAAP  
Adjustments
(A)
  Adjusted   US GAAP  
Adjusted
excl. FX
Revenue
                               
Research
$
      853,489
 
                -
 
      853,489
 
       826,778
 
                -
 
    826,778
 
3%
 
7%
Publishing
 
      633,449
 
                -
 
      633,449
 
       695,728
 
                -
 
    695,728
 
-9%
 
-7%
Solutions
 
      231,592
 
                -
 
      231,592
 
       204,531
 
                -
 
    204,531
 
13%
 
14%
                                     
 
Total
$
   1,718,530
 
                -
 
   1,718,530
 
    1,727,037
 
                -
 
  1,727,037
 
0%
 
2%
                                     
Direct Contribution to Profit
                               
Research
$
      397,486
 
           1,949
 
      399,435
 
       383,499
 
           2,982
 
    386,481
 
4%
 
5%
Publishing
 
      285,174
 
           1,596
 
      286,770
 
       304,965
 
           4,507
 
    309,472
 
-6%
 
-5%
Solutions
 
        47,673
 
           1,787
 
        49,460
 
        36,975
 
           1,042
 
      38,017
 
29%
 
29%
                                     
 
Total
$
      730,333
 
           5,332
 
      735,665
 
       725,439
 
           8,531
 
    733,970
 
1%
 
2%
                                     
Contribution to Profit (After Allocated Shared Services and Admin. Costs)
                   
Research
$
      252,228
 
           1,949
 
      254,177
 
       252,110
 
           2,982
 
    255,092
 
0%
 
2%
Publishing
 
      125,703
 
           1,596
 
      127,299
 
       126,058
 
           4,507
 
    130,565
 
0%
 
0%
Solutions
 
        14,822
 
           1,787
 
        16,609
 
          3,992
 
           1,042
 
        5,034
 
271%
 
224%
                                     
 
Total
$
      392,753
 
           5,332
 
      398,085
 
       382,160
 
           8,531
 
    390,691
 
3%
 
4%
                                     
Unallocated Shared Services and Admin. Costs
     (186,600)
 
          16,865
 
     (169,735)
 
      (194,047)
 
         20,080
 
   (173,967)
 
-4%
 
1%
                                     
Operating Income
$
      206,153
 
          22,197
 
      228,350
 
       188,113
 
         28,611
 
    216,724
 
10%
 
7%
                                     
                                     
                                     
                                     
Total Shared Services and Admin. Costs by Function
                   
 
Distribution and Operation Services
$
       (82,474)
 
           6,668
 
       (75,806)
 
       (90,180)
 
         10,137
 
     (80,043)
 
-9%
 
-1%
 
Technology and Content Management
     (268,259)
 
           1,458
 
     (266,801)
 
      (262,178)
 
           3,537
 
   (258,641)
 
2%
 
5%
 
Finance
 
       (46,755)
 
             (294)
 
       (47,049)
 
       (50,233)
 
           3,474
 
     (46,759)
 
-7%
 
3%
 
One-time Pension Settlement
 
        (8,842)
 
           8,842
 
              -
 
               -
 
                -
 
             -
       
 
Other Administration
 
     (117,850)
 
              191
 
     (117,659)
 
      (134,735)
 
           2,932
 
   (131,803)
 
-13%
 
-9%
 
Total
$
     (524,180)
 
          16,865
 
     (507,315)
 
      (537,326)
 
         20,080
 
   (517,246)
 
-2%
 
0%
                                     
                                     
   
 (A) See the accompanying Notes to Unaudited Financial Statements for a description of the adjustment.
 
 
 
 

 
 
UNAUDITED ADJUSTED CONTRIBUTION TO PROFIT
INCLUDING ALLOCATED SHARED SERVICES AND ADMINISTRATIVE COSTS
FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED
APRIL 30, 2017 AND 2016
(in thousands)
                                       
                                       
       
Fourth Quarter Ended
   
Twelve Months Ended
       
April 30,
 
April 30,
        2017   2016   % Change  
% Change
excl. FX
    2017   2016   % Change  
% Change
excl. FX
Research:
                                 
 
Direct Contribution to Profit
$
        112,578
 
        113,884
 
-1%
 
-3%
 
$
    397,486
 
         383,499
 
4%
 
6%
 
Restructuring Charges (Credits) (A)
 
            1,272
 
              (381)
           
        1,949
 
             2,982
       
 
Adjusted Direct Contribution to Profit
 
        113,850
 
        113,503
 
0%
 
-1%
   
    399,435
 
         386,481
 
3%
 
5%
                                       
 
Allocated Shared Services and Admin. Costs
 
        (33,585)
 
         (33,131)
 
1%
 
3%
   
  (145,258)
 
       (131,389)
 
11%
 
13%
 
Adjusted Contribution to Profit (after allocated
$
          80,265
 
          80,372
 
0%
 
-3%
 
$
    254,177
 
         255,092
 
0%
 
2%
   
Shared Services and Admin. Costs)
                                 
                                       
Publishing:
                                 
 
Direct Contribution to Profit
$
          70,720
 
          62,345
 
13%
 
16%
 
$
    285,174
 
         304,965
 
-6%
 
-5%
 
Restructuring Charges (A)
 
                   -
 
                127
           
        1,596
 
             4,507
       
 
Adjusted Direct Contribution to Profit
 
          70,720
 
          62,472
 
13%
 
16%
   
    286,770
 
         309,472
 
-7%
 
-5%
                                       
 
Allocated Shared Services and Admin. Costs
 
        (39,656)
 
         (47,632)
 
-17%
 
-15%
   
  (159,471)
 
       (178,907)
 
-11%
 
-9%
 
Adjusted Contribution to Profit (after allocated
$
          31,064
 
          14,840
 
109%
 
117%
 
$
    127,299
 
         130,565
 
-3%
 
0%
   
Shared Services and Admin. Costs)
                                 
       
                   -
 
                    -
           
               -
 
                    -
       
Solutions:
                                 
 
Direct Contribution to Profit
$
          12,811
 
          12,121
 
6%
 
5%
 
$
      47,673
 
           36,975
 
29%
 
28%
 
Restructuring Charges (A)
 
                168
 
                657
           
        1,787
 
             1,042
       
 
Adjusted Direct Contribution to Profit
 
          12,979
 
          12,778
 
2%
 
1%
   
      49,460
 
           38,017
 
30%
 
29%
                                       
 
Allocated Shared Services and Admin. Costs
 
           (7,086)
 
           (8,289)
 
-15%
 
-13%
   
    (32,851)
 
         (32,983)
 
0%
 
0%
 
Adjusted Contribution to Profit (after allocated
$
            5,893
 
             4,489
 
31%
 
27%
 
$
      16,609
 
             5,034
       
   
Shared Services and Admin. Costs)
                                 
                                       
                                       
Total Adjusted Contribution to Profit (after allocated Shared Services and Admin. Costs)
$
        117,222
 
          99,701
 
18%
 
16%
 
$
    398,085
 
         390,691
 
2%
 
4%
 
 
                                 
                                       
Unallocated Shared Services and Admin. Costs:
                                 
 
Unallocated Shared Services and Admin. Costs
$
        (52,360)
 
         (55,978)
 
-6%
 
-5%
 
$
  (186,600)
 
       (194,047)
 
-4%
 
-1%
 
Restructuring (Credits) Charges (A)
 
           (3,130)
 
             7,376
           
        8,023
 
           20,080
       
 
One-time - Pension Settlement (B)
 
                   -
 
                    -
           
        8,842
 
                    -
       
 
Adjusted Unallocated Shared Services and Admin. Costs
$
        (55,490)
 
         (48,602)
 
14%
 
16%
 
$
  (169,735)
 
       (173,967)
 
-2%
 
1%
                                       
Adjusted Operating Income
$
          61,732
 
          51,099
 
21%
 
16%
 
$
    228,350
 
         216,724
 
5%
 
7%
                                       
                                       
                                       
   
See the accompanying Notes to Unaudited Financial Statements for a description of the adjustment.
       
 
 
 
 

 
 
 
JOHN WILEY & SONS, INC.
SEGMENT REVENUE by PRODUCT/SERVICE
FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED
APRIL 30, 2017 AND 2016
(in thousands)
                                       
       
Fourth Quarter
           
Twelve Months
       
       
Ended April 30,
           
Ended April 30,
     
 
        2017   2016  
% of
Revenue
 
% Change
excl. FX
    2017  
2016
 
% of
Revenue
 
% Change
excl. FX
Research
                                 
 
Journal Revenue
                                 
   
Journal Subscriptions
$
     167,319
 
           171,335
 
71%
 
-3%
 
$
     639,720
 
     622,305
 
75%
 
6%
   
Author-Funded Access
 
          8,782
 
               7,370
 
4%
 
26%
   
        30,633
 
        25,671
 
4%
 
26%
   
Licensing, Reprints, Backfiles, and Other
       49,775
 
             52,141
 
21%
 
1%
   
     164,070
 
     178,802
 
19%
 
-3%
   
Total Journal Revenue
 
     225,876
 
           230,846
 
96%
 
-1%
   
     834,423
 
     826,778
 
98%
 
4%
                                       
   
Platform Services (Atypon)
 
          8,626
 
                      -
 
4%
       
        19,066
 
                 -
 
2%
   
                                       
                                       
   
Total Research Revenue
$
     234,502
 
           230,846
 
100%
 
3%
 
$
     853,489
 
     826,778
 
100%
 
7%
                                       
                                       
Publishing
                                 
   
STM and Professional Books
$
       75,521
 
             79,242
 
49%
 
-2%
 
$
     291,255
 
     330,984
 
46%
 
-9%
   
Education Books
 
       33,674
 
             26,656
 
22%
 
28%
   
     196,343
 
     229,989
 
31%
 
-13%
   
Total Books and Reference Material
     109,195
 
           105,898
 
71%
 
6%
   
     487,598
 
     560,973
 
77%
 
-11%
                                       
                                       
   
Course Workflow (WileyPLUS)
 
       18,178
 
             17,160
 
12%
 
6%
   
        62,348
 
        58,519
 
10%
 
7%
   
Online Test Preparation and Certification
       10,024
 
               6,643
 
7%
 
52%
   
        35,609
 
        28,115
 
6%
 
27%
   
Licensing, Distribution, Advertising and Other
       16,351
 
             17,371
 
10%
 
-2%
   
        47,894
 
        48,121
 
7%
 
3%
                                       
   
Total Publishing Revenue
$
     153,748
 
           147,072
 
100%
 
7%
 
$
     633,449
 
     695,728
 
100%
 
-7%
                                       
                                       
Solutions
                                 
                                       
 
Online Program Management
 
       30,443
 
             26,715
 
48%
 
14%
   
     111,638
 
        96,469
 
48%
 
16%
 
Professional Assessment
 
       16,417
 
             15,174
 
26%
 
9%
   
        59,868
 
        57,370
 
26%
 
5%
 
Corporate Learning
 
       17,091
 
             14,494
 
26%
 
21%
   
        60,086
 
        50,692
 
26%
 
20%
                                       
                                       
   
Total Solutions Revenue
$
       63,951
 
             56,383
 
100%
 
14%
 
$
     231,592
 
     204,531
 
100%
 
14%
                                       
                                       
                                       
                                       
Total Revenue
$
     452,201
 
           434,301
     
6%
 
$
  1,718,530
 
  1,727,037
     
2%
 
 
 
 

 
 
JOHN WILEY & SONS, INC.
UNAUDITED STATEMENTS OF FINANCIAL POSITION
(in thousands)
         
   
April 30,
   
2017
 
2016
         
Current Assets
       
Cash & cash equivalents
$
          58,516
 
        363,806
Accounts receivable
 
        188,679
 
        167,638
Inventories
 
          47,852
 
          57,779
Prepaid and other
 
          64,688
 
          81,456
Total Current Assets
 
       359,735
 
        670,679
Product Development Assets
 
                 99,275
 
          72,126
Technology, Property and Equipment
 
        252,488
 
        214,770
Intangible Assets
 
        828,099
 
        877,007
Goodwill
 
        982,101
 
        951,663
Income Tax Deposits
 
                   -
 
          62,912
Other Assets
 
          84,519
 
          71,939
Total Assets
 
    2,606,217
 
    2,921,096
           
Current Liabilities
       
Accounts and royalties payable
 
        139,206
 
        166,222
Deferred revenue
 
        436,235
 
        426,489
Accrued employment costs
 
          98,185
 
          97,902
Accrued income taxes
 
          22,222
 
            9,450
Accrued pension liability
 
            5,776
 
            5,492
Other accrued liabilities
 
          86,232
 
          76,252
Total Current Liabilities
 
        787,856
 
        781,807
Long-Term Debt
 
        365,000
 
        605,007
Accrued Pension Liability
 
        214,597
 
        224,170
Deferred Income Tax Liabilities
 
        160,491
 
        189,868
Other Long-Term Liabilities
 
          75,136
 
          83,138
Shareholders' Equity
 
    1,003,137
 
    1,037,106
Total Liabilities & Shareholders' Equity
$
 2,606,217
 
 2,921,096
 
 
 
 

 
 
JOHN WILEY & SONS, INC.
UNAUDITED STATEMENTS OF FREE CASH FLOW
(in thousands)
           
           
     
 Twelve Months Ended
     
 April 30,
     
2017
 
2016
Operating Activities:
       
 
Net income
$
         113,643
 
           145,782
 
Amortization of intangibles
 
           49,669
 
             49,764
 
Amortization of composition costs
 
           40,209
 
             39,658
 
Depreciation of technology, property and equipment
           66,683
 
             66,427
 
Restructuring charges
 
           13,355
 
             28,611
 
Restructuring payments
 
          (22,854)
 
            (29,864)
 
Deferred income tax benefit on UK rate change
            (2,575)
 
              (5,859)
 
Unfavorable tax settlement
 
           49,029
 
                    -
 
One-time pension settlement
 
             8,842
 
                    -
 
Share-based compensation expense
 
           17,552
 
             16,105
 
Excess tax benefits from share-based compensation
               (414)
 
              (1,027)
 
Royalty advances
 
        (112,370)
 
          (110,135)
 
Earned royalty advances
 
         114,647
 
           109,102
 
Other non-cash charges and credits
 
             6,298
 
             15,786
 
Change in deferred revenue
 
           22,692
 
             66,983
 
Net change in operating assets and liabilities
 
          (49,905)
 
            (41,376)
 
Cash Provided by Operating Activities
 
         314,501
 
           349,957
           
Investments in organic growth:
       
 
Additions to technology, property and equipment
        (110,700)
 
            (93,705)
 
Book composition and other product development spending
          (37,559)
 
            (37,272)
 
Free Cash Flow less Book Composition and Other Product Development Spending
         166,242
 
           218,980
           
Other Investing and Financing Activities:
       
 
Acquisitions, net of cash
 
        (154,766)
 
            (20,418)
 
Proceeds from settlement of foreign exchange forward contract
           60,417
 
                    -
 
Repayment of long-term debt
 
        (923,007)
 
          (460,085)
 
Repayment of short-term debt
 
                  -
 
          (150,000)
 
Borrowings of long-term debt
 
         683,000
 
           415,000
 
Borrowings of short-term Debt
 
                  -
 
             50,000
 
Change in book overdrafts
 
               (214)
 
               1,725
 
Cash dividends
 
          (71,545)
 
            (69,896)
 
Purchase of treasury shares
 
          (50,326)
 
            (69,977)
 
Debt issuance costs
 
                  -
 
              (3,362)
 
Proceeds from exercise of stock options and other
           15,506
 
                  (95)
 
Excess tax benefits from share-based compensation
                414
 
               1,027
 
Cash Used for Investing and Financing Activities
        (440,521)
 
          (306,081)
           
Effects of Exchange Rate Changes on Cash
 
          (31,011)
 
              (6,534)
           
Decrease in Cash and Cash Equivalents for Period
$
        (305,290)
 
            (93,635)