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EX-99.10 - EARNINGS PRESENTATION - WILEY JOHN & SONS, INC.exhibit99.htm

 
 

 

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


March 11, 2014
(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 7.01: 
REGULATION FD DISCLOSURE

The information in this report is being furnished (i) pursuant to Regulation FD, and (ii) pursuant to item 12 Results of Operation and Financial Condition (in accordance with SEC interim guidance issued March 28, 2003).  In accordance with General Instructions B.2 and B.6 of Form 8-K, the information in this report shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1934, as amended. 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.

On March 11, 2014, John Wiley & Sons Inc., a New York corporation (the “Company”), issued a press release announcing the Company’s financial results for the third quarter of fiscal year 2014. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and incorporated.  Exhibit 99.10 is a copy of the slides furnished at the third quarter fiscal year 2014 earnings presentation.

  Exhibit No.
Description

99.1           Press release dated March 11, 2014 titled “Wiley Reports Third Quarter Fiscal 2014 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).
 
99.10         Press release slideshow presentation (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:                                               Media Contact:
Brian Campbell, Investor Relations                 Linda Dunbar, Corporate Media Relations
201.748.6874                                                        201.748.6390
brian.campbell@wiley.com                               ldunbar@wiley.com


Wiley Reports Third Quarter Fiscal 2014 Results

·  
Adjusted revenue of $458 million, up 1% on a constant currency basis
·  
Adjusted revenue change by segment on a constant currency basis and excluding the divested consumer publishing programs:  Research +3%, Professional Development -5%, and Education even
·  
Journal subscription revenue of  $154 million, up 7% over prior year and 4% year-to-date on a constant currency basis
·  
Adjusted EPS of $0.93, even with prior year on a constant currency basis
·  
Full year financial outlook reaffirmed

March 11, 2014 (Hoboken, NJ) – John Wiley & Sons, Inc. (NYSE: JWa and JWb), a global provider of knowledge and knowledge-enabled services that improve outcomes in research, professional practice, and education, today announced the following results for the third quarter of fiscal year 2014, ending January 31, 2014:
 
 
                                                       Change
$ millions
  FY14
 FY13
 
Excluding FX
Including FX
 
ADJUSTED
         
 
Revenue
    Q3
    Nine Months
 
 
$458
$1,318
 
 
$459
$1,275
 
 
 
1%
4%
 
 
0%
3%
EPS
    Q3
    Nine Months
 
$0.93
$2.28
 
$0.93
$2.20
 
 
0%
4%
 
0%
4%
 
US GAAP
         
 
Revenue
    Q3
    Nine Months
 
 
$458
$1,318
 
 
$472
$1,315
 
 
 
(2%)
1%
 
 
(3%)
0%
 
EPS
    Q3
    Nine Months
 
 
$0.88
$2.10
 
 
$0.95
$2.26
 
 
 
(7%)
(7%)
 
 
(7%)
(7%)
Please see the attached financial schedules for more detail


 
 

 

Business Summary
“Through three quarters, research journal performance has been favorable, with 4% revenue growth in journal subscriptions, strong revenue growth in author-funded open access, and a solid start to subscription billings for volume year 2014,” said Steve Smith, President and CEO of Wiley.  “In addition, professional and education solutions, including talent management, WileyPLUS, and online program management, continue to show strong double-digit revenue growth.”

With one quarter remaining in the fiscal year, the company reaffirmed its full-year guidance for low single-digit adjusted revenue growth and adjusted EPS of $2.85 to $2.95.

Third Quarter Highlights
·  
Adjusted revenue on a constant currency basis rose 1% over prior year to $458 million, excluding the prior year operating results of the divested consumer publishing programs ($13.9 million of revenue in Q3 FY13). Revenue in the year-ago period included a $4 million favorable impact from shipments delayed into that quarter due to distribution disruptions caused by Hurricane Sandy. Revenue fell 3% on a US GAAP basis.
·  
Adjusted earnings per share (EPS) was even at $0.93.  Adjusted EPS for the current quarter excludes restructuring charges of $4.3 million ($0.05/share), and the prior year period excludes the operating results of the divested consumer publishing program of $2.0 million ($0.02/share).   Adjusted revenue and margin growth, restructuring and other savings, and lower income taxes were offset by higher incentive compensation accruals, a 4% increase in technology expense, and a lower property tax incentive.  US GAAP EPS for the quarter was $0.88 per share compared to $0.95 per share in the prior period.
·  
Free Cash Flow of $84.6 million for the first nine months was roughly even with the prior year period.  Lower disputed income tax deposits paid to the German government were offset by lower cash collections in the quarter and higher payments related to the restructuring program as compared to the year-ago period.
·  
Restructuring update:  Wiley recorded restructuring charges of $4.3 million this quarter related to its previously announced restructuring program.  Including this charge, Wiley has recorded $51.8 million in restructuring charges since the program was announced in January 2013. The Company expects to record additional restructuring charges in the fourth quarter of approximately $10 million.   As of January 31, 2014, Wiley had developed and approved  plans  to achieve $75 million of its $80 million FY15 run-rate savings goal, with more than half of the $80 million expected to improve earnings in FY15 and the remainder reinvested into the business.
·  
Share repurchases: In the quarter, Wiley repurchased 375K shares for $20.0 million, an average price of $53.30 per share.  Fiscal year-to-date, the Company has repurchased 810K shares for $38.5 million, an average price of $47.53.  As of January 31, Wiley had nearly 3.7 million shares remaining in the program.

Adjusted Results
The Company provides financial measures referred to as “adjusted” revenue, contribution to profit,  and EPS, which exclude restructuring charges, operating results from divestitures, impairment charges, gain on the sale of publishing programs, and the deferred tax benefits from the changes in UK income tax rates. Variances to adjusted revenue, contribution to profit, and EPS exclude FX impacts 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”)
Throughout this report, references are made to variances “excluding foreign exchange” or “on a constant currency basis”; such amounts exclude both period-over-period currency translation effects and transactional gains and losses.  

RESEARCH
·  
Revenue:  Third quarter revenue on a constant currency basis rose 3% to $248.8 million, driven by journal subscription revenue growth of 7%, which included favorable impacts from production timing.  Also contributing were digital book sales (+12%) and open access (+$3 million).  Partially offsetting this growth was a 16% decline in print book revenue.  For the first nine months, revenue on a constant currency basis was up 3%, with journal subscription revenue up 4%.
·  
Adjusted Contribution to Profit: Third quarter adjusted contribution to profit (after allocated shared services and administrative costs) grew 2% on a constant currency basis to $69.0 million, with higher society royalty costs and accrued incentive compensation partially offsetting revenue growth.  For the first nine months, adjusted contribution to profit (after shared services and administrative costs) grew 5% to $210.8 million, excluding the impact of foreign exchange.
·  
Calendar Year 2014 Journal Subscriptions:   At the end of January, calendar year 2014 journal subscriptions were up 4% with 81% of targeted business closed for the 2014 volume year.
·  
Society Business:  Two new society journals were signed in the quarter with combined annual revenue of $1.7 million; 50 were renewed worth approximately $19 million annually; and eight journals with combined annual revenue of $5.3 million were not renewed, primarily due to the conclusion of one society relationship.
·  
Other Key Developments:   In January, Wiley announced a partnership with technology company Knode to provide customized portals to learned societies and other academic organizations worldwide.  Wiley’s cloud-based portal is populated with more than 20 million documents and millions of expert profiles. Researchers are using Knode to find experts, identify and connect with collaborators, and promote their expertise to the world. For society executives and institutional research managers, custom analytics provide aggregated views of research expertise and output.

PROFESSIONAL DEVELOPMENT
·  
Adjusted Revenue:  Third quarter adjusted revenue declined 5% to $94.2 million, excluding FX and revenue from the divested consumer publishing programs ($13.9 million) in the prior year period.  Adjusted revenue performance was driven by a decline in print books (-9%), particularly due to lower demand for technology titles and the discontinuation of certain low-margin non-divested consumer titles, which offset solid growth in online training and assessment (+20%) and digital books (+9%).  Revenue in the year-ago period included a $2 million favorable impact from shipments delayed into that quarter due to distribution disruptions caused by Hurricane Sandy.  For the first nine months, adjusted revenue on a constant currency basis was down 1%.
·  
Adjusted Contribution to Profit:  Third quarter adjusted contribution to profit (after allocated shared service and administrative costs) grew 21% to $11.9 million due to restructuring savings and higher margin digital revenue, which offset the revenue decline in print books.  Adjusted contribution to profit excludes restructuring charges and the operating results from the divested consumer assets in the prior year.  For the first nine months, adjusted contribution to profit (after shared services and administrative costs) grew 48% to $22.8 million, excluding the impact of foreign exchange.
·  
Acquisitions:  In January, Wiley acquired the assets of Elan Guides, an early-stage CFA test preparation company.   Elan’s CFA test preparation materials will be incorporated into Wiley’s test preparation platform for business and finance professionals.  Terms were not disclosed.
 
 
 
 

 
 
EDUCATION
·  
Revenue:  Third quarter revenue was $114.9 million, essentially even on a constant currency basis.  Revenue growth from WileyPLUS (+20%), Deltak (+12%), and Binder and Custom Products (+3%) offset a decline in both print textbooks (-8%) and digital books (-8%).   Note that Deltak’s third quarter 2013 reported results included an extra week carried forward from the acquisition closing date, which occurred just prior to the end of the second quarter 2013.  Excluding the impact of that carry-over period, Deltak revenue increased by approximately 20% as compared to the year-ago quarter.  Education revenue in the year-ago period also included a $2 million favorable impact from shipments delayed into that quarter due to disruptions caused by Hurricane Sandy, and earlier ordering from Australian schools that benefitted the second quarter of 2014.  Digital textbook growth for the period was unfavorably impacted by weakened enrollment at for-profit institutions.  For the first nine months, Education revenue overall increased 12% on a constant currency basis to $299.7 million, primarily due to the first half contribution from Deltak ($31 million).
·  
Adjusted Contribution to Profit:  Third quarter adjusted contribution to profit (after allocated shared service and administrative costs) declined 9% to $30.5 million, reflecting changes in revenue mix and higher accrued incentive costs.  For the first nine months, adjusted contribution to profit (after shared services and administrative costs) increased 2% to $59.4 million, excluding the impact of foreign exchange.
·  
Online Program Management (OPM):  Deltak secured two university partners in the quarter, bringing the total number of institutions under contract to 36.  As of January 31, 2014, Deltak had 120 programs generating revenue and 45 programs under contract and in development but not yet generating revenue.  

(Please see the attached tables for more information, including Quarter and Year-to-Date Segment Revenue Statistics by Product/Service and Subject Category)

Earnings Conference Call
·  
Scheduled for today, March 11, at 10:00 a.m. (EDT)
·  
Access the webcast at www.wiley.com> Investor Relations> Events and Presentations, or http://www.wiley.com/WileyCDA/Section/id-370238.html
·  
U.S. callers, please dial (888) 337-8198 and enter the participant code 9980621#
·  
International callers, please dial (719) 325-2464 and enter the participant code 9980621#
·  
An archive of the webcast will be available for a period of up to 14 days

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995
This release contains certain forward-looking statements concerning the Company's operations, performance, and financial condition. Reliance should not be placed on forward-looking statements, as actual results may differ materially from those in any forward-looking statements. Any such forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond the control of the Company, and are subject to change based on many important factors. Such factors include, but are not limited to (i) the level of investment in new technologies and products; (ii) subscriber renewal rates for the Company's journals; (iii) the financial stability and liquidity of journal subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and financial stability of key online retailers; (vi) the seasonal nature of the Company's educational business and the impact of the used book market; (vii) worldwide economic and political conditions; (viii) the Company's ability to protect its copyrights and other intellectual property worldwide (ix) the ability of the Company to successfully integrate acquired operations and realize expected opportunities and (x) other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances.

About Wiley
Wiley is a global provider of knowledge and knowledge-enabled services that improve outcomes in areas of research, professional practice, and education.  Through the Research segment, the Company provides digital and print scientific, technical, medical, and scholarly journals, reference works, books, database services, and advertising. The Professional Development segment provides digital and print books, online assessment and training services, and test prep and certification.   In Education, Wiley provides education solutions including online program management services for higher education institutions and course management tools for instructors and students, as well as print and digital content.
 
 
 

 

JOHN WILEY & SONS, INC.
UNAUDITED SUMMARY OF OPERATIONS
FOR THE THIRD QUARTER AND NINE MONTHS ENDED
JANUARY 31, 2014 AND 2013
(in thousands, except per share amounts)
                                     
THIRD QUARTER ENDED JANUARY 31,
                                     
       
2014
 
2013
 
% Change
        US GAAP  
Adjustments (A,B)
   Adjusted    US GAAP    Adjustments (B-D)    Adjusted    US GAAP  
Adjusted
excl. FX
                                     
Revenue
$
    457,933
 
                 -
 
     457,933
 
    472,435
 
        (13,858)
 
    458,577
 
-3%
 
1%
                                     
Costs and Expenses
                               
 
Cost of Sales
 
    130,563
 
                 -
 
     130,563
 
    141,794
 
          (9,143)
 
    132,651
 
-8%
 
-1%
 
Operating and Administrative
 
    238,569
 
                 -
 
     238,569
 
    235,857
 
          (2,678)
 
    233,179
 
1%
 
3%
 
Restructuring Charges (A)
 
        4,256
 
           (4,256)
 
              -
 
             -
 
                -
 
             -
       
 
Amortization of Intangibles
 
      11,165
 
                 -
 
       11,165
 
      11,158
 
                -
 
      11,158
 
0%
 
0%
                                     
 
Total Costs and Expenses
 
    384,553
 
           (4,256)
 
     380,297
 
    388,809
 
        (11,821)
 
    376,988
 
-1%
 
1%
                                     
Operating Income
 
      73,380
 
            4,256
 
       77,636
 
      83,626
 
          (2,037)
 
      81,589
 
-12%
 
-3%
 
Operating Margin
 
16.0%
     
17.0%
 
17.7%
     
17.8%
       
                                     
Interest Expense
 
       (3,485)
 
                 -
 
        (3,485)
 
       (3,827)
 
                -
 
       (3,827)
 
-9%
 
-9%
Foreign Exchange Gain (Loss)
 
            29
 
                 -
 
             29
 
       (1,147)
 
                -
 
       (1,147)
 
-103%
 
2%
Interest Income and Other
 
           466
 
                 -
 
            466
 
           342
 
                -
 
          342
 
36%
 
36%
                                     
Income Before Taxes
 
      70,390
 
            4,256
 
       74,646
 
      78,994
 
          (2,037)
 
      76,957
 
-11%
 
-3%
                                     
Provision (Benefit) for Income Taxes (A-D)
      17,901
 
            1,347
 
       19,248
 
      21,894
 
             (775)
 
      21,119
 
-18%
 
-9%
                                     
Net Income
$
      52,489
 
            2,909
 
       55,398
 
      57,100
 
          (1,262)
 
      55,838
 
-8%
 
0%
                                     
                                     
Earnings Per Share- Diluted
$
          0.88
 
              0.05
 
           0.93
 
          0.95
 
            (0.02)
 
         0.93
 
-7%
 
0%
                                     
Average Shares - Diluted
 
      59,713
 
           59,713
 
       59,713
 
      60,254
 
         60,254
 
      60,254
       
                                     
                                     
NINE MONTHS ENDED JANUARY 31,
                                     
       
2014
 
2013
 
% Change
         US GAAP    Adjustments (A,B,E)    Adjusted    US GAAP    Adjustments (A-E)    Adjusted    US GAAP  
 Adjusted
excl. FX
                                     
Revenue
$
  1,318,106
 
                 -
 
   1,318,106
 
  1,314,924
 
        (40,359)
 
 1,274,565
 
0%
 
4%
                                     
Costs and Expenses
                               
 
Cost of Sales
 
    380,706
 
                 -
 
     380,706
 
    398,592
 
        (25,505)
 
    373,087
 
-4%
 
3%
 
Operating and Administrative
 
    713,090
 
                 -
 
     713,090
 
    689,833
 
        (12,118)
 
    677,715
 
3%
 
6%
 
Restructuring Charges (A)
 
      27,327
 
          (27,327)
 
              -
 
        4,841
 
          (4,841)
 
             -
       
 
Impairment Charges (B)
 
        4,786
 
           (4,786)
 
              -
 
      15,521
 
        (15,521)
 
             -
       
 
Amortization of Intangibles
 
      33,066
 
                 -
 
       33,066
 
      30,404
 
               (53)
 
      30,351
 
9%
 
9%
                                     
 
Total Costs and Expenses
 
  1,158,975
 
          (32,113)
 
   1,126,862
 
  1,139,191
 
        (58,038)
 
 1,081,153
 
2%
 
5%
                                     
Gain on Sale of Travel Publishing Program (C)
             -
 
                 -
 
              -
 
        9,829
 
          (9,829)
 
             -
       
                                     
Operating Income
 
    159,131
 
           32,113
 
     191,244
 
    185,562
 
           7,850
 
    193,412
 
-14%
 
0%
 
Operating Margin
 
12.1%
     
14.5%
 
14.1%
     
15.2%
       
                                     
Interest Expense
 
     (10,348)
 
                 -
 
      (10,348)
 
       (9,557)
 
                -
 
       (9,557)
 
8%
 
8%
Foreign Exchange Gain (Loss)
 
           329
 
                 -
 
            329
 
       (1,599)
 
                -
 
       (1,599)
 
-121%
 
-2%
Interest Income and Other
 
        2,095
 
                 -
 
         2,095
 
        1,569
 
                -
 
        1,569
 
34%
 
34%
                                     
Income Before Taxes
 
    151,207
 
           32,113
 
     183,320
 
    175,975
 
           7,850
 
    183,825
 
-14%
 
0%
                                     
Provision (Benefit) for Income Taxes (A-E)
      26,588
 
           21,126
 
       47,714
 
      39,701
 
         11,068
 
      50,769
 
-33%
 
-5%
                                     
Net Income
$
    124,619
 
           10,987
 
     135,606
 
    136,274
 
          (3,218)
 
    133,056
 
-9%
 
3%
                                     
                                     
Earnings Per Share- Diluted
$
          2.10
 
              0.19
 
           2.28
 
          2.26
 
            (0.05)
 
         2.20
 
-7%
 
4%
                                     
Average Shares - Diluted
 
      59,388
 
           59,388
 
       59,388
 
      60,349
 
         60,349
 
      60,349
       
                                     
 
 
See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.

 
 
 

 
 
 
JOHN WILEY & SONS, INC.
FOR THE THIRD QUARTER AND NINE MONTHS ENDED
JANUARY 31, 2014 AND 2013
                         
 
                       
RECONCILIATION OF US GAAP EPS TO ADJUSTED EPS - DILUTED (UNAUDITED)
                         
                         
   
 Third Quarter Ended
 
 Nine Months Ended
   
 January 31,
 
 January 31,
     
 2014
   
 2013
   
 2014
   
 2013
                         
 US GAAP Earnings Per Share - Diluted
 $
            0.88
 
 $
        0.95
 
 $
        2.10
 
 $
         2.26
 Adjusted to exclude the following:
                     
 
 Restructuring Charges (A)
 
          (0.05)
   
            -
   
      (0.31)
   
        (0.06)
 
 Impairment Charges (B)
 
                -
   
            -
   
      (0.06)
   
        (0.16)
 
 Gain on Sale of Travel Publishing Program (C)
                -
   
            -
   
            -
   
         0.10
 
 Operational Results of Divested Consumer Programs (D)
                -
   
        0.02
   
            -
   
         0.03
 
 Deferred Income Tax Benefit on UK Rate Change (E)
                -
   
         -
   
        0.18
   
      0.14
                         
 Adjusted Earnings Per Share - Diluted
 $
            0.93
 
 $
        0.93
 
 $
        2.28
 
 $
         2.20
                         
                         
                         
NOTES TO UNAUDITED FINANCIAL STATEMENTS
                         
                         
 Adjustments:
                     
 (A)
RESTRUCTURING CHARGES: The adjusted results for the three and nine months ended January 31, 2014 and the nine months ended January 31, 2013 exclude restructuring charges related to the Company's Restructuring and Reinvestment Program of $4.3 million ($2.9 million after tax, $0.05 per share), $27.3 million ($18.3 million after tax, $0.31 per share) and $4.8 million ($3.5 million after tax, $0.06 per share), respectively.
 
 (B)
Impairment Charges: The adjusted results for the nine months ended January 31, 2014 exclude asset impairment charges related to certain technology investments of $4.8 million ($3.4 million after tax, $0.06 per share).  The adjusted results for the nine months ended January 31, 2013 exclude 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).
 
 (C)
Gain on Sale of Travel Publishing Program: The adjusted results for the nine months ended January 31, 2013 exclude a gain on sale of the travel publishing program of $9.8 million ($6.2 million after tax, $0.10 per share).
 
 (D)
Operating Results of Divested Consumer Programs: The adjusted results for the three and nine months ended January 31, 2013 exclude the operating results of the divested Professional Development consumer publishing programs sold in fiscal year 2013.
 
 (E)
Deferred Income Tax Benefit on UK Rate Change: The adjusted results for the nine months ended January 31, 2014 and 2013 exclude deferred tax benefits of $10.6 million ($0.18 per share) and $8.4 million ($0.14 per share), respectively. The tax benefits are associated with tax legislation enacted in the United Kingdom that reduced the U.K. corporate income tax rates by 3% and 2%, respectively.  The benefits reflect the remeasurement of the Company's deferred tax balances to the new income tax rates of 21% effective April 1, 2014 and 20% effective April 1, 2015 and had no current cash tax impact.
 
                         
                         
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 THIRD QUARTER AND NINE MONTHS ENDED
JANUARY 31, 2014 AND 2013
(in thousands)
                                     
THIRD QUARTER ENDED JANUARY 31,
                                     
       
2014
 
2013
 
% Change
     US GAAP    Adjustments (A,B)    Adjusted    US GAAP    Adjustments (B-D)    Adjusted    US GAAP  
 Adjusted
excl. FX
Revenue
                               
Research
$
      248,797
 
                -
 
      248,797
 
    240,902
 
                -
 
    240,902
 
3%
 
3%
Professional Development
 
        94,201
 
                -
 
        94,201
 
    113,106
 
        (13,858)
 
      99,248
 
-17%
 
-5%
Education
 
      114,935
 
                -
 
      114,935
 
    118,427
 
                -
 
    118,427
 
-3%
 
0%
                                     
 
Total
$
      457,933
 
                -
 
      457,933
 
    472,435
 
        (13,858)
 
    458,577
 
-3%
 
1%
                                     
Direct Contribution to Profit
                               
Research
$
      103,244
 
             (782)
 
      102,462
 
    100,369
 
                -
 
    100,369
 
3%
 
2%
Professional Development
 
        31,740
 
             (833)
 
        30,907
 
      30,780
 
          (2,037)
 
      28,743
 
3%
 
8%
Education
 
        44,505
 
              117
 
        44,622
 
      48,376
 
                -
 
      48,376
 
-8%
 
-4%
                                     
 
Total
$
      179,489
 
          (1,498)
 
      177,991
 
    179,525
 
          (2,037)
 
    177,488
 
0%
 
1%
                                     
Contribution to Profit (After Allocated Shared Services and Admin. Costs)                                
Research
$
        69,799
 
             (782)
 
        69,017
 
      67,715
 
                -
 
      67,715
 
3%
 
2%
Professional Development
 
        12,760
 
             (833)
 
        11,927
 
      11,877
 
          (2,037)
 
        9,840
 
-
 
21%
Education
 
        30,377
 
              117
 
        30,494
 
      35,055
 
                -
 
      35,055
 
-13%
 
-9%
                                     
 
Total
$
      112,936
 
          (1,498)
 
      111,438
 
    114,647
 
          (2,037)
 
    112,610
 
-1%
 
0%
                                     
Unallocated Shared Services and Admin. Costs
       (39,556)
 
           5,754
 
       (33,802)
 
     (31,021)
 
                -
 
     (31,021)
 
28%
 
10%
                                     
Operating Income
$
        73,380
 
           4,256
 
        77,636
 
      83,626
 
          (2,037)
 
      81,589
 
-12%
 
-3%
                                     
                                     
                                     
                                     
Total Shared Services and Admin. Costs by Function
                   
 
Distribution
$
       (24,384)
 
                17
 
       (24,367)
 
     (25,911)
 
                -
 
     (25,911)
 
-6%
 
-5%
 
Technology Services
 
       (46,154)
 
           2,283
 
       (43,871)
 
     (42,381)
 
                -
 
     (42,381)
 
9%
 
4%
 
Finance
 
       (11,842)
 
              882
 
       (10,960)
 
     (10,273)
 
                -
 
     (10,273)
 
15%
 
8%
 
Other Administration
 
       (23,729)
 
           2,572
 
       (21,157)
 
     (17,334)
 
                -
 
     (17,334)
 
37%
 
23%
 
Total
$
     (106,109)
 
           5,754
 
     (100,355)
 
     (95,899)
 
                -
 
     (95,899)
 
11%
 
5%
                                     
                                     
                                     
NINE MONTHS ENDED JANUARY 31,
                                     
       
2014
 
2013
 
% Change
    US GAAP   Adjustments (A,B)     Adjusted    US GAAP    Adjustments (A-D)    Adjusted    US GAAP  
 Adjusted
excl. FX
Revenue
                               
Research
$
      747,532
 
                -
 
      747,532
 
    726,679
 
                -
 
    726,679
 
3%
 
3%
Professional Development
 
      270,832
 
                -
 
      270,832
 
    316,360
 
        (40,359)
 
    276,001
 
-14%
 
-1%
Education
 
      299,742
 
                -
 
      299,742
 
    271,885
 
                -
 
    271,885
 
10%
 
12%
                                     
 
Total
$
   1,318,106
 
                -
 
   1,318,106
 
 1,314,924
 
        (40,359)
 
 1,274,565
 
0%
 
4%
                                     
Direct Contribution to Profit
                               
Research
$
      309,832
 
           4,590
 
      314,422
 
    300,624
 
           2,966
 
    303,590
 
3%
 
4%
Professional Development
 
        76,759
 
           4,834
 
        81,593
 
      71,949
 
           4,263
 
      76,212
 
7%
 
8%
Education
 
      102,687
 
              375
 
      103,062
 
      99,150
 
             169
 
      99,319
 
4%
 
6%
                                     
 
Total
$
      489,278
 
           9,799
 
      499,077
 
    471,723
 
           7,398
 
    479,121
 
4%
 
5%
                                     
Contribution to Profit (After Allocated Shared Services and Admin. Costs)                                
Research
$
      206,230
 
           4,590
 
      210,820
 
    199,663
 
           2,966
 
    202,629
 
3%
 
5%
Professional Development
 
        17,944
 
           4,834
 
        22,778
 
      11,296
 
           4,263
 
      15,559
 
-
 
48%
Education
 
        59,019
 
              375
 
        59,394
 
      60,063
 
             169
 
      60,232
 
-2%
 
2%
                                     
 
Total
$
      283,193
 
           9,799
 
      292,992
 
    271,022
 
           7,398
 
    278,420
 
4%
 
7%
                                     
Unallocated Shared Services and Admin. Costs
     (124,062)
 
          22,314
 
     (101,748)
 
     (85,460)
 
             452
 
     (85,008)
 
45%
 
21%
                                     
Operating Income
$
      159,131
 
          32,113
 
      191,244
 
    185,562
 
           7,850
 
    193,412
 
-14%
 
0%
                                     
                                     
                                     
Total Shared Services and Admin. Costs by Function
                   
 
Distribution
$
       (75,937)
 
           2,591
 
       (73,346)
 
     (77,589)
 
             193
 
     (77,396)
 
-2%
 
-4%
 
Technology Services
 
     (147,124)
 
          13,243
 
     (133,881)
 
   (115,162)
 
             256
 
   (114,906)
 
28%
 
17%
 
Finance
 
       (33,174)
 
              882
 
       (32,292)
 
     (31,263)
 
                -
 
     (31,263)
 
6%
 
4%
 
Other Administration
 
       (73,912)
 
           5,598
 
       (68,314)
 
     (62,147)
 
                 3
 
     (62,144)
 
19%
 
11%
 
Total
$
     (330,147)
 
          22,314
 
     (307,833)
 
   (286,161)
 
             452
 
   (285,709)
 
15%
 
8%
                                     
                                     
                                     
   
See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.

 
 

 

UNAUDITED ADJUSTED CONTRIBUTION TO PROFIT
INCLUDING ALLOCATED SHARED SERVICES AND ADMINISTRATIVE COSTS
FOR THE THIRD QUARTER AND NINE MONTHS ENDED
JANUARY 31, 2014 AND 2013
(in thousands)
                                     
       
Third Quarter Ended
     
Nine Months Ended
   
       
January 31,
     
January 31,
   
         2014    2013    % Change   
 % Change
excl. FX 
  2014   2013   % Change  
% Change
excl. FX
                                     
Research:
                               
 
Direct Contribution to Profit
$
  103,244
 
  100,369
 
3%
 
3%
 
  309,832
 
 300,624
 
3%
 
4%
 
Restructuring Charges (Credits) (A)
 
        (782)
 
           -
         
      4,590
 
     2,966
       
 
Adjusted Direct Contribution to Profit
 
  102,462
 
  100,369
 
2%
 
2%
 
  314,422
 
 303,590
 
4%
 
4%
                                     
 
Allocated Shared Services and Admin. Costs:
                               
   
Distribution
 
   (11,011)
 
   (11,495)
 
-4%
 
-4%
 
   (33,714)
 
  (34,813)
 
-3%
 
-3%
   
Technology
 
   (17,727)
 
   (16,517)
 
7%
 
7%
 
   (54,307)
 
  (49,736)
 
9%
 
9%
   
Occupancy and Other
 
     (4,707)
 
     (4,642)
 
1%
 
1%
 
   (15,581)
 
  (16,412)
 
-5%
 
-4%
 
Adjusted Contribution to Profit (after allocated Shared Services and Admin. Costs)
$
    69,017
 
    67,715
 
2%
 
2%
 
  210,820
 
 202,629
 
4%
 
5%
                                     
Professional Development:
                               
 
Direct Contribution to Profit
$
    31,740
 
    30,780
 
3%
 
4%
 
    76,759
 
   71,949
 
7%
 
8%
 
Restructuring Charges (Credits) (A)
 
        (833)
 
           -
         
      4,834
 
     1,254
       
 
Impairment Charges (B)
 
           -
 
           -
         
           -
 
   15,521
       
 
Gain on Sale of Travel Publishing Program (C)
 
           -
 
           -
         
           -
 
    (9,829)
       
 
Direct Contribution to profit - Divested Consumer Publishing Programs (D)
           -
 
     (2,037)
         
           -
 
    (2,683)
       
 
Adjusted Direct Contribution to Profit
 
    30,907
 
    28,743
 
8%
 
8%
 
    81,593
 
   76,212
 
7%
 
8%
                                     
 
Allocated Shared Services and Admin. Costs:
                               
   
Distribution
 
     (9,320)
 
   (10,196)
 
-9%
 
-7%
 
   (27,861)
 
  (30,937)
 
-10%
 
-9%
   
Technology
 
     (7,543)
 
     (7,238)
 
4%
 
4%
 
   (23,260)
 
  (21,662)
 
7%
 
7%
   
Occupancy and Other
 
     (2,117)
 
     (1,469)
 
44%
 
44%
 
     (7,694)
 
    (8,054)
 
-4%
 
-3%
 
Adjusted Contribution to Profit (after allocated Shared Services and Admin. Costs)
$
    11,927
 
      9,840
 
21%
 
21%
 
    22,778
 
   15,559
 
46%
 
48%
                                     
Education:
                               
 
Direct Contribution to Profit
$
    44,505
 
    48,376
 
-8%
 
-4%
 
  102,687
 
   99,150
 
4%
 
6%
 
Restructuring Charges (A)
 
         117
 
           -
         
         375
 
        169
       
 
Adjusted Direct Contribution to Profit
 
    44,622
 
    48,376
 
-8%
 
-4%
 
  103,062
 
   99,319
 
4%
 
6%
                                     
 
Allocated Shared Services and Admin. Costs:
                               
   
Distribution
 
     (4,012)
 
     (4,074)
 
-2%
 
1%
 
   (11,755)
 
  (11,646)
 
1%
 
4%
   
Technology
 
     (8,429)
 
     (8,049)
 
5%
 
6%
 
   (25,802)
 
  (22,548)
 
14%
 
15%
   
Occupancy and Other
 
     (1,687)
 
     (1,198)
 
41%
 
49%
 
     (6,111)
 
    (4,893)
 
25%
 
27%
 
Adjusted Contribution to Profit (after allocated Shared Services and Admin. Costs)
$
    30,494
 
    35,055
 
-13%
 
-9%
 
    59,394
 
   60,232
 
-1%
 
2%
                                     
Total Adjusted Contribution to Profit (after allocated Shared Services and Admin. Costs)
$
  111,438
 
  112,610
 
-1%
 
0%
 
  292,992
 
 278,420
 
5%
 
7%
                                     
Unallocated Shared Services and Admin. Costs:
                               
 
Unallocated Shared Services and Admin. Costs
   (39,556)
 
   (31,021)
 
28%
 
28%
 
 (124,062)
 
  (85,460)
 
45%
 
46%
 
Restructuring Charges (A)
 
      5,754
 
           -
         
    17,528
 
        452
       
 
Impairment Charges (B)
 
           -
 
           -
         
      4,786
 
          -
       
 
Adjusted Unallocated Shared Services and Admin. Costs
$
   (33,802)
 
   (31,021)
 
9%
 
10%
 
 (101,748)
 
  (85,008)
 
20%
 
21%
                                     
Adjusted Operating Income
$
    77,636
 
    81,589
 
-5%
 
-3%
 
  191,244
 
 193,412
 
-1%
 
0%
                                     
                                     
                                     
   
See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.
   
 

 
 

 

 
JOHN WILEY & SONS, INC.
SEGMENT REVENUE STATISTICS
FOR THE THIRD QUARTER AND NINE MONTHS ENDED
JANUARY 31, 2014 AND 2013
(in millions)
                                       
       
Third Quarter
           
Nine Months
       
        Ended January 31,    % of    % Change     Ended January 31,    % of    % Change
RESEARCH    2014    2013    Revenue    excl. FX      2014    2013    Revenue    excl. FX
                                       
Revenue by Product/Service:
                                 
 
Journal Subscriptions
$
         154,035
 
         143,768
 
62%
 
7%
 
$
         478,374
 
         461,611
 
64%
 
4%
 
Print Books
 
           30,990
 
           37,078
 
12%
 
-16%
   
           89,483
 
         101,279
 
12%
 
-11%
 
Digital Books
 
           12,636
 
           11,092
 
5%
 
12%
   
           31,588
 
           25,130
 
4%
 
25%
 
Open Access
 
             4,347
 
             1,310
 
2%
 
232%
   
           11,538
 
             3,691
 
2%
 
213%
 
Other (includes Reprints, Backfiles, Rights, Advertising)
           46,789
 
           47,654
 
19%
 
-2%
   
         136,549
 
         134,968
 
18%
 
2%
   
Total Revenue
$
         248,797
 
         240,902
 
100%
 
3%
 
$
         747,532
 
         726,679
 
100%
 
3%
                                       
Revenue by Subject Category:
                                 
 
Medicine
$
           68,264
 
           69,275
 
27%
 
-1%
 
$
         212,926
 
         212,763
 
28%
 
2%
 
Physical Sciences & Engineering
           71,643
 
           69,788
 
29%
 
1%
   
         209,469
 
         205,684
 
28%
 
1%
 
Life Sciences
 
           61,639
 
           54,128
 
25%
 
13%
   
         186,533
 
         167,657
 
25%
 
12%
 
Social Sciences & Humanities
           46,252
 
           46,807
 
19%
 
-1%
   
         135,548
 
         137,760
 
18%
 
-1%
 
Other
 
               999
 
               904
 
0%
 
11%
   
             3,056
 
             2,815
 
0%
 
9%
   
Total Revenue
$
         248,797
 
         240,902
 
100%
 
3%
 
$
         747,532
 
         726,679
 
100%
 
3%
                                       
                                       
               
       
Third Quarter
           
Nine Months
       
        Ended January31,    % of    % Change     Ended January 31,    % of    % Change
PROFESSIONAL DEVELOPMENT    2014    2013    Revenue    excl. FX (a)     2014    2013    Revenue    excl. FX (a)
                                       
Revenue by Product/Service:
                                 
 
Print Books
$
           64,757
 
           71,465
 
69%
 
-9%
 
$
         183,392
 
         199,068
 
68%
 
-7%
 
Digital Books
 
           11,459
 
           10,507
 
12%
 
9%
   
           34,352
 
           28,801
 
13%
 
20%
 
Online Training & Assessment
             8,792
 
             7,336
 
9%
 
20%
   
           26,713
 
           21,047
 
10%
 
27%
 
Other (includes Rights, Translations, Advertising)
             9,193
 
             9,940
 
10%
 
-7%
   
           26,375
 
           27,085
 
10%
 
-2%
 
Divested Consumer Publishing Programs
                    -
 
           13,858
           
                    -
 
           40,359
       
   
Total Revenue
$
           94,201
 
         113,106
 
100%
 
-5%
 
$
         270,832
 
         316,360
 
100%
 
-1%
                                       
Revenue by Subject Category:
                                 
 
Business
$
           42,298
 
           42,048
 
45%
 
1%
 
$
         123,263
 
         119,360
 
46%
 
4%
 
Technology
 
           21,863
 
           24,747
 
23%
 
-11%
   
           57,397
 
           63,945
 
21%
 
-10%
 
Consumer
 
           10,709
 
           12,642
 
11%
 
-15%
   
           30,467
 
           33,729
 
11%
 
-9%
 
Professional Education
 
             6,515
 
             5,939
 
7%
 
11%
   
           22,743
 
           21,295
 
8%
 
7%
 
Architecture
 
             6,685
 
             6,764
 
7%
 
-1%
   
           18,286
 
           19,211
 
7%
 
-4%
 
Psychology
 
             4,576
 
             3,694
 
5%
 
24%
   
           12,812
 
           10,430
 
5%
 
23%
 
Other
 
             1,555
 
             3,414
 
2%
 
-52%
   
             5,864
 
             8,031
 
2%
 
-23%
 
Divested Consumer Publishing Programs
                    -
 
           13,858
           
                    -
 
           40,359
       
   
Total Revenue
$
           94,201
 
         113,106
 
100%
 
-5%
 
$
         270,832
 
         316,360
 
100%
 
-1%
 
Note (a) - Variance excludes the revenue of the divested Professional Development consumer publishing programs sold in fiscal year 2013.
                     
                     
 
       
Third Quarter
           
Nine Months
       
         Ended January 31,    % of    % Change      Ended January 31,    % of    % Change
EDUCATION    2014    2013   Revenue    excl. FX      2014    2013    Revenue    excl. FX
                                       
Revenue by Product/Service:
                                 
 
Print Textbooks
$
           54,358
 
           62,395
 
47%
 
-8%
 
$
         140,932
 
         159,875
 
47%
 
-9%
 
Binder and Custom Products
 
           12,896
 
           12,463
 
11%
 
3%
   
           43,970
 
           39,260
 
15%
 
12%
 
Online Program Management (Deltak)
           19,145
 
           17,145
 
17%
 
12%
   
           50,396
 
           17,145
 
17%
   
 
Digital Books
 
             7,964
 
             8,803
 
7%
 
-8%
   
           21,524
 
           19,002
 
7%
 
15%
 
WileyPLUS
 
           18,578
 
           15,554
 
16%
 
20%
   
           35,590
 
           29,105
 
12%
 
23%
 
Other
 
             1,994
 
             2,067
 
2%
 
1%
   
             7,330
 
             7,498
 
2%
 
4%
   
Total Revenue
$
         114,935
 
         118,427
 
100%
 
0%
 
$
         299,742
 
         271,885
 
100%
 
12%
                                       
Revenue by Subject Category:
                                 
 
Business
$
           26,259
 
           26,620
 
23%
 
1%
 
$
           66,355
 
           64,440
 
22%
 
5%
 
Sciences
 
           16,587
 
           17,101
 
14%
 
-1%
   
           53,564
 
           53,402
 
18%
 
1%
 
Social Sciences
 
           14,444
 
           15,193
 
13%
 
-4%
   
           40,271
 
           41,814
 
13%
 
-3%
 
Engineering & Computer Science
           12,865
 
           14,388
 
11%
 
-9%
   
           32,772
 
           37,479
 
11%
 
-11%
 
Mathematics & Statistics
 
             6,843
 
             6,981
 
6%
 
-2%
   
           21,899
 
           21,366
 
7%
 
3%
 
Schools (Australia K-12)
 
           13,906
 
           17,040