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 January 31, 2000 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, including area code (212) 850-6000
--------------
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 January 31, 2000 were:
Class A, par value $1.00 - 49,005,586
Class B, par Value $1.00 - 11,949,656
This is the first page of a 16 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 January 31, 2000 and 1999 and April 30, 1999.............. 3
Condensed Consolidated Statements of Income - Unaudited
for the Three and Nine Months ended January 31, 2000 and 1999.. 4
Condensed Consolidated Statements of Cash Flow - Unaudited
for the Three and Nine Months ended January 31, 2000 and 1999.. 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 6. Exhibits and Reports on Form 8-K.................................. 15
"Safe Harbor" Statement under the
Private Securities Litigation Reform Act of 1995........................ 15
SIGNATURES................................................................... 16
EXHIBITS
27 Financial Data Schedule
<PAGE>
<TABLE>
<CAPTION>
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands)
(UNAUDITED)
January 31, April 30,
-----------------------------------------
Assets 2000 1999 1999
------------------- ----------------- ---------------
<S> <C> <C> <C>
Current Asset
Cash and cash equivalents $ 82,070 182,700 $ 148,970
Accounts receivable 87,299 80,129 53,785
Inventories 39,884 41,306 40,003
Deferred income tax benefits 3,857 446 3,865
Prepaid expenses 6,108 6,254 9,347
---------------- ----------------- ---------------
Total Current Assets 219,218 310,835 255,970
Product Development Assets 40,310 36,938 38,099
Property and Equipment 35,452 33,792 34,726
Intangible Assets 305,965 177,531 174,911
Deferred Income Tax Benefits 10,144 14,180 13,001
Other Assets 13,374 11,296 11,845
------------------------------------------------------------
Total Assets $ 624,463 584,572 $ 528,552
============================================================
Liabilities & Shareholders' Equity
Current Liabilities
Notes payable and current portion of long-term debt $ 30,000 - $ -
Accounts and royalties payable 72,910 60,048 34,708
Deferred subscription revenues 139,343 139,327 110,143
Accrued income taxes 9,921 4,369 3,356
Other accrued liabilities 54,766 44,101 46,893
---------------------------------------------------------
Total Current Liabilities 306,940 247,845 195,100
Long-Term Debt 95,000 125,000 125,000
Other Long-Term Liabilities 32,372 28,843 30,271
Deferred Income Taxes 16,476 16,770 15,969
Shareholders' Equity 173,675 166,114 162,212
------------------------------------------------------------
Total Liabilities & Shareholders' Equity $ 624,463 584,572 $ 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 Nine Months
Ended January 31, Ended January 31,
--------------------------------------- -------------------------------------
2000 1999 2000 1999
-------------------- ---------------- ------------------- ---------------
<S> <C> <C> <C> <C>
Revenues $ 158,394 137,976 $ 445,712 383,707
Costs and Expenses
Cost of sales 52,861 48,592 149,675 133,162
Operating and administrative expenses 72,676 65,671 207,995 189,843
Amortization of intangibles 4,371 2,431 12,073 7,048
-------------------- ---------------- ------------------- ---------------
Total Costs and Expenses 129,908 116,694 369,743 330,053
-------------------- ---------------- ------------------- ---------------
Operating Income 28,486 21,282 75,969 53,654
Interest Income and Other 478 1,260 1,035 3,838
Interest Expense (2,192) (1,671) (6,338) (5,622)
-------------------- ---------------- ------------------- ---------------
Interest Income (Expense) - Net (1,714) (411) (5,303) (1,784)
-------------------- ---------------- ------------------- ---------------
Income Before Taxes 26,772 20,871 70,666 51,870
Provision For Income Taxes 10,040 7,513 26,500 18,673
-------------------- ------------------ ------------------ ---------------
Net Income $ 16,732 13,358 $ 44,166 33,197
==================== ================ =================== ===============
Income Per Share
Diluted $ 0.26 0.20 $ 0.68 0.50
Basic $ 0.27 0.21 $ 0.72 0.53
Cash Dividends Per Share
Class A Common $ 0.035625 0.031875 $ 0.106875 0.095625
Class B Common $ 0.031875 0.028125 $ 0.095625 0.084375
Average Shares
Diluted 64,242 66,049 64,951 66,486
Basic 61,201 62,191 61,745 63,023
</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 Nine Months
Ended January 31,
------------------------------------------
2000 1999
-------------------- -------------------
<S> <C> <C>
Operating Activities
Net income $ 44,166 33,197
Non-cash items 77,277 54,102
Net change in operating assets and liabilities 22,790 38,063
-------------------- -------------------
Cash Provided by Operating Activities 144,233 125,362
-------------------- -------------------
Investing Activities
Additions to product development assets (23,592) (22,719)
Additions to property and equipment (8,965) (6,671)
Acquisition of publishing assets (145,092) (10,437)
-------------------- -------------------
Cash Used in Investing Activities (177,649) (39,827)
-------------------- -------------------
Financing Activities
Purchase of treasury shares (27,093) (25,055)
Cash dividends (6,477) (5,919)
Proceeds from exercise of stock options 1,147 1,191
-------------------- -------------------
Cash Used for Financing Activities (32,423) (29,783)
-------------------- -------------------
Effects of Exchange Rate Changes on Cash (1,061) (456)
-------------------- -------------------
Cash and Cash Equivalents
Increase (Decrease) for Period (66,900) 55,296
Balance at Beginning of Period 148,970 127,404
-------------------- -------------------
Balance at End of Period $ 82,070 182,700
==================== ===================
Cash Paid During the Period for
Interest $ 6,615 5,895
Income taxes $ 12,998 13,264
</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
JANUARY 31, 2000
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 January 31, 2000 and 1999, and April
30, 1999, and results of operations and cash flow for the periods ended
January 31, 2000 and 1999. 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 nine months ended January 31, 2000 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 Nine Months
Ended January 31, Ended January 31,
---------------------------------- -- ---------------------------------
2000 1999 2000 1999
--------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
(thousands)
Weighted average shares outstanding
61,726 62,995 62,268 63,809
Less: Unearned deferred compensation
shares (525) (804) (523) (786)
--------------- --------------- -------------- ---------------
Shares used for basic income per share
61,201 62,191 61,745 63,023
Dilutive effect of stock options and
other stock awards 3,041 3,858 3,206 3,463
--------------- --------------- -------------- ----------------
Shares used for diluted income per share
64,242 66,049 64,951 66,486
--------------- --------------- -------------- ---------------
</TABLE>
4. Inventories were as follows:
<TABLE>
<CAPTION>
January 31, April 30,
--------------------------------
2000 1999 1999
-------------- -------------- -------------
<S> <C> <C> <C>
(thousands)
Finished goods $33,107 34,317 $34,485
Work-in-process 4,055 5,621 5,325
Paper, cloth and other 4,836 3,743 2,007
-------------- -------------- -------------
41,998 43,681 41,817
LIFO reserve (2,114) (2,375) (1,814)
-------------- -------------- -------------
Total inventories $39,884 41,306 $40,003
-------------- -------------- -------------
</TABLE>
<PAGE>
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2000
5. Comprehensive income was as follows:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended January 31, Ended January 31,
--------------------------------- --------------------------------
2000 1999 2000 1999
-------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
(thousands)
Net Income $16,732 13,358 $44,166 33,197
Other Comprehensive Income (Loss) - Foreign
Currency Translation Adjustments (841) 62 (854) (1,099)
-------------- ------------- ------------- --------------
Comprehensive Income $15,891 13,420 $43,312 32,098
-------------- ------------- ------------- --------------
</TABLE>
6. During the current fiscal year, the Company acquired certain higher
education titles for approximately $57 million in cash, and the
Jossey-Bass publishing company for approximately $81 million in cash,
from Pearson Inc. 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 Company
also acquired the J.K. Lasser tax and financial guides for
approximately $5 million in cash. The acquisitions were financed by
available cash balances and short-term lines of credit. 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 $142 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 nine months of fiscal year 2000 by
approximately $1.1 million.
<PAGE>
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2000
8. Segment information was as follows:
<TABLE>
<CAPTION>
Three Months Ended January 31,
------------------------------------------------------------------------------------
2000 1999
---------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(thousands)
Inter- Inter-
External segment External segment
Revenues Customers Sales Total Customers Sales Total
-------------- ------------ ------------ ------------- ------------ ------------
Domestic Segments:
Scientific, Technical, and Medical $34,453 $164 $34,617 $32,041 $1,402 $33,443
Professional/Trade 35,303 6,334 41,637 28,025 3,291 31,316
College 32,857 5,371 38,228 26,690 3,802 30,492
European Segment 34,019 3,520 37,539 34,605 2,865 37,470
Other Segments 21,762 182 21,944 16,615 113 16,728
Eliminations 0 (15,571) (15,571) 0 (11,473) (11,473)
-------------- ------------ ------------ ------------- ------------ ------------
Total Revenues $158,394 $0 $158,394 $137,976 $0 $137,976
-------------- ------------ ------------ ------------- ------------ ------------
Direct Contribution to Profit
Domestic Segments:
Scientific, Technical, and Medical $13,779 $12,996
Professional/Trade 8,855 8,069
College 13,545 10,074
European Segment 12,305 10,266
Other Segments 6,076 4,135
------------ ------------
Total Direct Contribution to Profit 54,560 45,540
Shared Services and Admin. Costs (26,074) (24,258)
------------ ------------
Operating Income 28,486 21,282
Interest Expense - Net (1,714) (411)
------------ ------------
Income Before Taxes $26,772 $20,871
------------ ------------
</TABLE>
<PAGE>
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 2000
<TABLE>
<CAPTION>
Nine Months Ended January 31,
--------------------------------------------------------------------------------------
2000 1999
----------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(thousands)
Inter- Inter-
External segment External segment
Revenues Customers Sales Total Customers Sales Total
-------------- ------------ ------------- -------------- ------------ ------------
Domestic Segments:
Scientific, Technical, and Medical $102,415 $3,149 $105,564 $93,349 $4,357 $97,706
Professional/Trade 98,027 12,951 110,978 74,574 9,823 84,397
College 91,474 16,801 108,275 74,282 12,493 86,775
European Segment 101,141 7,915 109,056 99,759 7,850 107,609
Other Segments 52,655 460 53,115 41,743 356 42,099
Eliminations 0 (41,276) (41,276) 0 (34,879) (34,879)
-------------- ------------ ------------- -------------- ------------ ------------
Total Revenues $445,712 $0 $445,712 $383,707 $0 $383,707
-------------- ------------ ------------- -------------- ------------ ------------
Direct Contribution to Profit
Domestic Segments:
Scientific, Technical, and Medical $43,940 $38,422
Professional/Trade 22,154 18,754
College 37,279 25,648
European Segment 33,471 32,482
Other Segments 11,210 7,348
------------- ------------
Total Direct Contribution to Profit 148,054 122,654
Shared Services and Admin. Costs (72,085) (69,000)
------------- ------------
Operating Income 75,969 53,654
Interest Expense - Net (5,303) (1,784)
------------- ------------
Income Before Taxes $70,666 $51,870
------------- ------------
</TABLE>
As a result of recent acquisitions, total assets for the Professional/Trade
segment and College segment increased to approximately $167 million and $107
million, respectively.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
JANUARY 31, 2000
FINANCIAL CONDITION
Operating activities for the first nine months of fiscal 2000 provided
$144.2 million of cash, or $18.9 million more than the prior year's
comparable period. The generation of cash during this period is consistent
with the seasonality of the journal subscription receipts cycle which
occurs, for the most part, in the third quarter of the fiscal year. The
increase over the prior year was primarily due to higher net income and
payable balances, offset to some extent by higher receivable balances.
Investing activities used $177.6 million during the current year-to-date,
or $137.8 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, certain higher
education titles and the J.K. Lasser tax and financial guides, as more
fully described in note 6.
Financing activities primarily reflect the purchase of treasury shares and
dividend payments.
RESULTS OF OPERATIONS
THIRD QUARTER ENDED JANUARY 31, 2000
Revenues for the third quarter advanced 15% to $158.4 million compared with
$138.0 million in the prior year. Revenues were adversely affected somewhat
by foreign currency translation due to the strong U.S. dollar. Excluding
the acquisitions completed during the current fiscal year and the adverse
foreign currency translation effects, as noted above, organic revenue
growth for the quarter was approximately 6% over the comparable prior year
period. Operating income for the current quarter increased 34% to $28.5
million, compared with $21.3 million in the prior year. Net income advanced
25% to $16.7 million. Diluted earnings per share advanced 30% to $0.26 for
the quarter compared with $0.20 in the prior year's third quarter.
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 33.4% compared with
35.2% in the prior year's third quarter. Operating expenses as a percentage
of revenues declined to 45.9% in the current quarter, down from 47.6% in
the prior year's third quarter due to synergies achieved on the
acquisitions. The operating margin improved to 18.0% in the current
quarter, compared with 15.4% in the prior year's third quarter.
Interest expense-net increased $1.3 million, as a result of financing costs
related to the acquisitions completed 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 Professional/Trade segment revenues advanced 33% for the third
quarter over the prior year, benefiting from recent acquisitions of
Jossey-Bass, a San Francisco-based professional publisher, and the J.K.
Lasser tax and financial guides, as well as strong backlist titles,
including increased demand from online Internet suppliers. The direct
contribution to profit advanced 10%. The direct contribution margin
declined from 25.8% in the prior year's third quarter to 21.3% as a
result of one-time integration costs related to the current year
acquisitions. 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. During the quarter, the domestic
professional/trade business launched Wiley Virtual CPA Exam Review, an
interactive multimedia course on the Web which is based on the Company's
well known Delaney CPA Examination Review. This subscription-based 24/7
learning environment uses streaming video and audio lectures with
self-assessment tests and extensive graphics. The Wiley Virtual CPA Exam
Review is only one example of the Professional/Trade segments strategy to
leverage the deep reservoir of "must have" content on the Internet.
Domestic College segment revenues increased 25% 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.
The direct contribution to profit increased 34%, and the direct
contribution margin improved to 35.4% during the current quarter compared
with 33.0% in the prior year's third quarter. The college publishing
market is as robust as it has been during the past decade. The College
segment continued to invest in new technological tools to help teachers
teach and students learn. For example, through alliances the College
segment is providing web-based course management tools for professors and
online tutorial, quiz and homework management tools for students. Every
major college textbook now has a technology component designed to
facilitate teaching and learning. The College business has over 300
web-sites serving the needs of professors and students. These web-sites
are being redesigned to generate content dynamically from existing
databases, as well as linking them to key portals. Alliances are also
being formed to provide many of our top-selling textbooks in the e-book
format.
Domestic Scientific, Technical and Medical (STM) revenues increased 4%,
for the third quarter compared with the prior year mainly due to the
subscription journals business. The direct contribution to profit
increased 6%. The direct contribution margin was 39.8% in the current
quarter compared with 38.9% 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 such as OhioLink, the
University of California system's California Digital Library, Hoffman
LaRoche, Glaxo Wellcome, the University of Toronto and the University of
Hong Kong have signed licenses that are attractive to them and to Wiley.
CrossRef, the reference linking service, continued to sign-up new
publishers. Twenty-three publishers are now participating in this
important initiative to serve customers better. Wiley is a founding
member of CrossRef and co-developer of the technology on which the
service is based.
European segment revenues were essentially flat for the quarter, as the
translation effects of a stronger U.S. dollar adversely impacted revenue
growth. The direct contribution margin was 32.8% in the current quarter
compared with 27.4% in the prior year's third quarter. The improvement in
the Other segment's results of operations was due to strong local product
revenues in Canada and Australia and the strengthening of many of the
Asian economies.
<PAGE>
RESULTS OF OPERATIONS
NINE MONTHS ENDED JANUARY 31, 2000
Revenues for the first nine months advanced 16% to $445.7 million
compared with $383.7 million in the prior year. Revenues were again
adversely affected somewhat by foreign currency translation due to the
strong U.S. dollar. Excluding the acquisitions completed during the
current fiscal year and the adverse foreign currency translation effects,
as noted above, organic revenue growth for the first nine months was
approximately 7% over the comparable prior year period. Operating income
for the nine months increased 42% to $76.0 million, compared with $53.7
million in the prior year. Net income advanced 33% to $44.2 million.
Diluted earnings per share advanced 36% to $0.68 for the first nine
months of the year compared with $0.50 in the prior year. After financing
costs, the current year acquisitions were accretive to earnings by
approximately $2.4 million.
Costs of sales as a percentage of revenues for the nine months declined
to 33.6% from 34.7% in the prior year. Operating expenses as a percentage
of revenues declined to 46.7% in the current period, down from 49.5% in
the prior year due to synergies achieved on the acquisitions. The
operating margin improved to 17.0% in the current period compared with
14.0% in the prior year.
Interest expense-net increased $3.5 million as a result of financing
costs related to the acquisitions completed during the year. The
effective tax rate was 37.5% in the current period, compared with 36% in
the prior year.
SEGMENT RESULTS
Domestic Professional/Trade revenues advanced 31% for the nine months
over the prior year, benefiting from the recent acquisitions of
Jossey-Bass, a San Francisco-based professional publisher, and the J.K.
Lasser tax and financial guides, as well as strong backlist titles,
including increased demand from online Internet suppliers. The direct
contribution to profit advanced 18%. The direct contribution margin
declined from 22.2% in the prior year to 20.0% due to one-time
integration costs related to the current year acquisitions.
Domestic College revenues increased 25% for the nine months compared with
the prior year, primarily related to the acquisition of certain higher
education titles during the year, as well as a strong frontlist The
direct contribution to profit increased 45%, and the direct contribution
margin improved to 34.4% during the period compared with 29.6% in the
prior year.
Domestic Scientific, Technical and Medical (STM) revenues increased 8%
for the first nine months compared with the prior year mainly due to the
subscription journals business. The direct contribution to profit
increased 14%. The direct contribution margin was 41.6% in the current
period compared with 39.3% in the prior year.
European segment revenues increased 1%, as the translation effects of a
stronger U.S. dollar adversely impacted revenue growth. The direct
contribution margin was 30.7% in the current period compared with 30.2%
in the prior year. The improvement in the Other segment's results of
operations was due to strong local product in Canada and Australia 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.
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
outstanding at January 31, 2000, which approximated fair
value. The weighted average interest rate as of January 31,
2000 was approximately 6.4%. 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 January 31, 2000, the
Company had open foreign exchange forward contracts expiring
through April 30, 2000 as follows:
Average
Currency Sold U.S. $ Value Contract
---------------- ------------- ------------
Canadian Dollars $1.6 million $.6834
Australian Dollars $0.4 million $.6612
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended January 31, 2000
"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) worldwide economic and
political conditions; and (vi) 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: March 13, 2000
<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> 9-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> MAY-01-1999
<PERIOD-END> JAN-31-2000
<CASH> $82,070
<SECURITIES> 0
<RECEIVABLES> 152,528
<ALLOWANCES> 65,229
<INVENTORY> 39,884
<CURRENT-ASSETS> 219,218
<PP&E> 101,103
<DEPRECIATION> 65,651
<TOTAL-ASSETS> 624,463
<CURRENT-LIABILITIES> 306,940
<BONDS> 95,000
0
0
<COMMON> 83,190
<OTHER-SE> 90,485
<TOTAL-LIABILITY-AND-EQUITY> 624,463
<SALES> 0
<TOTAL-REVENUES> 445,712
<CGS> 149,675
<TOTAL-COSTS> 369,743
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,338
<INCOME-PRETAX> 70,666
<INCOME-TAX> 26,500
<INCOME-CONTINUING> 44,166
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 44,166
<EPS-BASIC> 0.72
<EPS-DILUTED> 0.68
</TABLE>
