SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT 1934
For the quarterly period ended October 31, 1999 Commission File No. 1-11507
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES ACT OF 1934
For the transition period from to
JOHN WILEY & SONS, INC.
(Exact name of Registrant as specified in its charter)
NEW YORK 13-5593032
- -------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
605 THIRD AVENUE, NEW YORK, NY 10158-0012
- -------------------------------- ----------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, (212) 850-6000
including area code ----------------------------------
NOT APPLICABLE
--------------------------------------------------------------
Former name, former address, and former fiscal year,
if changed since last report
Indicate by check mark, whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
The number of shares outstanding of each of the Registrant's classes of common
stock as of October 31, 1999 were:
Class A, par value $1.00 - 49,848,663
Class B, par value $1.00 - 12,072,156
This is the first page of a 17 page document
<PAGE>
JOHN WILEY & SONS, INC.
INDEX
PART I - FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements.
Condensed Consolidated Statements of Financial Position - Unaudited
as of October 31, 1999 and 1998 and April 30, 1999................... 3
Condensed Consolidated Statements of Income - Unaudited
for the Three and Six Months ended October 31, 1999 and 1998. ....... 4
Condensed Consolidated Statements of Cash Flow - Unaudited
for the Three and Six Months ended October 31, 1999 and 1998......... 5
Notes to Unaudited Condensed Consolidated Financial Statements...... 6-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 10-13
Item 3. Quantitative and Qualitative Disclosure About Market Risk........14
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.... ........ 15
Item 6. Exhibits and Reports on Form 8-K.......................... ..... 15
"Safe Harbor" Statement under the
Private Securities Litigation Reform Act of 1995.................... 16
SIGNATURES............................................................... 17
EXHIBITS
3(i) Certificate of Amendment of the Certificate of Incorporation dated as of
September 1999
27 Financial Data Schedule
<PAGE>
<TABLE>
<CAPTION>
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands)
(UNAUDITED)
October 31, April 30,
------------------- ---------
Assets 1999 1998 1999
--------- ------- ---------
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents $ 2,419 71,867 $ 148,970
Accounts receivable 87,977 68,919 53,785
Inventories 40,133 44,923 40,003
Deferred income tax benefits 3,883 443 3,865
Prepaid expenses 6,082 6,528 9,347
-------- -------- --------
Total Current Assets 140,494 192,680 255,970
Product Development Assets 40,375 36,028 38,099
Property and Equipment 34,301 34,073 34,726
Intangible Assets 305,574 178,966 174,911
Deferred Income Tax Benefits 11,463 15,570 13,001
Other Assets 12,399 11,618 11,845
--------- --------- --------
Total Assets $ 544,606 468,935 $ 528,552
========= ========= ========
Liabilities & Shareholders' Equity
Current Liabilities
Notes payable and
Current portion of long-term debt $ 69,736 - $ -
Accounts and royalties payable 56,192 53,775 34,708
Deferred subscription revenues 43,252 34,091 110,143
Accrued income taxes 6,719 5,848 3,356
Other accrued liabilities 50,260 40,603 46,893
-------- -------- --------
Total Current Liabilities 226,159 134,317 195,100
Long-Term Debt 95,000 125,000 125,000
Other Long-Term Liabilities 32,174 28,353 30,271
Deferred Income Taxes 15,807 16,276 15,969
Shareholders' Equity 175,466 164,989 162,212
--------- --------- --------
Total Liabilities
& Shareholders' Equity $ 544,606 468,935 $ 528,552
========= ========= ========
</TABLE>
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
JOHN WILEY & SONS, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands except per share information)
Three Months Six Months
Ended October 31, Ended October 31,
------------------ ------------------
1999 1998 1999 1998
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Revenues $ 150,338 123,640 $ 287,318 245,731
Costs and Expenses
Cost of sales 49,272 42,203 96,814 84,570
Operating and admin. expenses 71,579 63,798 135,319 124,172
Amortization of intangibles 4,573 2,333 7,702 4,617
-------- ------- ------- -------
Total Costs and Expenses 125,424 108,334 239,835 213,359
-------- ------- ------- -------
Operating Income 24,914 15,306 47,483 32,372
Interest Income and Other (67) 1,156 557 2,578
Interest Expense (2,313) (1,969) (4,146) (3,951)
-------- ------- -------- -------
Interest Income (Expense) - Net (2,380) (813) (3,589) (1,373)
-------- ------- -------- -------
Income Before Taxes 22,534 14,493 43,894 30,999
Provision For Income Taxes 8,450 5,218 16,460 11,160
-------- -------- -------- -------
Net Income $ 14,084 9,275 $ 27,434 19,839
======== ======== ======== =======
Income Per Share
Diluted $ 0.22 0.14 $ 0.42 0.30
Basic $ 0.23 0.15 $ 0.44 0.31
Cash Dividends Per Share
Class A Common $ 0.035625 0.031875 $0.071250 0.063750
Class B Common $ 0.031875 0.028125 $0.063750 0.056250
Average Shares
Diluted 64,526 66,367 65,099 66,421
Basic 61,423 63,029 61,812 63,156
</TABLE>
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
<PAGE>
<TABLE>
<CAPTION>
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW - UNAUDITED
(In thousands)
For The Six Months
Ended October 31,
-------------------------
1999 1998
---------- ---------
<S> <C> <C>
Operating Activities
Net income $ 27,434 19,839
Non-cash items 49,386 37,700
Net change in operating assets and liabilities (90,470) (69,044)
--------- ---------
Cash Used In Operating Activities (13,650) (11,505)
--------- ---------
Investing Activities
Additions to product development assets (14,858) (14,222)
Additions to property and equipment (4,417) (4,203)
Acquisition of publishing assets (139,838) (8,412)
--------- ---------
Cash Used in Investing Activities (159,113) (26,837)
--------- ---------
Financing Activities
Purchase of treasury shares (10,968) (12,989)
Net borrowings of short-term debt 39,736 -
Cash dividends (4,326) (3,966)
Proceeds from exercise of stock options 709 709
--------- ---------
Cash Used for Financing Activities 25,151 (16,245)
--------- ---------
Effects of Exchange Rate Changes on Cash 1,061 (951)
--------- ---------
Cash and Cash Equivalents
Decrease for Period (146,551) (55,538)
Balance at Beginning of Period 148,970 127,405
--------- --------
Balance at End of Period $ 2,419 71,867
========= ========
Cash Paid During the Period for
Interest $ 4,019 3,920
Income taxes $ 9,610 6,425
</TABLE>
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
<PAGE>
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1999
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting only
of normal recurring adjustments, necessary to present fairly the Company's
consolidated financial position as of October 31, 1999 and 1998, and April
30, 1999, and results of operations and cash flows for the periods ended
October 31, 1999 and 1998. These statements should be read in conjunction
with the most recent audited financial statements contained in the
Company's Form 10-K for the fiscal year ended April 30, 1999.
2. The results for the three and six months ended October 31, 1999 are not
necessarily indicative of the results to be expected for the full year.
3. A reconciliation of the shares used in the computation of income per share
follows:
<TABLE>
<CAPTION>
Three Months Six Months
Ended October 31, Ended October 31,
----------------- -----------------
1999 1998 1999 1998
------- -------- ------- --------
<S> <C> <C> <C> <C>
(thousands)
Weighted average shares outstanding
61,946 63,823 62,333 63,933
Less: Unearned deferred compensation
shares (523) (794) (521) (777)
------- ------ ------ -------
Shares used for basic income per share 61,423 63,029 61,812 63,156
Dilutive effect of stock options and
other stock awards 3,103 3,338 3,287 3,265
------- ------ ------ -------
Shares used for diluted income per
share 64,526 66,367 65,099 66,421
------- ------ ------- -------
</TABLE>
4. Inventories were as follows:
<TABLE>
<CAPTION>
October 31, April 30,
---------------------------- -------------
1999 1998 1999
-------------- ----------- -------------
<S> <C> <C> <C>
(thousands)
Finished goods $35,209 36,235 $34,485
Work-in-process 3,070 5,940 5,325
Paper, cloth and other 3,868 5,023 2,007
---------- ----------- ----------
42,147 47,198 41,817
LIFO reserve (2,014) (2,275) (1,814)
---------- ----------- ----------
Total inventories $40,133 44,923 $40,003
---------- ----------- ----------
</TABLE>
<PAGE>
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1999
5. Comprehensive income was as follows:
<TABLE>
<CAPTION>
Three Months Six Months
Ended October 31, Ended October 31,
------------------ -----------------
1999 1998 1999 1998
--------- -------- --------- -------
<S> <C> <C> <C> <C>
(thousands)
Net Income $14,084 9,275 $27,434 19,839
Other Comprehensive Income(Loss) -
Foreign Currency Translation
Adjustments (67) 169 (11) (1,161)
-------- -------- -------- -------
Comprehensive Income $14,017 9,444 $27,423 18,678
-------- -------- -------- -------
</TABLE>
6. In the first quarter of fiscal year 2000, the Company acquired
certain higher education titles for approximately $58 million in cash,
and the Jossey-Bass publishing company for approximately $82 million in
cash,from Pearson Inc. The acquisitions were financed by available cash
balances and short-term lines of credit. The higher education titles
include such disciplines as biology/anatomy and physiology, engineering,
mathematics, economics/finance and teacher education. Jossey-Bass
publishes books and journals for professional and executives in such
areas as business, psychology and educational/health management. The
acquisitions have been accounted for by the purchase method, and the
accompanying financial statements include the net assets acquired and
results of operations since the dates of acquisition. The cost of the
acquisitions has been allocated on the basis of preliminary estimates of
the fair values of the assets acquired and the liabilities assumed.
Final asset and liability fair values may differ based on appraisals and
tax bases, however, it is anticipated that any changes will not have a
material effect in the aggregate on the consolidated financial position
of the Company. The excess of cost over the preliminary estimate of the
fair value of the tangible assets acquired amounted to approximately
$138 million, relating primarily to acquired publication rights and
goodwill, and is being amortized on a straight line basis over estimated
average lives ranging from 10 to 20 years.
7. In the first quarter of fiscal year 2000, the Company adopted Statement
of Position ("SOP") 98-1, "Accounting for the Cost of Computer Software
Developed or Obtained for Internal Use" issued by the American Institute
of Certified Public Accountants. SOP 98-1 requires that certain costs
incurred in developing or obtaining internal use software be capitalized
and amortized over the useful life of the software. Previously, the
Company expensed most of these costs as incurred. The adoption of SOP 98-1
had the effect of increasing net income in the first six months of
fiscal year 2000 by approximately $840,000.
<PAGE>
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1999
8. Segment information was as follows:
<TABLE>
<CAPTION>
Three Months Ended October 31,
-------------------------------------------------
1999 1998
-------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(thousands)
Inter- Inter-
External segment External segment
Revenues Customers Sales Total Customers Sales Total
------------------------ ------------------------
Domestic Segments:
Scientific, Tech, & Med. $ 34,508 1,363 35,871 $30,791 1,590 32,381
Professional/Trade 36,475 3,495 39,970 26,577 3,844 30,421
College 28,085 6,550 34,635 19,513 4,563 24,076
European Segment 35,487 1,703 37,190 34,789 2,201 36,990
Other Segments 15,783 175 15,958 11,970 110 12,080
Eliminations - (13,286) (13,286) - (12,308) (12,308)
------------------------ -------------------------
Total Revenues $150,338 - 150,338 $123,640 - 123,640
------------------------ -------------------------
Direct Contribution to Profit
Domestic Segments:
Scientific, Tech, & Med. $ 15,286 $12,349
Professional/Trade 9,207 8,188
College 10,461 3,936
European Segment 10,128 11,517
Other Segments 2,768 1,771
--------- --------
Total Direct Contribution to Profit 47,850 37,761
Shared Services and Admin. Costs (22,936) (22,455)
--------- --------
Operating Income 24,914 15,306
Interest Expense - Net (2,380) (813)
--------- ---------
Income Before Taxes $22,534 $14,493
--------- ---------
</TABLE>
<PAGE>
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1999
<TABLE>
<CAPTION>
Six Months Ended October 31,
-----------------------------------------------------
1999 1998
--------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
(thousands)
Inter- Inter-
External segment External segment
Revenues Customers Sales Total Customers Sales Total
--------------------------------------- ------------
Domestic Segments:
Scientific, Tech, & Med. $67,962 2,985 70,947 $61,308 2,955 64,263
Professional/Trade 62,724 6,617 69,341 46,549 6,532 53,081
College 58,617 11,430 70,047 47,592 8,691 56,283
European Segment 67,122 4,395 71,517 65,154 4,985 70,139
Other Segments 30,893 278 31,171 25,128 243 25,371
Eliminations - (25,705)(25,705) - (23,406)(23,406)
-------------------------- --------------------------
Total Revenues $287,318 - 287,318 $245,731 - 245,731
-------------------------- --------------------------
Direct Contribution to Profit
Domestic Segments:
Scientific, Tech, & Med. $30,161 $25,426
Professional/Trade 13,299 10,685
College 23,734 15,574
European Segment 21,166 22,216
Other Segments 5,134 3,213
--------- --------
Total Direct Contribution to Profit 93,494 77,114
Shared Services and Admin. Costs (46,011) (44,742)
--------- --------
Operating Income 47,483 32,372
Interest Expense - Net (3,589) (1,373)
---------- ---------
Income Before Taxes $43,894 $30,999
---------- ---------
</TABLE>
As a result of recent aquisitions, total assets for the Professional/Trade
segment and College segment increased to approximately $171 million and $102
million, respectively.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OCTOBER 31, 1999
FINANCIAL CONDITION
During this seasonal period of cash usage, operating activities used $13.7
million of cash,or $2.2 million more than the prior year's comparable
period. The increase was primarily due to higher receivable levels. The use
of cash during this period is consistent with the seasonality of journal
subscription receipts and college product receipts that occur, for the most
part, in the second half of the fiscal year.
Investing activities used $159.1 million during the current year-to-date,
or $132.3 million more than the comparable prior year's period, as the
Company continued to expand its core publishing programs through
acquisitions including the Jossey-Bass publishing company and certain
higher education titles from Pearson Inc. as more fully described in note
6.
Financing activities primarily reflect the purchase of treasury shares,
dividend payments, and additional short-term borrowings of $39.7 million at
a floating interest rate of 5.5% to partially finance the acquisitions
noted above.
RESULTS OF OPERATIONS
SECOND QUARTER ENDED OCTOBER 31, 1999
Revenues for the second quarter advanced 22% to $150.3 million compared
with $123.6 million in the prior year. Excluding the acquisitions completed
during the current fiscal year as noted above, organic revenue growth for
the quarter was approximately 8% over the comparable prior year period.
Operating income for the current quarter increased 63% to $24.9 million,
compared with $15.3 million in the prior year. Net income advanced 52% to
$14.1 million.
The Company's overall strategy of gaining market share in its core
businesses by growing organically and through targeted acquisitions, while
at the same time improving margins, is working. The Company continues to
invest in new technologies as it accelerates its migration to the digital
world.
Cost of sales as a percentage of revenues declined to 32.8% compared with
34.1% in the prior year's second quarter. Operating expenses as a
percentage of revenues declined to 47.6% in the current quarter, down from
51.6% in the prior year's second quarter due to cost containment measures
coupled with synergies achieved on the acquisitions. The operating margin
improved to 16.6% in the current quarter, compared with 12.4% in the prior
year's second quarter.
Interest income decreased $1.1 million, as cash balances were used to
finance the acquisitions during the year. The effective tax rate was 37.5%
in the current quarter, compared with 36% in the prior year.
<PAGE>
SEGMENT RESULTS
Domestic Scientific, Technical and Medical (STM) revenues increased 11%,
for the second quarter compared with the prior year mainly due to the
subscription journals business. The direct contribution to profit
increased 24%. The direct contribution margin was 42.6% in the current
quarter compared with 38.1% in the prior year's second quarter. Wiley
InterScience, the Company's web-based service, is being expanded by
adding the content of some of our best-selling major reference works and
increasing the number of dedicated sales staff. The investment in Wiley
InterScience is beginning to pay off. Customers are signing multi-year
enhanced access licenses on business terms that are attractive to them
and to the Company. In addition, the Company is playing a leading role in
the development of a reference linking service with eleven other
prominent STM publishers. This unprecedented collaboration will allow
researchers to move easily from a reference in a journal article to the
content of a cited journal article typically located on a different
server and published by a different publisher.
Domestic Professional/Trade segment revenues advanced 31% for the second
quarter over the prior year, benefiting from the recent acquisition of
Jossey-Bass, a San Francisco-based professional publisher, and strong
demand for backlist titles, including increased demand from online
internet suppliers. The direct contribution to profit advanced 12%. The
direct contribution margin was 23.0% compared with 26.9% in the prior
year. The Professional/Trade business is taking advantage of the dramatic
growth of e-commerce. Online selling plays to the division's strength as
a niche publisher with a deep backlist serving the professional needs of
its customers. There is a growing demand for electronic products among
the professional markets that it serves, notably computing, accounting,
finance, psychology and architecture. The division is capitalizing on
these opportunities with a combination of print and web-based products
and services, as well as through the formation of strategic alliances.
Domestic College segment revenues increased 44% for the quarter compared
with the prior year, primarily related to the acquisition of certain
higher education titles during the year, as well as a strong frontlist.
Some orders which are normally received in July of the first quarter were
received in August of this year's second quarter. The direct contribution
to profit increased 166%, and the direct contribution margin improved to
30.2% during the current quarter compared with 16.4% in the prior year's
second quarter. The college publishing market is as robust as it has been
during the past decade. Aided by technology, lifelong learning
opportunities are emerging. All of the division's major college titles
now have a technology component to facilitate teaching and learning, on
and off the campus. The College division has formed partnerships to
provide faculty with course management tools, including online testing.
And, technology is helping the division become more efficient by enabling
it to distribute teaching supplements to faculty electronically.
European segment revenues increased .5%, as the translation effects of a
stronger U.S. dollar adversely impacted revenue growth. The direct
contribution margin was 27.2% in the current quarter compared with 31.1%
in the prior year's second quarter. The improvement in the Other
segment's results of operations was due to strong local product and the
strengthening of many of the Asian economies.
<PAGE>
RESULTS OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1999
Revenues for the first six months advanced 17% to $287.3 million compared
with $245.7 million in the prior year. Excluding the acquisitions
completed during the current fiscal year, organic revenue growth for the
first six months was approximately 7% over the comparable prior year
period. Operating income for the six months increased 47% to $47.5
million, compared with $32.4 million in the prior year. Net income
advanced 38% to $27.4 million. After financing costs, the current year
acquisitions were accretive to earnings by approximately $1.6 million.
Costs of sales as a percentage of revenues for the six months declined to
33.7% compared with 34.4% in the prior year. Operating expenses as a
percentage of revenues declined to 47.1% in the current period, down from
50.5% in the prior year due to cost containment measures coupled with
synergies achieved on the acquisitions. The operating margin improved to
16.5% in the current period compared with 13.2% in the prior year.
Interest income decreased $2 million, as cash balances were used to
finance the acquisitions during the year. The effective tax rate was
37.5% in the current period, compared with 36% in the prior year.
SEGMENT RESULTS
Domestic Scientific, Technical and Medical (STM) revenues increased 10%
for the first six months compared with the prior year mainly due to the
subscription journals business. The direct contribution to profit
increased 19%. The direct contribution margin was 42.5% in the current
period compared with 39.6% in the prior year.
Domestic Professional/Trade revenues advanced 31% for the six months over
the prior year, benefiting from the recent acquisition of Jossey-Bass, a
San Francisco-based professional publisher, and strong demand for
backlist titles, including increased demand from online internet
suppliers. The direct contribution to profit advanced 24%. The direct
contribution margin was 19.2% compared with 20.1% in the prior year.
Domestic College revenues increased 24% for the six months compared with
the prior year, primarly related to the acquisition of certain higher
education titles during the year, as well as a strong frontlist. The
direct contribution to profit increased 52%, and the direct contribution
margin improved to 33.9% during the period compared with 27.7% in the
prior year.
European segment revenues increased 2%, as the translation effects of a
stronger U.S. dollar adversely impacted revenue growth. The direct
contribution margin was 29.6% in the current period compared with 31.7%
in the prior year. The improvement in the Other segment's results of
operations was due to strong local product and the strengthening of many
of the Asian economies.
<PAGE>
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 133 "Accounting for Derivative
Instruments and Hedging Activities", which specifies the accounting and
disclosure requirements for such instruments, and is effective for the
Company's fiscal year beginning on May 1, 2001. It is anticipated that the
adoption of this new accounting standard will not have a material effect on
the consolidated financial statements of the Company.
YEAR 2000 ISSUES
The Company reviewed its systems and products to determine the extent and
impact of the year 2000 issues, and has substantially completed the
remediation and testing of its systems. Many of the Company's systems were
new and were designed to accommodate the year 2000 issue when originally
installed. The total cost to remedy the situation is currently estimated to
be approximately $2.9 million, of which approximately $2.7 million has been
expended through October 31, 1999.
The Company has communicated with its key customers and suppliers in an
effort to assess how they intend to resolve their year 2000 issues.
Although nothing has come to the Company's attention to indicate that its
key customers or suppliers will not be able to resolve their year 2000
issues in a satisfactory and timely manner, there can be no assurance that
they have resolved their year 2000 issues, nor is it possible to estimate
the magnitude of the adverse impact it would have on the Company's
operations, if they fail to do so.
The anticipated costs and timing of resolving the year 2000 issues are
based on numerous assumptions and estimates relating to future events
including the timely resolution of the third party customer and supplier
interface issues and other similar uncertainties. The Company is in the
process of finalizing contingency plans which will be implemented, if
required.
EURO CONVERSION ISSUES
Effective January 1, 1999, eleven member countries of the European union
established fixed conversion rates between their existing legal currencies
and the Euro, and adopted the Euro as their common legal currency.
The Company has completed its assessment of the impact that the conversion
to the Euro will have on its operations and the modifications that will be
required to its systems. Although it is still in the early stages of
implementing corrective measures, the Company believes that the Euro
conversion should not have a material effect on its operations.
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
The Company is exposed to market risk primarily related to
interest rates and foreign exchange. It is the Company's
policy to monitor these exposures and to use derivative
financial instruments from time to time to reduce fluctuation
in earnings and cash flow when it is deemed appropriate to do
so. The Company does not use derivative financial instruments
for trading or speculative purposes.
Interest Rates
The Company had a $125 million variable rate long-term loan
and $39.7 million of variable rate short-term debt outstanding
at October 31,1999, which approximated fair value. The
weighted average interest rate as of October 31, 1999 was
approximately 5.5%. The Company did not use any derivative
financial instruments to manage this exposure.
Foreign Exchange Rates
The Company is exposed to foreign currency exchange movements
primarily in European, Asian, Canadian and Australian
currencies. Consequently, the Company, from time to time,
enters into foreign exchange forward contracts as a hedge
against its overseas subsidiaries' foreign currency asset,
liability, commitment, and anticipated transaction exposures,
including intercompany purchases. At October 31, 1999, the
Company had open foreign exchange forward contracts expiring
through April 30, 2000 as follows:
Average
Currency Sold U.S. $Value Contract Rate
------------- ----------- -------------
Canadian Dollars $2.6 million $.6832
Australian Dollars $1.5 million $.6610
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The following
matters were voted upon at the annual meeting of shareholders of the
Company on September 16, 1999.
Election of Directors
---------------------
Ten directors as indicated in the Proxy Statement were elected to the
Board, three of whom were elected by the holders of Class A Common
Stock, and seven by the holders of Class B Common Stock.
Adoption of the Long Term Annual Incentive Plan
-----------------------------------------------
The Long Term Annual Incentive Plan was approved as follows:
Votes For 11,135,305
Votes Against 2,712,389
Abstentions 52,182
Adoption of the Executive Annual Incentive Plan
-----------------------------------------------
The Executive Annual Incentive Plan was approved as follows:
Votes For 14,711,276
Votes Against 255,375
Abstentions 54,225
Approval Of Amendment To The Company's Restated Certificate Of
--------------------------------------------------------------
Incorporation
--------------------------------------------------------------
The amendment increased the total number of shares of all classes of
capital stock which the Company shall have authority to issue
254,000,000 shares, consisting of 2,000,000 shares of Preferred
Stock, 180,000,000 shares of Class A Common Stock, and 72,000,000
shares of Class B Common Stock.
The amendment was approved as follows:
Votes For 12,556,738
Votes Against 2,449,520
Abstentions 14,619
Ratification of Appointment of Arthur Andersen LLP, as Independent
------------------------------------------------------------------
Public Accountants for the Fiscal Year Ending April 30, 2000
------------------------------------------------------------
The appointment was ratified as follows:
Votes For 15,011,104
Votes Against 311
Abstentions 9,462
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3(i) - Certificate of Amendment of the Certificate of
Incorporation dated as of September 1999
27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
October 31, 1999
<PAGE>
"Safe Harbor" Statement under the
Private Securities Litigation Reform Act of 1995
This report contains certain forward-looking statements concerning the Company's
operations, performance and financial condition. Reliance should not be placed
on forward-looking statements, as actual results may differ materially from
those in any forward-looking statements. Any such forward- looking statements
are based upon a number of assumptions and estimates that are inherently subject
to uncertainties and contingencies, many of which are beyond the control of the
Company, and are subject to change based on many important factors. Such factors
include, but are not limited to: (i) the pace, acceptance, and level of
investment in emerging new electronic technologies and products; (ii) subscriber
renewal rates for the Company's journals; (iii) the consolidation of the retail
book trade market; (iv) the seasonal nature of the Company's educational
business and the impact of the used book market; (v) the ability of the Company
and its customers and suppliers to satisfactorily resolve the year 2000 issues
in a timely manner; (vi) worldwide economic and political conditions; and (vii)
other factors detailed from time to time in the Company's filings with the
Securities and Exchange Commission. The Company undertakes no obligation to
update or revise any such forward-looking statements to reflect subsequent
events or circumstances.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JOHN WILEY & SONS, INC.
Registrant
By /s/William J. Pesce
--------------
William J. Pesce
President and
Chief Executive Officer
By /s/Robert D. Wilder
--------------
Robert D. Wilder
Executive Vice President and
Chief Financial Officer
Dated: December 14, 1999
Exhibit 3(i)
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 original name of the corporation is JOHN WILEY
AND SONS. The current 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.
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 One Hundred Twenty-eight Million
(128,000,000) to Two Hundred Fifty-four Million (254,000,000) by authorizing an
additional Ninety Million (90,000,000) shares of Class A Common Stock with a par
value of One Dollar ($1.00) per share, and an additional Thirty-six Million
(36,000,000) 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 Two Hundred
Fifty-four Million (254,000,000) shares, consisting of Two Million (2,000,000)
shares of Preferred Stock with a par value of One Dollar ($1.00) per share, One
Hundred Eighty Million (180,000,000) shares of Class A Common Stock with a par
value of One Dollar ($1.00) per share, and Seventy-two Million (72,000,000)
shares of Class B Common Stock with a par value of One Dollar ($1.00) per share.
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 24, 1999, 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 16, 1999.
<PAGE>
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.
September 20, 1999
----------------------------
Robert D. Wilder
Executive Vice President and
Chief Financial Officer
----------------------------
Josephine Bacchi
Corporate Secretary
<PAGE>
STATE OF NEW YORK )
COUNTY OF NEW YORK) ss:
Robert D. Wilder, being duly sworn, deposes and says that he
is the Executive Vice President of JOHN WILEY & SONS, INC.; that he signed said
Certificate in the corporate name; that he has read the said Certificate and
knows the contents thereof; and that the statements contained are true to his
knowledge.
------------------------------
Josephine Bacchi
Corporate Secretary
Subscribed and sworn to before
me on September 20, 1999.
- ----------------------------
Notary Public
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27
FINANCIAL DATA SCHEDULE
(Dollars in Thousands Except Per Share Data)
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AND THE CONSOLIDATED STATEMENT OF
INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000107140
<NAME> JOHN WILEY & SONS, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> MAY-01-1999
<PERIOD-END> OCT-31-1999
<CASH> 2,419
<SECURITIES> 0
<RECEIVABLES> 147,530
<ALLOWANCES> 59,553
<INVENTORY> 40,133
<CURRENT-ASSETS> 140,494
<PP&E> 97,986
<DEPRECIATION> 63,685
<TOTAL-ASSETS> 544,606
<CURRENT-LIABILITIES> 226,159
<BONDS> 95,000
0
0
<COMMON> 83,190
<OTHER-SE> 92,276
<TOTAL-LIABILITY-AND-EQUITY> 544,606
<SALES> 0
<TOTAL-REVENUES> 287,318
<CGS> 96,814
<TOTAL-COSTS> 239,835
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,146
<INCOME-PRETAX> 43,894
<INCOME-TAX> 16,460
<INCOME-CONTINUING> 27,434
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,434
<EPS-BASIC> 0.44
<EPS-DILUTED> 0.42
</TABLE>
