Wiley Reports Second Quarter 2018 Results

  Wiley Reports Second Quarter 2018 Results

Business Wire

HOBOKEN, N.J. -- December 6, 2017

John Wiley and Sons Inc. (NYSE:JWA)(NYSE:JWB), a global research and learning
company, today announced results for the second quarter ending October 31,
2017.

HIGHLIGHTS

  * Revenue increased 6% to $452 million; +3% at constant currency
  * Adjusted EPS increased 32% to $1.03; +22% at constant currency. EPS on a
    GAAP basis at $1.04, up from ($0.20)
  * Free Cash Flow less Product Development Spending for six months improved
    by $38 million
  * Brian A. Napack named as President and CEO

FINANCIAL SUMMARY

Unaudited ($millions except for EPS)
                                                         Change
GAAP Measures               Q2 2018   Q2 2017   Change  
                                                         Constant Currency
Revenue                     $451.7    $425.6    6%       3%
Operating Income            $82.8     $47.6     74%
Diluted EPS                 $1.04     ($0.20)   +$1.24    
                                                         Change
Non-GAAP Measures           Q2 2018   Q2 2017   Change  
                                                         Constant Currency
Adjusted Operating Income   $81.4     $63.3              16%
Adjusted EPS                $1.03     $0.78              22%
                                                          

  * Revenue increase was largely driven by growth in Research Journals (+3%),
    STM and Professional Publishing (+4%), and Education Services/Online
    Program Management (+6%), as well as growth from the Atypon acquisition
    (+$6 million).
  * Adjusted Operating Income growth was mainly due to higher revenue and
    lower technology expenses, including ERP implementation costs. Adjusted
    Contribution to Profit (CTP) for Research, Publishing, and Solutions rose
    for all three segments. GAAP Operating Income increased 74% to $82.8
    million, which also reflected the timing of restructuring charges and
    credits, as well as a settlement charge related to a pension distribution
    for terminated employees in the prior year.
  * Adjusted EPS increase was due to higher operating income and lower
    interest expense. GAAP EPS growth (+$1.24) also reflected unfavorable
    items in the prior year, including an income tax settlement in Germany
    (-$0.83) and the pension settlement charge (-$0.10).
  * Return to Shareholders: During the quarter, Wiley repurchased 285,599
    shares for $15.2 million at an average cost of $53.37. Approximately 3.2
    million shares remain in the repurchase program.

MANAGEMENT COMMENTARY

“The second quarter was highlighted by the announcement of Brian Napack as our
new President and CEO and Ella Balagula as our new EVP of Publishing. We also
realized improved growth in Research, better than expected results in
Publishing, and significant progress in our operational excellence
initiatives,” said Matthew Kissner, Chairman. “This month, we celebrate 210
years of enabling many of the world’s advances in research and learning. While
we are immensely proud of our legacy, we are just as energized by the
opportunities ahead of us.”

FISCAL YEAR 2018 OUTLOOK

The Company reaffirms its fiscal 2018 guidance.
                                          FY18 Expectation ^ 
Metric ($M)                 FY17 Actual  
                                          (at constant currency)
Revenue                     $1,718.5      Approximately even
Adjusted Operating Income   $228.4        Approximately even
Adjusted EPS                $3.01         Low-single digit % decline
Cash from Operations        $314.5        $350 million or higher
Capex                       $148.3        Slightly lower
                                           

Adjusted Results: The Company provides financial measures referred to as
“adjusted,” which  exclude unusual charges and credits as more fully described
in the attached financial schedules. For the three and six month periods ended
October 31, 2017, the Company excluded foreign exchange gains and losses on
intercompany transactions in deriving adjusted earnings in the current and
prior year periods. This change will also be reflected in subsequent periods.
The Company believes these gains and losses, which result from transactions
associated with tax planning efforts, do not reflect its underlying
performance.

Foreign Exchange: Foreign exchange was beneficial to second quarter revenue
and EPS by $14.5 million and $0.08, respectively, and first half revenue and
EPS by $17.3 million and $0.15. If current rates were to hold through
year-end, Wiley would record positive FX variances in the fiscal year of
approximately $45 million in revenue, $25 million in operating income, and
$0.35 in EPS due to changes in exchange rates and functional currency gains
related to calendar year 2017 journal subscriptions in the UK.

Note: variances in this release are on a constant currency basis unless
otherwise noted.

RESEARCH SEGMENT

  * Revenue: $228.9 million (+11% GAAP; +5% constant currency). The increase
    was driven primarily by the contribution from the Atypon acquisition (+$6
    million), strong Open Access growth (+25%), and higher Licensing,
    Reprints, Backfile and Other revenue (+11%).
  * Adjusted Contribution to Profit: $70.8 million (+4% constant currency).
    Improved performance reflected higher revenue offset primarily by Atypon
    expenses and higher royalty costs. GAAP Contribution to Profit of $71.2
    million (+18%) also reflected impacts from foreign exchange and the timing
    of restructuring charges and credits.
  * Society Publishing Partnerships: Two new society contracts were signed in
    the quarter with combined annual revenue of $3.0 million and ten were
    renewed with combined annual revenue of $6.6 million. None were lost.
  * Wiley Digital Archives: In October, Wiley launched a new program to enable
    institutional customers to purchase digital access to unique or rare
    historical primary sources, digitized from partner societies, libraries,
    and archives around the world.

PUBLISHING SEGMENT

  * Revenue: $165.0 million (+1% GAAP; flat constant currency). Better than
    expected performance was driven by STM, Professional, and Educational
    Publishing (+2%) and growth in Test Preparation and Certification (+5%)
    and Licensing, Distribution, Advertising, and Other (+11%). Course
    Workflow (WileyPLUS) was down 18% in the quarter due to the timing of
    revenue recognition. Operationally, WileyPLUS sales (net of actual
    returns) rose 8% for the quarter and 4% for the six months. The timing
    differences for revenue recognition reflect longer sales amortization for
    subscription periods extending across two semesters.
  * Adjusted Contribution to Profit: $42.5 million (+14% constant currency).
    Improved performance was primarily due to savings from operational
    excellence initiatives. GAAP Contribution to Profit of $42.5 million
    (+16%) also reflected impacts from foreign exchange and the timing of
    restructuring charges and credits.
  * New Leadership: In October, Wiley announced Ella Balagula as the new
    Executive Vice President of Wiley’s Publishing segment. Prior to joining,
    Ms. Balagula was Senior Vice President and General Manager of Engineering
    Solutions at Elsevier, where she was responsible for commercial
    go-to-market, product management, software development and content
    acquisition and production in the engineering and academic segments.
  * Partnership: In November, Wiley and Kortext, a digital textbook and
    personal study platform, announced a partnership with the Egyptian
    Knowledge Bank (EKB) to provide digital textbooks to every Egyptian
    citizen and all universities, empowering their students to learn anytime,
    anywhere.

SOLUTIONS SEGMENT

  * Revenue: $57.9 million (+3% GAAP and +2% constant currency). Growth in
    Education Services/Online Program Management (+6%) more than offset a 4%
    decline in Corporate Learning (CrossKnowledge), where French government
    funding slowed for unemployment initiatives and blended learning programs,
    and a 2% decline in Professional Assessment, where our pre-hire assessment
    business has been shifting from enterprise direct sales to higher margin
    partner channels.
  * Adjusted Contribution to Profit: Increased 14% to $6.7 million.
    Improvement driven by higher revenue and increased operating efficiency.
    GAAP Contribution to Profit of $7.3 million (+36%) also reflected impacts
    from foreign exchange and the timing of restructuring charges and credits.
  * Education Services (OPM): Wiley signed four new programs and discontinued
    one this quarter. As of October 31, Wiley had 39 university partners and
    254 programs under contract.

SIX MONTH RESULTS

Unaudited ($millions except for EPS)
                                                                      Change
GAAP Measures                       1H 2018     1H 2017      Change  
                                                                      Constant
                                                                      Currency
Revenue                             $863.2      $829.9       4%       2%
Operating Income                    $97.3       $91.6        6%
Diluted EPS                         $1.20       $0.34        +$0.86
Cash Flow Used For Operations       ($46,357)   ($86,094)    46%       
                                                                      Change
Non-GAAP Measures                   1H 2018     1H 2017      Change  
                                                                      Constant
                                                                      Currency
Adjusted Operating Income           $125.2      $106.3                5%
Adjusted EPS                        $1.62       $1.31                 12%
Free Cash Flow less Product         (117,754)   ($155,426)            24%
Development Spending
                                                                       

  * Revenue growth for the first six months driven primarily by Research
    Journals (+2%), Education Services/Online Program Management (+10%), and
    Test Preparation and Certification (+14%), as well as growth from the
    Atypon acquisition (+$14 million GAAP). Research and Solutions revenue
    growth more than offset a 4% decline in Publishing revenue.
  * Adjusted Operating Income growth for the first half was mainly due to the
    increase in revenue, which was partially offset by $6 million of one-time
    credits related to employee benefit plans in the prior year. GAAP
    Operating Income was up 6% to $97.3 million as higher restructuring
    charges were more than offset by the pension settlement charge in the
    prior year and the favourable impact of foreign exchange in the current
    year.
  * Adjusted EPS growth in the first six months was due to higher operating
    income and lower interest expense. GAAP EPS growth (+$0.86) also reflected
    restructuring charges in both periods and an income tax settlement in
    Germany (-$0.82) in the prior year.
  * Free Cash Flow less Product Development Spending improvement was mainly
    due to the timing of cash collections and payments as anticipated in the
    fourth quarter 2017 report. Free cash flow is seasonally negative in the
    first half of Wiley’s fiscal year principally due to the timing of
    collections for journal subscriptions.

EARNINGS CONFERENCE CALL

Scheduled for today, December 6 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 (800) 289-0438 and enter the participant code 3013070#. International
callers, please dial (323) 994-2083 and enter the participant code 3013070#.

ABOUT WILEY

Wiley, a global research and learning company, helps people and organizations
develop the skills and knowledge they need to succeed. Our online scientific,
technical, medical, and scholarly journals, combined with our digital
learning, assessment and certification solutions help universities, academic
societies, businesses, governments and individuals increase the academic and
professional impact of their work. For more than 200 years, we have delivered
consistent performance to our stakeholders. The company's website can be
accessed at www.wiley.com.

FORWARD-LOOKING STATEMENTS

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.

 
JOHN WILEY & SONS, INC.
UNAUDITED SUMMARY OF OPERATIONS
FOR THE SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2017 AND 2016
(in thousands, except per share amounts)
                                                                                                        
SECOND QUARTER ENDED OCTOBER 31,
                                                                                                          
                     2017                                  2016                                  % Change
                     US GAAP     Adjustments   Adjusted    US GAAP     Adjustments   Adjusted    US      Adjusted
                                 (A)                                   (A)                       GAAP    excl. FX
                                                                                                          
Revenue            $ 451,731     -             451,731     425,588     -             425,588     6   %   3     %
                                                                                                          
Costs and
Expenses
  Cost of Sales      119,865     -             119,865     111,574     -             111,574     7   %   4     %
  Operating and      239,318     -             239,318     247,270     (8,842   )    238,428     -3  %   -1    %
  Administrative
  Restructuring
  and Related        (1,406  )   1,406         -           6,847       (6,847   )    -           NM      0     %
  (Credits)
  Charges
  Amortization       11,183      -             11,183      12,253      -             12,253      -9  %   -10   %
  of Intangibles
                                                                                                          
  Total Costs        368,960     1,406         370,366     377,944     (15,689  )    362,255     -2  %   0     %
  and Expenses
                                                                                                          
Operating Income     82,771      (1,406   )    81,365      47,644      15,689        63,333      74  %   16    %
  Operating          18.3    %                 18.0    %   11.2    %                 14.9    %
  Margin
                                                                                                          
Interest Expense     (3,455  )   -             (3,455  )   (4,360  )   -             (4,360  )   -21 %   -21   %
Foreign Exchange     (416    )   287           (129    )   (360    )   1,899         1,539       16  %   NM
(Losses) Gains
Interest Income      576         -             576         478         -             478         21  %   21    %
and Other
                                                                                                          
Income Before        79,476      (1,119   )    78,357      43,402      17,588        60,990      83  %   19    %
Taxes
                                                                                                          
Provision
(Benefit) for        19,428      (391     )    19,037      54,853      (38,957  )    15,896      -65 %   12    %
Income Taxes
                                                                                                          
Net Income         $ 60,048      (728     )    59,320      (11,451 )   56,545        45,094      NM      21    %
                                                                                                          
                                                                                                          
Earnings Per       $ 1.04        (0.01    )    1.03        (0.20   )   0.98          0.78        NM      22    %
Share- Diluted
                                                                                                          
Average Shares -     57,554      57,554        57,554      57,538      57,538        57,538
Diluted
                                                                                                          
SIX MONTHS ENDED OCTOBER 31,
                                                                                                          
                     2017                                  2016                                  % Change
                     US GAAP     Adjustments   Adjusted    US GAAP     Adjustments   Adjusted    US      Adjusted
                                 (A)                                   (A)                       GAAP    excl. FX
                                                                                                          
Revenue            $ 863,175     -             863,175     829,873     -             829,873     4   %   2     %
                                                                                                          
Costs and
Expenses
  Cost of Sales      234,653     -             234,653     225,052     -             225,052     4   %   3     %
  Operating and      483,126     (3,600   )    479,526     482,497     (8,842   )    473,655     0   %   1     %
  Administrative
  Restructuring
  and Related        24,323      (24,323  )    -           5,927       (5,927   )    -           NM      0     %
  Charges
  (Credits)
  Amortization       23,802      -             23,802      24,826      -             24,826      -4  %   -4    %
  of Intangibles
                                                                                                          
  Total Costs        765,904     (27,923  )    737,981     738,302     (14,769  )    723,533     4   %   2     %
  and Expenses
                                                                                                          
Operating Income     97,271      27,923        125,194     91,571      14,769        106,340     6   %   5     %
  Operating          11.3    %                 14.5    %   11.0    %                 12.8    %
  Margin
                                                                                                          
Interest Expense     (6,728  )   -             (6,728  )   (8,431  )   -             (8,431  )   -20 %   -20   %
Foreign Exchange     (5,552  )   6,304         752         (139    )   3,228         3,089       NM      NM
(Losses) Gains
Interest Income      581         -             581         728         -             728         -20 %   -20   %
and Other
                                                                                                          
Income Before        85,572      34,227        119,799     83,729      17,997        101,726     2   %   6     %
Taxes
                                                                                                          
Provision
(Benefit) for        16,288      10,236        26,524      64,180      (39,021  )    25,159      -75 %   -5    %
Income Taxes
                                                                                                          
Net Income         $ 69,284      23,991        93,275      19,549      57,018        76,567      NM      10    %
                                                                                                          
                                                                                                          
Earnings Per       $ 1.20        0.42          1.62        0.34        0.98          1.31        NM      12    %
Share- Diluted
                                                                                                          
Average Shares -     57,633      57,633        57,633      58,259      58,259        58,259
Diluted
                                                                                                          
(A) See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.
NM- Not Meaningful
            

 
JOHN WILEY & SONS, INC.
FOR THE SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2017 AND 2016
 
RECONCILIATION OF US GAAP TO ADJUSTED EPS - DILUTED (UNAUDITED)
                                                                    
                                                                        
                                    Second Quarter Ended    Six Months Ended
                                    October 31,             October 31,
                                    2017        2016        2017     2016     
                                                                        
US GAAP Earnings Per Share -        $ 1.04      $ (0.20 )   $ 1.20   $ 0.34
Diluted
Adjusted to exclude the
following:
  Restructuring and Related           (0.02 )     0.08        0.33     0.07
  (Credits) Charges (A)
  Foreign Exchange Losses on          0.01        0.01        0.09     0.04
  Intercompany Transactions (B)
  One-time - Pension Settlement       -           0.10        -        0.09
  (C)
  Unfavorable Tax Settlement (D)      -           0.83        -        0.82
  Deferred Income Tax Benefit on      -           (0.04 )     -        (0.04 )
  UK Rate Change (E)
Adjusted Earnings Per Share -       $ 1.03      $ 0.78      $ 1.62   $ 1.31   
Diluted (F)
                                                                              

NOTES TO UNAUDITED FINANCIAL STATEMENTS
          
Adjustments:
                Adjusted results exclude restructuring (credits) charges and
                related items associated with the Company's Restructuring and
                Reinvestment Program. For the three months ended October 31,
(A)             2017 and 2016, there were credits of $1.4 million or $(0.02)
                per share and charges of $6.8 million or $0.08 per share,
                respectively. For the six months ended October 31, 2017 and
                2016, there were charges of $27.9 million or $0.33 per share,
                and charges of $5.9 million or $0.07 per share, respectively.
                 
                In 2017, we adjusted results to exclude foreign exchange
                losses associated with intercompany transactions. The prior
                year adjusted earnings per share amounts have been recasted to
                conform to current year presentation. For the three months
(B)             ended October 31, 2017 and 2016, there were gains of $0.3
                million or $0.01 per share and gains of $1.9 million or $0.01
                per share, respectively. For the six months ended October 31,
                2017 and 2016, there were gains of $6.3 million or $0.09 per
                share, and gains of $3.2 million or $0.04 per share,
                respectively.
                 
                As previously disclosed and as reported in the Company's SEC
                filings, 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
(C)             election period closed on August 29, 2016. The total charge
                including a prorata portion of the unamortized net actuarial
                loss was $8.8 million or $0.10 per share for the quarter and,
                $0.09 per share for the six month period. The aggregate amount
                of payments under this one time election was $28.3 million,
                which was paid from Pension Plan assets in October 2016.
                 
                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
(D)             subsidiaries. In September 2016, the German Federal Fiscal
                Court issued an unfavorable final judgement in Wiley's
                longstanding tax appeal. As a result in 2016, the Company
                recorded a $47.5 million charge, $0.83 per share in the
                quarter, $0.82 per share for the six month period.
                 
                As previously disclosed and as reported in the Company's SEC
                filings, the adjusted results for the three and six months
                ended October 31, 2016 exclude deferred tax benefits of $2.6
                million, or $0.04 per share, associated with tax legislation
(E)             enacted in the second quarter of fiscal year 2017 in the
                United Kingdom that reduced the U.K. corporate income tax
                rates by 1 percentage point in 2020. The benefits reflect the
                remeasurement of the Company's deferred tax balances from 18%
                to the new income tax rate of 17% effective April 1, 2020 and
                had no current cash tax impact.
                 
(F)             The Reconciliation of US GAAP to Adjusted EPS - Diluted table
                may not foot due to rounding.
                                                
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 unusual or special 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 the impact of foreign exchange.
 

 
JOHN WILEY & SONS, INC.
UNAUDITED SEGMENT RESULTS
FOR THE SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2017 AND 2016
(in thousands)
                                                                                                       
SECOND QUARTER ENDED OCTOBER 31,
                                                                                                         
                    2017                                  2016                                  % Change
                    US GAAP     Adjustments   Adjusted    US GAAP     Adjustments   Adjusted    US      Adjusted
                                (A)                                   (A)                       GAAP    excl. FX
Research
Revenue
  Journal         $ 170,163     -             170,163     159,726     -             159,726     7   %   0     %
  Subscriptions
  Open Access       9,350       -             9,350       7,423       -             7,423       26  %   25    %
  Licensing,
  Reprints,         41,329      -             41,329      36,367      -             36,367      14  %   11    %
  Backfiles and
  Other
      Total
      Journal       220,842     -             220,842     203,516     -             203,516     9   %   3     %
      Revenue
  Publishing
  Technology        8,028       -             8,028       2,478       -             2,478       NM      NM
  Services
  (Atypon)
Total Revenue       228,870     -             228,870     205,994     -             205,994     11  %   5     %
Contribution to     71,163      (388     )    70,775      60,292      229           60,521      18  %   4     %
Profit (A)
                                                                                                         
                                                                                                         
Publishing
Revenue
  STM and
  Professional    $ 71,460      -             71,460      68,130      -             68,130      5   %   4     %
  Publishing
  Education         57,711      -             57,711      57,472      -             57,472      0   %   -1    %
  Publishing
  Course
  Workflow          16,310      -             16,310      19,840      -             19,840      -18 %   -18   %
  (WileyPLUS)
  Test
  Preparation       7,919       -             7,919       7,521       -             7,521       5   %   5     %
  and
  Certification
  Licensing,
  Distribution,     11,585      -             11,585      10,337      -             10,337      12  %   11    %
  Advertising
  and Other
Total Revenue       164,985     -             164,985     163,300     -             163,300     1   %   0     %
Contribution to     42,476      71            42,547      36,490      215           36,705      16  %   14    %
Profit (A)
                                                                                                         
                                                                                                         
Solutions
Revenue
  Education
  Services        $ 29,737      -             29,737      28,007      -             28,007      6   %   6     %
  (OPM)
  Professional      15,821      -             15,821      16,146      -             16,146      -2  %   -2    %
  Assessment
  Corporate         12,318      -             12,318      12,141      -             12,141      1   %   -4    %
  Learning
Total Revenue       57,876      -             57,876      56,294      -             56,294      3   %   2     %
Contribution to     7,309       (625     )    6,684       5,359       524           5,883       36  %   14    %
Profit (A)
                                                                                                         
                                                                                                         
Corporate           (38,177 )   (464     )    (38,641 )   (54,497 )   14,721        (39,776 )   -30 %   -4    %
Expenses (A)
                                                                                     
Operating         $ 82,771      (1,406   )    81,365      47,644      15,689        63,333      74  %   16    %
Income
                                                                                                         
(A) See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.
NM- Not Meaningful
                                                                                                         
SIX MONTHS ENDED OCTOBER 31 ,
                                                                                                         
                    2017                                  2016                                  % Change
                    US GAAP     Adjustments   Adjusted    US GAAP     Adjustments   Adjusted    US      Adjusted
                                (A)                                   (A)                       GAAP    excl. FX
Research
Revenue
  Journal         $ 338,488     -             338,488     322,410     -             322,410     5   %   0     %
  Subscriptions
  Open Access       18,153      -             18,153      14,936      -             14,936      22  %   22    %
  Licensing,
  Reprints,         79,559      -             79,559      73,394      -             73,394      8   %   9     %
  Backfiles and
  Other
      Total
      Journal       436,200     -             436,200     410,740     -             410,740     6   %   2     %
      Revenue
  Publishing
  Technology        16,297      -             16,297      2,478       -             2,478       NM      NM
  Services
  (Atypon)
Total Revenue       452,497     -             452,497     413,218     -             413,218     10  %   6     %
Contribution to     132,624     4,448         137,072     120,727     160           120,887     10  %   2     %
Profit (A)
                                                                                                         
                                                                                                         
Publishing
Revenue
  STM and
  Professional    $ 135,060     -             135,060     138,835     -             138,835     -3  %   -3    %
  Publishing
  Education         103,447     -             103,447     112,326     -             112,326     -8  %   -8    %
  Publishing
  Course
  Workflow          17,520      -             17,520      20,706      -             20,706      -15 %   -16   %
  (WileyPLUS)
  Test
  Preparation       19,409      -             19,409      17,077      -             17,077      14  %   14    %
  and
  Certification
  Licensing,
  Distribution,     20,827      -             20,827      19,317      -             19,317      8   %   8     %
  Advertising
  and Other
Total Revenue       296,263     -             296,263     308,261     -             308,261     -4  %   -4    %
Contribution to     47,485      10,925        58,410      55,832      569           56,401      -15 %   3     %
Profit (A)
                                                                                                         
                                                                                                         
Solutions
Revenue
  Education
  Services        $ 56,074      -             56,074      51,179      -             51,179      10  %   10    %
  (OPM)
  Professional      30,708      -             30,708      29,668      -             29,668      4   %   4     %
  Assessment
  Corporate         27,633                    27,633      27,547      -             27,547      0   %   -2    %
  Learning
Total Revenue       114,415     -             114,415     108,394     -             108,394     6   %   5     %
Contribution to     5,341       2,170         7,511       5,506       524           6,030       -3  %   24    %
Profit (A)
                                                                                                         
                                                                                                         
Corporate           (88,179 )   10,380        (77,799 )   (90,494 )   13,516        (76,978 )   -3  %   1     %
Expenses (A)
                                                                                     
Operating         $ 97,271      27,923        125,194     91,571      14,769        106,340     6   %   5     %
Income
                                                                                                         
(A) See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.
NM- Not Meaningful
       

 
JOHN WILEY & SONS, INC.
UNAUDITED CONDENSED STATEMENTS OF FINANCIAL POSITION
(in thousands)
                                                                  
                                         October 31,                 April 30,
                                         2017          2016          2017
                                                                      
Current Assets
         Cash and cash equivalents     $ 72,871      $ 267,410     $ 58,516
         Accounts receivable             193,506       212,590       188,679
         Inventories                     43,540        51,779        47,852
         Prepaid and other               54,092        147,753       64,688
         Total Current Assets            364,009       679,532       359,735
Product Development Assets               68,124        38,574        70,955
Royalty Advances                         12,500        10,353        28,320
Technology, Property and Equipment       274,624       248,281       252,488
Intangible Assets                        828,524       822,962       828,099
Goodwill                                 999,546       974,068       982,101
Other Assets                             85,503        79,684        84,519
         Total Assets                  $ 2,632,830   $ 2,853,454   $ 2,606,217
                                                                      
Current Liabilities
         Accounts and royalties        $ 150,888     $ 158,985     $ 139,206
         payable
         Deferred revenue                244,328       223,307       436,235
         Accrued employment costs        79,827        69,072        98,185
         Accrued income taxes            17,711        8,515         22,222
         Accrued pension liability       5,826         5,459         5,776
         Other accrued liabilities       83,615        77,484        86,232
         Total Current Liabilities       582,195       542,822       787,856
Long-Term Debt                           562,962       883,992       365,000
Accrued Pension Liability                208,382       181,735       214,597
Deferred Income Tax Liabilities          156,397       191,729       160,491
Other Long-Term Liabilities              75,844        71,675        75,136
Shareholders' Equity                     1,047,050     981,501       1,003,137
         Total Liabilities &           $ 2,632,830   $ 2,853,454   $ 2,606,217
         Shareholders' Equity
                                                                      

 
JOHN WILEY & SONS, INC.
UNAUDITED CONDENSED STATEMENTS OF FREE CASH FLOW
(in thousands)
                                                                   
                                                       Six Months Ended
                                                       October 31,
                                                       2017         2016
Operating Activities:
   Net income                                        $ 69,284       19,549
   Amortization of intangibles                         23,802       24,826
   Amortization of product development spending        20,246       18,701
   Depreciation of technology, property and            34,775       34,092
   equipment
   Non-cash charges and credits                        56,225       113,852
   Net change in operating assets and liabilities      (250,689 )   (297,114 )
   Cash Used for Operating Activities                  (46,357  )   (86,094  )
                                                                     
Investments in organic growth:
   Additions to technology, property and equipment     (56,252  )   (52,728  )
   Product development spending                        (15,145  )   (16,604  )
   Free Cash Flow less Product Development             (117,754 )   (155,426 )
   Spending
                                                                     
Other Investing and Financing Activities:
   Acquisitions, net of cash                           (6,097   )   (135,753 )
   Net debt borrowings                                 196,589      278,985
   Change in book overdrafts                           (2,629   )   (5,861   )
   Cash dividends                                      (36,699  )   (35,883  )
   Purchase of treasury shares                         (29,257  )   (21,289  )
   Proceeds from exercise of stock options and         7,347        15,890    
   other
   Cash Provided by Investing and Financing            129,254      96,089
   Activities
                                                                     
Effects of Exchange Rate Changes on Cash               2,855        (37,059  )
                                                                     
Increase (Decrease) in Cash and Cash Equivalents     $ 14,355       (96,396  )
for Period
                                                                     
                                                                     
                                                                     
RECONCILIATION TO GAAP PRESENTATION
                                                                     
Investing Activities:
   Product development spending                      $ (15,145  )   (16,604  )
   Additions to technology, property and equipment     (56,252  )   (52,728  )
   Acquisitions, net of cash                           (6,097   )   (135,753 )
   Cash Used for Investing Activities                $ (77,494  )   (205,085 )
                                                                     
Financing Activities:
Cash Provided by Investing and Financing             $ 129,254      96,089
Activities
Excluding:
   Acquisitions, net of cash                           (6,097   )   (135,753 )
   Cash Provided by Financing Activities             $ 135,351      231,842   
                                                                              

Free Cash Flow less Product Development Spending:
 
The Company provides financial measures referred to as “Free Cash Flow less
Product Development Spending.” Free Cash Flow less Product Development
Spending is defined as “cash flow from operating activities, less book
composition and other product development and capital spending.” Management
believes this metric provides additional information to investors to
facilitate the comparison of past and present results. This metric is also
used internally by management in evaluating results. This non-GAAP measure is
not intended to replace the financial results reported in accordance with US
Generally Accepted Accounting Principles.

View source version on businesswire.com:
http://www.businesswire.com/news/home/20171206005383/en/

Contact:

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