SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT 1934
For the quarterly period ended July 31, 1996Commission File No. 1-11507
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES ACT OF 1934
For the transition period from to
JOHN WILEY & SONS, INC.
-------------------------
(Exact name of Registrant as specified in its charter)
NEW YORK 13-5593032
- --------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
Identification No.)
incorporation or organization)
605 THIRD AVENUE, NEW YORK, NY 10158-0012
- ----------------------------- ------------------------
(Address of principal executive Zip Code
offices)
Registrant's telephone number, (212) 850-6000
including area code -----------------------
NOT APPLICABLE
Former name, former address, and former fiscal year,
if changed since last report
Indicate by check mark, whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES [X] NO [ ]
The number of shares outstanding of each of the Registrant's
classes of common stock as of July 31, 1996 were:
Class A, par value $1.00 - 12,951,558
Class B, par value $1.00 - 3,205,858
This is the first of a eleven page document
<PAGE>
JOHN WILEY & SONS, INC.
INDEX
PART I - FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements.
Condensed Consolidated Statements of
Financial Position - Unaudited as of July 31, 1996
and 1995 and April 30, 1996 3
Condensed Consolidated Statements of Income - Unaudited
for the Three Months ended July 31, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flow - Unaudited
for the Three Months ended July 31, 1996 and 1995 5
Notes to Unaudited Condensed Consolidated Financial
Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 10
Exhibit 27 Financial Data Schedule 11
<PAGE>
JOHN WILEY & SONS, INC. AND SUBSIDIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
- UNAUDITED
(In thousands)
<TABLE>
<CAPTION>
July 31, April 30,
--------------- ----------
Assets 1996 1995 1996
--------------------------------
<C> <C> <C>
Current Assets
Cash and cash equivalents $ 8,163 3,243 55,284
Accounts receivable 81,406 67,791 60,276
Inventories 61,416 44,352 43,981
Deferred income tax benefits 20,982 7,979 7,677
Prepaid expenses 6,224 4,776 3,413
--------------------------------
Total Current Assets 178,191 128,141 170,631
Product Development Assets 30,059 25,779 30,282
Property and Equipment 28,698 21,666 22,989
Intangible Assets 171,244 52,433 52,394
Other Assets 9,141 7,400 8,205
--------------------------------
Total Assets $ 417,333 235,419 284,501
================================
Liabilities & Shareholders' Equity
Current Liabilities
Notes payable and current
portion of long-term debt $ 106,524 579 -
Accounts and royalties payable 44,067 38,545 36,952
Deferred subscription revenues 59,769 43,771 71,999
Accrued income taxes 8,142 8,460 5,068
Other accrued liabilities 35,604 20,607 25,097
--------------------------------
Total Current Liabilities 254,106 111,962 139,116
Other Long-Term Liabilities 26,184 13,565 14,994
Deferred Income Taxes 12,249 5,100 12,409
Shareholders' Equity 124,794 104,792 117,982
--------------------------------
Total Liabilities &
Shareholders' Equity $ 417,333 235,419 284,501
=================================
</TABLE>
The accompanying Notes are an integral part of the
condensed consolidated financial statements.
<PAGE>
JOHN WILEY & SONS, INC. AND SUBSIDARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands except per share information)
Three Month
Ended July 31,
----------------------------
1996 1995
----------------------------
Revenues $ 99,217 88,092
Cost and Expenses
Cost of sales 33,682 28,872
Operating and administrative exepnses 52,328 46,619
Amoritzation of intangibles 1,491 1,105
----------------------------
Total Cost and Expenses 87,501 76,596
----------------------------
Operating Income 11,716 11,496
Interst Income and Other 323 397
Interest Expense (744) (29)
-----------------------------
Interest Income (Expense)-Net (421) 368
-----------------------------
Income Before Taxes 11,295 11,864
Provision For Income Taxes 4,066 4,746
-----------------------------
Net Income 7,229 7,118
=============================
Net Income Per Share
Primary $ 0.44 0.43
Fully Diluted $ 0.44 0.43
Cash Dividends Per Share
Class A Common $ 0.1000 0.0875
Class B Common $ 0.0875 0.0775
Average Shares
Primary 16,518 16,448
Fully Diluted 16,526 16,458
The acompanying Notes are an integral part of the condensed
consolidated financial statements.
<PAGE>
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW - UNAUDITED
(In thousands)
Three Months
Ended July 31,
-----------------------
1996 1995
-----------------------
Operating Activities
Net income $ 7,229 7,118
Non-cash items 10,226 12,261
Net change in operating assets and liabilities (47,613) (39,992)
-----------------------
Cash Used in Operating Activities (30,158) (20,613)
-----------------------
Investing Activities
Additions to product development assets (5,078) (5,374)
Additions to property and equipment (2,220) (2,246)
Acquisition of publishing assets (102,569) (1,244)
-----------------------
Cash Used for Investing Activities (109,867) (8,864)
-----------------------
Financing Activities
Purchase of treasury shares (552) (218)
Net borrowings (repayment) of short-term debt 94,683 (44)
Cash dividends (1,574) (1,373)
Proceeds from exercise of stock options 141 130
------------------------
Cash Provided by (Used for) Financing Activities 92,698 (1,505)
------------------------
Effects of Exchange Rate Changes on Cash 206 (185)
------------------------
Cash and Cash Equivalents
Decrease for Period (47,121) (31,167)
Balance at Beginning of Period 55,284 34,410
-----------------------
Balance at End of Period $ 8,163 3,243
=======================
Cash Paid During the Period for
Interest $ 214 23
Income taxes (refund) $ 1,355 (1,038)
The accompanying Notes are an integral part of the condensed
consolidated financial statements.
<PAGE>
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1996
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the Company's
consolidated financial position as of July 31, 1996 and 1995, and April 30,
1996, and results of operations and cash flows for the periods ended July 31,
1996 and 1995. These statements should be read in conjunction with the most
recent audited financial statements contained in the Company's Form 10-K for
the fiscal year ended April 30, 1996.
2. The results for the three months ended July 31, 1996 are not necessarily
indicative of the results to be expected for the full year.
3. Income per share is determined by dividing income by the weighted average
number of common shares outstanding and common stock equivalents resulting from
the assumed exercise of outstanding dilutive stock options and other stock
awards, less shares assumed to be repurchased with the related proceeds at the
average market price for the period for primary earnings per share, and at the
higher of the average or end of period market price for fully diluted earnings
per share.
4. Inventories were as follows:
July 31, April 30,
-------------------- ---------
1996 1995 1996
------- ------ -------
(Thousands)
Finished goods $51,485 35,497 39,616
Work-in-process 8,785 6,743 4,865
Paper, cloth and other 4,837 5,675 3,026
----------------------------------
65,107 47,915 47,507
LIFO reserve (3,691) (3,563) (3,526)
----------------------------------
Total inventories $61,416 44,352 43,981
----------------------------------
The increase in inventories at July 31, 1996 primarily relates to the
acquisition of VCH.
5. In June 1996, the Company completed the acquisition of a 90% interest in
the German based VCH Publishing Group (VCH) through the purchase of 90% of the
shares of VCH Verlagsgesellschaft mbH for approximately $99 million in cash,
including estimated expenses. VCH is a leading scientific, technical, and
professional publisher of journals and books in such disciplines as chemistry,
architecture, civil engineering and law.
<PAGE>
The transaction is initially being financed through available cash balances,
existing lines of credit, and a $75 million bridge line of credit. The
Company is currently in the process of refinancing the transaction.
In July 1996, the Company acquired the publishing assets of Technical
Insights, Inc., a publisher of print and electronic newsletters in various
areas of science and technology for approximately $3.8 million in cash.
These acquisitions have been accounted for by the purchase method, and the
accompanying financial statements include the net assets acquired and results
of operations since date of acquisition. The cost of the acquisitions has
been allocated on the basis of preliminary estimates of the fair values of
the assets acquired and the liabilities assumed. Final asset and liability
fair values may differ based on appraisals and tax bases, however it is
anticipated that any changes will not have a material effect in the aggregate
on the consolidated financial position of the Company. The excess of cost
over the preliminary estimate of the fair value of the tangible assets
acquired amounted to approximately $120 million relating to acquired
publication rights, noncompete agreements, goodwill and other intangibles and
is being amortized on a straight line basis over an estimated average life of
30 years.
The following pro forma information presents the results of operations of the
Company as if the VCH acquisition had been consummated as of May 1, 1995.
The pro forma effects for Technical Insights were not material. The pro
forma financial information is not necessarily indicative of the actual
results that would have been obtained had the acquisition been consummated as
of May 1, 1995, nor is it necessarily indicative of future results of
operations.
Three Months
Ended July 31,
-------------------------------
1996 1995
------ --------
(In thousands, except per share
information)
Revenues $ 103,729 $108,893
Net Income $ 5,820 $ 4,935
Net Income Per Share $ 0.35 $ 0.30
6. Effective May 1, 1996, the Company adopted the Financial
Accounting Standards Board's Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of". This standard establishes the
accounting for the impairment of long-lived assets, certain identifiable
intangibles and goodwill related to those assets to be held and used,
and for long-lived assets and certain identifiable intangibles to be
disposed of. The adoption of this standard did not have a material
effect on the consolidated financial statements of the Company.
Effective May 1, 1996, the Company adopted the Financial Accounting Standards
Board's SFAS No. 123. "Accounting for Stock-Based Compensation' ("SFAS 123").
This standard established accounting and reporting standards for stock-based
employee compensation. The Company will continue to measure compensation
costs for its stock-based compensation plans using the intrinsic value-based
method, and will include certain pro forma disclosures required by SFAS 123
in its audited financial statements for the fiscal year ended April 30, 1997.
The adoption of this standard did not have a material effect on the
consolidated financial statements of the Company.
<PAGE>
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JULY 31, 1996
FINANCIAL CONDITION
During this seasonal period of cash usage, operating activities used $30.2
million of cash, or $9.6 million more than the prior year's comparable
quarter. The increase was primarily due to higher working capital and
expense levels to support the higher volume of business. The use of cash
during this period is consistent with the seasonality of the journal
subscription and the educational sector's receipts cycle which occur, for the
most part, later in the fiscal year.
Investing activities used $109.9 million during the current quarter, or $101
million more than the comparable prior year's quarter, due to the VCH and
Technical Insights acquisitions as mentioned in note 5.
Financing activities primarily reflect the initial financing for the above
acquisitions as indicated in note 5, as well as dividend payments during the
quarter.
RESULTS OF OPERATIONS
FIRST QUARTER ENDED JULY 31, 1996
Revenues for the first quarter advanced 13% to $99.2 million compared with
$88.1 million in the prior year. Operating income for the current quarter
was $11.7 million, compared with $11.5 million in the prior year. Net income
advanced 2% to $7.2 million. The current quarter includes the results of
operations of VCH Publishing Group since date of acquisition in June 1996,
which had the effect of increasing revenues by approximately 6%, and reducing
operating income by $0.7 million and net income by $1.0 million, or $0.06 per
share, primarily due to amortization of intangibles and financing costs
related to the acquisition.
Excluding VCH, the improvement in revenues and operating income was primarily
attributable to strong performances in the Company's scientific, technical
and medical journals program and in its college division.
Cost of sales as a percentage of revenues increased from 32.8% in the prior
year to 33.9%. Operating expenses as a percentage of revenues were 52.7% in
the current quarter compared with 52.9% in the prior year's first quarter.
Interest expense increased by $0.7 million due to the financing costs related
to the VCH acquisition. The effective tax rate of 36% in the current quarter
reflects a reduction of 4% from the prior year's first quarter due in large
part to the tax benefits of VCH's acquisition related amortization and
financing costs.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
-------------------------------
(a) Exhibits
---------
27 - Financial Data Schedule
(b) Reports on Form 8-K
-------------------
The Company filed a Form 8-K dated May 7, 1996 under item 5: Other
Events relating to the agreement to acquire a 90% interest in the
German-based VCH Publishing Group and the authorization to repurchase
up to one million shares of the Company's common stock from time to
time on the open market.
The Company filed a Form 8-K dated June 13, 1996 under Item 2:
Acquisition or Disposition of Assets relating to the completion of the
acquisition of a 90% interest in VCH Publishing Group.
The Company filed a Form 8-K/A dated June 13, 1996 amending the Form
8-K dated June 13, 1996 to provide Financial Statements of
Businesses Acquired under Item 7(a) and Pro Forma Financial
Information under Item 7(b).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JOHN WILEY & SONS, INC.
Registrant
By/s/ Charles R. Ellis
-----------------
Charles R. Ellis
President &
Chief Executive Officer
By/s/ Robert D. Wilder
---------------------
Robert D. Wilder
Executive Vice President &
Chief Financial Officer
Dated: September 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
FINANCIAL DATA SCHEDULE
(Dollars in Thousands Except Per Share Data)
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AND THE CONSOLIDATED STATEMENT OF INCOME AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
<C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-START> MAY-01-1996
<PERIOD-END> JUL-31-1996
<CASH> $ 8,163
<SECURITIES> 0
<RECEIVABLES> 110,150
<ALLOWANCES> 28,744
<INVENTORY> 61,416
<CURRENT-ASSETS> 178,191
<PP&E> 65,028
<DEPRECIATION> 36,330
<TOTAL-ASSETS> 417,333
<CURRENT-LIABILITIES> 254,106
<BONDS> 0
<COMMON> 20,511
0
0
<OTHER-SE> 104,283
<TOTAL-LIABILITY-AND-EQUITY> 417,333
<SALES> 0
<TOTAL-REVENUES> 99,217
<CGS> 0
<TOTAL-COSTS> 33,682
<OTHER-EXPENSES> 53,819
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 744
<INCOME-PRETAX> 11,295
<INCOME-TAX> 4,066
<INCOME-CONTINUING> 7,229
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,229
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
</TABLE>
