FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: April, 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the transition period from to
Commission file number 1-11507
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
incorporation or organization Identification No.
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 --------------------------
Securities registered pursuant to
Section 12(b) of the Act:
Title of each class Name of each exchange on
which registered
Class A Common Stock, par value New York Stock Exchange
$1.00 per share
Class B Common Stock, par value New York Stock Exchange
$1.00 per share
Securities registered pursuant to
Section 12(g) of the Act:
None
<PAGE>
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
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K
The number of shares outstanding of the Registrant's
Class A and Class B Common Stock, par value $1.00 per
share as of May 31, 1996, was 12,926,878 and 3,206,058
respectively, and the aggregate market value of such
shares of Common Stock held by non-affiliates of the
Registrant as of such date was $402,004,202 based upon the
closing market price of the Class A and Class B Common
Stock.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's Definitive proxy Statement to be
filed with the Commission on or about August 9, 1996 for
the Annual Meeting of Shareholders to be held on September
19, 1996, (the "1996 Proxy Statement") is, to the extent
noted below, incorporated by reference in Part III.
<PAGE>
PART I
Item 1. Business
The Company is a New York corporation incorporated on
January 15, 1904. (As used herein the term "Company" means
John Wiley & Sons, Inc., and its subsidiaries and
affiliated companies, unless the context indicates
otherwise).
The Company operates in one business segment, namely
publishing, which develops, publishes, and markets
products in print and electronic formats including
textbooks, professional and reference works, consumer
books, journals, and other subscription-based products,
for the educational, scientific, technical, professional
and trade markets in the United States and
internationally.
Textbooks are produced primarily for use in formal
instruction in the college and university markets, as well
as the secondary school market in Australia, while
professional and reference books, encyclopedias,
dictionaries, and periodicals are intended primarily for
practicing and research professionals and for libraries.
Some of these, as well as nonfiction consumer
publications, are also marketed to the general public. in
addition, the Company markets and distributes books from
other publishers. The Company also develops and markets
electronic versions of certain of its print products, as
well as computer software and electronic data bases for
educational use and professional research and training.
Book publications are primarily in the areas of pure and
applied science, engineering, architecture, the social
sciences, biomedicine, accounting, law, computer science
and business administration. Journal publications are
primarily in the scientific and technical, and biomedical
research areas.
In fiscal 1996, the Company acquired Clinical
Psychology Publishing Company (CPPC), a publisher of
journals and books in the fields of clinical and
educational psychology; Preservation Press consisting of
architectural heritage books, technical preservation
guides and children's architecture books; and certain
other smaller publishing properties. In addition, the
Company became the publisher of Cancer, the American
Cancer Society's medical journal.
<PAGE>
Subsequent to the fiscal 1996 year-end, the Company
acquired a 90% interest in the German based VCH Publishing
Group (VCH) for approximately $100 million in cash. VCH
publishes nearly 100 scholarly and professional journals,
as well as more than 500 books annually, with a backlist
of 3,000 titles. VCH is a leading scientific, technical,
and professional publisher in chemistry and related
disciplines. The group also includes Akademie Verlag, a
science and humanities publisher; Ernst & Sohn, an
architecture and civil engineering publisher; Academy
Group, a London-based architecture and design publisher;
and Chemical Concepts, an electronic chemical database
publisher.
The company is on the Internet with a World Wide Web
site located at http://www.wiley.com.
Domestic Publishing Operations
Adopted textbooks (i.e., textbooks prescribed for
course use) are sold primarily to bookstores serving
educational institutions in the United States (i.e.,
college bookstores). The Company employs college sales
representatives who call upon faculty members responsible
for selecting books to be used in courses, and upon the
college bookstores which serve such institutions and their
students. Approximately 2,400 domestic college bookstore
accounts are active customers. Textbook sales are
generally made on a fully returnable basis.
The textbook business is seasonal with the majority
of textbook sales occurring during June through August and
November through January. Significant amounts of
inventory are acquired prior to those periods in order to
meet customer delivery requirements. There is an active
used textbook market which negatively affects the sales of
new textbooks.
Professional and consumer book sales consist of sales
to trade bookstores serving the general public, to
wholesalers who supply such bookstores, to certain college
bookstores for their non-textbook requirements, to
individual professional practitioners, and to research
institutions, jobbers, libraries (including public,
professional, academic, and other special libraries),
industrial organizations, and governmental agencies. The
Company employs sales representatives who call upon
independent bookstores, along with national and regional
chain bookstores, wholesalers and jobbers in the United
States. Trade sales to bookstores, wholesalers and
jobbers are generally made on a fully returnable basis.
Sales of professional and consumer books also result
from direct mail campaigns, telemarketing, and advertising
and reviews in periodicals. The mailings and advertising
are intended to promote sales through bookstores and
jobbers, as well as to solicit sales directly.
<PAGE>
Journal subscriptions result primarily from direct
mail and other advertising and promotional campaigns,
renewals which are solicited annually either directly or
by companies commonly referred to as independent
subscription agents, and memberships in the professional
societies for those journals that are sponsored by such
societies.
The Company also receives licensing revenues from
photocopies and electronic reproductions of journal
articles and other materials.
Domestic publishing products, other than journals,
are distributed from a Company operated warehouse located
in Somerset, New Jersey. Journals are mailed to
subscribers directly from the independent printers.
International Publishing Operations
The Company's publications are sold throughout most
of the world through subsidiaries located in Europe,
Canada, Australia, and Asia, or through agents, or
directly from New York. These subsidiaries market their
own indigenous publications, as well as publications
produced by the domestic operations and other subsidiaries
and affiliates.
The Export Sales Department in New York markets the
Company's publications through agents as well as foreign
sales representatives in countries not served by a foreign
subsidiary. John Wiley & Sons International Rights, Inc.
sells foreign reprint and translations rights. The
Company publishes, or licenses others to publish, its
products which are distributed throughout the world in 40
foreign languages.
Approximately 41% of the Company's fiscal 1996
revenues were derived from non-U.S. markets.
Publishing Procedures
The Company usually enters into agreements with
authors which state the terms and conditions under which
the respective authors' materials will be published and
under which other related rights may be exercised, the
name in which the copyright will be registered, the basis
for any royalties, and other matters. The Company
continues to add new titles, revise existing titles, and
discontinue the sale of others in the normal course of its
business.
Most of the authors of the books and other products
published are compensated by royalties which vary with the
nature of the product and its anticipated sales potential.
In general, royalties for textbooks and consumer books are
higher than royalties for research and reference works.
The Company makes advances against future royalties to
authors of certain of its publications.
<PAGE>
Materials for publication are obtained from authors
throughout most of the world through the efforts of an
editorial staff, outside editorial advisors, and advisory
boards. Most materials originate with their authors, but
many are prepared as a result of suggestions or
solicitations by editors or advisors. The Company's
general practice is to revise its basic textbooks every
three to five years, if warranted, and to revise other
titles as appropriate. Approximately 36% of the Company's
fiscal 1996 domestic book publishing revenues were from
titles published or revised in that fiscal year.
Subscription-based products, other than journals, are
updated more frequently on a regular schedule.
Most journals are owned by the Company, in which case
they may or may not be sponsored by a professional
society. Some are owned by such societies and published
by the Company under an agreement. Societies which
sponsor or own such journals generally receive a royalty
and/or other consideration which varies with the nature of
the relationship. The Company usually enters into
agreements with the editors of journals which state the
duties of the editors, and the fees and expenses for their
services. Contributions of journal articles transfer
publication rights to the Company or professional society,
as applicable. Journal revenues represented approximately
31% of the Company's fiscal 1996 revenues.
The Company's publishing business is not dependent
upon a single customer, the loss of whom could have a
material adverse effect. Approximately 86% of the
Company's journal subscription business is sourced through
independent subscription agents. These companies
facilitate the journal ordering process by consolidating
the subscription orders/billings of each subscriber.
Monies are collected in advance from subscribers by the
subscription agents and are remitted to the journal
publishers, including the Company, generally prior to the
commencement of the subscription. Cash receipts from
subscription agents are highly dependent on their
financial position and liquidity. No one agent accounts
for more than 6% of total consolidated revenues.
The Company performs marketing and distribution
services for other publishers under agency arrangements.
It also engages in co-publishing of titles with foreign
publishers and in publication of adaptations of works from
other publishers for particular markets.
Like most other publishers, the Company generally
contracts with independent printers and binderies for
their services. The Company purchases its paper from
printers and from independent suppliers. Paper prices
have increased over the past few years. The Company
believes that adequate printing and binding facilities,
and sources of paper and other required materials are
available to it, and that it is not dependent upon any
single supplier.
<PAGE>
The Company produces electronic versions of some of
its products including software, video, CD-ROM, and
through on-line services. Approximately 700 products are
available in electronic formats, of which 200 are primary
stand-alone products with the remainder representing
supplemental products in support of other print products.
The Company believes that the demand for new electronic
technology products will increase. Accordingly, to
properly service its customers and to remain competitive,
the Company anticipates it will be necessary to increase
its expenditures related to such new technologies over the
next several years.
Copyrights, Patents, Trademarks, and Environment
Substantially all of the Company's publications are
protected by copyright, either in its own name, in the
name of the author of the work, or in the name of the
sponsoring professional society. Such copyrights protect
the Company's exclusive right to publish the work in the
United States and in many countries abroad for specified
periods: in most cases the author's life plus 50 years,
but in any event a minimum of 28 years for works published
prior to 1978 and 35 years for works published thereafter.
The Company does not own any other material patents,
franchises, or concessions, but does have registered
trademarks and service marks in connection with its
publishing businesses. The Company's operations are
generally not affected by environmental legislation.
Competition Within the Publishing Industry
The sectors of the publishing industry in which the
Company is engaged are highly competitive. The principal
competitive criteria for the publishing industry are
believed to be product quality, suitability of format and
subject matter, author reputation, price, timely
availability of both new titles and revisions of existing
texts and, for textbooks and certain trade books, timely
delivery of products to retail outlets. Recent years have
seen a consolidation trend within the publishing industry,
with several publishing companies having been acquired by
larger publishers and other companies.
Based upon currently available industry statistics,
the Company believes that of books published and sold in
the United States, it accounts for approximately 3% of the
total sales of such university and college textbooks, and
approximately 3% of the total sales of such professional
books.
<PAGE>
The Company knows of no reliable industry statistics
which would enable it to determine its share of the
various foreign markets in which its operates. The
Company believes that the percentage of its total book
publishing sales in markets outside the United States is
higher than that of most of the United States publishers.
The Company also believes, with the acquisition of VCH, it
is the second largest publisher of scientific and
technical journals worldwide, as well as the leading
commercial chemistry publisher, and one of the three
largest publishers of university and college textbooks for
the "hardside" disciplines, i.e. engineering, sciences and
mathematics.
Employees
As of April 30, 1996, the Company employed
approximately 1,830 persons on a full-time basis
worldwide, none of whom are unionized. Management
considers relations with its employees to be generally
satisfactory.
Financial Information About Industry Segments
The note entitled - "Segment Information" of the
Notes to Consolidated Financial Statements listed in the
attached index is incorporated herein by reference.
Financial Information about Foreign and
Domestic Operations and Export Sales
The note entitled - "Segment Information" of the
Notes to Consolidated Financial Statements listed in the
attached index is incorporated herein by reference.
<PAGE>
Executive Officers
Set forth below as of April 30, 1996 are the names
and ages of all executive officers of the Company, the
period during which they have been officers, and the
offices presently held by each of them.
Officer
Name and Age Since Present Office
- --------------- --------- ----------------
Bradford Wiley II 1993 Chairman of the Board since January
55 1993 and a Director (previously
Editor, College Division)
Charles R. Ellis 1988 President and Chief Executive Officer
61 and a Director since June 1990
Stephen A. Kippur 1986 Senior Vice President, Professional,
49 Reference & Trade Publishing Group
since July 1990
William J. Pesce 1989 Senior Vice President, Educational &
45 International Publishing Group since
February 1996 (previously Senior
Vice President, Educational
Publishing Group)
Richard S. Rudick 1978 Senior Vice President, General
57 Counsel since June 1989 (previously
Vice President, General Counsel and
Secretary)
Robert D. Wilder 1986 Senior Vice President, Chief
48 Financial Officer since June 1990
William Arlington 1990 Vice President, Human Resources since
47 June 1990
Peter W. Clifford 1989 Vice President, Finance and
50 Controller since November 1991
(previously Vice President,
Controller)
Deborah E. Wiley 1982 Vice President and Director of
50 Corporate Communications since June
1994 and a Director (previously Vice
Chairman of the Board)
Each of the officers listed above will serve until
the next organizational meeting of the Board of Directors
of the Company and until each of the respective successors
is duly elected and qualified. Deborah E. Wiley is the
sister of Bradford Wiley II. There is no other family
relationship among any of the aforementioned individuals.
<PAGE>
Item 2. Properties
The Company's publishing businesses occupy office,
warehouse, and distribution centers in various parts of
the world, as listed below (excluding those locations with
less than 10,000 square feet of floor area, none of which
is considered material property).
Location Purpose Approx. Sq. Lease Expiration
Ft. Date
- ----------------------------------------------------------
Leased-
Domestic:
New York, Executive and 230,000 2003
New York Editorial
Offices
Somerset, Distribution 170,000 1998
New Jersey Center and
Office
Somerset, Warehouse 50,000 2000
New Jersey
Colorado Office 17,000 2000
Springs,
Colorado
Leased-
Foreign:
Brisbane, Office 16,000 1998
Australia Warehouse 26,000 2000
Toronto, Office 14,000 2001
Canada Warehouse 41,000 1996
Chichester, Office 52,000 2009
England Warehouse 70,000 2012
Asia Office 53,000 1997
and Warehouse
All of the buildings and the equipment owned or
leased are believed to be in good condition and are
generally fully utilized. The Company considers its
facilities overall to be adequate for its present and near-
term anticipated needs.
<PAGE>
Item 3. Legal Proceedings
The Company is involved in routine litigation in the
ordinary course of its business. In the opinion of
management, the ultimate resolution of all pending
litigation will not have a material effect upon the
financial condition or results of operations of the
Company.
Item 4. Submission of Matters to a
Vote of Security Holders
No matters were submitted to the Company's security
holders during the last quarter of the fiscal year ended
April, 30, 1996.
PART II
Item 5. Market for the Company's Common
Equity and Related Stockholder Matters
The Quarterly Share Prices, Dividends and Related
Stockholder Matters listed in the attached index are
incorporated herein by reference.
Item 6. Selected Financial Data
The Selected Financial Data listed in the attached
index is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Management's Discussion and Analysis of Financial
Condition and Results of Operations listed in the attached
index is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data
listed in the attached index are incorporated herein by
reference.
Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers
The information regarding the Board of Directors on
pages 4 to 11 of the 1996 Proxy Statement is incorporated
herein by reference, and information regarding Executive
Officers appears in Part I of this report.
Item 11. Executive Compensation
The information on pages 12 to 18 of the 1996 Proxy
Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain
Beneficial Owners and Management
The information on pages 3, 4, 10, and 11 of the 1996
Proxy Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information on pages 5 to 6 of the 1996 Proxy
Statement is incorporated herein by reference.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K
(a) Financial Statements and Schedules
(1) List of Financial Statements filed.
The financial statements listed in the
attached index are filed as part of
this Report.
(2) List of Financial Statement Schedules
filed.
The financial statement schedules
listed in the attached index are filed
as part of this Report.
(b) Reports on Form 8-K.
No reports on form 8-K were filed during
the quarter ended April 30, 1996.
(c) Exhibits
2.1 Purchase and Assignment Agreement dated May 7,
1996 among the Company and VCH Publishing Limited
Partnership (incorporated by reference to the
Company's report on Form 8-K dated as of June 13,
1996).
2.2 Purchase and Assignment Agreement dated May 7,
1996 among the Company and Gesellschaft Deutscher
Chemiker e.V. and Deutsche Pharmazeutische
Gesellschaft e.V. (incorporated by reference to
the Company's report on Form 8-K dated as of June
13, 1996).
3.1 Restated Certificate of Incorporation
(incorporated by reference to the Company's
report on Form 10-K for the year ended April 30,
1992).
3.2 Certificate of Amendment of the Certificate of
Incorporation dated October 13, 1995.
3.3 Restated By-Laws dated as of July 1994
(incorporated by reference to the Company's
report on Form 10-K for the year ended April 30,
1995).
4.1 Form of agreement between the Company and certain
employees restricting transfer of Class B Common
Stock (incorporated by reference to the Company's
Report on Form 10-Q for the quarterly period
ended January 31, 1986).
<PAGE>
10.1 Credit Agreement dated as of March 30, 1995 among
the Company, Morgan Guaranty Trust Company of New
York, Chemical Bank, Corestates Bank, N.A., and
Morgan Guaranty Trust Company of New York, as
Agent (incorporated by reference to the Company's
report on Form 10-K for the year ended April 30,
1995).
10.2 Credit Agreement dated as of June 12, 1996 among
the Company and the Banks from time to time
parties hereto and Morgan Guaranty Trust Company
of New York, as Agent.
10.3 1991 Key Employee Stock Plan (incorporated by
reference to the Company's Definitive Proxy
Statement dated August 8, 1991).
10.4 1982 and 1987 Incentive Stock Option and
Performance Stock Plans (incorporated by
reference to the Company's Definitive Proxy
Statements dated July 30, 1982 and August 10,
1987).
10.5 Amendment to 1982 Stock Option and Performance
Stock Plan dated as of September 19, 1985
(incorporated by reference to the Company's
Report on Form 8-K dated as of September 19,
1985).
10.6 Amendment to 1982 Incentive Stock Option and
Performance Stock Plan dated as of March 2, 1989
(incorporated by reference to the Company's
Report on Form 10-K for the year ended April 30,
1989).
10.7 Amendment to 1987 Incentive Stock Option and
Performance Stock Plan dated as of March 2, 1989
(incorporated by reference to the Company's
Report on 10-K for the year ended April 30,
1989).
10.8 1990 Director Stock Plan as Amended and Restated
as of June 22, 1995.
10.9 1989 Supplemental Executive Retirement Plan
(incorporated by reference to the Company's
Report on Form 10-K for the year ended April 30,
1989).
10.10 Agreement of Lease dated as of May 16, 1985
between Fisher 40th & 3rd Company and Hawaiian
Realty, Inc., Landlord, and the Company, Tenant
(incorporated by reference to the Company's
Report on Form 10-K for the year ended April 30,
1985).
<PAGE>
10.11 Form of the Fiscal Year 1995 Executive Long-Term
Incentive Plan (incorporated by reference to the
Company's Report on Form 10-K for the year ended
April 30, 1994).
10.12 Form of the Fiscal Year 1996 Executive Long-Term
Incentive Plan (incorporated by reference to the
Company's Report on Form 10-K for the year ended
April 30, 1995).
10.13 Form of the Fiscal Year 1997 Executive Long-Term
Incentive Plan.
10.14 Form of the Fiscal Year 1996 Executive Annual
Incentive Plan (incorporated by reference to the
Company's Report on Form 10-K for the year ended
April 30, 1995).
10.15 Form of the Fiscal Year 1997 Executive Annual
Incentive Plan.
10.16 Senior Executive Employment Agreement amended as
of March 29, 1995 between Charles R. Ellis and
the Company (incorporated by reference to the
Company's Report on Form 10-K for the year ended
April 30, 1995).
10.17 Restricted Stock Award Agreement dated as of June
23, 1994 between Charles R. Ellis and the
Company. (incorporated by reference to the
Company's Report on Form 10-Q for the quarterly
period ended July 31, 1995).
10.18 Senior Executive Employment Agreement dated as of
July 1, 1994 between Stephen A. Kippur and the
Company. (incorporated by reference to the
Company's Report on Form 10-Q for the quarterly
period ended July 31, 1995).
10.19 Amendment No. 1 to Stephen A. Kippur's Senior
Executive Employment Agreement dated as of July
1, 1994. (incorporated by reference to the
Company's Report on Form 10-Q for the quarterly
period ended July 31, 1995).
10.20 Restricted Stock Award Agreement dated as of June
23, 1994 between Stephen A. Kippur and the
Company. (incorporated by reference to the
Company's Report on Form 10-Q for the quarterly
period ended July 31, 1995).
10.21 Senior Executive Employment Agreement dated as of
July 1, 1994 between William J. Pesce and the
Company. (incorporated by reference to the
Company's Report on Form 10-Q for the quarterly
period ended July 31, 1995).
<PAGE>
10.22 Amendment No. 1 to William J. Pesce's Senior
Executive Employment Agreement dated as of July
1, 1994. (incorporated by reference to the
Company's Report on Form 10-Q for the quarterly
period ended July 31, 1995).
10.23 Restricted Stock Award Agreement dated as of June
23, 1994 between William J. Pesce and the
Company. (incorporated by reference to the
Company's Report on Form 10-Q for the quarterly
period ended July 31, 1995).
10.24 Senior Executive Employment Agreement dated as of
July 1, 1994 between Robert D. Wilder and the
Company. (incorporated by reference to the
Company's Report on Form 10-Q for the quarterly
period ended July 31, 1995).
10.25 Amendment No. 1 to Robert D. Wilder's Senior
Executive Employment Agreement dated as of July
1, 1994. (incorporated by reference to the
Company's Report on Form 10-Q for the quarterly
period ended July 31, 1995).
10.26 Restricted Stock Award Agreement dated as of June
23, 1994 between Robert D. Wilder and the
Company. (incorporated by reference to the
Company's Report on Form 10-Q for the quarterly
period ended July 31, 1995).
22 List of Subsidiaries of the Company.
24 Consent of Independent Public Accountants
(included in this report as listed in the
attached index).
27 Financial Data Schedule.
<PAGE>
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
The following financial statements and information
appearing on the pages indicated are filed as part of this
Report:
Page(s)
Report of Independent Public Accountants and
Consent of Independent Public Accountants 16
Consolidated Statements of Financial Position
as of April 30, 1996 and 1995 17
Consolidated Statements of Income and Retained Earnings
for the years ended April 30, 1996, 1995 and 1994 18
Consolidated Statements of Cash Flows for the
years ended April 30, 1996, 1995 and 1994 19
Notes to Consolidated Financial Statements 20-27
Management's Discussion and Analysis of Financial
Condition
and Results of Operations 28-30
Results by Quarter (Unaudited) 31
Quarterly Share Prices, Dividends and Related Stockholders
Matters 31
Selected Financial Data 32
Schedule II - Valuation and Qualifying Accounts 33
Other schedules are omitted because of absence of
conditions under which they apply or because the
information required is included in the Notes to the
Consolidated Financial Statements.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and the Shareholders
of John Wiley & Sons, Inc.:
We have audited the accompanying consolidated
statements of financial position of John Wiley & Sons,
Inc. (a New York corporation), and subsidiaries as of
April 30, 1996 and 1995, and the related consolidated
statements of income and retained earnings and cash flows
for each of the three years in the period ended April 30,
1996. These financial statements and the schedule
referred to below are the responsibility of the Company's
management. Our responsibility is to express an opinion
on these financial statements and the schedule based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of John Wiley & Sons, Inc., and
subsidiaries as of April 30, 1996 and 1995, and the
results of their operations and their cash flows for each
of the three years in the period ended April 30, 1996 in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a
whole. The schedule listed in the Index to Consolidated
Financial Statements and Schedules is presented for
purposes of complying with the Securities and Exchange
Commission's rules and is not a required part of the basic
financial statements. This schedule has been subjected to
the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated
in all material respects in relation to the basic
financial statements taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
June 12, 1996
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent
to the incorporation of our report included in the John
Wiley & Sons, Inc. Form 10-K for the year ended April 30,
1996, into the Company's previously filed Registration
Statement File Nos. 33-60268, 2-65296, 2-95104, 33-29372
and 33-62605.
ARTHUR ANDERSEN LLP
New York, New York
June 20, 1996
<PAGE>
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
April 30
John Wiley & Sons, Inc. and Subsidiaries
Dollars in thousands 1996 1995
-------------------------
Assets
Current Assets
Cash and cash equivalents $ 55,284 $ 34,410
Accounts receivable 60,276 52,562
Inventories 43,981 41,535
Deferred income tax benefits 7,677 8,004
Prepaid expenses 3,413 4,680
-------------------------
Total Current Assets 170,631 141,191
Product Development Assets 30,282 24,509
Property and Equipment 22,989 21,244
Intangible Assets 52,394 53,351
Other Assets 8,205 7,186
Total Assets $ 284,501 $ 247,481
=========================
Liabilities and Shareholders' Equity
Current Liabilities
Notes payable and current portion
of long-term debt $ - $ 621
Accounts and royalties payable 36,952 34,273
Deferred subscription revenues 71,999 65,749
Accrued income taxes 5,068 4,227
Other accrued liabilities 25,097 25,080
-------------------------
Total Current Liabilities 139,116 129,950
-------------------------
Other Long-Term Liabilities 14,994 13,818
Deferred Income Taxes 12,409 4,881
Shareholders' Equity
Common stock issued
Class A (16,412,343 and 16,173,270 shares 16,412 16,173
Class B (4,086,482 and 4,168,640 shares) 4,086 4,168
Additional paid-in capital 31,615 25,446
Retained earnings 106,716 87,541
Cumulative translation adjustment (3,086) (2,411)
Unearned deferred compensation (4,268) (1,547)
-------------------------
151,475 129,370
Less Treasury shares at cost
(Class A-3,503,109 and 3,551,882;
Class B-871,024 and 871,024 (33,493) (30,538)
-------------------------
Total Shareholders' Equity 117,982 98,832
-------------------------
Total Liabilities and Shareholders' Equity $ 284,501 $ 247,481
=========================
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS
For the years ended April 30
John Wiley & Sons, Inc. and Subsidiaries
Dollars in thousands except per share data
1996 1995 1994
----------------------------------
Revenues $ 362,704 $ 331,091 $ 294,289
Costs and Expenses
Cost of sales 126,718 113,142 99,683
Operating and administrative
expenses 198,494 186,984 170,000
Amortization of intangibles 4,537 4,086 5,723
----------------------------------
Total Costs and Expenses 329,749 304,212 275,406
----------------------------------
Operating Income 32,955 26,879 18,883
Interest Income and Other 6,211 1,768 1,821
Interest Expense (368) (2,854) (3,638)
----------------------------------
Interest Income (Expense)-Net 5,843 (1,086) (1,817)
Income Before Taxes 38,798 25,793 17,066
Provision for Income Taxes 14,118 7,482 4,949
----------------------------------
Net Income 24,680 18,311 12,117
----------------------------------
Retained Earnings at Beginning
of Year 87,541 74,024 66,080
Cash Dividends
Class A Common
($.35, $.31 and $.275 per share) 4,492 3,885 3,358
Class B Common
($.31, $.275 and $.245 per share) 1,013 909 15
----------------------------------
Total Dividends 5,505 4,794 4,173
----------------------------------
Retained Earnings at End of Year $ 106,716 $ 87,541 $ 74,024
==================================
Income Per Share
Primary and Fully Diluted $ 1.49 $ 1.12 $ 0.76
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended April 30
John Wiley & Sons, Inc. and Subsidiaries
Dollars in thousands 1996 1995 1994
----------------------------------
Operating Activities
Net Income $ 24,680 $ 18,311 $ 12,117
Non-cash Items
Amortization of intangibles 4,537 4,086 5,723
Amortization of composition costs 15,196 12,285 11,979
Depreciation of property
and equipment 7,314 6,589 6,075
Reserves for returns, doubtful
accounts and obsolescence 6,586 4,321 3,679
Deferred income taxes 7,873 2,094 (1,499)
Other 7,583 5,155 3,295
Changes in Operating Assets and
Liabilities
Increase in receivables (12,150) (8,337) (11,863)
Decrease (increase) in inventories (3,734) (3,962) 758
Increase in accounts and
royalties payable 3,821 6,951 5,594
Increase in deferred subscription
revenues 4,996 7,596 6,132
Net change in other operating
assets and liabilities 1,420 (3,198) (2,256)
Cash Provided by Operating
Activities 68,122 51,891 39,734
----------------------------------
Investing Activities
Additions to product development
assets (26,483) (19,705) (16,827)
Additions to property and
equipment (9,310) (7,876) (6,504)
Proceeds from sale of publishing
lines - - 9,210
Acquisition of publishing assets (3,968) (12,268) (8,305)
----------------------------------
Cash Used for Investing Activities (39,761) (39,849) (22,426)
----------------------------------
Financing Activities
Purchase of treasury shares (3,323) (212) -
Repayment of long-term debt - (32,000) (4,000)
Net borrowings (repayments)
of short-term debt (624) 522 (21)
Cash dividends (5,505) (4,794) (4,173)
Proceeds from issuance of stock
on option exercises and other 2,289 590 2,815
----------------------------------
Cash Used for Financing
Activities (7,163) (35,894) (5,379)
----------------------------------
Effects of Exchange Rate Changes
on Cash (324) 805 (787)
----------------------------------
Cash and Cash Equivalents
Increase (Decrease) for Year 20,874 (23,047) 11,142
Balance at Beginning of Year 34,410 57,457 46,315
----------------------------------
Balance at End of Year $ 55,284 $ 34,410 $ 57,457
==================================
Cash Paid During the Year for
Interest $ 647 $ 3,807 $ 3,674
Income Taxes $ 2,799 $ 6,886 $ 3,715
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
Notes to Consolidated Financial Statements
Summary of Significant Accounting Policies
Principles of Consolidation: The consolidated financial
statements include the accounts of John Wiley & Sons,
Inc., and its majority-owned subsidiaries ("the Company").
All significant intercompany items have been eliminated.
Prior year per share data has been restated to reflect the
2-for-1 stock split in October 1995.
Use of Estimates: The preparation of financial statements
in conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
Sales Returns and Doubtful Accounts: The Company provides
an estimated allowance for doubtful accounts and for
future returns on sales made during the year. The
allowance for doubtful accounts and returns (estimated
returns net of inventory and royalty costs) is shown as a
reduction of receivables in the accompanying consolidated
balance sheets and amounted to $26.8 and $22.6 million at
April 30, 1996 and 1995, respectively.
Depreciation and Amortization: Furniture and equipment is
depreciated principally on the straight-line method over
estimated useful lives ranging from 3 to 10 years.
Leasehold improvements and capital leases are amortized
over the lesser of the estimated useful lives of the
assets or the duration of the various leases, using the
straight-line method. Composition costs representing the
costs incurred to bring an edited manuscript to
publication including typesetting, proofreading, design
and illustration, etc. are capitalized and amortized over
estimated useful lives representative of product revenue
patterns, generally 3 years.
Intangible Assets: Intangible assets consist of acquired
publication rights, which are principally amortized based
on the projected revenues of titles acquired, non-compete
agreements, which are amortized over the term of such
agreements, and goodwill and other intangibles, which are
amortized on a straight line basis over periods ranging
from 5 to 40 years. If facts and circumstances indicate
that intangible assets may be permanently impaired, it is
the Company's policy to assess the carrying value and
recoverability of such assets based on an analysis of
undiscounted future cash flows of the related operations.
Any resulting reduction in carrying value would be charged
to operating results.
<PAGE>
Income Per Share: 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.
Subscription Revenues: Subscription revenues are generally
collected in advance. These revenues are deferred and
recognized as earned when the related issue is shipped to
the subscriber.
Foreign Exchange Contracts: The Company,
from time to time, enters into forward exchange contracts
as a hedge against its overseas subsidiaries' non-
functional currency asset, liability, and commitment
exposures. Such exposures include anticipated annual
journal subscription revenues, as well as that portion of
the revenues and related receivables on sales of book
products, that are denominated in U.S. dollars, while the
foreign subsidiaries' expense structure is denominated in
their own functional currencies. Realized and unrealized
gains and losses are deferred and taken into income over
the lives of the hedged items if permitted by generally
accepted accounting principles; otherwise the contracts
are marked to market with any gains and losses reflected
in operating expenses. There were no open foreign
exchange contracts, and no gains or losses were deferred
at April 30, 1996 or 1995.
Cash Equivalents: Cash equivalents consist primarily of
highly liquid investments with a maturity of three months
or less and are stated at cost plus accrued interest which
approximates market value.
New Accounting Standards: In March 1995, the Financial
Accounting Standards Board issued 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" for fiscal years beginning after
December 15, 1995. The Company intends to adopt SFAS No.
121 in fiscal year 1997, and does not expect the impact on
its financial position or its results of operations to be
material.
In October 1995, the Financial Accounting Standards
Board issued SFAS No. 123, "Accounting for Stock-Based
Compensation" which requires certain disclosures for
fiscal years beginning after December 15, 1995 for those
companies that will continue to use an intrinsic value
based method for measuring compensation cost in connection
with employee stock compensation plans. The Company
currently plans to continue to use the intrinsic value
based method and will adopt the disclosure requirements in
fiscal 1997.
<PAGE>
Acquisitions
Subsequent to the fiscal 1996 year-end, the Company
acquired a 90% interest in the German based VCH Publishing
Group (VCH) for approximately $100 million in cash. VCH
has annual revenues of approximately $60 million and
publishes nearly 100 scholarly and professional journals,
as well as more than 500 books annually, with a backlist
of 3,000 titles. VCH is a leading scientific, technical,
and professional publisher in chemistry and related
disciplines. The group also includes Akademie Verlag, a
science and humanities publisher; Ernst & Sohn, an
architecture and civil engineering publisher; Academy
Group, a London-based architecture and design publisher;
and Chemical Concepts, an electronic chemical database
publisher.
In fiscal 1996, the Company acquired Clinical
Psychology Publishing Company (CPPC), a publisher of
journals and books in the fields of clinical and
educational psychology; Preservation Press consisting of
architectural heritage books, technical preservation
guides and children's architecture books; and certain
other smaller publishing properties. In addition, the
Company became the publisher of Cancer, the American
Cancer Society's medical journal. The purchase prices
amounted to $4.0 million in cash plus assumed liabilities
of $1.3 million. The excess of cost over the fair value
of the tangible assets acquired amounted to approximately
$3.7 million, of which $.9 million related to acquired
publication rights, $.2 million related to non-compete
agreements, and $2.6 million represented goodwill and
other intangibles which are being amortized over 5 to 15
years.
In fiscal 1995, the Company acquired the publishing
business of Executive Enterprises, Inc., consisting of
books, journals and newsletters for environmental
management, accounting, law and human resource
professionals; ValuSource, which produces specialized
business valuation software for accountants, entrepreneurs
and corporations; the college engineering list of Houghton
Mifflin; the book publishing program of Oliver Wight
Publications, Inc., consisting of general management and
manufacturing/quality titles; the OS/2 computer-book list
of Van Nostrand Reinhold, Inc., and other smaller
publishing lists, for purchase prices aggregating $12.3
million in cash plus assumed liabilities of $2.9 million.
The excess of cost over the fair value of the tangible
assets acquired amounted to approximately $13.5 million,
of which $6.7 million related to acquired publication
rights, $.5 million related to non-compete agreements, and
$6.3 million represented goodwill and other intangibles
which are being amortized over 10 to 15 years.
<PAGE>
In fiscal 1994, the Company acquired the professional
computer book line of QED Information Services in the
United States; Belhaven Press, which publishes earth and
environmental science titles in the United Kingdom; and
the Company's joint venture partner's 30% minority
interest in Protocols, which publishes life science
continuity products, for purchase prices aggregating $8.3
million. The excess of cost over the fair value of the
tangible assets acquired amounted to approximately $6.9
million, of which $.5 million related to acquired
publication rights, $.3 million related to non-compete
agreements, and $6.1 million represented goodwill and
other intangibles which are being amortized over 15 years.
The fiscal 1996 and prior acquisitions have been
accounted for by the purchase method, and the accompanying
financial statements include their results of operations
since their respective dates of acquisition. The proforma
effects on the results of operations for these
acquisitions were not material.
Divested and Restructured Operations
In fiscal 1994, the Company divested its Canadian
high school and Australian primary school and certain
agency lines for aggregate proceeds of $9.2 million,
resulting in a gain of $1.8 million, or $1.3 million after
taxes. In addition, in a cost saving initiative, the
Company restructured and consolidated certain distribution
and information technology support functions which
resulted in an unusual charge of $1.8 million, or $1.1
million after taxes. The net effect of the divestitures
and restructurings amounted to an after-tax gain of $.2
million, or $.01 per share in fiscal 1994.
Inventories
Inventories at April 30 were as follows:
Dollars in thousands 1996 1995
--------------------------
Finished Goods $ 39,616 $ 36,467
Work-in-Process 4,865 5,762
Paper, Cloth and Other 3,026 2,769
--------------------------
47,507 44,998
LIFO Reserve (3,526) (3,463)
--------------------------
Total $ 43,981 $ 41,535
--------------------------
Domestic book inventories aggregating $32.2 and $29.0
million at April 30, 1996 and 1995, respectively, are
stated at cost or market, whichever is lower, using the
last-in, first-out method. All other inventories are
stated at cost or market, whichever is lower, using the
first-in, first-out method.
<PAGE>
Product Development Assets
Product development assets consisted of the following
at April 30:
Dollars in thousands 1996 1995
--------------------------
Composition Costs $ 21,505 $ 16,685
Royalty Advances 8,777 7,824
--------------------------
Total $ 30,282 $ 24,509
--------------------------
Composition costs are net of accumulated amortization of
$27,199 in 1996 and $23,014 in 1995.
Property and Equipment
Property and equipment consisted of the following at
April 30:
Dollars in thousands 1996 1995
--------------------------
Furniture and Equipment $ 45,765 $ 42,974
Leasehold Improvements 12,045 11,382
--------------------------
57,810 $ 54,356
Accumulated Depreciation (34,821) (33,112)
--------------------------
Total $ 22,989 $ 21,244
--------------------------
Intangible Assets
Intangible assets are stated at cost, net of
accumulated amortization, and consisted of the following
at April 30:
Dollars in thousands 1996 1995
--------------------------
Goodwill and Other Intangibles $ 43,752 $ 43,273
Acquired Publication Rights 8,007 9,037
Non-compete Agreements 635 1,041
--------------------------
Total $ 52,394 $ 53,351
--------------------------
Other Accrued Liabilities
Included in other accrued liabilities is accrued
compensation of approximately $13.5 and $13.3 million for
1996 and 1995, respectively.
<PAGE>
Income Taxes
The provision for income taxes was as follows:
Dollars in thousands 1996 1995 1994
---------------------------------
Currently Payable
Federal $ 1,122 $ 1,184 $ 1,471
Foreign 4,142 3,675 4,772
State and local 1,000 314 115
-------------------------------
Total Current Provision 6,264 5,173 6,358
-------------------------------
Deferred Provision
Federal 5,270 1,716 (174)
Foreign 1,687 451 (1,277)
State and Local 897 142 42
-------------------------------
Total Deferred
Provision (Benefit) 7,854 2,309 (1,409)
-------------------------------
Total Provision $ 14,118 $ 7,482 $ 4,949
-------------------------------
The Company's effective income tax rate as a percent
of pre-tax income differed from the U.S. federal statutory
rate as shown below:
1996 1995 1994
------------------------------
U.S. Federal Statutory Rate 35.0% 35.0% 35.0%
State and Local Income Taxes
Net of Federal Income Tax Benefit 3.2 .8 .4
Tax Benefit Derived from FSC Income (3.1) (6.1) (4.8)
Foreign Source Earnings Taxed at
Other than U.S. Statutory Rate 1.1 (1.0) (2.1)
Nondeductible Amortization
of Intangibles .7 1.1 1.7
Other-Net (.5) (.8) (1.2)
-----------------------------
Effective Income Tax Rate 36.4% 29.0% 29.0%
-----------------------------
<PAGE>
Deferred taxes result from timing differences in the
recognition of revenue and expense for tax and financial
reporting purposes. The components of the provision for
deferred taxes were as follows:
Dollars in thousands 1996 1995 1994
--------------------------------------
Depreciation and Amortization $(3,684) $ 1,451 $ 6
Accrued Expenses 6,100 1,197 715
Circulation Costs 1,471 1,614 (1,800)
Provision for Sales Returns
and Doubtful Accounts (1,391) (255) 547
Inventory 578 (1,150) 1,076
Retirement Benefits (66) (224) 116
Divested Operations (3,386) _ _
Long-Term Liabilities 5,102 _ 329
Alternative Minimum Tax Credit
and Other Carryforwards 1,869 (722) (1,770)
Tax Law Rate Change _ _ (470)
Other-Net 1,261 398 (158)
--------------------------------------
Total Deferred Provision (Benefit) $ 7,854 $ 2,309 $ (1,409)
--------------------------------------
<PAGE>
The significant components of deferred tax assets and
liabilities were as follows:
1996 1995
Dollars in thousands Current Long-Term Current Long-Term
--------------------------------------------
Deferred Tax Assets
Reserve for Sales Returns
and doubtful Accounts $ 7,100 $ _ $ 5,603 $ _
Circulation and Other Costs
Capitalized for Taxes _ 2,951 _ 3,624
Retirement and Post-
Employment Benefit _ 2,517 _ 2,510
Alternative Minimum
Tax Credit and Other Carryforwards (252) _ 1,315 _
Accrued Compensation 192 _ 1,592
Accrued Liabilities and Other 30 _ 213
---------------------------------------
Total Deferred Tax Assets 7,070 5,468 8,723 6,134
---------------------------------------
Deferred Tax Liabilities
Depreciation and amortization _ (3,278) _ (6,954)
Divested Operations _ 248 _ (2,156)
Accrued Expenses _ (5,664) _ _
Long-Term Liabilities _ (6,557) _ (83)
Other 607 (2,626) (719) (1,822)
---------------------------------------
Total Deferred Tax liabilities 607 (17,877) (719) (11,015)
---------------------------------------
Net Deferred Tax Asset (Liability) $ 7,677 $(12,409) $ 8,004 $(4,881)
---------------------------------------
In fiscal 1996, the Company received approximately $6
million of net federal, state and local tax refunds
including interest on the favorable resolution of amended
tax return claims of prior years primarily relating to
timing differences. Net income for fiscal 1996 includes
interest income related thereto of $4.4 million, or $2.6
million after taxes, equal to $.16 per share.
<PAGE>
In general, the Company plans to continue to invest
the undistributed earnings of its foreign subsidiaries in
those businesses and therefore, no provision is made for
taxes which would be payable if such earnings were
distributed. At April 30, 1996, the undistributed earnings
of foreign subsidiaries approximated $26.3 million and, if
remitted currently, would result in additional taxes
approximating $1.8 million.
Notes Payable and Debt
The Company has a revolving credit agreement with
three banks providing a line of credit of $50 million
until March 30, 2000. The Company has the option of
borrowing Eurodollars at a rate based on the London
Interbank Offered Rate (LIBOR) or dollars at the banks'
prime rate or at a rate based on the current certificate
of deposit rate. A facility fee ranging from .125% to
.25% depending on certain coverage ratios is charged on
the total commitment. In the event of a change of
control, as defined, the banks have the option to
terminate the agreement and require repayment of any
amounts outstanding. The Company and its subsidiaries also
have other short-term lines of credit aggregating $51
million at various interest rates. Information relating to
short-term lines of credit follows:
Dollars in thousands 1996 1995 1994
-------------------------------------
End of Year
Amount outstanding $ _ $ 621 $ 79
Weighted average interest rate _ 8.5% 7.3%
During the Year
Maximum amount outstanding $ 18,909 $ 1,351 $ 7,390
Average amount outstanding $ 5,960 $ 529 $ 1,184
Weighted average interest rate 7.0% 8.7% 7.0%
-------------------------------------
The Company's revolving credit agreement
contains certain restrictive covenants related to minimum
net worth, funded debt levels, financial ratios, and
restricted payments, including a cumulative limitation for
dividends paid. Under the most restrictive covenant,
approximately $48 million was available for the payment of
future dividends as of April 30, 1996.
Subsequent to the fiscal 1996 year-end, the Company
obtained bridge financing for the VCH acquisition by
entering into a credit agreement with a bank and its
assigns providing a line of credit of $75 million thru
June 11, 1997 on terms similar to the above mentioned
revolving credit agreement.
<PAGE>
In fiscal 1995, the Company prepaid the remaining $26
million of the 10.31% long-term notes outstanding.
Although the Company incurred prepayment costs of $1.6
million, which was included in interest income and other,
the Company benefits by eliminating the negative interest
rate spread between the higher interest rate on the debt
retired compared with the current interest rates being
earned on short-term investments. Also included in
interest income and other were a gain of $1.5 million
related to the sale of shares of Nippon Wilson Learning
which were received in connection with the sale of the
Company's training business in fiscal 1991.
Retirement Plans
The Company and its principal subsidiaries have
contributory and noncontributory retirement plans which
cover substantially all employees. The plans generally
provide for employee retirement between the ages of 60 to
65 and benefits based on length of service and final
average compensation, as defined. In fiscal 1995, the
domestic plan was amended to provide that final average
compensation be based on the highest three consecutive
years ended December 31, 1993. The Company may, but is
not required to, update from time to time the ending date
for the three-year period used to determine final average
compensation. The amendment had the effect of increasing
pension expense for fiscal 1995 by approximately $.2
million. Funds are contributed as necessary to provide for
current service and for a portion of any unfunded
projected benefit obligation. To the extent these
requirements are exceeded by plan assets, a contribution
may not be made in a particular year. Plan assets consist
principally of investments in corporate stocks and bonds
and government obligations.
Pension costs for the defined benefit plans were as follows:
Dollars in thousands 1996 1995 1994
-----------------------------------
Service Cost $ 2,598 $ 2,418 $ 2,095
Interest Cost on Projected
Benefit Obligation 3,757 3,440 3,073
Return on Assets (6,331) (2,937) (3,685)
Net Amortization and Deferral 1,430 (1,764) (731)
-----------------------------------
Net Periodic Pension Expense $ 1,454 $ 1,157 $ 752
-----------------------------------
The net pension expense included above for the
international plans amounted to approximately $1.1, $1.0,
and $1.0 million for 1996, 1995, and 1994, respectively.
<PAGE>
The following table sets forth the status of the
plans and the amounts recognized in the Company's
consolidated statements of financial position.
1996 1995
Domestic Int'l. Domestic Int'l.
Dollars in thousands Plan Plans Plan Plans
------------------------------------------
Fair Value of Plan Assets $ 41,846 $ 19,230 $ 37,340 $ 15,978
Accumulated Benefit Obligation
Vested Benefits (31,789) (13,835) (29,758) (11,579)
Nonvested Benefits (2,728) (99) (2,456) (91)
------------------------------------------
(34,517) (13,934) (32,214) (11,670)
Projected Compensation Increases (809) (2,631) (728) (2,696)
------------------------------------------
Projected Benefit Obligation (35,326) (16,565) (32,942) (14,366)
------------------------------------------
Funded Status 6,520 2,665 4,398 1,612
Unrecognized Net Asset (2,991) (1,433) (3,590) (1,737)
Unrecognized Prior Service Cost 1,018 1,247 105 1,456
Unrecognized Net Loss (Gain) (3,578) (3,118) 362 (2,408)
------------------------------------------
Prepaid (Accrued) Pension Cost $ 969 $ (639) $ 1,275 $ (1,077)
------------------------------------------
The range of assumptions used in 1996 and 1995 were:
1996 1995
Domestic Int'l. Domestic Int'l.
Plan Plans Plan Plans
---------------------------------------
Discount Rate 7.5% 8.5% 7.5% 8.5%
Expected Long-Term Rate of Return
on Plan Assets 8.0% 7.0-8.0% 8.0% 7.0-8.0%
Rate of Increase in Compensation Levels _% 5.5-7.0% _% 5.5-7.0%
---------------------------------------
<PAGE>
The Company has agreements with certain officers and
senior management personnel that provide for the payment
of supplemental retirement benefits during each of the 10
years after the termination of employment. Under certain
circumstances, including a change of control as defined,
the payment of such amounts could be accelerated on a
present value basis. The cost of these benefits is being
charged to expense on a present value basis over the
estimated term of employment and amounted to approximately
$1.0, $.9 and $.7 million in 1996, 1995 and 1994,
respectively.
The Company provides life insurance and health care
benefits, subject to certain dollar limitations and
retiree contributions, for substantially all of its
retired domestic employees. The cost of such benefits is
expensed over the years that the employees render service
and are funded on a pay-as-you-go, cash basis. The
accumulated post-retirement benefit obligation amounted to
$.3 and $.2 million at April 30, 1996 and 1995,
respectively, and the amount expensed in fiscal 1996 and
prior years was not material.
Commitments and Contingencies
The following schedule shows the composition of rent
expense for operating leases:
Dollars in thousands 1996 1995 1994
-----------------------------------------
Minimum Rental $ 12,550 $ 12,202 $ 11,885
Lease Escalation 1,913 1,848 1,756
Less: Sublease Rentals (19) (63) (55)
-----------------------------------------
Total $ 14,444 $ 13,987 $ 13,586
-----------------------------------------
Future minimum payments under operating leases
aggregated $97.2 million at April 30, 1996. Annual
payments under these leases are $14.4, $13.4, $13.1,
$12.9, and $12.4 million for fiscal years 1997 through
2001, respectively. The Company is guarantor through 1998
of certain lease obligations assumed by the buyer of the
domestic training operations which were divested in fiscal
1991, aggregating approximately $2.0 million, which is net
of the 50% guarantee provided by the parent of the buyer.
The Company is involved in routine litigation in the
ordinary course of its business. In the opinion of
management, the ultimate resolution of all pending
litigation will not have a material effect upon the
financial condition or results of operations of the
Company.
Segment Information
The Company operates in one business segment, namely
publishing, and develops, publishes and markets products
in print and electronic formats including textbooks,
professional and reference works, consumer books, and
periodicals including journals and other subscription-
based products, for the educational, scientific,
technical, professional and trade markets around the
world.
<PAGE>
The Company's international operations are located in
Europe, Canada, Australia and Asia. The following table
presents revenues, operating income and identifiable
assets for the domestic and international operations.
Dollars in thousands 1996 1995 1994
------------------------------------
Revenues
Domestic $ 279,998 $ 258,464 $ 229,061
International 112,299 102,907 89,235
Interarea transfers (29,593) (30,280) (24,007)
------------------------------------
Total $ 362,704 $ 331,091 $ 294,289
------------------------------------
Operating Income <F1>
Domestic $ 20,180 $ 15,242 $ 8,957
International 12,775 11,637 9,926
------------------------------------
Total $ 32,955 $ 26,879 $ 18,883
------------------------------------
Identifiable Assets
Domestic $ 178,442 $ 166,478 $ 144,624
International 50,775 46,593 41,859
Corporate 55,284 34,410 57,457
--------------------------------------
Total $ 284,501 $ 247,481 $ 243,940
--------------------------------------
[FN]
<F1> Includes a pretax unusual items gain of $1,819 in
international operations and a pretax unusual items charge
of $1,768 in domestic operations in 1994.
Transfers between geographic areas are generally made
at a fixed discount from list price and principally
represent sales from the United States to the Company's
international operations. Export sales from the United
States to unaffiliated international customers amounted to
approximately $47.5, $41.2 and $33.9 million in 1996, 1995
and 1994, respectively. The pre-tax income for
consolidated international operations was approximately
$13.0, $11.6 and $10.0 million in 1996, 1995 and 1994,
respectively.
Included in operating and administrative expenses
were net foreign exchange gains (losses) of approximately
$.2, $(.2) and $.2 million in 1996, 1995 and 1994,
respectively.
Changes in the cumulative translation adjustment account were as
follows:
Dollars in thousands 1996 1995
------------------------------
Balance, May 1 $ (2,411) $ (3,805)
Aggregate Translation
Adjustments for the Year (675) 1,394
------------------------------
Balance, April 30 $ (3,086) $ (2,411)
------------------------------
<PAGE>
Stock Option and Other Plans
Options were granted on the Company's Class A Common
stock and are exercisable, in part or in full, over a
maximum period of 10 years from the date of grant under
various stock option plans. Outstanding options were
granted at prices not less than 100% of the fair market
value of the stock at the date the options were granted.
Under certain circumstances relating to a change of
control, as defined, the right to exercise options
outstanding could be accelerated.
Option activity under existing plans was as follows:
1996 1995
-----------------------------
Outstanding at Beginning of Year
1,070,038 878,192
Granted 133,224 285,800
Exercised (157,099) (69,402)
Canceled (17,500) (24,552)
------------------------------
Outstanding at End of Year 1,028,663 1,070,038
------------------------------
Exercisable at End of Year 570,170 595,754
Available for Future Grant 1,229,592 1,356,568
Price Range of Options
Exercised $ 6.75 to 28.25 $ 7.00 to 20.69
Price Range of Options
Outstanding $ 6.75 to 31.63 $ 6.75 to 26.25
Under the terms of the Company's executive long-term
incentive plans, upon the achievement of certain three-
year financial performance based targets, awards will be
payable in cash and/or restricted shares of the Company's
Class A Common stock at the end of the plan cycle. The
restricted shares vest equally as to 50% on the first and
second anniversary date after the date the award is
earned. The amount charged to expense for such plans was
approximately $.9, $.8 and $.7 million in 1996, 1995 and
1994, respectively. Restricted shares earned under the
plans amounted to 8,650, 11,084 and 33,640 in 1996, 1995
and 1994, respectively.
In both fiscal 1996 and 1995, the Company granted in
each year a total of 90,000 restricted shares of the
Company's Class A Common stock to four key executive
officers in connection with their employment agreements.
The restricted shares vest one-third at the end of the
third, fourth and fifth years, respectively, following the
date of the grant. Under certain circumstances relating
to a change of control or termination, as defined, the
restrictions would lapse and shares would vest earlier.
Compensation expense aggregating $4.4 million is being
charged to earnings ratably over five years, or sooner if
vesting is accelerated, from the dates of grant, and
amounted to $.9 and $.3 million in fiscal 1996 and 1995,
respectively.
<PAGE>
Under the terms of the Company's Director Stock Plan,
each member of the Board of Directors who is not an
employee of the Company is awarded Class A Common stock
equal to 50% of the board member's cash compensation,
based on the market value of the stock on the date of the
shareholders' meeting. Directors may also elect to
receive all or a portion of their cash compensation in
stock. Compensation cost related to this plan charged to
expense amounted to approximately $.2 million in 1996,
1995 and 1994, respectively. Under this plan 5,752, 8,662
and 13,692 shares were issued in 1996, 1995, and 1994,
respectively.
Capital Stock and Changes in Capital Accounts
Preferred stock consists of 2,000,000 authorized
shares with $1 par value. To date, no preferred shares
have been issued. Common stock consists of 30,000,000
authorized shares of Class A Common, $1 par value, and
12,000,000 authorized shares of Class B Common, $1 par
value.
Each share of the Company's Class B Common stock is
convertible into one share of Class A Common stock. The
holders of Class A stock are entitled to elect 30% of the
entire Board of Directors and the holders of Class B stock
are entitled to elect the remainder. On all other
matters, each share of Class A stock is entitled to one-
tenth of one vote and each share of Class B stock is
entitled to one vote.
<PAGE>
Changes in selected capital accounts were as follows:
Additional
Common Stock Paid-In Treasury
Dollars in thousands Class A Class B Capital Stock
--------------------------------------------
Balance
May 1, 1993 $ 7,873 $ 2,102 $ 29,114 $(31,159)
Director Stock Plan Issuance _ _ 64 94
Executive Long-Term
Incentive Plan Issuance _ _ 174 230
Exercise of Stock Options 161 _ 2,852 (198)
Other 11 (11) 804 _
----------------------------------------------
Balance
April 30, 1994 $ 8,045 $ 2,091 $ 33,008 $ (31,033)
Restricted Share Issuance _ _ 1,266 618
Director Stock Plan Issuance _ _ 124 59
Executive Long-Term
Incentive Plan Issuance _ _ 162 76
Exercise of Stock Options 35 _ 601 (46)
Purchase of Treasury Shares _ _ _ (212)
Other 7 (7) 455 _
Retroactive effect of
2 for 1 stock split 8,086 2,084 (10,170) _
----------------------------------------------
Balance
April 30, 1995 $ 16,173 $ 4,168 $ 25,446 $(30,538)
Director Stock Plan Issuance 124 41
Executive Long-Term
Incentive Plan Issuance 182 60
Purchase of Treasury Shares (3,323)
Restricted Share Issuance 3,054 948
Issuance of Shares Under
Employee Savings Plan 674 208
Exercise of Stock Options 157 1,354 (889)
Other 82 (82) 781 _
---------------------------------------------
Balance April 30, 1996 $ 16,412 $ 4,086 $ 31,615 $(33,493)
---------------------------------------------
<PAGE>
Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Results of Operations:
Fiscal 1996 Compared to Fiscal 1995
In 1996, the Company continued to expand its global
operations and grow its core businesses, while at the same
time improving its profitability, cash flows and return on
investment.
The Company invested a total of $4.0 million during
the year to acquire the Clinical Psychology Publishing
Company (CPPC), a publisher of journals and books in the
fields of clinical and educational psychology;
Preservation Press consisting of architectural heritage
books, technical preservation guides and children's
architecture books; and certain other smaller publishing
properties. The Company also became the publisher of
Cancer, the American Cancer Society's medical journal.
Subsequent to the fiscal 1996 year-end, the Company
acquired a 90% interest in the German based VCH Publishing
Group (VCH) for approximately $100 million in cash. VCH
has annual revenues of approximately $60 million and
publishes nearly 100 scholarly and professional journals,
as well as more than 500 books annually, with a backlist
of 3,000 titles. VCH is a leading scientific, technical,
and professional publisher in chemistry and related
disciplines. The group also includes Akademie Verlag, a
science and humanities publisher; Ernst & Sohn, an
architecture and civil engineering publisher; Academy
Group, a London-based architecture and design publisher;
and Chemical Concepts, an electronic chemical database
publisher. The Company currently anticipates that the
acquisition will dilute income per share for approximately
two years following the acquisition. The extent and
duration of the dilution will depend primarily on the
amortization of intangibles, financing costs, and VCH's
future operating results.
Revenues for the year advanced 10% to $362.7 million
led by the Company's worldwide scientific, technical and
medical journal programs, college texts and the
professional/trade computer and business book lines. The
domestic scientific, technical and medical division
registered a 14% increase in revenues and the domestic
professional/trade division revenues increased 9% over the
prior year. The domestic college division again
outperformed the industry as a whole with a 9% increase in
revenues over the prior year. The international divisions
also registered a 9% improvement in revenues paced by
European and Asian operations.
Cost of sales as a percentage of revenues was 34.9%
in 1996 compared with 34.2% in the prior year primarily
reflecting increased paper costs.
<PAGE>
Operating and administrative expenses increased by
6.2% but declined as a percentage of revenues to 54.7% in
1996 from 56.5% as the rate of growth in expenses was
contained at less than the revenue growth rate.
Operating income increased 23% over the prior year to
$33.0 million primarily due to the effects of the higher
revenue base coupled with a cost contained infrastructure.
Operating income margins improved to 9.1% of revenue from
8.1% in the prior year.
Net interest income increased by $6.9 million over
the prior year primarily as a result of interest received
on the favorable resolution of amended tax return claims
amounting to $4.4 million, or $2.6 million after taxes,
equal to $.16 per share. The improvement was also due to
the prepayment of high cost long-term debt at the end of
fiscal 1995.
The effective tax rate was 36.4% compared with 29.0%
in the prior year due to higher effective tax rates on
state, local and foreign sourced earnings.
Results of Operations:
Fiscal 1995 Compared to Fiscal 1994
The Company invested $12.3 million during the year to
acquire the publishing business of Executive Enterprises,
Inc., consisting of books, journals and newsletters for
environmental management, accounting, law and human
resource professionals; ValuSource, which produces
specialized business valuation software for accountants,
entrepreneurs and corporations; the college engineering
list of Houghton Mifflin; the book publishing program of
Oliver Wight Publications, Inc., consisting of general
management and manufacturing/quality titles; and the OS/2
computer-book list of Van Nostrand Reinhold, Inc.
Revenues for the year advanced 13% to $331.1 million
led by the domestic professional and trade division, where
revenues increased 20% based on the strength of the
business and computer-book lines. The domestic
scientific, technical and medical division registered a
10% improvement attributable to increased journal
revenues. The domestic college division increased its
market share and outperformed the industry as a whole in
what was considered a difficult market environment.
International revenues reflected significant increases
over the prior year led by the Company's European and
Asian operations.
Cost of sales as a percentage of revenues was 34.2%
in 1995 compared with 33.9% in the prior year primarily
reflecting increased paper costs.
<PAGE>
Operating and administrative expenses as a percentage
of revenues declined to 56.5% in 1995 from 57.8% as the
rate of growth in expenses was contained at less than the
revenue growth rate. This improvement was offset to some
degree by unfavorable foreign exchange rates.
Operating income increased 42% over the prior year to
$26.9 million as revenues increased at a greater rate than
operating expenses.
Interest expense declined by $.8 million due to the
repayment of long-term debt. The effective tax rate was
29% in both years due to the benefits derived from lower
taxed foreign source earnings.
Net income increased 51% over 1994 due to the
operating income gains and lower interest expense.
Liquidity and Capital Resources
The Company's cash and cash equivalents balance was
$55.3 million at the end of fiscal 1996, compared with
$34.4 at the end of the prior year. Cash provided by
operating activities was $68.1 million in fiscal 1996, an
increase of $16.2 million over the prior year, of which
approximately $6 million resulted from tax refunds and
interest received on the favorable resolution of amended
tax return claims of prior years.
The Company's operating cash flow is strongly
affected by the seasonality of its domestic college
business and receipts from its journal subscriptions.
Receipts from journal subscriptions occur primarily during
November and December from companies commonly referred to
as independent subscription agents. These companies
facilitate the journal ordering process by consolidating
the subscription orders/billings of each subscriber.
Monies are collected in advance from subscribers by the
subscription agents and are remitted to the journal
publishers, including the Company, generally prior to the
commencement of the subscription. Remittances are highly
dependent upon the financial position and liquidity of
such companies.
Sales to the domestic college market tend to be
concentrated in June through August, and again in November
through January. Cash disbursements for inventory are
relatively large during the spring in anticipation of
these college sales. The Company normally requires
increased funds for working capital from the beginning of
the fiscal year into September. Subject to variations
that may be caused by fluctuations in inventory
accumulation or in patterns of customer payments, the
Company's normal operating cash flow is not expected to
vary materially in the near term.
<PAGE>
To finance its short-term seasonal working capital
requirements and its growth opportunities, the Company has
adequate cash and cash equivalents available, as well as
both domestic and foreign short-term lines of credit, as
more fully described in the note to the consolidated
financial statements entitled "Notes Payable and Debt".
The acquisition of the VCH Publishing Group will be
financed by new debt facilities.
The capital expenditures of the Company consist
primarily of investments in product development and
property and equipment. Capital expenditures for fiscal
1997 are expected to increase approximately 10% over 1996,
primarily representing increased investments in product
development, including electronic media products, and
computer equipment upgrades to support the higher volume
of business to ensure efficient, quality-driven customer
service. These investments will be funded primarily from
internal cash generation or from the liquidation of cash
equivalents.
Effects of Inflation and Cost Increases
Although the impact of inflation is somewhat
minimized, as the business does not require a high level
of investment in property and equipment, the Company does
experience continuing cost increases reflecting, in part,
general inflationary factors. Fiscal 1996 and 1995
witnessed an increase in paper prices after years of a
stable to decreasing price environment. To mitigate the
effects of paper and other cost increases, the Company has
taken a number of initiatives including various steps to
lower overall production and manufacturing costs including
substitution of paper grades. In addition, selling prices
have been selectively increased as competitive conditions
permit. The Company anticipates that it will be able to
continue this approach in the future.
New Accounting Standards
In March 1995, the Financial Accounting Standards
Board issued 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"
for fiscal years beginning after December 15, 1995. The
Company intends to adopt SFAS No. 121 in fiscal year 1997,
and does not expect the impact on its financial position
or its results of operations to be material.
In October 1995, the Financial Accounting Standards
Board issued SFAS No. 123, "Accounting for Stock-Based
Compensation" which requires certain disclosures for
fiscal years beginning after December 15, 1995 for those
companies that will continue to use an intrinsic value
based method for measuring compensation cost in connection
with employee stock compensation plans. The Company
currently plans to continue to use the intrinsic value
based method and will adopt the disclosure requirements in
fiscal 1997.
<PAGE>
Results by Quarter (Unaudited)
John Wiley & Sons, Inc. and Subsidiaries
Dollars in thousands except per share data
1996 1995
----------------------------
Revenues
First quarter $ 88,092 $ 80,787
Second quarter 86,831 78,558
Third quarter 97,409 91,930
Fourth quarter 90,372 79,816
----------------------------
Fiscal year $ 362,704 $ 331,091
---------------------------
Operating Income
First quarter $ 11,496 $ 10,450
Second quarter 7,119 5,652
Third quarter 10,710 10,240
Fourth quarter 3,630 537
---------------------------
Fiscal year $ 32,955 $ 26,879
---------------------------
Net Income
First quarter $ 7,118 $ 6,067
Second quarter 4,240 3,082
Third quarter1 9,835 6,530
Fourth quarter 3,487 2,632
--------------------------
Fiscal year $ 24,680 $ 18,311
--------------------------
Income Per Share
Primary and Fully Diluted
First quarter $ .43 $ .37
Second quarter .26 .19
Third quarter1 .59 .40
Fourth quarter .21 .16
Fiscal year $ 1.49 $ 1.12
1 Includes interest income after taxes in 1996 of $2.6
million, equal to $.16 per share, relating to interest
received on the favorable resolution of amended tax
return claims.
<PAGE>
The Company's Class A and Class B shares are listed
on the New York Stock Exchange under the symbols JWA and
JWB, respectively. Dividends per share and the market
price range by fiscal quarter for the past two fiscal
years were as follows:
Class A Common Stock Class B Common Stock
Divi- Market Price Divi- Market Price
dends High Low dends High Low
--------------------------------------------------------
1996
First quarter $.0875 $28.75 $27.13 $.0775 $29.00 $27.75
Second quarter .0875 30.50 27.13 .0775 30.00 28.00
Third quarter .0875 35.00 28.88 .0775 34.75 28.75
Fourth quarter .0875 35.00 29.63 .0775 34.63 29.50
--------------------------------------------------------
1995
First quarter $.0775 $21.63 $20.50 $.06875 $21.25 $20.50
Second quarter .0775 22.13 20.13 .06875 21.75 20.38
Third quarter .0775 25.75 21.38 .06875 25.63 21.38
Fourth quarter .0775 28.00 25.13 .06875 27.75 25.25
--------------------------------------------------------
As of April 30, 1996, the approximate number of
holders of the Company's Class A and Class B Common Stock
were 1,278 and 200, respectively, based on the holders of
record and other information available to the Company.
The Company's revolving credit agreements contain
certain restrictive covenants related to the payment of
dividends. Under the most restrictive covenant,
approximately $48 million was available for the payment of
future dividends. Subject to the foregoing, the Board of
Directors considers quarterly the payment of cash
dividends based upon its review of earnings, the financial
position of the Company and other relevant factors.
Selected Financial Data
John Wiley & Sons, Inc. and Subsidiaries
<TABLE>
Dollars in thousands except per share data
<CAPTION>
For the years ended April 30
1996 1995 1994 1993 1992
----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $ 362,704 $ 331,091 $ 294,289 $ 272,894 $ 248,151
Income Before
Extraordinary Item <F1> 24,680 18,311 12,117 7,718 3,576
Extraordinary Item _ _ _ _ (495)
Net Income1 24,680 18,311 12,117 7,718 3,081
Working Capital 31,515 11,241 35,059 31,804 30,800
Total Assets 284,501 247,481 243,940 220,593 213,744
Long-Term Debt _ _ 26,000 32,000 36,000
Shareholders' Equity 117,982 98,832 82,330 71,276 69,552
----------------------------------------------------
Per Share Data
Income Before
Extraordinary Item <F1>
Primary and Fully Diluted 1.49 1.1 2 .76 .50 .23
Net Income <F1>
Primary and Fully Diluted 1.49 1.12 .76 .50 .20
Cash Dividends
Class A Common .35 .31 .275 .275 .275
Class B Common .31 .275 .245 .245 .245
Book Value-End of Year 7.32 6.21 5.23 4.63 4.56
<FN>
<F1>
Fiscal 1996 includes interest income after taxes of $2.6 million, or
$.16 per share, received on the favorable resolution of amended tax
return claims.
</FN>
</TABLE>
<PAGE>
Schedule II
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED APRIL 30, 1996, 1995 AND 1994
(Dollars in Thousands)
<TABLE>
<CAPTION> Balance at Additions Deductions Balance
Beginning Charged to From at End of
Description of Period Income Reserves Period
-------------------------------------------------
<S> <C> <C> <C> <C>
Year Ended April 30, 1996
Allowance for sales
returns <F1> $ 17,519 $ 17,744 $ 14,477 $ 20,786
Allowance for doubtful
accounts $ 5,114 $ 5,499 $ 4,564<F2> $ 6,049
Year Ended April 30, 1995
Allowance for sales
returns <F1> $ 15,558 $ 16,110 $ 14,149 $ 17,519
Allowance for doubtful
accounts $ 4,385 $ 4,014 $ 3,285<F2>$ 5,114
Year Ended April 30, 1994
Allowance for sales
returns <F1> $ 13,424 $ 13,470 $ 11,336 $ 15,558
Allowance for doubtful
accounts $ 3,409 $ 4,081 $ 3,105<F2>$ 4,385
<FN>
<F1> Allowance for sales returns represents anticipated returns net of
inventory and royalty costs.
<F2> Accounts writen off, less recoveries.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, the Company has
duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
JOHN WILEY & SONS, INC.
----------------------------------------
(Company)
By: /s/ Charles R. Ellis
----------------------------------------
Charles R. Ellis
President and Chief Executive Officer
By: /s/ Robert D. Wilder
----------------------------------------
Robert D. Wilder
Executive Vice President and
Chief Financial & Operations Officer
By: /s/ Peter W. Clifford
----------------------------------------
Peter W. Clifford
Senior Vice President, Finance
Corporate Controller
& Chief Accounting Officer
Dated: June 20, 1996
<PAGE>
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by
the following persons constituting directors of the
Company on June 20, 1996.
- ----------------------------- ----------------------------
Franklin E. Agnew Chester O. Macey
/s/ Warren J. Baker /s/ William R. Sutherland
- ----------------------------- ----------------------------
Warren J. Baker William R. Sutherland
/s/ Charles R. Ellis
- ----------------------------- ----------------------------
Charles R. Ellis Thomas M. Taylor
/s/ H. Allen Fernald /s/ Leo J. Thomas
- ----------------------------- ----------------------------
H. Allen Fernald Leo J. Thomas
/s/ Gary J. Fernandes /s/ Bradford Wiley II
- ----------------------------- ----------------------------
Gary J. Fernandes Bradford Wiley II
/s/ Larry Franklin /s/ Deborah E. Wiley
- ----------------------------- ----------------------------
Larry Franklin Deborah E. Wiley
/s/ John S. Herrington /s/ Peter Booth Wiley
- ----------------------------- ----------------------------
John S. Herrington Peter Booth Wiley
Exhibit 3.2
------------
Certificate of Amendment
of the
Certificate of Incorporation
of
JOHN WILEY & SONS, INC.
Under Section 805 of the Business Corporation Law
-------------------------------------------------------
It is hereby certified that:
FIRST: The name of the corporation is JOHN WILEY & SONS, INC.
SECOND: The Certificate of Incorporation of the corporation
was filed by the Department of State on January 15,
1904 under the name of JOHN WILEY & SONS.
THIRD: The amendment of the Certificate of Incorporation
of the corporation effected by this certificate of
amendment is as follows: To increase the aggregate
number of shares of capital stock which the
corporation shall have authority to issue from
Sixteen Million (16,000,000) to Forty-four Million
(44,000,000) by authorizing an additional Twenty
Million (20,000,000) shares of Class A Common Stock
with a par value of One Dollar ($1.00) per share
and an additional Eight Million (8,000,000) shares
of Class B Common Stock with a par value of One
Dollar ($1.00) per share.
FOURTH: To accomplish the foregoing amendment, Article
THIRD of the Certificate of Incorporation, relating
to the number of shares of all classes of capital
stock which the corporation shall have authority to
issue, is hereby amended to read as follows: The
total number of shares of all classes of capital
stock which the corporation shall have authority to
issue is Forty-four Million (44,000,000) shares,
consisting of Two Million (2,000,000) shares of
Preferred Stock with a par value of One Dollar
($1.00) per share, Thirty Million (30,000,000)
shares of Class A Common Stock with a par value of
One Dollar ($1.00) per share, and Twelve Million
(12,000,000) shares of Class B Common Stock with a
par value of One Dollar ($1.00) per share.
<PAGE>
FIFTH: The foregoing amendment of the Certificate of
Incorporation of the corporation was authorized by
a vote of the Board of Directors at a meeting held
on June 22, 1995, followed by the vote of the
holders of at least a majority of all of the
outstanding shares of the corporation entitled to
vote on the said amendment of the Certificate of
Incorporation at a meeting of the shareholders held
on September 21, 1995.
IN WITNESS WHEREOF, we have subscribed this document
on the date set forth below and do hereby affirm, under the
penalties of perjury, that the statements contained therein
have been examined by us and are true and correct.
October 13, 1995
/s/ Robert D. Wilder
-----------------------
Robert D. Wilder
Senior Vice President and
Chief Financial Officer
/s/ Josephine Bacchi
-----------------------
Josephine Bacchi
Corporate Secretary
Exhibit 10.2
---------------
CONFORMED COPY
$75,000,000
CREDIT AGREEMENT
dated as of
June 12, 1996
among
John Wiley & Sons, Inc.,
The Banks From Time to Time Parties Hereto
and
Morgan Guaranty Trust Company of New York,
as Agent
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions 1
SECTION 1.02. Accounting Terms and
Determinations 14
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend 15
SECTION 2.02. Method of Borrowing 15
SECTION 2.03. Notes 17
SECTION 2.04. Maturity of Loans 17
SECTION 2.05. Interest Rates 17
SECTION 2.06. Facility Fees 21
SECTION 2.07. Optional Termination
or Reduction of Commitments 22
SECTION 2.08. Mandatory
Termination of Commitments 22
SECTION 2.09. Optional Prepayments 22
SECTION 2.10. General Provisions
as to Payments 22
SECTION 2.11. Funding Losses 23
SECTION 2.12. Computation of
Interest and Fees 23
SECTION 2.13. Withholding Tax
Exemption 24
SECTION 2.14. Change of Control 24
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness 26
SECTION 3.02. Borrowings 27
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence
and Power 28
SECTION 4.02. Corporate and
Governmental Authorization; No
Contravention 28
SECTION 4.03. Binding Effect 29
SECTION 4.04. Financial
Information 29
SECTION 4.05. Litigation 29
SECTION 4.06. Compliance with
ERISA 30
SECTION 4.07. Taxes 30
SECTION 4.08. Subsidiaries 30
SECTION 4.09. Not an Investment
Company 31
SECTION 4.10. Status of Notes 31
SECTION 4.11. Environmental
Matters 31
ARTICLE V
COVENANTS
SECTION 5.01. Information 31
SECTION 5.02. Payment of Taxes;
Insurance; Maintenance of Corporate
Existence 34
SECTION 5.03. Maintenance of
Property; Conduct of Business 35
SECTION 5.04. Compliance with Laws 35
SECTION 5.05. Inspection of
Property, Books and Records 36
SECTION 5.06. Limitation on Liens 36
SECTION 5.07. Consolidations,
Mergers and Sales of Assets 38
SECTION 5.08. Use of Proceeds 38
SECTION 5.09. Subsidiary Debt 38
SECTION 5.10. Consolidated
Shareholders' Equity 38
SECTION 5.11. Debt to Subsidiaries 38
SECTION 5.12. EBIT/TD Ratio 38
SECTION 5.13. Restricted Payments
and Guarantees 39
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default 39
SECTION 6.02. Notice of Default 42
<PAGE>
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and
Authorization 42
SECTION 7.02. Agent and Affiliates 42
SECTION 7.03. Action by Agent 42
SECTION 7.04. Consultation with
Experts 42
SECTION 7.05. Liability of Agent 42
SECTION 7.06. Indemnification 43
SECTION 7.07. Credit Decision 43
SECTION 7.08. Successor Agent 43
SECTION 7.09. Agent's Fee 44
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for
Determining Interest Rate
Inadequate or Unfair 44
SECTION 8.02. Illegality 45
SECTION 8.03. Increased Cost and
Reduced Return 45
SECTION 8.04. Base Rate Loans
Substituted for Affected Fixed Rate
Loans 47
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices 48
SECTION 9.02. No Waivers 48
SECTION 9.03. Expenses;
Documentary Taxes; Indemnification 48
SECTION 9.04. Sharing of Set-Offs 49
SECTION 9.05. Amendments and
Waivers 50
SECTION 9.06. Successors and
Assigns 50
SECTION 9.07. Collateral 52
SECTION 9.08. New York Law 52
SECTION 9.09. Counterparts;
Integration 52
<PAGE>
Exhibit A - Note
Exhibit B - Opinion of Counsel for the Borrower
<PAGE>
CREDIT AGREEMENT
AGREEMENT dated as of June 12, 1996 among JOHN
WILEY & SONS, INC., the BANKS from time to time parties
hereto and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms,
as used herein, have the following meanings:
"Acquisition" means the Acquisition by the
Borrower of 90% of the outstanding capital stock of VCH
Publishing Group from Pallas Investment Group, the German
Chemical Society and the German Pharmaceutical Society.
"Adjusted CD Rate" has the meaning set forth in
Section 2.05(b).
"Adjusted London Interbank Offered Rate" has the
meaning set forth in Section 2.05(c).
"Administrative Questionnaire" means, with respect
to each Bank, the administrative questionnaire in the form
submitted to such Bank by the Agent and submitted to the
Agent (with a copy to the Borrower) duly completed by such
Bank.
"Agent" means Morgan Guaranty Trust Company of New
York in its capacity as agent for the Banks hereunder, and
its successors in such capacity.
"Applicable Lending Office" means, with respect to
any Bank, (i) in the case of its Domestic Loans, its
Domestic Lending Office and (ii) in the case of its
Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Applicable Margin" has the meaning set forth in
Section 2.05(e).
"Assessment Rate" has the meaning set forth in
Section 2.05(b).
"Assignee" has the meaning set forth in Section
9.06(c).
<PAGE>
"Bank" means Morgan, each Assignee which becomes a
Bank pursuant to Section 9.06(c), and their respective
successors.
"Base Rate" means, for any day, a rate per annum
equal to the higher of (i) the Prime Rate for such day and
(ii) the sum of 1/2 of 1% plus the Federal Funds Rate for
such day.
"Base Rate Loan" means a Loan to be made by a Bank
as a Base Rate Loan pursuant to the applicable Notice of
Borrowing or Article VIII.
"Benefit Arrangement" means at any time an
employee benefit plan within the meaning of Section 3(3) of
ERISA which is not a Plan or a Multiemployer Plan and which
is maintained or otherwise contributed to by any member of
the ERISA Group.
"Board" means the Board of Directors of the
Borrower or a committee of directors lawfully exercising the
relevant powers of the Board.
"Borrower" means John Wiley & Sons, Inc., a New
York corporation, and its successors.
"Borrower's 1995 Form 10-K" means the Borrower's
annual report on Form 10-K for the fiscal year ended April
30, 1995, as filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934.
"Borrowing" means a borrowing hereunder consisting
of Loans made to the Borrower at the same time by the Banks
pursuant to Article II. A Borrowing is a "Domestic
Borrowing" if such Loans are Domestic Loans or a
"Euro-Dollar Borrowing" if such Loans are Euro-Dollar Loans.
A Domestic Borrowing is a "CD Borrowing" if such Domestic
Loans are CD Loans or a "Base Rate Borrowing" if such
Domestic Loans are Base Rate Loans.
"Capital Lease" means any lease of property which,
in accordance with GAAP, should be capitalized on the
lessee's balance sheet; and "Capital Lease Obligation" means
the amount of the liability which should be so capitalized.
"CD Base Rate" has the meaning set forth in
Section 2.05(b).
"CD Loan" means a Loan to be made by a Bank as a
CD Loan pursuant to the applicable Notice of Borrowing.
<PAGE>
"College Publishing Segment" means the business
segment of the Borrower and its Subsidiaries attributable to
textbooks and other related materials for colleges and
universities.
"Commitment" means (i) with respect to each Bank
listed on the signature pages hereof, the amount set forth
opposite its name on the signature pages hereof and (ii)
with respect to each Assignee or other Person which becomes
a Bank pursuant to Section 9.06(c), the amount of Commitment
thereby assumed by it, in each case as such amount may be
reduced from time to time pursuant to Sections 2.07 or
9.06(c) or increased from time to time pursuant to Section
9.06(c).
"Consolidated EBIT" means, for any fiscal period,
Consolidated Net Income for such period plus, to the extent
deducted in determining Consolidated Net Income for such
period, the aggregate amount of (i) Consolidated Interest
Charges and (ii) provision for income taxes.
"Consolidated Interest Charges" means, for any
fiscal period, the aggregate amount of interest charges,
whether expensed or capitalized, incurred or accrued by the
Borrower and its Consolidated Subsidiaries during such
period.
"Consolidated Net Income" means the consolidated
net income of the Borrower and its Consolidated
Subsidiaries, determined in accordance with GAAP, excluding
(A) the proceeds of any life insurance policy to
the extent, if any, that such proceeds have been
included in consolidated net income,
(B) after-tax gains arising from (1) the sale or
other disposition of any assets (other than sales in
the Ordinary Course of Business) to the extent that the
aggregate amount of the gain exceeds the aggregate
amount of losses from the sale, abandonment or other
disposition of assets (other than sales in the Ordinary
Course of Business), (2) any write-up of assets to the
extent, if any, such write-up has been included in
consolidated net income, or (3) the acquisition of
outstanding Debt securities of the Borrower or any
Subsidiary,
(C) any amount representing any interest in the
undistributed earnings of any other Person (other than
a Subsidiary),
<PAGE>
(D) any earnings, prior the date of acquisition,
of any Person acquired in any manner, and any earnings
of any Subsidiary accrued prior to becoming a
Subsidiary, to the extent, if any, that any such
earnings have been included in consolidated net income,
(E) any earnings of a successor to or transferee
of the assets of the Borrower prior to becoming such
successor or transferee, to the extent, if any, that
any such earnings have been included in consolidated
net income,
(F) any deferred credit (or amortization of a
deferred credit) arising from the creation of the
negative goodwill pursuant to the acquisition of any
Person, and
(G) any portion of the net income of any
Subsidiary which for any reason is unavailable for
payment of dividends.
"Consolidated Net Worth" means Consolidated
Shareholders' Equity minus the aggregate net book value of
the following to the extent, if any, that such items were
included in consolidated assets or deducted from
consolidated liabilities in computing Consolidated
Shareholders' Equity:
(A) the amount (if any) by which the sum of
(1) the aggregate amount of Investments
described in subsection (C) of the definition of
Restricted Investments plus
(2) other Restricted Investments made
after May 1, 1994,
exceeds $10,000,000, and
(B) any write-up of assets (other than current
assets and other than any write-up arising from the
acquisition of any Person in the Ordinary Course of
Business) made after May 1, 1994.
"Consolidated Shareholders' Equity" means the
consolidated total shareholders' equity (including capital
stock, additional paid-in capital, retained earnings and any
accumulated translation adjustment as reduced by treasury
stock) in the Borrower and its Consolidated Subsidiaries,
determined in accordance with GAAP.
<PAGE>
"Consolidated Subsidiary" means at any date any
Subsidiary or other entity the accounts of which would be
consolidated with those of the Borrower in its consolidated
financial statements if such statements were prepared as of
such date.
"Debt" means all obligations for borrowed money,
including (A) any obligation owed for all or any part of the
purchase price of property or other assets or for services
or for the cost of property or other assets constructed or
of improvements thereto, other than trade accounts payable
included in current liabilities and incurred in respect of
property or services purchased in the ordinary course of
business that are not more than 90 days overdue, (B) any
Capital Lease Obligation, (C) any obligation (whether fixed
or contingent) to reimburse any bank or other Person in
respect of amounts paid or payable under a standby letter of
credit and (D) any Guarantee with respect to Debt (of the
kind otherwise described in this definition) of another
Person.
"Default" means any condition or event which
constitutes an Event of Default or which with the giving of
notice or lapse of time or both would, unless cured or
waived, become an Event of Default.
"Derivatives Obligations" of any Person means all
obligations of such Person in respect of any rate swap
transaction, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity
or equity index option, bond option, interest rate option,
foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any
other similar transaction (including any option with respect
to any of the foregoing transactions) or any combination of
the foregoing transactions.
"Designated Business" means the College Publishing
Segment or the Scientific and Technical Publishing Segment.
"Domestic Business Day" means any day except a
Saturday, Sunday or other day on which commercial banks in
New York City are authorized by law to close.
<PAGE>
"Domestic Lending Office" means, as to each Bank,
its office located at its address set forth in its
Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as
its Domestic Lending Office by notice to the Borrower and
the Agent; provided that any Bank may so designate separate
Domestic Lending Offices for its Base Rate Loans, on the one
hand, and its CD Loans, on the other hand, in which case all
references herein to the Domestic Lending Office of such
Bank shall be deemed to refer to either or both of such
offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate
Loans or both.
"Domestic Reserve Percentage" has the meaning set
forth in Section 2.05(b).
"EBIT/TD Ratio" means at any date the ratio
(expressed as a percentage) of (i) Consolidated EBIT for the
four consecutive fiscal quarters of the Borrower and its
Consolidated Subsidiaries ending on such date to (ii) Total
Debt at such date.
"Effective Date" means the date this Agreement
becomes effective in accordance with Section 3.01.
"Environmental Laws" means any and all federal,
state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment
or to emissions, discharges or releases of pollutants,
contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air,
surface water, ground water, or land, or otherwise relating
to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products,
chemicals or industrial, toxic or hazardous substances or
wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA Group" means the Borrower, any Subsidiary
and all members of a controlled group of corporations and
all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section
414 of the Internal Revenue Code.
<PAGE>
"Euro-Dollar Business Day" means any Domestic
Business Day on which commercial banks are open for
international business (including dealings in dollar
deposits) in London.
"Euro-Dollar Lending Office" means, as to each
Bank, its office, branch or affiliate located at its address
set forth in its Administrative Questionnaire (or identified
in its Administrative Questionnaire as its Euro-Dollar
Lending Office) or such other office, branch or affiliate of
such Bank as it may hereafter designate as its Euro-Dollar
Lending Office by notice to the Borrower and the Agent.
"Euro-Dollar Loan" means a Loan to be made by a
Bank as a Euro-Dollar Loan pursuant to the applicable Notice
of Borrowing.
"Euro-Dollar Reserve Percentage" has the meaning
set forth in Section 2.05(c).
"Event of Default" has the meaning set forth in
Section 6.01.
"Federal Funds Rate" means, for any day, the rate
per annum (rounded upwards, if necessary, to the nearest
1/100th of 1%) equal to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New
York on the Domestic Business Day next succeeding such day,
provided that (i) if such day is not a Domestic Business
Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business
Day as so published on the next succeeding Domestic Business
Day, and (ii) if no such rate is so published on such next
succeeding Domestic Business Day, the Federal Funds Rate for
such day shall be the average rate quoted to Morgan Guaranty
Trust Company of New York on such day on such transactions
as determined by the Agent.
"Fixed Rate Borrowing" means a CD Borrowing or a
Euro-Dollar Borrowing.
"Fixed Rate Loans" means CD Loans or Euro-Dollar
Loans or both.
"GAAP" means generally accepted accounting
principles as in effect at the time of application to the
provisions hereof.
<PAGE>
"Guarantee" means any guarantee or other
contingent liability (other than any endorsement for
collection or deposit in the ordinary course of business),
direct or indirect, with respect to any obligation of
another Person, through an agreement or otherwise,
including, without limitation, (A) any other endorsement or
discount with recourse or undertaking substantially
equivalent to or having economic effect similar to a
guarantee in respect of any such obligation and (B) any
agreement (1) to purchase, or to advance or supply funds for
the payment or purchase of, any such obligation, (2) to
purchase, sell or lease property, products, materials or
supplies, or transportation or services, in respect of
enabling such other Person to pay any such obligation or to
assure the owner thereof against loss regardless of the
delivery or nondelivery of the property, products, materials
or supplies or transportation or services or (3) to make any
loan, advance or capital contribution to or other investment
in, or to otherwise provide funds to or for, such other
Person in respect of enabling such Person to satisfy any
obligation (including any liability for a dividend, stock
liquidation payment or expense) or to assure a minimum
equity, working capital or other balance sheet condition in
respect of any such obligation.
The amount of any Guarantee shall be equal to the
outstanding amount of the obligation directly or indirectly
guaranteed.
"Interest Period" means: (1) with respect to each
Euro-Dollar Borrowing, the period commencing on the date of
such Borrowing and ending one, two, three or six months
thereafter, as the Borrower may elect in the applicable
Notice of Borrowing; provided that:
(a) any Interest Period which would
otherwise end on a day which is not a Euro-Dollar
Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar
month, in which case such Interest Period shall
end on the next preceding Euro-Dollar Business
Day;
(b) any Interest Period which begins on the
last Euro-Dollar Business Day of a calendar month
(or on a day for which there is no numerically
corresponding day in the calendar month at the end
of such Interest Period) shall, subject to clause
(c) below, end on the last Euro-Dollar Business
Day of a calendar month; and
<PAGE>
(c) any Interest Period which would
otherwise end after the Termination Date shall end
on the Termination Date.
(2) with respect to each CD Borrowing, the period
commencing on the date of such Borrowing and ending 30, 60,
90 or 180 days thereafter, as the Borrower may elect in the
applicable Notice of Borrowing; provided that:
(a) any Interest Period (other than an
Interest Period determined pursuant to clause (b)
below) which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended
to the next succeeding Euro-Dollar Business Day;
and
(b) any Interest Period which would
otherwise end after the Termination Date shall end
on the Termination Date.
(3) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending 30
days thereafter; provided that:
(a) any Interest Period (other than an
Interest Period determined pursuant to clause (b)
below) which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended
to the next succeeding Euro-Dollar Business Day;
and
(b) any Interest Period which would
otherwise end after the Termination Date shall end
on the Termination Date.
"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended, or any successor statute.
"Investment" means any investment so classified
under GAAP, made by stock purchase, capital contribution,
loan or advance or by purchase of property or otherwise, but
in any event shall include as an investment in any Person
the amount of all Debt owed by such Person and all accounts
receivable from such Person which are not current assets or
did not arise from sales to such Person in the ordinary
course of business.
<PAGE>
"Lien" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset. For the
purposes of this Agreement, the Borrower or any Subsidiary
shall be deemed to own subject to a Lien any asset which it
has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease
or other title retention agreement relating to such asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan
and "Loans" means Domestic Loans or Euro-Dollar Loans or
both.
"London Interbank Offered Rate" has the meaning
set forth in Section 2.05(c).
"Material Debt" means Debt (other than the Notes)
of the Borrower and/or one or more of its Subsidiaries,
arising in one or more related or unrelated transactions, in
an aggregate principal amount exceeding $1,000,000.
"Material Financial Obligations" means a principal
or face amount of Debt and/or payment or collateralization
obligations in respect of Derivatives Obligations of the
Borrower and/or one or more of its Subsidiaries, arising in
one or more related or unrelated transactions, exceeding in
the aggregate $1,000,000.
"Material Plan" means at any time a Plan or Plans
having aggregate Unfunded Liabilities in excess of
$10,000,000.
"Morgan" means Morgan Guaranty Trust Company of
New York; provided that, when used in Section 2.05 or 8.01
with reference to any Euro-Dollar Loan, the term "Morgan"
shall mean the principal London office of Morgan Guaranty
Trust Company of New York.
"Notes" means promissory notes of the Borrower,
substantially in the form of Exhibit A hereto, evidencing
the obligation of the Borrower to repay the Loans, and
"Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" has the meaning set forth in
Section 2.02.
<PAGE>
"Operating Lease" means any lease, other than a
Capital Lease, of real or personal property; and "Operating
Lease Rentals" means the sum of the rental and other
obligations required to be paid by the lessees under an
Operating Lease excluding any amount required to be paid by
the Lessee (whether or not therein designated as rental or
additional rental) on account of maintenance, repairs,
insurance, taxes, assessments, water rates and similar
charges.
"Ordinary Course of Business" means the
activities, events and transactions of the Borrower that
would reasonably be expected to recur in the foreseeable
future, do not possess a high degree of abnormality and are
not unrelated to, or only incidentally related to, the
publishing and marketing of books, journals and information
services in all formats and computer software related
thereto; the importing, adapting and marketing of works from
other publishers and the designing and marketing of teaching
and training materials for business and professional users.
For purposes of this Agreement, sales, directly or
indirectly, of book lists, publishing or training product
lines, or other similar forms of publication rights
(excluding sales in one transaction or a series of related
transactions of all or substantially all of any Designated
Business) shall be deemed to be sales in the Ordinary Course
of Business.
"Parent" means, with respect to any Bank, any
Person controlling such Bank.
"Participant" has the meaning set forth in Section
9.06(b).
"PBGC" means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its
functions under ERISA.
"Person" means an individual, a corporation, a
partnership, an association, a trust or any other entity or
organization, including a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension
benefit plan (other than a Multiemployer Plan) which is
covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Internal Revenue
Code and either (i) is maintained, or contributed to, by any
member of the ERISA Group for employees of any member of the
ERISA Group or (ii) has at any time within the preceding
five years been maintained, or contributed to, by any Person
which was at such time a member of the ERISA Group for
employees of any Person which was at such time a member of
the ERISA Group.
<PAGE>
"Prime Rate" means the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York in
New York City from time to time as its Prime Rate.
"Refunding Borrowing" means a Borrowing which,
after application of the proceeds thereof, results in no net
increase in the outstanding principal amount of Loans made
by any Bank.
"Regulation U" means Regulation U of the Board of
Governors of the Federal Reserve System, as in effect from
time to time.
"Required Banks" means at any time Banks having at
least 66 2/3% of the aggregate amount of the Commitments or,
if the Commitments shall have been terminated, holding Notes
evidencing at least 66 2/3% of the aggregate unpaid
principal amount of the Loans.
"Restricted Guarantee" means any Guarantee of the
Borrower or a Subsidiary in respect of any obligation of
another Person other than
(A) any Guarantee of the Borrower in respect of
any Subsidiary, and
(B) any Guarantee in respect of Debt to the
extent such Debt is secured by a Capital Lease of the
Borrower or a Subsidiary.
"Restricted Investment" means any Investment,
other than
(A) any Investment in (1) a marketable
obligation, maturing within one year after acquisition
thereof, issued or guaranteed by the United States of
America or an instrumentality or agency thereof, (2) a
certificate of deposit or other obligation, maturing
within one year after acquisition thereof, issued by a
United States national or state bank or trust company
having capital, surplus and undivided profits of at
least $100,000,000, (3) open market commercial paper,
maturing within 270 days after acquisition thereof,
which has the highest credit rating of either Standard
& Poor's Corporation ("S&P") or Moody's Investors
Service, Inc. ("Moody's"), (4) adjustable rate
preferred stocks or money market preferred stocks
issued by a corporation organized under the laws of the
United States or a state thereof which have one of the
two highest ratings of either S&P or Moody's and which
mature (or are redeemable at the option of the holder)
within twelve months after the acquisition thereof and
(5) commercial paper or notes issued by a governmental
authority located in the United States, which are of
credit quality not lower than that of the investments
referred to in clause (4) above and which mature (or
are redeemable at the option of the holder) within
twelve months after the acquisition thereof,
<PAGE>
(B) any Investment in a Subsidiary, and
(C) any Investment hereafter acquired in exchange
for, or out of the net cash proceeds from the
substantially concurrent sale of, common shares of the
Borrower.
In computing the amount of any Restricted Investment in any
Person, unrealized increases or decreases in value, or
write-ups, write-downs or write-offs of Restricted
Investments in the Person shall be disregarded (except to
the extent included in the determination of net income of
the Borrower or a Subsidiary).
"Restricted Payment" means
(A) the declaration of any dividend on, or the
incurrence of any liability to make any other payment
or distribution in respect of, any shares of the
Borrower (other than one payable solely in its common
shares), and
(B) any payment or distribution on account of the
purchase, redemption or other retirement of any shares
of the Borrower, or of any warrant, option or other
right to acquire such shares, or any other payment or
distribution (other than pursuant to a dividend
theretofore declared or liability theretofore incurred
as specified in Subsection (A)), made in respect
thereof, either directly or indirectly, except any
payment or distribution on account of (1) the principal
of and prepayment charge, if any, on convertible Debt,
or (2) the purchase, redemption or other retirement of
shares of the Borrower in exchange for, or out of the
net cash proceeds received by the Borrower from a
substantially concurrent sale of, other shares of the
Borrower.
The amount of the any Restricted Payment in property shall
be deemed to be the greater of its fair value (as determined
by the Board) or its net book value.
"Revolving Credit Period" means the period from
and including the Effective Date to but not including the
Termination Date.
"Scientific and Technical Publishing Segment"
means that portion of the business of the Borrower and its
Subsidiaries attributable to technical and scientific
publications.
<PAGE>
"Subsidiary" of any designated Person means any
Person or other entity at least a majority of the Voting
Stock (or comparable ownership interests) of which is at the
time owned by the designated Person and/or one or more of
its Subsidiaries. Except as otherwise expressly indicated
herein, references to Subsidiaries shall mean Subsidiaries
of the Borrower.
"Subsidiary Debt" means the Debt of all
Subsidiaries of the Borrower, consolidated in accordance
with GAAP.
"Termination Date" means June 11, 1997, or, if
such day is not a Euro-Dollar Business Day, the next
preceding Euro-Dollar Business Day.
"Total Debt" means at any date the aggregate
amount of Debt of the Borrower and its Consolidated
Subsidiaries, determined on a consolidated basis as of such
date.
"Unfunded Liabilities" means, with respect to any
Plan at any time, the amount (if any) by which (i) the
present value of all benefits under such Plan exceeds
(ii) the fair market value of all Plan assets allocable to
such benefits (excluding any accrued but unpaid
contributions), all determined as of the then most recent
valuation date for such Plan, but only to the extent that
such excess represents a potential liability of a member of
the ERISA Group to the PBGC or any other Person under Title
IV of ERISA.
"Voting Stock" means shares of a Person of the
class or classes having general voting power (not depending
on the happening of a contingency) under ordinary
circumstances to elect a majority of the Board. As of the
date of this Agreement, the Class B Stock is the Voting
Stock of the Borrower.
SECTION 1.02. Accounting Terms and
Determinations. All financial statements provided for in
this Agreement shall be prepared, all financial computations
hereunder shall be made, and all accounting terms shall have
the meanings given to them, in accordance with GAAP, except
as otherwise provided in this Agreement. Any consolidated
or consolidating financial statement or financial
computation with respect to the Borrower and its
Subsidiaries required by this Agreement shall be done in
accordance with GAAP, and if at the time that any such
statement or computation is required to be made the Borrower
shall not have any Subsidiary such terms shall mean a
financial statement or a financial computation, as the case
may be, with respect to the Borrower only.
<PAGE>
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. During the
Revolving Credit Period each Bank severally agrees, on the
terms and conditions set forth in this Agreement, to lend to
the Borrower from time to time amounts not to exceed in the
aggregate at any one time outstanding the amount of its
Commitment. Each Borrowing under this Section 2.01 shall be
in an aggregate principal amount of $5,000,000 or any larger
multiple of $1,000,000 (except that any such Borrowing may
be in the aggregate amount of the unused Commitments) and
shall be made from the several Banks ratably in proportion
to their respective Commitments. Within the foregoing
limits, the Borrower may borrow under this Section 2.01,
repay, or to the extent permitted by Section 2.09, prepay
Loans and reborrow at any time during the Revolving Credit
Period under this Section 2.01.
SECTION 2.02. Method of Borrowing. (a) The
Borrower shall give the Agent notice (a "Notice of
Borrowing") not later than 10:30 A.M. (New York City time)
on (i) the second Domestic Business Day before each CD
Borrowing, (ii) the date of each Base Rate Borrowing, and
(iii) the third Euro-Dollar Business Day before each
Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall
be a Domestic Business Day in the case of a
Domestic Borrowing or a Euro-Dollar Business Day
in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such
Borrowing are to be CD Loans, Base Rate Loans or
Euro-Dollar Loans, and
(iv) in the case of a Fixed Rate Borrowing,
the duration of the Interest Period applicable
thereto, subject to the provisions of the
definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing, the
Agent shall promptly notify each Bank of the contents
thereof and of such Bank's ratable share of such Borrowing
and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
<PAGE>
(c) Not later than 12:00 noon (New York City
time) on the date of each Borrowing, each Bank shall (except
as provided in subsection (d) of this Section) make
available its ratable share of such Borrowing (determined in
accordance with Section 2.01), in Federal or other funds
immediately available in New York City, to the Agent at its
address specified in or pursuant to Section 9.01. Unless
the Agent determines in its reasonable judgment that any
applicable condition specified in Article III has not been
satisfied, the Agent will make the funds so received from
the Banks available to the Borrower at the Agent's aforesaid
address.
(d) If any Bank makes a new Loan hereunder on a
day on which the Borrower is to repay all or any part of an
outstanding Loan from such Bank, such Bank shall apply the
proceeds of its new Loan to make such repayment and only an
amount equal to the difference (if any) between the amount
being borrowed and the amount being repaid shall be made
available by such Bank to the Agent as provided in
subsection (c) of this Section, or remitted by the Borrower
to the Agent as provided in Section 2.10, as the case may
be.
(e) Unless the Agent shall have received notice
from a Bank prior to the date of any Borrowing that such
Bank will not make available to the Agent such Bank's share
of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such
Borrowing in accordance with subsections (c) and (d) of this
Section 2.02 and the Agent may, in reliance upon such
assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank
shall not have so made such share available to the Agent,
such Bank and the Borrower severally agree to repay to the
Agent forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such
amount is made available to the Borrower until the date such
amount is repaid to the Agent, at (i) in the case of the
Borrower, a rate per annum equal to the higher of the
Federal Funds Rate and the interest rate applicable thereto
pursuant to Section 2.05 and (ii) in the case of such Bank,
the Federal Funds Rate. If such Bank shall repay to the
Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for
purposes of this Agreement.
SECTION 2.03. Notes. (a) The Loans of each Bank
shall be evidenced by a single Note payable to the order of
such Bank for the account of its Applicable Lending Office
in an amount equal to the aggregate unpaid principal amount
of such Bank's Loans.
<PAGE>
(b) Each Bank may, by notice to the Borrower and
the Agent, request that its Loans of a particular type be
evidenced by a separate Note in an amount equal to the
aggregate unpaid principal amount of such Loans. Each such
Note shall be in substantially the form of Exhibit A hereto
with appropriate modifications to reflect the fact that it
evidences solely Loans of the relevant type. Each reference
in this Agreement to the "Note" of such Bank shall be deemed
to refer to and include any or all of such Notes, as the
context may require.
(c) Upon receipt of each Bank's Note pursuant to
Section 3.01(b), the Agent shall forward such Note to such
Bank. Each Bank shall record the date, amount, type and
maturity of each Loan made by it and the date and amount of
each payment of principal made by the Borrower with respect
thereto, and may, if such Bank so elects in connection with
any transfer or enforcement of its Note, endorse on the
schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such
Loan then outstanding; provided that the failure of any Bank
to make any such recordation or endorsement shall not affect
the obligations of the Borrower hereunder or under the
Notes. Each Bank is hereby irrevocably authorized by the
Borrower so to endorse its Note and to attach to and make a
part of its Note a continuation of any such schedule as and
when required.
SECTION 2.04. Maturity of Loans. Each Loan
included in any Borrowing shall mature, and the principal
amount thereof shall be due and payable, on the last day of
the Interest Period applicable to such Borrowing and on the
Termination Date.
SECTION 2.05. Interest Rates. (a) Each Base
Rate Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made
until it becomes due, at a rate per annum equal to the Base
Rate for such day. Such interest shall be payable for each
Interest Period on the last day thereof. Any overdue
principal of and overdue interest on any Base Rate Loan
shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of 1% plus the
Base Rate for such day.
<PAGE>
(b) Each CD Loan shall bear interest on the
outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the
sum of the Applicable Margin plus the applicable Adjusted CD
Rate; provided that if any CD Loan shall, as a result of
clause (2)(b) of the definition of Interest Period, have an
Interest Period of less than 30 days, such CD Loan shall
bear interest during such Interest Period at the rate
applicable to Base Rate Loans during such period. Such
interest shall be payable for each Interest Period on the
last day thereof and, if such Interest Period is longer than
90 days, at intervals of 90 days after the first day
thereof. Any overdue principal of and overdue interest on
any CD Loan shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to the sum of 1%
plus the higher of (i) the sum of the Applicable Margin plus
the Adjusted CD Rate applicable to such Loan and (ii) the
Base Rate for such day.
The "Adjusted CD Rate" applicable to any Interest
Period means a rate per annum determined pursuant to the
following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
__________
* The amount in brackets being rounded upwards, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest
Period is the rate of interest determined by the Agent to be
the prevailing rate per annum bid at 10:00 A.M. (New York
City time) (or as soon thereafter as practicable) on the
first day of such Interest Period by two or more New York
certificate of deposit dealers of recognized standing for
the purchase at face value from Morgan of its certificates
of deposit in an amount comparable to the unpaid principal
amount of the CD Loan of Morgan to which such Interest
Period applies and having a maturity comparable to such
Interest Period.
<PAGE>
"Domestic Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect
on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including without
limitation any basic, supplemental or emergency reserves)
for a member bank of the Federal Reserve System in New York
City with deposits exceeding five billion dollars in respect
of new non-personal time deposits in dollars in New York
City having a maturity comparable to the related Interest
Period and in an amount of $100,000 or more. The Adjusted
CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve
Percentage.
"Assessment Rate" means for any day the annual
assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund classified as adequately
capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within
the meaning of 12 C.F.R. 327.4(a) (or any successor
provision) to the Federal Deposit Insurance Corporation (or
any successor) for such Corporation's (or such successor's)
insuring time deposits at offices of such institution in the
United States. The Adjusted CD Rate shall be adjusted
automatically on and as of the effective date of any change
in the Assessment Rate.
(c) Each Euro-Dollar Loan shall bear interest on
the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the
sum of the Applicable Margin plus the applicable Adjusted
London Interbank Offered Rate. Such interest shall be
payable for each Interest Period on the last day thereof
and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof.
The "Adjusted London Interbank Offered Rate"
applicable to any Interest Period means a rate per annum
equal to the quotient obtained (rounded upwards, if
necessary, to the next higher 1/100 of 1%) by dividing
(i) the applicable London Interbank Offered Rate by
(ii) 1.00 minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to
any Interest Period means the rate per annum at which
deposits in dollars are offered to Morgan in the London
interbank market at approximately 11:00 A.M. (London time)
two Euro-Dollar Business Days before the first day of such
Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of Morgan to which
such Interest Period is to apply and for a period of time
comparable to such Interest Period.
<PAGE>
"Euro-Dollar Reserve Percentage" means for any day
that percentage (expressed as a decimal) which is in effect
on such day, as prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for determining
the maximum reserve requirement for a member bank of the
Federal Reserve System in New York City with deposits
exceeding five billion dollars in respect of "Eurocurrency
liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which
the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which
includes loans by a non-United States office of any Bank to
United States residents). The Adjusted London Interbank
Offered Rate shall be adjusted automatically on and as of
the effective date of any change in the Euro-Dollar Reserve
Percentage.
(d) Any overdue principal of and overdue interest
on any Euro-Dollar Loan shall bear interest, payable on
demand, for each day from and including the date payment
thereof was due to but excluding the date of actual payment,
at a rate per annum equal to the sum of 1% plus the higher
of (i) the sum of the Applicable Margin plus the Adjusted
London Interbank Offered Rate applicable to such Loan and
(ii) the Applicable Margin plus the quotient obtained
(rounded upwards, if necessary, to the next higher 1/100 of
1%) by dividing (x) the rate per annum at which one day (or,
if such amount due remains unpaid more than three
Euro-Dollar Business Days, then for such other period of
time not longer than six months as the Agent may select)
deposits in dollars in an amount approximately equal to such
overdue payment due to Morgan are offered to Morgan in the
London interbank market for the applicable period determined
as provided above by (y) 1.00 minus the Euro-Dollar Reserve
Percentage (or, if the circumstances described in clause (a)
or (b) of Section 8.01 shall exist, at a rate per annum
equal to the sum of 1% plus the Base Rate for such day).
(e) The "Applicable Margin" for each Fixed Rate
Loan outstanding on any day during any fiscal quarter of the
Borrower is (i) for each day during any fiscal quarter as to
which the EBIT/TD Ratio for the then immediately preceding
four consecutive fiscal quarters was greater than 75%, the
applicable amount set forth in the table below under the
caption Level I, (ii) for each day during any fiscal quarter
as to which the EBIT/TD Ratio for the then immediately
preceding four consecutive fiscal quarters was equal to or
less than 75% but greater than 40%, the applicable amount
set forth in the table below under the caption Level II, and
(iii) for each day during any fiscal quarter as to which the
EBIT/TD Ratio for the then immediately preceding four
consecutive fiscal quarters was equal to or less than 40%,
the applicable amount set forth in the table below under the
caption Level III.
<PAGE>
Level I Level II Level III
Euro-Dollar Loans 0.25% 0.35% 0.5%
CD Loans 0.375% 0.475% 0.625%
For purposes of making interest payments hereunder, the
Applicable Margin for Fixed Rate Loans of any type shall
change only upon delivery of an officer's certificate
pursuant to Section 5.01(e)(iii) setting forth the EBIT/TD
Ratio on the basis of which a change is required pursuant to
this subsection (e). Such change, however, will be
retroactively effective to the first day of the relevant
fiscal quarter, and an appropriate adjustment shall be made
within three Domestic Business Days after the delivery of
such certificate for any resulting change in the amount of
interest accrued from such first day and previously paid.
(f) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give
prompt notice to the Borrower and the Banks of each rate of
interest so determined, and its determination thereof shall
be conclusive in the absence of manifest error.
SECTION 2.06. Facility Fees. During the
Revolving Credit Period, the Borrower shall pay to the
Agent, for the account of the Banks ratably in accordance
with their respective Commitments, a facility fee for each
day at a rate per annum equal to (i) 0.125% for any day on
which Level I (as such term is used in Section 2.05)
applies, (ii) 0.175% for any day on which Level II (as such
term is used in Section 2.05) applies, and (iii) 0.25% for
any day on which Level III (as such term is used in Section
2.05) applies, on the aggregate amount of the Commitments
(whether used or unused) on such day. Such facility fees
shall accrue for each day from and including the Effective
Date to but excluding the Termination Date (or earlier date
of termination of the Commitments in their entirety).
Accrued fees under this Section shall be payable quarterly
in arrears on each March 31, June 30, September 30 and
December 31 during the Revolving Credit Period and on the
Termination Date (or earlier date of termination of the
Commitments in their entirety).
SECTION 2.07. Optional Termination or Reduction
of Commitments. During the Revolving Credit Period, the
Borrower may, upon at least three Domestic Business Days'
notice to the Agent, terminate at any time, or
proportionately reduce from time to time by an aggregate
amount of $10,000,000 or any larger multiple of $1,000,000,
the unused portions of the Commitments. If the Commitments
are terminated in their entirety, all accrued fees shall be
payable on the effective date of such termination.
<PAGE>
SECTION 2.08. Mandatory Termination of
Commitments. The Commitments shall terminate on the
Termination Date and any Loans then outstanding (together
with accrued interest thereon) shall be due and payable on
such date.
SECTION 2.09. Optional Prepayments. (a) The
Borrower may, upon at least one Domestic Business Day's
notice to the Agent, prepay any Base Rate Borrowing in whole
at any time, or from time to time in part in amounts
aggregating $1,000,000 or any larger multiple of $1,000,000,
by paying the principal amount to be prepaid together with
accrued interest thereon to the date of prepayment. Each
such optional prepayment shall be applied to prepay ratably
the Loans of the several Banks included in such Borrowing.
(b) Except as provided in Section 8.02, the
Borrower may not prepay all or any portion of the principal
amount of any Fixed Rate Loan prior to the maturity thereof.
(c) Upon receipt of a notice of prepayment
pursuant to this Section, the Agent shall promptly notify
each Bank of the contents thereof and of such Bank's ratable
share of such prepayment and such notice shall not
thereafter be revocable by the Borrower.
SECTION 2.10. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of,
and interest on, the Loans and of facility fees hereunder,
not later than 12:00 noon (New York City time) on the date
when due, in Federal or other funds immediately available in
New York City, to the Agent at its address referred to in
Section 9.01. The Agent will promptly distribute to each
Bank its ratable share of each such payment received by the
Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Domestic Loans or of
facility fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended
to the next succeeding Domestic Business Day. Whenever any
payment of principal of, or interest on, the Euro-Dollar
Loans shall be due on a day which is not a Euro-Dollar
Business Day, the date for payment thereof shall be extended
to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next
preceding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or
otherwise, interest thereon shall be payable for such
extended time.
<PAGE>
(b) Unless the Agent shall have received notice
from the Borrower prior to the date on which any payment is
due to the Banks hereunder that the Borrower will not make
such payment in full, the Agent may assume that the Borrower
has made such payment in full to the Agent on such date and
the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to
the amount then due such Bank. If and to the extent that
the Borrower shall not have so made such payment, each Bank
shall repay to the Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for
each day from the date such amount is distributed to such
Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.11. Funding Losses. If the Borrower
makes any payment of principal with respect to any Fixed
Rate Loan (pursuant to Article VI or VIII or otherwise) on
any day other than the last day of the Interest Period
applicable thereto, or the end of an applicable period fixed
pursuant to Section 2.05(d), or if the Borrower fails to
borrow any Fixed Rate Loans after notice has been given to
any Bank in accordance with Section 2.02(b), the Borrower
shall reimburse each Bank within 15 days after demand for
any resulting loss or expense incurred by it (or by an
existing or prospective Participant in the related Loan),
including (without limitation) any loss incurred in
obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after
any such payment or failure to borrow, provided that such
Bank shall have delivered to the Borrower a certificate as
to the amount of such loss or expense, which certificate
shall be conclusive in the absence of manifest error.
SECTION 2.12. Computation of Interest and Fees.
Interest based on the Prime Rate hereunder and facility fees
shall be computed on the basis of a year of 365 days (or 366
days in a leap year) and paid for the actual number of days
elapsed (including the first day but excluding the last
day). All other interest shall be computed on the basis of
a year of 360 days and paid for the actual number of days
elapsed (including the first day but excluding the last
day).
<PAGE>
SECTION 2.13. Withholding Tax . At least five
Domestic Business Days prior to the first date on which
interest or fees are payable hereunder for the account of
any Bank, each Bank that is not incorporated under the laws
of the United States of America or a state thereof agrees
that it will deliver to each of the Borrower and the Agent
two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, certifying in either case that
such Bank is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of
any United States federal income taxes. Each Bank which so
delivers a Form 1001 or 4224 further undertakes to deliver
to each of the Borrower and the Agent two additional copies
of such form (or a successor form) on or before the date
that such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most
recent form so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Agent, in each case
certifying that such Bank is entitled to receive payments
under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes,
unless an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on
which any such delivery would otherwise be required which
renders all such forms inapplicable or which would prevent
such Bank from duly completing and delivering any such form
with respect to it and such Bank advises the Borrower and
the Agent that it is not capable of receiving payments
without any deduction or withholding of United States
federal income tax.
SECTION 2.14. Change of Control. If a Change of
Control shall occur (i) the Borrower will, promptly and in
any event within 20 days after the occurrence thereof, give
each Bank notice thereof and shall describe in reasonable
detail the facts and circumstances giving rise thereto and
(ii) each Bank may, by notice to the Borrower and the Agent
given not later than 20 days after such notice of Change of
Control shall have been given, terminate its Commitment,
which shall be terminated 45 days after such notice of
Change of Control shall have been given, and declare the
Note held by it, together with accrued interest thereon, and
any other amounts payable hereunder for its account to be,
and such Note and such other amounts shall thereupon become,
due and payable on such forty-fifth day without presentment,
demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower; provided that no Bank
shall be obligated, without its written consent given at the
time, to make a Loan to be included in any Borrowing other
than a Refunding Borrowing during the period from and
including the date of any such Change of Control to and
including the forty-fifth day following such notice of
Change of Control.
<PAGE>
For the purposes of this Section, the following
terms have the following meanings:
"Acquiring Person" means any Person
(excluding any trustee of any stock participation
plan or pension plan of the Borrower or any
Subsidiary so long as all such plans in the
aggregate hold less than 20% of the Voting Stock
of the Borrower), who along with any Affiliates or
Associates of such Person, becomes the beneficial
owner (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended),
directly or indirectly, of more than 10% of the
Voting Stock of the Borrower.
"Affiliate" of any designated Person means any
Person that has a relationship with the designated
Person whereby either of such Persons directly or
indirectly controls or is controlled by or is under
common control with the other, or holds or beneficially
owns 5% or more of the equity interest in the other or
5% or more of any class of voting securities of the
other. For this purpose "control" means the power,
direct or indirect, of one Person to direct or cause
direction of the management and policies of another,
whether by contract, through voting securities or
otherwise.
"Associate" means, with respect to any
Person, (1) any corporation or organization (other
than the Borrower or a Subsidiary of the Borrower)
of which such Person is an officer, employee or
partner or is, directly or indirectly, the
beneficial owner of 10% or more of the shares of
any class, (2) any trust or other estate in which
such Person has a substantial beneficial interest
or as to which such Person serves as trustee or in
a similar fiduciary capacity, and (3) any relative
or spouse of such Person, or any relative of such
spouse, who has the same home as such Person or
who is a director or officer of the Borrower or
any of its Subsidiaries.
"Change in Control" of the Borrower shall be
deemed to have occurred at such time or times as
(1) any Person (other than W. Bradford Wiley,
Deborah E. Wiley, Peter Booth Wiley and William
Bradford Wiley II, their Affiliates or Associates)
alone or with any Affiliates or Associates of such
Person, is or becomes the beneficial owner,
directly or indirectly, of 50% or more of the
Voting Stock of the Borrower or (2) individuals
who constitute the Continuing Directors cease for
any reason to constitute at least a majority of
the Board.
<PAGE>
"Continuing Director" means any member of the
Board who is not an Affiliate or Associate of an
Acquiring Person and who was a member of the Board
immediately prior to the time that any Acquiring
Person became an Acquiring Person and any other
director who is not an Affiliate or Associate of
an Acquiring Person and who is recommended to
succeed a Continuing Director by a majority of
Continuing Directors who are then members of the
Board.
ARTICLE III
CONDITIONS
SECTION 3.01. Effectiveness. This Agreement
shall become effective on the date that each of the
following conditions shall have been satisfied (or waived in
accordance with Section 9.05):
(a) receipt by the Agent of counterparts
hereof signed by each of the parties hereto (or,
in the case of any party as to which an executed
counterpart shall not have been received, receipt
by the Agent in form satisfactory to it of
telegraphic, telex, facsimile or other written
confirmation from such party of execution of a
counterpart hereof by such party);
(b) receipt by the Agent for the account of
each Bank of a duly executed Note dated on or
before the Effective Date complying with the
provisions of Section 2.03;
(c) receipt by the Agent of evidence satisfactory
to it in its sole good faith discretion of the
substantially simultaneous closing of the Acquisition;
(d) receipt by the Agent of an opinion of
Richard S. Rudick, General Counsel for the
Borrower, substantially in the form of Exhibit B
hereto and covering such additional matters
relating to the transactions contemplated hereby
as the Required Banks may reasonably request;
(e) receipt by the Agent of a certificate
signed by the Chief Financial Officer or Treasurer
of the Borrower, dated the Effective Date, to the
effect set forth in clauses (c) and (d) of Section
3.02; and
<PAGE>
(f) receipt by the Agent of all documents it
may reasonably request relating to the existence
of the Borrower, the corporate authority for and
the validity of this Agreement and the Notes, and
any other matters relevant hereto, all in form and
substance satisfactory to the Agent;
Provided that this Agreement shall not become effective or
be binding on any party hereto unless all of the foregoing
conditions are satisfied not later than June 30, 1996. The
Agent shall promptly notify the Borrower and the Banks of
the Effective Date, and such notice shall be conclusive and
binding on all parties hereto.
SECTION 3.02. Borrowings. The obligation of any
Bank to make a Loan on the occasion of any Borrowing is
subject to the satisfaction of the following conditions:
(a) receipt by the Agent of notice of such
Borrowing as required by Section 2.02;
(b) the fact that, immediately after such
Borrowing, the aggregate outstanding principal
amount of the Loans will not exceed the aggregate
amount of the Commitments;
(c) the fact that, immediately before and
after such Borrowing, no Default shall have
occurred and be continuing; and
(d) the fact that the representations and
warranties of the Borrower contained in this
Agreement (except, in the case of a Refunding
Borrowing, the representations and warranties set
forth in Sections 4.04(c) and 4.05 as to any
matter which has theretofore been disclosed in
writing by the Borrower to the Banks) shall be
true on and as of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a
representation and warranty by the Borrower on the date of
such Borrowing as to the facts specified in clauses (b), (c)
and (d) of this Section.
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The
Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
New York, and has all corporate powers and all material
governmental licenses, authorizations, consents and
approvals required to carry on its business as now
conducted.
SECTION 4.02. Corporate and Governmental
Authorization; No Contravention. The execution, delivery
and performance by the Borrower of this Agreement and the
Notes are within the Borrower's corporate power, have been
duly authorized by all necessary corporate action, require
no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene,
or constitute a default under, any provision of applicable
law or regulation or of the Restated Certificate of
Incorporation or by-laws of the Borrower or of any
agreement, judgment, injunction, order, decree or other
instrument binding upon the Borrower or result in the
creation or imposition of any Lien on any asset of the
Borrower or any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement
constitutes a valid and binding agreement of the Borrower
and each Note, when executed and delivered in accordance
with this Agreement, will constitute a valid and binding
obligation of the Borrower, in each case enforceable in
accordance with its terms.
SECTION 4.04. Financial Information.
(a) The consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of April 30,
1995 and the related consolidated statements of income,
retained earnings and cash flows for the fiscal year then
ended, reported on by Arthur Andersen & Co., and set forth
in the Borrower's 1995 Form 10-K, a copy of which has been
delivered to each of the Banks, fairly present, in
conformity with GAAP, the consolidated financial position of
the Borrower and its Consolidated Subsidiaries as of such
date and their consolidated results of operations and
changes in financial position for such fiscal year.
<PAGE>
(b) The unaudited consolidated balance sheet of
the Borrower and its Consolidated Subsidiaries as of January
31, 1996 and the related unaudited consolidated condensed
statements of income for the nine months then ended, set
forth in the Borrower's quarterly report for the fiscal
quarter ended January 31, 1996 as filed with the Securities
and Exchange Commission on Form 10-Q, a copy of which has
been delivered to each of the Banks, fairly present, in
conformity with GAAP applied on a basis consistent with the
financial statements referred to in subsection (a) of this
Section, the consolidated financial position of the Borrower
and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and changes in financial
position for such nine month period (subject to normal
year-end adjustments).
(c) Since January 31, 1996 there has been no
material adverse change in the business, financial position,
results of operations or prospects of the Borrower and its
Consolidated Subsidiaries, considered as a whole.
SECTION 4.05. Litigation. There is no action,
suit or proceeding pending against, or to the knowledge of
the Borrower threatened against or affecting, the Borrower
or any of its Subsidiaries before any court or arbitrator or
any governmental body, agency or official in which there is
a reasonable possibility of an adverse decision which could
materially adversely affect the business, consolidated
financial position or consolidated results of operations of
the Borrower and its Consolidated Subsidiaries or which in
any manner draws into question the validity of this
Agreement or the Notes.
SECTION 4.06. Compliance with . Each member of
the ERISA Group has fulfilled its obligations under the
minimum funding standards of ERISA and the Internal Revenue
Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions
of ERISA and the Internal Revenue Code with respect to each
Plan. No member of the ERISA Group has (i) sought a waiver
of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement,
or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security under ERISA
or the Internal Revenue Code or (iii) incurred any liability
under Title IV of ERISA other than a liability to the PBGC
for premiums under Section 4007 of ERISA.
<PAGE>
SECTION 4.07. Taxes. The Borrower and its
Subsidiaries have filed all United States Federal income tax
returns and all other material tax returns which are
required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment
received by the Borrower or any Subsidiary. The charges,
accruals and reserves on the books of the Borrower and its
Subsidiaries in respect of taxes or other governmental
charges are, in the opinion of the Borrower, adequate.
SECTION 4.08. Subsidiaries. Each of the
Borrower's corporate Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on
its business as now conducted.
SECTION 4.09. Not an Investment Company. The
Borrower is not an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
SECTION 4.10. Status of Notes. The obligations
of the Borrower under this Agreement and the Notes to pay
the principal of and interest on the Notes and any and all
other amounts due hereunder constitute direct unconditional
and general obligations of the Borrower and do rank and will
rank at least pari passu in priority of payment and in all
other respects with all other unsecured Indebtedness of the
Borrower now existing.
SECTION 4.11. Environmental Matters. The
Borrower has reasonably concluded that Environmental Laws
are unlikely to have a material adverse effect on the
business, financial condition, results of operations or
prospects of the Borrower and its Subsidiaries, considered
as a whole.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as any Bank has
any Commitment hereunder or any amount payable under any
Note remains unpaid:
SECTION 5.01. Information. The Borrower will
deliver to each of the Banks:
<PAGE>
(a) as soon as available and in any event
within 90 days after the end of each fiscal year,
a consolidated and consolidating balance sheet of
the Borrower and its Consolidated Subsidiaries as
of the end of such fiscal year and the related
consolidated and consolidating statements of
income, retained earnings and cash flows for such
year, setting forth in each case in comparative
form the figures for the previous fiscal year,
prepared in accordance with generally accepted
accounting principles consistently applied and, in
the case of the consolidated statements, reported
on by Arthur Andersen & Co. or other independent
public accountants of nationally recognized
standing, which report shall contain no material
exceptions or qualifications except such as are
not unacceptable to the Banks;
(b) as soon as available and in any event
within 45 days after the end of each of the first
three quarters of each fiscal year, a consolidated
balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such fiscal quarter
and the related consolidated statements of income
for such quarter and for the portion of the fiscal
year ended on the last day of such quarter, and of
cash flows for the portion of the fiscal year
ended on the last day of such quarter, setting
forth in each case in comparative form the figures
for the corresponding quarter of the previous
fiscal year and the corresponding portion of the
previous fiscal year, prepared in accordance with
generally accepted accounting principles
consistently applied;
(c) promptly upon the filing thereof, copies
of all registration statements (excluding
registration statements on Form S-8 or any
successor form) and regular and periodic reports
filed by the Borrower with the Securities and
Exchange Commission (or any governmental agency
succeeding to the functions of said Commission) or
with any stock exchange on which the Borrower's
securities are traded;
(d) promptly upon the mailing thereof to the
shareholders of the Borrower, copies of all
financial statements, reports and proxy statements
which the Borrower shall have sent to its
shareholders;
<PAGE>
(e) simultaneously with each delivery of the
financial statements referred to in subsections
(a) and (b) above, a certificate dated the date of
such delivery and signed by the Treasurer or Chief
Financial Officer of the Borrower (i) stating that
such financial statements have been prepared in
conformity with generally accepted accounting
principles applied on a basis which, except as
disclosed therein, is consistent with the
preceding year, or the corresponding portion of
the preceding year (subject in the case of
financial statements delivered pursuant to
subsection (b) above, to normal year-end
adjustments of which none shall be material),
(ii) stating whether there existed on the date of
such financial statements or exists on the date of
such certificate any Default, and, in the case of
any such Default, specifying the nature and period
of existence thereof and what action the Borrower
is taking and proposes to take with respect
thereto, and (iii) stating that the Borrower is
and at all times during such period has been in
compliance with the covenants set forth in
Article V hereof and setting forth calculations
demonstrating compliance with the covenants set
forth in Sections 5.06 and 5.09 through 5.13;
(f) simultaneously with each delivery of the
consolidated financial statements referred to in
subsection (a) above, a written statement of the
independent public accountants reporting on such
consolidated financial statements to the effect
that in the course of the examination upon which
their report was based they became aware of no
condition or event involving financial or
accounting matters which constitutes a Default or,
if such accountants did become aware of any such
Default, specifying the nature and period of
existence thereof (it being agreed that such
accountants will not be required to conduct any
special or additional audit procedures for the
purpose of enabling them to furnish such written
statement);
(g) forthwith upon any officer of the
Borrower becoming aware of any Default, a
certificate signed by the Treasurer or Chief
Financial Officer of the Borrower specifying the
nature and period of existence thereof and the
action which the Borrower is taking or proposes to
take with respect thereto;
<PAGE>
(h) if and when any member of the ERISA
Group (i) gives or is required to give notice to
the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan
which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given
or is required to give notice of any such
reportable event, a copy of the notice of such
reportable event given or required to be given to
the PBGC; (ii) receives notice of complete or
partial withdrawal liability under Title IV of
ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives
notice from the PBGC under Title IV of ERISA of an
intent to terminate, impose liability (other than
for premiums under Section 4007 of ERISA) in
respect of, or appoint a trustee to administer any
Plan, a copy of such notice; (iv) applies for a
waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy
of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA,
a copy of such notice and other information filed
with the PBGC; (vi) gives notice of withdrawal
from any Plan pursuant to Section 4063 of ERISA, a
coy of such notice; or (vii) fails to make any
payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or
Benefit Arrangement which has resulted or could
result in the imposition of a Lien or the posting
of a bond or other security, a certificate of the
chief financial officer or the treasurer of the
Borrower setting forth details as to such
occurrence and action, if any, which the Borrower
or applicable member of the ERISA Group is
required or proposes to take;
(i) promptly upon the signing thereof,
notice of any lease of real or personal property
under which the Borrower or any of its
Subsidiaries is obligated to make aggregate
payments of $5,000,000 or more over any period of
five years, which notice shall provide for
inspection of such leased property at such times
as the Agent or the Banks may reasonably request;
and
<PAGE>
(j) such additional information regarding
the business, assets, financial condition, results
of operations or prospects of the Borrower and its
Subsidiaries as the Agent, at the request of any
Bank, may reasonably request from time to time.
SECTION 5.02. Payment of Taxes; Insurance;
Maintenance of Corporate Existence. The Borrower will and
will cause each Subsidiary to:
(a) pay or discharge promptly when due and
payable all taxes, assessments and other
governmental charges imposed upon it or any of its
property; provided that neither the Borrower nor
any Subsidiary shall be required to pay any such
tax, assessment or governmental charge if the
amount, applicability or validity thereof is being
contested in good faith by appropriate proceedings
(or payment may be made without penalty) and a
reserve, if appropriate, has been established with
respect thereto;
(b) maintain adequate insurance with
financially sound and reputable insurers covering
all such properties and risks as are customarily
insured by, and in such amounts as are customarily
carried by, firms engaged in similar businesses
and similarly situated; and
(c) do all things necessary to preserve and
keep in full force and effect the corporate
existence, rights and franchises of the Borrower
and its Subsidiaries; provided that this Section
5.02(c) shall not prevent the Borrower or any
Subsidiary from abandoning or disposing of any of
its property or abandoning or terminating any
right or franchise if (i) such abandonment,
disposition or termination does not violate any
other provision of this Agreement, (ii) in the
opinion of the Board of Directors of the Borrower,
such abandonment, disposition or termination is in
the best interest of the Borrower and is not
detrimental in any respect to the holder of any
Note and (iii) all such abandonments, dispositions
and terminations do not in the aggregate
materially and adversely affect the business,
assets, financial condition, results of operations
or prospects of the Borrower and its Consolidated
Subsidiaries, taken as a whole.
<PAGE>
SECTION 5.03. Maintenance of Property; Conduct of
Business. (a) The Borrower will keep, and will cause each
Subsidiary to keep, all property useful and necessary in its
business in good working order and condition, ordinary wear
and tear excepted.
(b) The Borrower will continue, and will cause
each Subsidiary to continue, to engage in business of the
same general type as now conducted by the Borrower and its
Subsidiaries.
SECTION 5.04. Compliance with Laws. The Borrower
will comply, and cause each Subsidiary to comply, in all
material respects with all applicable laws, ordinances,
rules, regulations, and requirements of governmental
authorities (including, without limitation, Environmental
Laws and ERISA and the rules and regulations thereunder)
except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings.
SECTION 5.05. Inspection of Property, Books and
Records. The Borrower will keep, and will cause each
Subsidiary to keep, proper books of record and account in
which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and
activities; and will permit, and will cause each Subsidiary
to permit, representatives of any Bank at such Bank's
expense to visit and inspect any of their respective
properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective
affairs, finances and accounts with their respective
officers, employees and independent public accountants, all
at such reasonable times and as often as may reasonably be
desired.
SECTION 5.06. Limitation on Liens. The Borrower
will not, and will not permit any Subsidiary to, create,
assume or suffer to be created, assumed or incurred or to
exist any Lien upon any property or assets of the Borrower
or any Subsidiary (whether now owned or hereafter acquired)
other than:
(a) Liens securing taxes, assessments or
other governmental charges to the extent
non-payment thereof is permitted by Section
5.02(a);
(b) Liens incurred in the ordinary course of
business in connection with the workmen's
compensation, unemployment insurance and other
social security obligations;
<PAGE>
(c) Liens incurred in the ordinary course of
business but not incurred in connection with the
borrowing of money, the incurrence of Derivatives
Obligations, the obtaining of advances or the
payment of the deferred purchase price of any
property or assets, including, without limitation,
Liens securing:
(i) claims of mechanics, workmen,
materialmen or other similar persons in
respect of obligations not yet due or being
contested in good faith by appropriate
proceedings, or
(ii) the performance of bids,
tenders or contracts which in the aggregate
do not detract in any material respect from
the value of the property or assets of the
Borrower or any Subsidiary or impair in any
material respect the use thereof in the
operation of the business of the Borrower or
any Subsidiary, or
(iii) leases (including equipment
leases), public or statutory obligations
(other than the obligations referred to in
paragraph (a) above), surety and appeal bonds
or other similar obligations, provided that
the aggregate obligations secured by such
Liens shall not exceed $15,000,000;
(d) Liens existing as of the date of this
Agreement; provided that no such Lien shall extend
to any property other than the property as to
which such Lien was in effect as of such date and
the Debt secured by such Lien shall not be
increased, renewed or extended;
(e) Liens on property to secure the payment
of all or any part of the purchase price thereof
or to secure any Debt, incurred prior to, at the
time of, or within 90 days after the acquisition
of such property, for the purpose of financing all
or any part of the purchase price of such
property; provided (i) that in no event shall the
amount of Debt secured by any such Lien exceed 75%
of the purchase price or fair market value at the
time of acquisition of the property subject to
such Lien, whichever is less, (ii) that any such
Lien does not extend to property other than the
property purchased or financed in connection with
which such Lien was created and (iii) that the
aggregate outstanding principal amount of all such
Debt shall not exceed $10,000,000;
<PAGE>
(f) Liens on property or assets of any
Subsidiary operating outside the United States
securing Debt of such Subsidiary;
(g) Liens on fixed assets securing Debt not
otherwise permitted; provided that the aggregate
outstanding principal amount of all Debt secured
by Liens permitted by this paragraph and by
paragraphs (d) and (e) above shall not exceed the
greater of (i) $4,000,000 or (ii) 25% of the
excess of consolidated net fixed assets over net
fixed assets subject to Liens permitted by
paragraph (f) above;
(h) Liens on cash and cash equivalents securing
Derivatives Obligations, provided that the aggregate
amount of cash and cash equivalents subject to such
Liens may at no time exceed $1,000,000; and
(i) Liens not otherwise permitted by the
foregoing clauses of this Section securing Debt in
an aggregate principal amount at any time
outstanding not to exceed 5% of Consolidated Net
Worth.
SECTION 5.07. Consolidations, Mergers and Sales
of Assets. The Borrower will not (i) consolidate or merge
with or into any other Person or (ii) sell, lease or
otherwise transfer, directly or indirectly, all or any
substantial part of the assets of the Borrower and its
Subsidiaries, taken as a whole, to any other Person (other
than property held for sale in the ordinary course of
business); provided that the Borrower may merge with another
Person if (A) the Borrower is the corporation surviving such
merger and (B) immediately after giving effect to such
merger, no Default shall have occurred and be continuing.
SECTION 5.08. Use of Proceeds. The proceeds of
the Loans made under this Agreement will be used by the
Borrower for its general corporate purposes. None of such
proceeds will be used in violation of any applicable law or
regulation.
SECTION 5.09. Subsidiary Debt. Subsidiary Debt
will at no time exceed an amount equal to (i) 25% of
Consolidated Net Worth at such time minus (ii) the aggregate
principal amount of Debt of the Borrower outstanding at such
time secured by a Lien permitted solely under paragraph (i)
of Section 5.06.
<PAGE>
SECTION 5.10. Consolidated Shareholders' Equity.
Consolidated Shareholders' Equity will at no time be less
than $60,000,000.
SECTION 5.11. Debt to Subsidiaries. The Borrower
will not incur any Debt owing to any Subsidiary unless the
same shall be for cash advances from such Subsidiary and
shall be subordinated and subject in right to the prior
payment in full of the Notes.
SECTION 5.12. EBIT/TD Ratio. The EBIT/TD Ratio
will not, for any period of four consecutive fiscal
quarters, be less than 20%.
SECTION 5.13. Restricted Payments and Guarantees.
The Borrower will not, directly or indirectly, make any
Restricted Payment and will not, and will not permit any
Subsidiary to, make any Restricted Guarantee unless, after
giving effect to any such action,
(i) the aggregate amount of all (A) Restricted
Payments made during the period commencing on May 1,
1994 and ending on and including the date of such
action ("Computation Period") and (B) Restricted
Guarantees of the Borrower and its Subsidiaries
existing on the date of such action, shall not exceed
$25,000,000 plus 85% (or in the case of a net loss,
minus 100%) of Consolidated Net Income accumulated for
the Computation Period, and
(ii) no Default shall have occurred and be
continuing.
The Borrower will not declare any dividend on any of its
shares payable more than 90 days after the declaration date.
The Borrower will not permit any Subsidiary to make any
Restricted Payment.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more
of the following events ("Events of Default") shall have
occurred and be continuing:
(a) the Borrower shall fail to pay when due any
principal of any Loan or shall fail to pay within five
Domestic Business Days of the due date thereof any
interest, fees or other amount payable hereunder;
<PAGE>
(b) the Borrower shall fail to observe or perform
any covenant contained in Sections 5.06 to 5.13,
inclusive;
(c) the Borrower shall fail to observe or perform
any covenant or agreement contained in this Agreement
(other than those covered by clause (a) or (b) above)
for 30 days after notice thereof has been given to the
Borrower by the Agent at the request of any Bank;
(d) any representation, warranty, certification
or statement made by the Borrower in this Agreement or
in any certificate, financial statement or other
document delivered pursuant to this Agreement shall
prove to have been incorrect in any material respect
when made (or deemed made);
(e) the Borrower or any Subsidiary shall fail to
pay when due, or within any applicable period of grace,
any obligation with respect to Material Debt or
Material Financial Obligations; or any event or
condition referred to in any instrument or agreement
evidencing or securing or relating to any obligation
with respect to Material Debt or Material Financial
Obligations of the Borrower or any Subsidiary shall
have occurred and be continuing which would cause, or
would permit (assuming the giving of appropriate notice
if required) any Person to cause, such obligation to
become due and payable prior to its stated maturity or
the obligations of the Borrower or any Subsidiary under
any obligation with respect to Material Debt or
Material Financial Obligations to become due and
payable;
(f) the Borrower or any Subsidiary shall commence
a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar
official of it or any substantial part of its property,
or shall consent to any such relief or to the
appointment of or taking possession by any such
official in an involuntary case or other proceeding
commenced against it, or shall make a general
assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the
foregoing;
<PAGE>
(g) an involuntary case or other proceeding shall
be commenced against the Borrower or any Subsidiary
seeking liquidation, reorganization or other relief
with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar
official of it or any substantial part of its property,
and such involuntary case or other proceeding shall
remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against
the Borrower or any Subsidiary under the federal
bankruptcy laws as now or hereafter in effect;
(h) any member of the ERISA Group shall fail to
pay within 30 days of the date when due an amount or
amounts aggregating in excess of $1,000,000 which it
shall have become liable to pay under Title IV of
ERISA; or notice of intent to terminate a Material Plan
shall be filed under Title IV of ERISA by any member of
the ERISA Group, any plan administrator or any
combination of the foregoing; or the PBGC shall
institute proceedings under Title IV of ERISA to
terminate, to impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material
Plan; or a condition shall exist by reason of which the
PBGC would be entitled to obtain a decree adjudicating
that any Material Plan must be terminated; or there
shall occur a complete or partial withdrawal from, or a
default, within the meaning of Section 4219(c)(5) of
ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA
Group to incur a current payment obligation in excess
of $10,000,000; or
(i) a judgment or order for the payment of money
in excess of $1,000,000 shall be rendered against the
Borrower or any Subsidiary and such judgment or order
shall continue unsatisfied and unstayed for a period of
30 days;
<PAGE>
then, and in every such event, the Agent shall (i) if
requested by Banks having more than 66 2/3% in aggregate
amount of the Commitments, by notice to the Borrower
terminate the Commitments and they shall thereupon
terminate, and (ii) if requested by Banks holding Notes
evidencing more than 66 2/3% in aggregate principal amount
of the Loans, by notice to the Borrower declare the Notes
(together with accrued interest thereon) to be, and the
Notes shall thereupon become, immediately due and payable
without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower;
provided that in the case of any of the Events of Default
specified in clause (f) or (g) above with respect to the
Borrower, without any notice to the Borrower or any other
act by the Agent or the Banks, the Commitments shall
thereupon terminate and the Notes (together with accrued
interest thereon) shall become immediately due and payable
without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
SECTION 6.02. Notice of Default. The Agent shall
give notice to the Borrower under Section 6.01(c) promptly
upon being requested to do so by any Bank and shall
thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and . Each Bank
irrevocably appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers
under this Agreement and the Notes as are delegated to the
Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. Morgan and
its affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower
or any Subsidiary or affiliate of the Borrower as if it were
not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations
of the Agent hereunder are only those expressly set forth
herein. Without limiting the generality of the foregoing,
the Agent shall not be required to take any action with
respect to any Default, except as expressly provided in
Article VI.
<PAGE>
SECTION 7.04. Consultation with Experts. The
Agent may consult with legal counsel (who may be counsel for
the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or
experts.
SECTION 7.05. Liability of Agent. Neither the
Agent nor any of its affiliates nor any of their respective
directors, officers, agents or employees shall be liable for
any action taken or not taken by it in connection herewith
(i) with the consent or at the request of the Required Banks
or (ii) in the absence of its own gross negligence or
willful misconduct. Neither the Agent nor any of its
affiliates nor any of their respective directors, officers,
agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify (i) any statement,
warranty or representation made in connection with this
Agreement or any borrowing hereunder; (ii) the performance
or observance of any of the covenants or agreements of the
Borrower; (iii) the satisfaction of any condition specified
in Article III, except receipt of items required to be
delivered to the Agent; or (iv) the validity, effectiveness
or genuineness of this Agreement, the Notes or any other
instrument or writing furnished in connection herewith. The
Agent shall not incur any liability by acting in reliance
upon any notice, consent, certificate, statement, or other
writing (which may be a bank wire, telex, facsimile or
similar writing) believed by it to be genuine or to be
signed by the proper party or parties.
SECTION 7.06.. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent, its
affiliates and their respective directors, officers, agents
and employees (to the extent not reimbursed by the Borrower)
against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability
(except such as result from such indemnitees' gross
negligence or willful misconduct) that such indemnitees may
suffer or incur in connection with this Agreement or any
action taken or omitted by such indemnitees hereunder.
SECTION 7.07. Credit Decision. Each Bank
acknowledges that it has, independently and without reliance
upon the Agent or any other Bank, and based on such
documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this
Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as
it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking any action
under this Agreement.
<PAGE>
SECTION 7.08. Successor. The Agent may resign at
any time by giving notice thereof to the Banks and the
Borrower. Upon any such resignation, the Required Banks
shall have the right, subject to approval by the Borrower,
to appoint a successor Agent, provided that approval of such
successor Agent by the Borrower shall not be unreasonably
withheld. If no successor Agent shall have been so
appointed by the Required Banks, and shall have accepted
such appointment, within 30 days after the retiring Agent
gives notice of resignation, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall
be a commercial bank organized or licensed under the laws of
the United States of America or of any State thereof and
having a combined capital and surplus of at least
$50,000,000. Upon the acceptance of its appointment as
Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the
rights and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation hereunder
as Agent, the provisions of this Article shall inure to its
benefit as to any actions taken or omitted to be taken by it
while it was Agent.
SECTION 7.09. Agent's Fee. The Borrower shall
pay to the Agent for its own account fees in the amounts and
at the times previously agreed upon between the Borrower and
the Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate
Inadequate or Unfair. If on or prior to the first day of
any Interest Period for any Fixed Rate Borrowing:
(a) the Agent is advised by Morgan that
deposits in dollars (in the applicable amounts)
are not being offered to Morgan in the relevant
market for such Interest Period, or
(b) Banks having 50% or more of the
aggregate amount of the Commitments advise the
Agent that the Adjusted CD Rate or the Adjusted
London Interbank Offered Rate, as the case may be,
as determined by the Agent will not adequately and
fairly reflect the cost to such Banks of funding
their CD Loans or Euro-Dollar Loans, as the case
may be, for such Interest Period,
<PAGE>
the Agent shall forthwith give notice thereof to the
Borrower and the Banks, whereupon until the Agent notifies
the Borrower that the circumstances giving rise to such
suspension no longer exist, the obligations of the Banks to
make CD Loans or Euro-Dollar Loans, as the case may be,
shall be suspended. Unless the Borrower notifies the Agent
at least two Domestic Business Days before the date of any
Fixed Rate Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such
date, such Borrowing shall instead be made as a Base Rate
Borrowing.
SECTION 8.02. Illegality. If, on or after the
date of this Agreement, the adoption of any applicable law,
rule or regulation, or any change in any applicable law,
rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority,
central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by
any Bank (or its Euro-Dollar Lending Office) with any
request or directive (whether or not having the force of
law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for any Bank (or
its Euro-Dollar Lending Office) to make, maintain or fund
its Euro-Dollar Loans and such Bank shall so notify the
Agent, the Agent shall forthwith give notice thereof to the
other Banks and the Borrower, whereupon until such Bank
notifies the Borrower and the Agent that the circumstances
giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans shall be
suspended. Before giving any notice to the Agent pursuant
to this Section, such Bank shall designate a different
Euro-Dollar Lending Office if such designation will avoid
the need for giving such notice and will not, in the
judgment of such Bank, be otherwise disadvantageous to such
Bank. If such Bank shall determine that it may not lawfully
continue to maintain and fund any of its outstanding
Euro-Dollar Loans to maturity and shall so specify in such
notice, the Borrower shall immediately prepay in full the
then outstanding principal amount of each such Euro-Dollar
Loan, together with accrued interest thereon. Concurrently
with prepaying each such Euro-Dollar Loan, the Borrower
shall borrow a Base Rate Loan in an equal principal amount
from such Bank (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans
of the other Banks), and such Bank shall make such a Base
Rate Loan.
<PAGE>
SECTION 8.03. Increased Cost and Reduced Return.
(a) If on or after the date hereof, the adoption of any
applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance
by any Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of
law) of any such authority, central bank or comparable
agency:
(i) shall subject any Bank (or its
Applicable Lending Office) to any tax, duty or
other charge with respect to its Fixed Rate Loans,
its Notes or its obligation to make Fixed Rate
Loans, or shall change the basis of taxation of
payments to any Bank (or its Applicable Lending
Office) of the principal of or interest on its
Fixed Rate Loans or any other amounts due under
this Agreement in respect of its Fixed Rate Loans
or its obligation to make Fixed Rate Loans (except
for changes in the rate of tax on the overall net
income of such Bank or its Applicable Lending
Office imposed by the jurisdiction in which such
Bank's principal executive office or Applicable
Lending Office is located); or
(ii) shall impose, modify or deem applicable
any reserve, special deposit or similar
requirement (including, without limitation, any
such requirement imposed by the Board of Governors
of the Federal Reserve System, but excluding
(A) with respect to any CD Loan any such
requirement included in an applicable Domestic
Reserve Percentage and (B) with respect to any
Euro-Dollar Loan any such requirement included in
an applicable Euro-Dollar Reserve Percentage)
against assets of, deposits with or for the
account of, or credit extended by, any Bank (or
its Applicable Lending Office) or shall impose on
any Bank (or its Applicable Lending Office) or on
the United States market for certificates of
deposit or the London interbank market any other
condition affecting its Fixed Rate Loans, its
Notes or its obligation to make Fixed Rate Loans;
<PAGE>
and the result of any of the foregoing is to increase the
cost to such Bank (or its Applicable Lending Office) of
making or maintaining any Fixed Rate Loan, or to reduce the
amount of any sum received or receivable by such Bank (or
its Applicable Lending Office) under this Agreement or under
its Notes with respect thereto, by an amount deemed by such
Bank to be material, then, within 15 days after demand by
such Bank (with a copy to the Agent), the Borrower shall pay
to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after
the date hereof, the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change in any
such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with
the interpretation or administration thereof, or any request
or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank
or comparable agency, has or would have the effect of
reducing the rate of return on capital of such Bank (or its
Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its
Parent) could have achieved but for such adoption, change or
compliance (taking into consideration its policies with
respect to capital adequacy) by an amount deemed by such
Bank to be material, then from time to time, within 15 days
after demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank (or its Parent) for
such reduction.
(c) Each Bank will promptly notify the Borrower
and the Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such
Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A
certificate of any Bank claiming compensation under this
Section and setting forth the additional amount or amounts
to be paid to it hereunder shall be conclusive in the
absence of manifest error. In determining such amount, such
Bank may use any reasonable averaging and attribution
methods.
<PAGE>
SECTION 8.04. Base Rate Loans Substituted for
Affected Fixed Rate Loans. If (i) the obligation of any
Bank to make Euro-Dollar Loans has been suspended pursuant
to Section 8.02 or (ii) any Bank has demanded compensation
under Section 8.03(a) and the Borrower shall, by at least
five Euro-Dollar Business Days' prior notice to such Bank
through the Agent, have elected that the provisions of this
Section shall apply to such Bank, then, unless and until
such Bank notifies the Borrower that the circumstances
giving rise to such suspension or demand for compensation no
longer apply:
(a) all Loans which would otherwise be made
by such Bank as CD Loans or Euro-Dollar Loans, as
the case may be, shall be made instead as Base
Rate Loans (on which interest and principal shall
be payable contemporaneously with the related
Fixed Rate Loans of the other Banks), and
(b) after each of its CD Loans or
Euro-Dollar Loans, as the case may be, has been
repaid, all payments of principal which would
otherwise be applied to repay such Fixed Rate
Loans shall be applied to repay its Base Rate
Loans instead.
<PAGE>
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. All notices, requests and other
communications to any party hereunder shall be in writing
(including bank wire, telex, facsimile transmission or
similar writing) and shall be given to such party: (x) in
the case of the Borrower or the Agent, at its address or
facsimile number set forth on the signature pages hereof,
(y) in the case of any Bank, at its address or telex or
facsimile number set forth in its Administrative
Questionnaire or (z) in the case of any party, such other
address or telex or facsimile number as such party may
hereafter specify for the purpose by notice to the Agent and
the Borrower. Each such notice, request or other
communication shall be effective (i) if given by telex, when
such telex is transmitted to the telex number specified in
this Section and the appropriate answerback is received,
(ii) if given by mail, 72 hours after such communication is
deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means,
when received at the address specified in this Section;
provided that notices to the Agent under Article II or
Article VIII shall not be effective until received.
SECTION 9.02. No. No failure or delay by the
Agent or any Bank in exercising any right, power or
privilege hereunder or under any Note shall operate as a
waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.
SECTION 9.03. Expenses; Documentary Taxes;
Indemnification. (a) The Borrower shall pay (i) all
out-of-pocket expenses of the Agent, including fees and
disbursements of special counsel for the Agent, in
connection with the preparation of this Agreement, any
waiver or consent hereunder or any amendment hereof or any
Default or alleged Default hereunder and (ii) if an Event of
Default occurs, all out-of-pocket expenses incurred by the
Agent or any Bank, including fees and disbursements of
counsel, in connection with such Event of Default and
collection and other enforcement proceedings resulting
therefrom. The Borrower shall indemnify each Bank against
any transfer taxes, documentary taxes, assessments or
charges made by any governmental authority by reason of the
execution and delivery of this Agreement or the Notes.
<PAGE>
(b) The Borrower agrees to indemnify the Agent
and each Bank, their respective affiliates and the
respective directors, officers, agents and employees of the
foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all damages, costs and
expenses of any kind (including, without limitation, the
reasonable fees and disbursements of counsel for any
Indemnitee in connection with any investigative,
administrative or judicial proceeding, whether or not such
Indemnitee shall be designated a party thereto) which may be
incurred by any Indemnitee, relating to or arising out of
this Agreement or any actual or proposed use of proceeds of
Loans hereunder; provided that no Indemnitee shall have the
right to be indemnified hereunder for its own gross
negligence or willful misconduct as determined by a court of
competent jurisdiction. The Borrower shall not be liable
for any settlement effected without the Borrower's consent,
which consent shall not be unreasonably withheld.
SECTION 9.04. Sharing of Set-. Each Bank agrees
that if it shall, by exercising any right of set-off or
counterclaim or otherwise, receive payment of a proportion
of the aggregate amount of principal and interest due with
respect to any Note held by it which is greater than the
proportion received by any other Bank in respect of the
aggregate amount of principal and interest due with respect
to any Note held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such
participation in the Notes held by the other Banks, and such
other adjustments shall be made, as may be required so that
all such payments of principal and interest with respect to
the Notes held by the Banks shall be shared by the Banks pro
rata; provided that nothing in this Section shall impair the
right of any Bank to exercise any right of set-off or
counterclaim it may have and to apply the amount subject to
such exercise to the payment of indebtedness of the Borrower
other than its indebtedness under the Notes. The Borrower
agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in a
Note, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim
and other rights with respect to such participation as fully
as if such holder of a participation were a direct creditor
of the Borrower in the amount of such participation.
<PAGE>
SECTION 9.05. Amendments and Waivers. Any
provision of this Agreement or the Notes may be amended or
waived if, but only if, such amendment or waiver is in
writing and is signed by the Borrower and the Required Banks
(and, if the rights or duties of the Agent are affected
thereby, by the Agent); provided that no such amendment or
waiver shall, unless signed by all the Banks, (i) increase
or decrease the Commitment of any Bank (except for a ratable
decrease in the Commitments of all Banks) or subject any
Bank to any additional obligation, (ii) reduce the principal
of, accrued interest on, or rate of interest on, any Loan or
any fees hereunder, (iii) postpone the date fixed for any
payment of principal of or interest on any Loan or any fees
hereunder or the Termination Date or (iv) change the
percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes, or the number of Banks, which
shall be required for the Banks or any of them to take any
action under this Section or any other provision of this
Agreement.
SECTION 9.06. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not
assign or otherwise transfer any of its rights under this
Agreement without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more
banks or other institutions (each a "Participant")
participating interests in its Commitment or any or all of
its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon
notice to the Borrower and the Agent, such Bank shall remain
responsible for the performance of its obligations
hereunder, and the Borrower and the Agent shall continue to
deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement.
Any agreement pursuant to which any Bank may grant such a
participating interest shall provide that such Bank shall
retain the sole right and responsibility to enforce the
obligations of the Borrower hereunder including, without
limitation, the right to approve any amendment, modification
or waiver of any provision of this Agreement; provided that
such participation agreement may provide that such Bank will
not agree to any modification, amendment or waiver of this
Agreement described in clause (i), (ii) or (iii) of Section
9.05 without the consent of the Participant. The Borrower
agrees that each Participant shall, to the extent provided
in its participation agreement, be entitled to the benefits
of Article VIII with respect to its participating interest.
An assignment or other transfer which is not permitted by
subsection (c) or (d) below shall be given effect for
purposes of this Agreement only to the extent of a
participating interest granted in accordance with this
subsection (b).
<PAGE>
(c) Any Bank may at any time assign to one or
more banks or other institutions (each an "Assignee") all,
or a proportionate part of all, of its rights and
obligations under this Agreement and the Notes, and such
Assignee shall assume such rights and obligations, pursuant
to an instrument executed by such Assignee and such
transferor Bank, with notice to the Borrower and subject to
the subscribed consent of the Agent; provided that if an
Assignee is an affiliate of such transferor Bank, no such
consent shall be required; and provided further that any
assignment shall not be less than $5,000,000, or if less,
shall constitute an assignment of all of such Bank's rights
and obligations under this Agreement and the Notes. Upon
execution and delivery of such an instrument and payment by
such Assignee to such transferor Bank of an amount equal to
the purchase price agreed between such transferor Bank and
such Assignee, such Assignee shall be a Bank party to this
Agreement and shall have all the rights and obligations of a
Bank with a Commitment as set forth in such instrument of
assumption, and the transferor Bank shall be released from
its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required.
Upon the consummation of any assignment pursuant to this
subsection (c), the transferor Bank, the Agent and the
Borrower shall make appropriate arrangements so that, if
required, a new Note is issued to the Assignee. If the
Assignee is not incorporated under the laws of the United
States of America or a state thereof, it shall, prior to the
first date on which interest or fees are payable hereunder
for its account, deliver to the Borrower and the Agent
certification as to exemption from deduction or withholding
of any United States federal income taxes in accordance with
Section 2.13.
(d) Any Bank may at any time assign all or any
portion of its rights under this Agreement and its Note to a
Federal Reserve Bank. No such assignment shall release the
transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee
of any Bank's rights shall be entitled to receive any
greater payment under Section 8.03 than such Bank would have
been entitled to receive with respect to the rights
transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the
provisions of Section 8.02 or 8.03 requiring such Bank to
designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances
giving rise to such greater payment did not exist.
<PAGE>
SECTION 9.07. Collateral. Each of the Banks
represents to the Agent and each of the other Banks that it
in good faith is not relying upon any "margin stock" (as
defined in Regulation U) as collateral in the extension or
maintenance of the credit provided for in this Agreement.
SECTION 9.08. New York Law. This Agreement and
each Note shall be construed in accordance with and governed
by the law of the State of New York.
SECTION 9.09. Counterparts; Integration. This
Agreement may be signed in any number of counterparts, each
of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement
and understanding among the parties hereto and supersedes
any and all prior agreements and understandings, oral or
written, relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective
authorized officers as of the day and year first above
written.
JOHN WILEY & SONS, INC.
By /s/ Robert D. Wilder
-------------------------------
Title: Sr. Vice President & CFO
605 Third Avenue
New York, New York 10058-0012
Facsimile number: (212) 850-6088
Commitments
- -----------
$75,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Bank and Agent
By /s/ Eugenia Wilds
-----------------------------------
Title: Vice President
60 Wall Street
New York, New York 10260-0060
Attention: Vance B. Barbour
Facsimile number: (212) 648-5017
<PAGE>
EXHIBIT A
June 12, 1996
For value received, JOHN WILEY & SONS, INC., a New
York corporation (the "Borrower"), promises to pay to the
order of ______________ (the "Bank"), for the account of its
Applicable Lending Office, the unpaid principal amount of
each Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below on the last day of the
Interest Period relating to such Loan. The Borrower
promises to pay interest on the unpaid principal amount of
each such Loan on the dates and at the rate or rates
provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the
United States in Federal or other immediately available
funds at the office of Morgan Guaranty Trust Company of New
York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types
and maturities thereof and all repayments of the principal
thereof shall be recorded by the Bank and, prior to any
transfer hereof, appropriate notations to evidence the
foregoing information with respect to each such Loan then
outstanding shall be endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule
attached to and made a part hereof; provided that the
failure of the Bank to make any such recordation or
endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the
Credit Agreement dated as of June 12, 1996 among the
Borrower, the banks listed on the signature pages thereof
and Morgan Guaranty Trust Company of New York, as Agent (as
the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the
Credit Agreement for provisions for the prepayment hereof
and the acceleration of the maturity hereof.
JOHN WILEY & SONS, INC.
By___________________________
Title:
<PAGE>
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
____________________________________________________________
Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
<PAGE>
EXHIBIT B
OPINION OF
COUNSEL FOR THE BORROWER
June 12, 1996
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260-0060
Dear Sirs:
I am counsel for John Wiley & Sons, Inc., a New
York corporation (the "Borrower") and have acted as counsel
to the Borrower in connection with the Credit Agreement (the
"Agreement") dated as of June 12, 1996 among the Borrower,
the banks from time to time parties thereto and Morgan
Guaranty Trust Company of New York, as Agent. Terms defined
in the Agreement are used herein as therein defined.
I have examined originals or copies, certified or
otherwise identified to my satisfaction, of such documents,
corporate records, certificates of public officials and
other instruments and have conducted such other
investigations of fact and law as we have deemed necessary
or advisable for purposes of this opinion.
Upon the basis of the foregoing, we are of the
opinion that:
1. The Borrower is a corporation duly
incorporated, validly existing and in good standing under
the laws of the State of New York, and has all corporate
powers and all material governmental licenses,
authorizations, consents and approvals required to carry on
its business as now conducted.
<PAGE>
2. The execution, delivery and performance by the
Borrower of the Agreement and each Note are within the
Borrower's corporate power, have been duly authorized by all
necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or
official and do not contravene, or constitute a default
under, any provision of applicable law or regulation or of
the Restated Certificate of Incorporation or by-laws of the
Borrower or of any agreement, judgment, injunction, order,
decree or other instrument binding upon the Borrower or
result in the creation or imposition of any Lien on any
asset of the Borrower or any of its Subsidiaries.
3. The Agreement constitutes a valid and binding
agreement of the Borrower and each Note constitutes a valid
and binding obligation of the Borrower, in each case
enforceable in accordance with its terms, except as the same
may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and by general
principles of equity.
4. There is no action, suit or proceeding pending
against, or to the best of my knowledge threatened against
or affecting the Borrower or any of its Subsidiaries before
any court or arbitrator or any governmental body, agency or
official, in which there is a reasonable possibility of an
adverse decision which could materially adversely affect the
business, consolidated financial position or consolidated
results of operations of the Borrower and its Consolidated
Subsidiaries or which in any manner draws into question the
validity of the Agreement or each Note.
5. I have no reason to believe that each of the
Borrower's Subsidiaries is not a corporation duly
incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation, or that each
does not have all corporate powers and all material
governmental licenses, authorizations, consents and
approvals required to carry on its business as now
conducted.
Very truly yours,
The Table of Contents is not a part of this Agreement.
Exhibit 10.8
-------------
JOHN WILEY & SONS, INC.
1990 DIRECTOR STOCK PLAN
AS AMENDED AND RESTATED AS OF JUNE 22, 1995
----------------------------------------------
1. Purposes. The purposes of the 1990 Director Stock Plan
as Amended and Restated as of June 22, 1995 (the "Plan") are
to (a) attract and retain highly qualified individuals to
serve as directors of John Wiley & Sons, Inc. (the "Company")
and (b) to increase the Non-Employee Directors' (as defined
below) stock ownership in the Company.
2. Effective Date. The Plan shall be amended and restated
effective as of June 22, 1995, subject to the approval of the
shareholders of the Company.
3. Participation. Only Non-Employee Directors shall be
eligible to participate in the Plan. A "Non-Employee
Director" is a person who is serving as a director of the
Company and who is not an employee of the Company or any
subsidiary of the Company.
4. Fifty Percent Grant. The date of each Annual Meeting of
company shareholders (each an "Annual Meeting") is herein
called a "Measurement Date." Commencing with the annual
meeting held in September 1991, as soon as practicable after
every Annual Meeting, each Non-Employee Director shall receive
shares of the company's Class A common stock ("Stock"),
rounded upward or downward to the nearest whole share, equal
in value to 50 percent of the cash compensation which such Non-
Employee Director has received (or would have received but for
an election pursuant to Section 5 hereof) from the Company for
services as a Non-Employee Director in respect of the period
beginning on the day immediately following the Annual Meeting
in the preceding year and ending with the date of the just
concluded Annual Meeting (the latter being the applicable
Measurement Date). The value of the Stock for purposes of
this paragraph shall be determined as of the applicable
Measurement Date and shall be equal to the closing price for
the Stock as reported by any exchange on which the Stock may
be listed on such date or, if no shares of the Stock were
traded on such date, on the next preceding date on which the
Stock was so traded.
<PAGE>
5. Election to Receive Stock in Lieu of Eligible Cash Fees.
Subject to the terms and conditions of the Plan, each Non-
Employee Director may elect to forego all or a portion of the
cash compensation otherwise payable for services to be
rendered by such Non-Employee Director during the Director
Year (as defined below) which begins after the date on which
such election is made, in increments of 25%, 50%, 75% or 100%
of such compensation, and to receive in lieu thereof whole
shares of Stock (rounded upward or downward to the nearest
whole share), as determined in accordance with Section 7
hereof. A "Director Year" is the twelve-month period
beginning on April 1 of each calendar year and ending on March
31 of the immediately following calendar year. An election
under this Section 5 to have cash compensation paid in shares
of Stock shall be valid only if it is in writing, signed by
the Non-Employee Director, and filed with the Corporate
Secretary of the Company but, in any event, such election must
be irrevocable with respect to the Director Year to which it
applies and must be made no later than six months prior to the
beginning of such Director Year. Stock to be received by a
Non-Employee Director pursuant to his or her election shall be
distributed to such Non-Employee Director at the end of each
calendar quarter.
6. Cash Compensation. For purposes of this Plan, cash
compensation shall mean the Non-Employee Director's annual
retainer, the additional retainer received by committee
chairmen and the Non-Employee Director's fee for attendance at
meetings of the Board of Directors of the Company (the
"Board") or of Board committees, but shall not include a Non-
Employee Director's expense reimbursements.
7. Equivalent Amount of Stock. The number of whole shares
of Stock to be distributed to a Non-Employee Director in
accordance with such Non-Employee Director's election made
under Section 5 above shall be equal to:
(a) the amount of the cash compensation which the Non-
Employee Director has elected to forego in exchange for shares
of Stock, divided by
(b) the closing price for the Stock as reported by any
exchange on which the Stock may be listed on the date of the
regularly scheduled quarterly meeting of the Board of
Directors or, if no shares of Stock were traded on such date,
on the next preceding date on which the Stock was traded.
<PAGE>
8. Shares Subject To The Plan. All shares of Stock to be
used for purposes of this Plan shall be treasury shares, that
is, shares previously issued and outstanding which have been
reacquired by the Company and have not been canceled. The
shares of Stock issued to a Non-Employee Director pursuant to
the provisions of this Plan may not be sold for at least six
months after having been acquired, except in the case of death
or disability of the Non-Employee Director.
9. Nonassignability. No rights under the Plan shall be
assignable or transferable by a Non-Employee Director other
than by will or the laws of descent and distribution.
10. Construction; Amendment; Termination. This Plan shall be
construed in accordance with the laws of the State of New York
and may be amended or terminated at any time by action of the
Board, provided, however, that the Plan may not be amended
more than once every six months other than to comport with
changes in the Internal Revenue Code of 1986, as amended, the
Employee Retirement Income Security Act of 1974, as amended,
or the rules thereunder.
Exhibit 10.13
--------------
JOHN WILEY & SONS, INC.
FY 1997 EXECUTIVE LONG TERM INCENTIVE PLAN
PLAN DOCUMENT
CONFIDENTIAL
MAY 1, 1996
<PAGE>
CONTENTS
Section Subject Page
I. Definitions 2
II. Plan Objectives 4
III. Eligibility 4
IV. Incentive 4
V. Performance Measurement and Objectives 4
VI. Performance Evaluation 5
VII. Payouts 6
VIII. Restricted Performance Shares 7
IX. Stock Option 8
X. Administration and Other Matters 8
<PAGE>
I. DEFINITIONS
Following are definitions for words and phrases used in this
document. Unless the context clearly indicates otherwise,
these words and phrases are considered to be defined terms and
appear in this document in italicized print:
company
John Wiley & Sons, Inc.
plan
The company's FY (Fiscal Year) 1997 Executive Long Term
Incentive Plan as set forth in this document.
shareholder plan
The company's 1991 Key Employee Stock Plan.
plan cycle
The three year period from May 1, 1996 to April 30, 1999.
executive compensation and development committee (ECDC)
The committee of the company's Board of Directors (Board)
responsible for reviewing executive compensation.
cumulative financial goals
The company's objectives to achieve specific cumulative
financial results in terms of operating income, net income and
cash flow as defined below, for the plan cycle, including
interim revised cumulative financial goals, if any, as
determined by the ECDC, the Finance Committee and the Board,
and confirmed in writing.
cumulative financial results
The company's actual achievement against the cumulative
financial goals set for the plan cycle, as reflected in the
company's audited financial statements.
participant
Any person who is eligible and is selected to participate in
the plan, as defined in Section III.
target incentive
The target incentive has two components as determined and
authorized by the ECDC at the committee meeting held on June
13, 1996: a restricted performance shares award, and cash,
which combined represent the value that a participant is
eligible to receive if 100% of his/her applicable cumulative
financial goals are achieved and the participant remains an
employee of the company through April 30, 2001, except as
otherwise provided in Section VIII. The target incentive is
based on the participant's position and is described in
Section IV.
stock
Class A Common Stock of the company.
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restricted performance shares
Stock issued pursuant to this plan and the shareholder plan
that is subject to forfeiture. In the shareholder plan, such
stock is referred to as "Restricted Stock." The value of each
share of restricted performance shares under this plan will be
determined by reference to the stock closing sale price, as
reported by New York Stock Exchange (NYSE), on the date the
ECDC acts at the beginning of the plan cycle (June 13, 1996).
In the event the stock is not traded on June 13, 1996 or the
date the ECDC acts, whichever is later, the closing sales
price shall be the price of the stock on the next day after
June 13, 1996 or the date the ECDC acts on which the stock
trades.
restricted period
The period during which the shares of restricted performance
shares shall be subject to forfeiture in whole or in part, as
defined in the shareholder plan, in accordance with the terms
of the award.
plan end adjusted restricted performance shares award.
The final amount of restricted performance shares awarded to a
participant, at the end of the plan cycle after adjustments,
if any, are made, as set forth in Section VIII.
stock option
A right granted as a participant, as more fully described
under Section IX, to purchase a specific number of shares of
stock at a specified price. The stock option granted under
this plan will be non-qualified (i.e. is not intended to
comply with the terms and conditions for a tax-qualified
option, as set forth in Section 422A of the Internal Revenue
Code of 1986).
grant date
The date on which a participant is granted the stock option.
This is also the date on which the exercise price of the stock
option is based.
payout amount
Actual gross cash dollar amount paid plus the dollar value of
the plan end adjusted restricted performance shares award, as
set forth in Section VIII, to a participant under this plan,
if any, for achievement of the cumulative financial goals, as
further discussed in this plan.
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performance levels
threshold
The minimum acceptable level of achievement for each
cumulative financial goal. If threshold performance is
achieved against all company cumulative financial goals,
a participant may earn 25% of the target incentive amount
for which he/she is eligible. If threshold performance
is achieved against all divisional cumulative financial
goals, a participant may earn 50% of the target incentive
amount for which he/she is eligible.
target
Achievement in aggregate of the cumulative financial
goals. Each individual cumulative financial goal is set
at a level which is both challenging and achievable.
outstanding
Superior achievement of the cumulative financial goals.
If outstanding performance is achieved against all
cumulative financial goals, the maximum amount a
participant may earn is 150% of the target incentive
amount for which he/she is eligible.
payout factor
The percentage applied to the target incentive amount
exclusive of the stock option portion, if any, to determine
the payout amount based on the percentage of cumulative
financial goals deemed achieved.
cumulative operating income
The operating income of the company before interest
expense/income and taxes, and excluding the effects of any
unusual activity during the plan cycle.
cumulative consolidated net income (net income)
Reported net income after taxes adjusted for the after-tax
effect of : (1) any unusual activity, and (2) any capital
stock repurchase or other unusual capital stock transaction.
cumulative cash flow from operations after investing
activities (cash flow) Net income, excluding unusual items
not related to the period being measured, plus/minus any non-
cash items included in net income and changes in operating
assets and liabilities, minus normal investments in product
development assets and property and equipment.
<PAGE>
cumulative divisional operating income (divisional operating
income)
Divisional operating income is defined as operating income
before allocations for corporate support services and taxes,
excluding the effects of any unusual activity.
divisional cumulative cash flow from operations after
investing activities (divisional cash flow)
operating income before allocations and taxes, excluding
unusual items not related to the period being measured,
plus/minus any non-cash items included in divisional operating
income (other than provisions for bad debts), and changes in
controllable assets and liabilities, less normal investments
in product development assets and direct property and
equipment additions. Controllable assets and liabilities are
inventory, composition, author advances, other deferred
publication costs, and deferred subscription revenues.
II. PLAN OBJECTIVES
The purpose of this plan is to enable the company to reinforce
and sustain a culture devoted to excellent performance,
emphasize long term financial performance at the corporate and
division levels, reward significant contributions to the
success of the company, attract and retain highly qualified
executives, and provide an opportunity for each participant to
acquire equity in the company.
III. ELIGIBILITY
The participant is selected by the ECDC in its sole
discretion, from among those employees in key management
positions deemed able to make the most significant
contributions to the growth and profitability of the company.
An employee must be a participant of the FY 1997 Executive
Annual Incentive Plan to be eligible to participate in this
plan. The President and CEO of the company is a participant.
IV. INCENTIVE
A. The participant's target incentive is determined based on
the participant's position in the company and the
contributions the position is deemed able to make in
achieving the cumulative financial goals of the company.
B. The participant's target incentive is recommended by the
President and CEO to the ECDC for its and the Board's
approval. In the case of the President and CEO, the
target incentive is recommended by the ECDC for the
Board's approval.
C. The incentive's two components may be restricted
performance shares, if authorized by the ECDC, and cash.
<PAGE>
V. PERFORMANCE MEASUREMENT AND OBJECTIVES
A. The objectives for the cumulative financial goals are
recommended by the ECDC with the advice of the Finance
Committee to the Board for its approval. The cumulative
financial goals performance objectives are set at a level
which are challenging and achievable.
B. Cumulative financial goals established for each
participant may include one or more organizational
level's financial goals (e.g. company and division), and
one or more financial goals for a particular
organizational unit (e.g. cash flow, income, divisional
operating income). The weighting of and between the two
organizational levels' cumulative financial goals may
vary, depending upon the participant's position.
Weighting of the participant's cumulative financial goals
is recommended by the President and CEO to the ECDC. In
the case of the President and CEO, the cumulative
financial goals are operating income, net income and cash
flow.
C. Threshold, target and outstanding performance levels for
the cumulative financial goals are recommended by the
President and CEO for approval by the ECDC, and the
Board.
VI. PERFORMANCE EVALUATION
A. Cumulative Financial Results
1. Actual cumulative financial results achieved by the
company and by each division will be calculated at
the end of the plan cycle, subject to adjustment for
audited results, and will be compared with the
previously set cumulative financial goals.
2. The cumulative financial results will be reviewed by
the President and CEO to determine proposed payout
factors for the company and for the divisions.
3. The President and CEO will provide to the ECDC a
view of the company's achievement of its cumulative
financial goals, as well as divisional achievement
of like objectives, if any, and will recommend
payout factors to be used for the company and
divisional objectives.
<PAGE>
B. Award Determination
1. At least threshold performance, in aggregate, of a
participant's particular organizational level's
objectives is necessary for the participant to
receive a payout for the particular organizational
level. However, once the overall threshold is
achieved for any single measure the non-achievement
of any one particular cumulative financial goal's
target objective does not preclude a payout.
2. The determination of the performance level
achievement (threshold, target and outstanding, or
points in between) for each organizational level's
cumulative financial goals will be made independent
of any other organizational level's cumulative
financial goals a participant may have.
3. If the participant has more than one organizational
level's cumulative financial goals, the non-
achievement of a threshold performance level of one
organizational level's cumulative financial goals
does not preclude a payout for the other
organizational level's cumulative financial goals.
4. The following details the effect of the cumulative
financial results performance levels on a
participant's payout amount. The actual payout
factors will be in the sole judgment and discretion
of the ECDC, taking into account the following
guidelines:
a. For below threshold performance in aggregate,
the payout amount is zero.
b. For company threshold performance in aggregate,
25% of the target incentive may be recommended.
For divisional threshold performance in
aggregate, 50% of the target incentive may be
recommended
c. For between company threshold and target
performance in aggregate, at minimum 25% of the
target incentive and up to 100% of the target
incentive may be recommended. For between
divisional threshold and target performance in
aggregate, at minimum 50% of the target
incentive and up to 100% of the target
incentive may be recommended.
d. For target performance in aggregate, 100% of
the target incentive may be recommended.
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e. For between target and outstanding performance
in aggregate, at minimum 100% of the target
incentive and up to 150% of the target
incentive may be recommended.
f. For outstanding performance in aggregate, 150%
of the target incentive may be recommended.
5. Notwithstanding anything to the contrary, the
maximum payout amount, if any, a participant may
receive is 150% of the target incentive.
VII PAYOUTS
A. The cash payout amount will be based on the following
formula:
**************************************************************
Target Incentive x Corporate Weighting x Payout Factor =
Corporate Incentive Payout
Target Incentive x Divisional Weighting x Divisional
Payout Factor = Divisional Incentive Payout
Corporate Incentive Payout + (if applicable) Divisional
Incentive Payout - (Plan End Adjusted Restricted performance
shares Award x Stock Price at Beginning of Plan Cycle) = Cash
Payout Amount
Note: See Section VIII for information regarding the
proportion of the payout amount which is paid in cash and in
restricted performance shares.
*************************************************************
B. The restricted performance shares and portion of the
payout amount, if any, will be made as set forth in
Section VIII below. The determination by the ECDC of
plan end adjusted restricted performance shares shall
constitute payout of this portion of the award.
C. The cash payout, if any, of the payout amount will be
made within 90 days after the end of the plan cycle.
D. In the event of a participant's death, permanent
disability, retirement or leave of absence prior to the
end of the plan cycle, restricted performance shares
awarded at the beginning of the plan cycle, if any, are
forfeited, and the payout amount, if any, will be
determined by the ECDC in its sole discretion.
E. A participant who resigns, or whose employment is
terminated by the company, with or without cause, prior
to the end of the plan cycle, is not eligible for a
payout amount and shall forfeit any restricted
performance shares awarded at the beginning of the plan
cycle.
<PAGE>
VIII. RESTRICTED PERFORMANCE SHARES AWARD PROVISIONS
A. Since one of the objectives of this plan is to provide
the participant with an equity stake in the company and
align management and shareholder interests, it is
intended that a portion of the target incentive, will be
awarded in equity (restricted performance shares) and the
remaining portion will be awarded in cash. At the
beginning of the plan cycle, the ECDC will determine the
proportion of the target incentive that will be allocated
between restricted performance shares, and cash. While
it is intended that such proportions will be maintained,
the actual proportions may be adjusted by the ECDC at the
end of the plan cycle, in its sole discretion.
B. Restricted performance shares, if any, shall be awarded
at the beginning of the plan cycle, after the June, 1996
ECDC meeting. The amount of restricted performance
shares awarded shall be based on the proportion of the
target incentive allocated to restricted performance
shares, as determined by the ECDC. The value of each
share will be determined based on the stock closing sale
price, as reported by the NYSE, on the date the ECDC acts
at the beginning of the plan cycle (June 13, 1996). In
the event the stock is not traded on June 13, 1996 or the
date the ECDC acts, whichever is later, the closing sales
price shall be the price of the stock on the next day
after June 13, 1996 or the date the ECDC acts on which
the stock trades, whichever is later. The restricted
performance shares awarded at the beginning of the plan
cycle also is subject to adjustment at the end of the
plan cycle as set forth in Sections VIII (C) and (D)
below. Restricted performance shares, if any, shall be
awarded pursuant to the shareholder plan, as approved by
the ECDC. In addition to the terms and conditions set
forth in the shareholder plan and Section VII (D) and (E)
below, the following conditions shall apply:
1. During the plan cycle, the participant shall not
have the right to receive dividends or other
distributions with respect to restricted performance
shares received at the beginning of the plan cycle
and shall not have the right to vote such shares.
After the end of the plan cycle, and after all
adjustments to the amount of restricted performance
shares are made by the ECDC as set forth in Section
VII(D) and (E) below, the participant shall have the
right to receive dividends or other distributions
with respect to the final amount of restricted
performance shares issued and shall have the right
to vote such shares. The date on which the dividend
and voting rights shall commence is the date on
which the ECDC makes its determination of the final
number of restricted performance shares awarded
after the plan cycle ends pursuant to Section VII(D)
and (E) below.
<PAGE>
2. During the restricted period, the restricted
performance shares may not be sold or transferred.
Restricted performance shares shall be legended and
held by the Company.
3. Withholding taxes relating to restricted performance
shares awarded may be satisfied by surrendering
shares to the company, in lieu of cash, upon lapse
of the restrictions.
4. The restricted period for restricted performance
shares awarded shall be as follows: subject to
continued employment except as otherwise set forth
in the shareholder plan or Sections VII and VIII of
this plan, the lapse of restrictions on one-half of
the restricted performance shares awarded will occur
on the first anniversary (April 30, 2000) of the
plan end date at which time the participant will
receive a new stock certificate in a number of
shares equal to one-half of the restricted
performance shares awarded with the restrictive
legend deleted, and the lapse of restrictions on the
remaining half will occur on the second anniversary
(April 30, 2001) of the plan end date at which time
the participant will receive a new stock certificate
in a number of shares equal to the remaining half
with the restrictive legend deleted.
5. If the participant dies or becomes permanently
disabled during the restricted period, the
restrictions on the restricted performance shares
will lapse on the date of such event.
6. If the participant retires during the restricted
period at or after his/her normal retirement date,
the restrictions on the restricted performance
shares will lapse on the date of such event.
7. If the participant takes early retirement during the
restricted period, the restrictions on the
restricted performance shares will not lapse until
the restricted period expires. If the participant
dies between the time the participant takes early
retirement and the end of the restricted period
(April 30, 2001), the lapse of restrictions on the
restricted performance shares will occur on the date
of such event.
8. The restricted performance shares may be adjusted by
the ECDC for any change in the capital stock of the
company, as provided in Section II of the
shareholder plan and is in all respects subject to
the provisions of that plan.
<PAGE>
9. In the event of a change of control, whether before
or after the end of the plan cycle, as defined in
the shareholder plan, all shares of restricted
performance shares which would otherwise remain
subject to restrictions under the plan shall be free
of such restrictions.
C. The number of shares of restricted performance shares
awarded at the beginning of the plan cycle, may be
adjusted at the end of the plan cycle for the following
reasons: (1) if the proportion of the target incentive
award of restricted performance shares is adjusted at
the end of the plan cycle by the ECDC as set forth in
Section VIII (A) and/or (2) when the payout factor is
adjusted at the end of the plan cycle based on actual
achievement of target objectives.
D. The final amount of restricted performance shares will
be determined as follows: The restricted performance
shares established by the ECDC at the beginning of the
plan cycle times (x) the payout factor equals (=) the
plan end adjusted restricted performance shares award.
The result of this calculation will be compared to the
restricted performance shares awarded at the beginning
of the plan cycle, and the appropriate amount of
restricted performance shares will be awarded or
forfeited, as required, to bring the restricted
performance shares award to the number of shares
designated as the plan end adjusted stock award.
IX. STOCK OPTION
The participant may be granted a stock option pursuant to the
shareholder plan at the beginning of the plan cycle,
representing another incentive vehicle by which the
participant is able to share in the equity growth of the
company. The number of shares in the stock option granted to
a participant under this plan is based on a set of variables
and assumptions, applied consistently to all participants,
regarding the monetary value a participant might receive upon
exercise of the stock option. The terms and conditions of the
award of the stock option are contained in the shareholder
plan and in the stock option award. Withholding taxes
relating to the gain realized on the exercise of an option may
be satisfied by surrendering to the company the equivalent
value of the taxes, or a portion thereof, in option shares in
lieu of cash.
<PAGE>
X. ADMINISTRATION AND OTHER MATTERS
A. This plan will be administered by the ECDC, who will have
authority in its sole discretion to interpret and
administer this plan, including, without limitation, all
questions regarding eligibility and status of any
participant, and no participant shall have any right to
receive any restricted performance shares or payment of
any kind whatsoever, except as determined by the ECDC
hereunder.
B. The company will have no obligation to reserve or
otherwise fund in advance any amount which may become
payable under the plan.
C. Restricted performance shares awarded and cash paid out
under this plan shall not be considered as compensation
for purposes of defining compensation for retirement,
savings or supplemental executive retirement plans, or
similar type plans.
D. This plan may not be modified or amended except with the
approval of the ECDC. Notwithstanding the foregoing,
Section VIII B (8) shall not be amended.
E. In the event of a conflict between the provisions of this
plan and the provisions of the shareholder plan, the
provisions of the shareholder plan shall apply.
Exhibit 10.14
--------------
JOHN WILEY & SONS, INC.
FY 1997 EXECUTIVE ANNUAL INCENTIVE PLAN
PLAN DOCUMENT
CONFIDENTIAL
MAY 1, 1996
<PAGE>
CONTENTS
Section Subject Page
I. Definitions 2
II. Plan Objectives 3
III. Eligibility 3
IV. Performance Objectives and Measurement 3
V. Performance Evaluation 4
VI. Payouts 6
VII. Status Changes 6
VIII. Administration and Other Matters 6
<PAGE>
I. DEFINITIONS
Following are definitions for words and phrases used in this
document. Unless the context clearly indicates otherwise,
these words and phrases are considered to be defined terms and
appear in this document in italicized print:
company
John Wiley & Sons, Inc.
plan
The company's FY (Fiscal Year) 1997 Executive Annual Incentive
Plan described in this document and any written amendments to
this document.
plan year
The twelve month period from May 1, 1996 to April 30, 1997.
executive compensation and development committee (ECDC)
The committee of the company's Board of Directors (Board)
responsible for reviewing executive compensation.
financial goals
A participant's objective to achieve specific financial
results for FY 1997, including interim revised financial
goals, if any, as approved and communicated in writing, as
described in Sections IV and V below.
financial results
Total company or division achievement against financial goals
set for FY 1997.
strategic milestone
A participant's objective to achieve specific results for FY
1997, including interim revised strategic milestones, if any,
as approved and communicated in writing, as described in
Sections IV and V below. Strategic milestones are leading
indicators of performance.
participant
Any person who is eligible to and is selected to participate
in the plan, as defined in Section III.
base salary
The participant's total amount of base salary, calculated as
follows: base salary as of June 24,1996, or the date of
hire, or promotion into the plan, if later, adjusted for any
increases or decreases during FY 1997, on a prorated basis and
adjusted for any amount of time the participant may not be in
the plan for reasons of hire, promotion, death, disability,
retirement and/or termination.
<PAGE>
payout
Actual gross dollar amount paid to a participant under the
plan, if any, for achievement of financial goals and strategic
milestones, as further discussed in this plan.
target incentive percent
The percent applied to the participant's base salary to
determine the target incentive amount.
target incentive amount
The amount, if any, that a participant is eligible to receive
if a participant achieves 100% of his/her financial goals and
strategic milestones. The incentive for financial goals
should constitute at least 70% of the target incentive amount
for the participant.
performance levels
threshold
The minimum acceptable level of achievement of each
financial goal and strategic milestone. If threshold
performance is achieved against all financial goals and
strategic milestones, a participant may earn 50% of the
target incentive amount for which he/she is eligible.
target
Achievement in aggregate of target financial goals and
strategic milestones. Each individual financial goal and
strategic milestone is set at a level which is both
challenging and achievable.
outstanding
Superior achievement of financial goals and strategic
milestones, both in quality and scope, with limited time
and resources. If outstanding performance is achieved
against all financial goals and strategic milestones, the
maximum amount a participant may earn is 150% of the
target incentive amount.
payout factor
Percentage of financial goals and strategic milestones deemed
achieved, used to determine the payout for which a participant
is eligible.
II. PLAN OBJECTIVES
The purpose of the FY 1997 Executive Annual Incentive Plan is
to enable the company to reinforce and sustain a culture
devoted to excellent performance, emphasize performance at the
corporate and division levels, reward significant
contributions to the success of Wiley, and attract and retain
highly qualified executives.
<PAGE>
III. ELIGIBILITY
The participant is selected by the President and CEO of the
company, from among those employees in key management
positions deemed able to make the most significant
contributions to the growth and profitability of the company,
with the approval of the ECDC. The President and CEO of the
company is a participant.
IV. PERFORMANCE OBJECTIVES AND MEASUREMENT
The plan employs two categories of objectives for performance
measurement: financial goals and strategic milestones. The
weighting of and between the two measures may vary, depending
upon the participant's position. Weighting is recommended by
the participant's manager and approved by the President and
CEO, if the President and CEO is not the participant's
manager.
A. Financial Goals
1. Financial goals for the company are determined near
the beginning of the plan year by the President and
CEO. The President and CEO's goals are reviewed and
approved by the Finance Committee of the Board and
ECDC, and approved by the Board.
2. Financial goals are set for the company as a whole
and for each division and may be revised in the
interim, as appropriate. The participant will be
given specific financial goals, based on an
appropriate mix of company and/or division
objectives.
3. Financial goals include defining levels of
performance (threshold, target and outstanding) and
the measures of each.
B. Strategic Milestones
1. Strategic milestones are non-financial individual
objectives over which the participant has a large
measure of control, which lead to, or are expected
to lead to improved performance for the company in
the future. Strategic milestones are determined
near the beginning of the plan year by the
participant, and approved by the participant's
manager, if the President and CEO is not the
participant's manager.
2. The strategic milestones for the President and CEO
are reviewed and approved by the Executive and
Policy Committee of the Board and by the Board.
3. The strategic milestones for the President and CEO
should be appropriately reflected in those of all
other employees at all levels. Each participant
collaborates with his/her manager in setting
strategic milestones. The strategic milestones may
be revised in the interim, as appropriate.
4. The determination of strategic milestones includes
defining a target level of performance and the
measure of such, and may include defining threshold
and outstanding levels of performance and the
measures of such.
V. PERFORMANCE EVALUATION
A. Financial Results
1. Actual financial results achieved by the company and
by each group and division will be calculated at the
end of the plan year, subject to adjustment for
audited results, and will be compared with
previously set financial goals.
2. Actual financial results will be reviewed by the
participant's manager and the President and CEO and
a payout factor determined. The payout factor is
based on a judgment of the relative importance of
financial results and the achievement compared to
the financial goals. This payout factor is subject
to the review and approval of the President and CEO.
The ECDC will evaluate the President and CEO's
financial results and will recommend to the Board
his/her financial results payout factor.
B. Strategic Milestones
1. Achievement of a participant's strategic milestones
will be determined at the end of the plan year by
comparing results achieved to previously set
objectives.
2. Each participant's manager will recommend a payout
factor for achievement of all strategic milestones
compared with the previously set objectives. In
determining the payout factor, the overall
performance on all strategic milestones will be
considered. This payout factor is subject to the
review and approval of the President and CEO, the
ECDC and the Board. The ECDC will recommend to the
Board for approval the payout factor for the
President and CEO's achievement of his/her strategic
milestones based on the Executive and Policy
Committee of the Board's evaluation of his/her
achievement compared with the previously set
objectives.
<PAGE>
C. Award Determination
1. Financial goals, established for each participant,
may include one or more organizational level's
financial goals (e.g. company and division), and one
or more financial goal for a particular
organizational unit. At least threshold
performance, in aggregate, of a participant's
particular organizational level is necessary for the
participant to receive a payout for the particular
organizational level. However, once the overall
threshold is achieved, the non-achievement of any
one particular financial goal's target objective
does not preclude a payout for all the participant's
financial goals.
2. At least threshold performance of financial goals is
required of the participant's organizational level
for a payout of strategic milestones to be made. If
the participant is measured against more than one
organizational level, at least threshold performance
of financial goals, is required of the
organizational level which has the greatest percent
weighting of the organizational levels' target
incentive amount for a payout of strategic
milestones to be made. If the percent weighting of
the target incentive amount is equal for all the
organizational levels against which the participant
is measured, then at least threshold performance of
financial goals is required of all the participant's
organizational levels for a payout of strategic
milestones to be made.
3. Payout eligibility will be determined by calculating
the amount for achievement of financial goals and
strategic milestones and adding the two together, as
follows:
<PAGE>
*************************************************************
EAIP PAYOUT ELIGIBILITY CALCULATION
FINANCIAL RESULTS PAYOUT AMOUNT
Base Salary X Target Incentive Percent
X Weighting of Financial Goals X Payout Factor
= Financial Goals Payout Eligibility
STRATEGIC MILESTONES PAYOUT AMOUNT
Base Salary X Target Incentive Percent
X Weighting of Strategic Milestones X Payout Factor
= Strategic Milestones Payout Eligibility
EAIP PAYOUT ELIGIBILITY
Financial Goals Payout Amount + Strategic Milestones Payout
Amount
= EAIP Payout Eligibility
**************************************************************
4. Notwithstanding anything to the contrary, the maximum
payout, if any, a participant may receive is 150% of the
target incentive amount.
5. The foregoing EAIP payout eligibility calculation is
intended to set forth general guidelines on how awards
are to be determined. The purpose of this plan is to
motivate the participant to perform in an outstanding
manner. The President and CEO has discretion under this
plan to take into consideration the contribution of the
participant, the participant's management of his/her
organizational unit and other relevant factors, positive
or negative, which impact the company's, the
participant's organizational unit(s), and the
participant's performance overall in determining whether
to recommend granting or denying an award, and the amount
of the award, if any. If the participant is the
President and CEO, such discretion is to be exercised by
the ECDC and the Board.
VI. PAYOUTS
Payouts will be made within 90 days after the end of the plan
year and will be based on audited financial results.
<PAGE>
VII. STATUS CHANGES
A. In the event of a participant's death, disability,
retirement or leave of absence prior to payout from the
plan, the payout, if any, will be determined by the
President and CEO in his/her sole discretion, subject to
any approval of the ECDC in its sole discretion, subject
to any required Board approvals. If the participant is
the President and CEO, such approval is required by the
Board, in its sole discretion.
B. A participant who resigns, or whose employment is
terminated by the company, with or without cause, before
payout from the plan is distributed, will not receive a
payout. Exception to this provision shall be made only
with the approval of the ECDC, in its sole discretion,
subject to any required Board approvals. If the
participant is the President and CEO, such approval is
required by the Board in its sole discretion.
C. A participant who transfers between divisions of the
company, will have his/her payout prorated to the nearest
fiscal quarter for the time spent in each division, based
on the achievement of financial goals and strategic
milestones established for the position in each division,
and based upon a judgment of the participant's
contribution to the achievement of goals in each
position, including interim revisions, if appropriate.
D. A participant who is appointed to a position with a
different target incentive percent will have his/her
payout prorated to the nearest fiscal quarter for the
time spent in each position, based on the achievement of
financial goals and strategic milestones established for
each position.
E. A participant who is hired or promoted into an eligible
position during the plan year may receive a prorated
payout as determined by the President and CEO, in his/her
sole discretion, subject to the approval of the ECDC.
VIII. ADMINISTRATION AND OTHER MATTERS
A. The plan is effective for the plan year. It will
terminate, subject to payout, if any, in accordance with
and subject to the provisions of this plan unless renewed
by the company in writing in its sole discretion.
B. This plan will be administered by the President and CEO,
who will have authority to interpret and administer this
plan, including, without limitation, all questions
regarding eligibility and status of the participant,
subject to the approval of the ECDC required under this
plan or the by-laws of the company.
<PAGE>
C. This plan may be withdrawn, amended or modified at any
time, and for any reason, in writing, in the company's
sole discretion.
D. The determination of an award and payout under this plan,
if any, is subject to the approval of the President and
CEO, the ECDC, and the Board in their sole discretion.
This plan does not confer upon any participant the right
to receive any payout, or payment of any kind whatsoever.
E. No participant shall have any vested rights under this
plan. This plan does not constitute a contract.
F. All deductions and other withholdings required by law
shall be made to the participant's payout, if any.
Exhibit 22
----------
SUBSIDIARIES OF JOHN WILEY & SONS, INC. <F1>
--------------------------------------------
Jurisdiction
In Which
Incorporated
-----------------
Wiley Europe Limited England
Wiley Heyden Limited England <F2>
John Wiley & Sons Limited England <F2>
Chancery Law Publishing Limited England <F2>
Jacaranda Wiley Limited Australia
John Wiley & Sons (HK) Limited Hong Kong
Wiley Intersciences, Inc. New York
John Wiley & Sons International
Rights, Inc. Delaware
Wiley-Liss, Inc. Delaware
Wiley Publishing Services, Inc. Delaware
Wiley Subscription Services, Inc. Delaware
Clinical Psychology Publishing
Company, Inc. Delaware
John Wiley & Sons Canada Limited Canada
Wiley Foreign Sales Corporation Barbados
John Wiley & Sons (Asia) Pte Ltd. Singapore
Scripta Technica, Inc. District of Columbia
John Wiley & Sons GmbH Germany
VCH Verlagsgesellschaft mbH Germany <F3>
Wilhelm Ernst & Sohn, Verlag fur
Architektur und technische
Wissenschaften, GmbH Germany <F4>
Akademie Verlag GmbH Germany <F4>
Academy Group Limited England <F4>
Chemical Concepts Gesellschaft fur
Chemie-Informationssysteme mbH Germany <F4>
VCH Publishers, Inc. Florida <F4>
VCH Publishers (U.K.) Limited England <F4>
VCH Verlags AG Switzerland <F4>
Verlag Chemie GmbH Germany <F4>
VCH Shuppan K. K. Japan <F4>
Physik-Verlag GmbH Germany <F4>
[FN]
<F1> The names of other subsidiaries which would not
constitute a significant subsidiary in the aggregate
have been omitted.
<F2> Subsidary of Wiley Europe Limited.
<F3> Subsidary of John Wiley & Sons GmbH.
<F4> Subsidiary of VCH Verlagsgesellschaft mbH.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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.
</LEGEND>
<CIK> 0000107140
<NAME> JOHN WILEY & SONS, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> APR-30-1996
<CASH> 2,078
<SECURITIES> 0
<RECEIVABLES> 92,599
<ALLOWANCES> 30,115
<INVENTORY> 45,622
<CURRENT-ASSETS> 121,470
<PP&E> 53,439
<DEPRECIATION> 31,702
<TOTAL-ASSETS> 229,774
<CURRENT-LIABILITIES> 102,260
<BONDS> 0
<COMMON> 20,392
0
0
<OTHER-SE> 87,603
<TOTAL-LIABILITY-AND-EQUITY> 229,774
<SALES> 0
<TOTAL-REVENUES> 174,923
<CGS> 0
<TOTAL-COSTS> 58,201
<OTHER-EXPENSES> 98,107
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 216
<INCOME-PRETAX> 18,930
<INCOME-TAX> 7,572
<INCOME-CONTINUING> 11,358
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,358
<EPS-PRIMARY> .69
<EPS-DILUTED> .69
</TABLE>
