John Wiley & Sons Inc. Annual Report 2009

Plain-text annual report

john wiley & sons, inc. 111 River Street Hoboken, NJ 07030-5774 201.748.6000 www.wiley.com john wiley & sons, inc. 2009 annual report solutions connecting people, products, and knowledge BF55539_Cover.indd 1 7/16/09 9:45:39 AM highlights For the fiscal year ended April 30 2009 2008 excluding FX including FX rEvENuE $ 1,611,390,000 $ 1,673,734,000 opErAtiNG iNComE $ 218,478,000 $ 225,211,000 3% 11% (4%) (3%) CHANGE NEt iNComE adjusted b gaap EArNiNGs pEr dilutEd sHArE adjusted b gaap rEturN oN Equity adjusted b gaap dividENds pEr sHArE class a common class b common $ 128,258,000 $ 128,873,000 $ 128,258,000 $ 147,536,000 23% 7% —% (13%) $ $ $ $ 2.15 2.15 $ $ 22% 21% 0.52 0.52 $ $ 2.17 2.49 22% 24% 0.44 0.44 22% 6% (1%) (14%) n/a n/a 18% 18% 2009 revenue By CORE BUSINESS Scientific, Technical, 60% Medical, and Scholarly 26% Professional/Trade 14% Higher Education 4% CANADA 50% UNITED STATES 24% EUROPE 3% OTHER 2009 revenue By LOCATION OF CUSTOMER 14% ASIA C o r p o r a t e H e a d q u a r t e r s , M a i n o f f i C e s , a n d d i s t r i b u t i o n C e n t e r s North AmericA Corporate Headquarters John Wiley & Sons, Inc. 111 River Street Hoboken, NJ 07030-5774 Telephone: 201.748.6000 Facsimile: 201.748.6088 Email: info@wiley.com Web site: www.wiley.com 350 Main Street Commerce Place Malden, MA 02148 Telephone: 781.388.8200 Facsimile: 781.388.8210 989 Market Street San Francisco, CA 94103-1741 Telephone: 415.433.1740 Facsimile: 415.433.0499 10475 Crosspoint Blvd. Indianapolis, IN 46256 Telephone: 317.572.3000 Facsimile: 317.572.4000 2121 State Avenue Ames, IA 50014-8300 Telephone: 515.292.0140 Facsimile: 515.292.3348 U.S. Distribution Center 1 Wiley Drive Somerset, NJ 08875-1272 Telephone: 800.225.5945 Facsimile: 732.302.2300 Email: custserv@wiley.com Wiley customer Service Support centers are located in North America, europe, Asia, and Australia for books, journals, and online customers. to contact a center near you, visit www.wiley.com and select “contact Us” in the green toolbar. 5353 Dundas Street West Suite 400 Toronto, Ontario Canada M9B 6H8 Telephone: 416.236.4433 Facsimile: 416.236.8743 Email: canada@wiley.com Canadian Distribution Center 6045 Freemont Blvd. Mississauga, Ontario Canada L5R 4J3 Telephone: 416.236.4433 Facsimile: 416.236.8743 eUrope The Atrium Southern Gate, Chichester West Sussex PO19 8SQ England Telephone: 44.1243.779777 Facsimile: 44.1243.775878 Email: customer@wiley.co.uk 9600 Garsington Road Oxford OX4 2DQ England Telephone: 44.1865.776868 Facsimile: 44.1865.714591 1 Rosenørns Allé DK-1970 Frederiksberg C Denmark Telephone: 45.7733.3333 Facsimile: 45.7733.3377 101 George Street Edinburgh EH2 3ES Scotland Telephone: 44.131.226.7232 Facsimile: 44.131.226.3803 Boschstrasse 12 D-69469 Weinheim Germany Telephone: 49.6201.6060 Facsimile: 49.6201.606328 Email: info@wiley-vch.de European Distribution Center 1 Oldlands Way Bognor Regis West Sussex PO22 9SA England Telephone: 44.1243.779777 Facsimile: 44.1243.850250 SuSan Spilka Corporate Communications Director / BernharDt FuDyma DeSign group Concept and Design SpenCer JoneS product photography / Bill haywarD portrait photography / graytor printing Company printing AUStrAliA 42 McDougall Street Milton, Queensland 4064 Australia Telephone: 61.7.3859.9755 Facsimile: 61.7.3859.9715 Email: brisbane@johnwiley.com.au 155 Cremorne Street Richmond, Victoria 3121 Australia Telephone: 61.3.9274.3100 Facsimile: 61.3.9274.3101 Email: melbourne@johnwiley.com.au Australian Distribution Center 33 Windorah Street Stafford, Queensland 4053 Australia Telephone: 61.7.3354.8455 Facsimile: 61.7.3352.7109 ASiA 2 Clementi Loop #02-01 Singapore 129809 Telephone: 65.64632400 Facsimile: 65.64634605 Email: enquiry@wiley.com.sg 600 North Bridge Road #05-01 Parkview Square Singapore 188778 Telephone: 65.65118188 Facsimile: 65.65118288 Frontier Koishikawa Bldg., 4F 1-28-1 Koishikawa, Bunkyo-Ku Tokyo 112-0002 Japan Telephone: 81.3.3830.1232 Facsimile: 81.3.5689.7276 4435-36/7, Ansari Road Darya Ganj, New Delhi 110 002 India Telephone: 91.11.4636.0000/01 Facsimile: 91.11.2327.5895 Asian Distribution Center 2 Clementi Loop #02-01 Singapore 129809 Telephone: 65.64632400 Facsimile: 65.64634605 Email: enquiry@wiley.com.sg This document is a publication of Wiley’s Corporate Communications department. An electronic version of this report is available online at www.wiley.com. This annual report is printed on FSC-certified paper from mixed sources. Cert no. SGS-COC-003604 BF55539_Cover.indd 2 7/16/09 10:21:25 AM financial Revenue ($ Millions) Earnings per Diluted Share (Adjusted) $2,000 1,600 1,200 800 400 0 $1,611 12% CAGR 9999 0000 0101 0202 0303 0404 0505 0606 0707a 0808a 0909a $ 2.50 2.00 1.50 1.00 0.50 0.00 $2.15 14% CAGR 9999 0000 0101 0202f 0303f,g 0404e 0505d 0606d 0707a,c 0808a,b 0909a Operating Income ($ Millions; adjusted) Stock Price (NYSE:JWA; 4/30 closing) $ 250 200 150 100 50 0 13% CAGR $218 $50 40 30 20 5% CAGR $33.90 9999 0000 0101 0202f 0303f 0404 0505 0606 0707a 0808a 0909a 10 99 00 01 02 03 04 05 06 07 08 09 Cumulative Total Return (Indexed) $180 160 140 120 100 80 60 40 04 05 06 07 08 09 ■ JWA ■ Russell 1000 ■ S&P Midcap 400 ■ Dow Pub The above graph provides an indicator of the cumulative total return to shareholders of the Company’s Class A Common Stock as compared with the cumulative total return on the Russell 1000, the Standard & Poors Midcap 400TM, and the Dow Jones Publishing IndexTM for the period from April 30, 2004, to April 30, 2009. The Company has elected to use the Russell 1000 Index and the Standard & Poors Midcap 400 Index as its broad equity market indices because it is currently included in those indices. Cumulative total return assumes $100 invested on April 30, 2004, and reinvestment of dividends throughout the period. 5% AUSTRALIA & NEW ZEALAND a. Includes the results of Blackwell Publishing (Holdings) Ltd. (“Blackwell”), which was acquired on February 2, 2007. b. The adjusted amounts reported for ﬁ scal year 2008 exclude tax beneﬁ ts of $18.7 million or $0.31 per diluted share associated with new tax legislation enacted in the United Kingdom and Germany that reduced the corporate income tax rates to 28% and 29%, respectively. The beneﬁ ts recognized by the Company reﬂ ect the adjustments required to restate all applicable deferred tax balances at the new tax rates. c. The adjusted amount reported for ﬁ scal year 2007 excludes a $5.5 million tax beneﬁ t or $0.09 per diluted share due to the resolution and settlement of certain tax matters with authorities in the U.S. and abroad. d. The adjusted amount for ﬁ scal year 2005 excludes a $0.12 per diluted share tax charge associated with the repatriation of $94 million of dividends under the American Jobs Creation Act of 2004. The adjusted amount for ﬁ scal year 2006 excludes a $0.12 per diluted share tax credit associated with the reversal of the 2005 tax charge. e. The adjusted amount reported for ﬁ scal year 2004 excludes a net tax beneﬁ t of $3 million or $0.05 per diluted share, related to the resolution of certain state and federal tax matters and an adjustment to accrued foreign taxes. f. Fiscal year 2002 and 2003 results exclude $12.3 million ($0.12 per diluted share) and $2.5 million ($0.02 per diluted share), respectively, of operating costs associated with the relocation of the Company’s headquarters. g. The adjusted amount reported for ﬁ scal year 2003 excludes a nonrecurring tax beneﬁ t of $12 million, equal to $0.19 per diluted share, resulting from a corporate reorganization that enabled the Company to increase the tax-deductible net asset basis of certain European subsidiaries. NOTE: The Company’s management evaluates operating performance excluding unusual and/ or nonrecurring events. Management believes excluding such events provides a more effective and comparable measure of performance and a more balanced view of the underlying dynamics of the Company’s business. Since adjusted net income and adjusted earnings per share are not measures calculated in accordance with GAAP, they should not be considered as a substitute for other GAAP measures, including net income and earnings per share, as an indicator of operating performance. Throughout this report, references to amounts “excluding foreign exchange” and “currency neutral” exclude both foreign currency translation effects and transactional gains and losses. CAGR – Compound Annual Growth Rate FX – Foreign Exchange GAAP – U.S. Generally Accepted Accounting Principles William J. Pesce President and Chief Executive Ofﬁ cer Stephen M. Smith Executive Vice President and Chief Operating Ofﬁ cer Peter Booth Wiley Chairman, Board of Directors 2 to our to our shareholders Despite the difﬁ cult economic conditions, Wiley performed well in ﬁ scal year 2009, delivering revenue and EPS growth on a currency neutral basis. Our Scientiﬁ c, Technical, Medical, and Scholarly (STMS) and Higher Education (HE) businesses recorded strong growth on a currency neutral basis. Our Professional/ Trade (P/T) business has been affected by the weak retail environment, especially in the U.S. In a tough year, all three of our businesses published and sold more content than was imaginable just a few short years ago. People all over the world need the information we publish, for living, learning, and working. We are serving our customers better and reaching more of them by publishing “must-have” content; taking advantage of digital opportunities; and investing in enduring relationships with authors, partners, and colleagues. Financial Results for Fiscal Year 2009 We are pleased to report that fi scal year 2009 revenue grew 3.4% on a currency neutral basis, the result of strong growth in our STMS and HE businesses. Including the negative $120 million eff ect of foreign exchange, full-year revenue declined 3.7% to $1.6 billion. Adjusted earnings per share (EPS) for fi scal year 2009 rose 22.0% on a currency neutral basis and excluding a $0.31 per share unusual tax benefi t reported in the prior year. Th e increase refl ected top-line results, reduced incentive compensation accruals, lower interest expense, and prudent cost management. EPS on a U.S. GAAP basis fell 13.7% due to unfavorable foreign exchange of $0.50 per share and the aforementioned unusual tax benefi t in fi scal year 2008. Th e Company continues to generate strong free cash fl ow, increasing to $164 million, up 40% from $117 million in fi scal year 2008. Increased cash from operating activities principally drove the year-on-year improvement. Cash collection delays reduced fi scal year 2009 cash fl ow by approximately $30 million. Th e backlog in cash collections, a residual eff ect of the STMS journal billing delays in the second half of fi scal year 2009, will be substantially cleared in the fi rst quarter of fi scal year 2010. 3 solution connecting people, products, and knowledge The theme of this year’s Annual Report — Solutions — showcases the ways in which Wiley is anticipating and responding to market challenges and opportunities. Wiley’s engagement with authors, customers, and partners is evolving as we leverage our content and enabling technology across business and geographic boundaries. These initiatives highlight our vision, strategies, and capabilities as we navigate through the current economic climate while investing in a prosperous future and fulﬁ lling our responsibilities as a respected corporate citizen. Free cash fl ow was used to reduce debt, pay dividends, repurchase shares, and invest in acquisitions. In fi scal year 2009, the Company repurchased approximately one million shares for $35 million, paid dividends of $30 million, made several acquisitions totaling $24 million, and reduced long term debt by $20 million. Year-end net debt (debt minus cash) was $720 million. Three Core Businesses SCIENTIFIC, TECHNICAL, MEDICAL, AND SCHOLARLY (STMS) Th e largest of our three core businesses, STMS serves the world’s research and scholarly communities and is the largest publisher globally for professional and scholarly societies. STMS programs encompass journals, books, major reference works, databases, and laboratory manuals, off ered in print and electronically. Th rough our Wiley InterScience online platform, we provide our customers access to a broad range of content, including approximately 1,500 journals; 7,600 online books; 100 major reference works; 10,000 laboratory protocols; and 1,000 digital back- fi les dating back as far as 200 years. On a currency neutral basis, STMS revenue advanced 9% (including a $17 million accounting adjustment related to the Blackwell acquisition that reduced revenue in fi scal year 2008), a result of higher journal subscription renewals, new business, and increased global rights income. Partially off setting the results were lower sales from backfi les, reprints, and custom publishing. Society relationships continued to strengthen and grow, with 32 new journals signed in fi scal year 2009, 87 journal contracts renewed or extended, and only nine journal contracts not renewed. Including $97 million of unfavorable foreign exchange, revenue declined 1% to $969 million. Direct contribution to profi t for the fi scal year grew 4% from the prior year to $399 million. On a currency neutral basis, contribution to profi t advanced 14%. Th e year-over-year increase refl ects top-line results, including the aforementioned acquisition-related accounting adjustment, partially off set by higher editorial costs due to new journals and performance-related compensation. Wiley achieved an important milestone in fi scal year 2009 by migrating online journal content, customers, and access licenses from Blackwell’s Synergy platform to Wiley InterScience. Th e migration included approximately 29,000 customers, more than two million licenses, and nearly two million journal articles. 4 Th e next step in the evolution of Wiley’s online service will be the launch of a new platform with an innovative architecture that will allow for fl exibility and future change, as well as a fresh user interface with many built-in features such as better browsing, vastly improved home pages for all types of products, subject pages, and ways to discover more from the abstract page (the destination page for users who come from search engines). Our objective is to launch a robust site in the coming year with all content available, providing a smooth transition and a positive user experience for customers. A fi scal year 2009 acquisition brought to STMS the Arnold statistics book program from Hodder Education, which includes more than 50 titles, complements areas of strength in Wiley’s statistics program, and provides growth opportunities. PROFESSIONAL/TRADE (P/T) Our P/T business serves professionals and consumers alike, producing books, subscription content, and information services, in all media. Our portfolio of global brands includes For Dummies, Frommer’s, Betty Crocker, Pillsbury, Better Homes and Gardens, Family Circle, Cliff sNotes, Webster’s New World, J.K. Lasser, Jossey-Bass, Pfeiff er, and Sybex. Subject areas include business, technology, architecture, cooking, psychology, education, travel, health, religion, consumer reference, and general interest. Global P/T revenue declined 10% to $413 million in fi scal year 2009, excluding unfavorable foreign exchange, compared to the prior year, or 13% including unfavorable foreign exchange. Th e decline is attributed to the ongoing weak retail environment, particularly in the U.S. Direct contribution to profi t was $95 million compared to $137 million for fi scal year 2008, refl ecting the revenue shortfall, additional inventory obsolescence and royalty advance provisions, and a $2 million bad-debt recovery in the prior year. Th e decline was partially mitigated by prudent expense management, principally in advertising, sales, and marketing, and lower accrued incentive compensation. Direct contribution to profi t declined 31%, or 27% excluding unfavorable foreign exchange, from the prior year. P/T is extending brands online and forging important partnerships to drive growth. Th e Company became the offi cial publisher of the Graduate Management Admission Test® (GMAT®) study guides, began to publish Better Homes and Gardens books, renewed our agreement with General Mills to publish Betty Crocker and Pillsbury cookbooks, and signed an agreement with the Vancouver Olympic Organizing Committee to become the offi cial publication partner of the 2010 Winter Olympic and Paralympic Games in Vancouver/Whistler. solution promoting critical knowledge Wiley’s publication of Restoring Financial Stability: How to Repair a Failed System, in partnership with New York University’s Stern School of Business, is a case study in collaboration and the breadth of our market reach. An October conversation between President and CEO Will Pesce, a Stern graduate and a member of Stern’s Board of Overseers, and the school’s Dean, Thomas F. Cooley, led to the March launch of this collection of 18 papers by 33 Stern faculty members on current economic conditions. A special issue of the journal Financial Markets, Institutions & Instruments, co-owned by Wiley and Stern, carried the executive summaries of the papers, adding academic readership to the professional and trade audience reached by the book. Stern based an MBA course on the book’s contents, and we are planning to make that course material available to academic institutions around the world. Colleagues from all three of Wiley’s global businesses collaborated to publish and disseminate these important publications quickly and efﬁ ciently. 5 solution business intelligence for global success Wiley’s successful transformation into a global organization has been supported by a well-executed Business Intelligence (BI) strategy. By building BI capabilities using global systems and data standards, along with Web-based planning and forecasting models, the Company has gained clarity and insight into the operations of its three core businesses, increasing its “analytical IQ” in a way that has helped us navigate the turbulence of the current economic environment. As a leading publisher in information science and technology, we have tapped our own reservoir of knowledge to create this capacity. HIGHER EDUCATION (HE) Wiley HE’s mission is to help teachers teach and students learn. HE serves teachers; undergraduate, graduate, and advanced placement students; secondary school students in Australia; and lifelong learners. We publish educational materials in all media, notably through WileyPLUS, our integrated online suite of teaching and learning resources. Wiley publishes materials in the sciences, engineering, mathematics, business/accounting, geography, computer science, statistics, education, psychology, and modern languages. Fiscal year 2009 global HE revenue grew 6% to $230 million excluding unfavorable foreign exchange or 1% including the currency eff ect. Strong growth occurred in every region and in nearly every subject category. Contributing to the results were a strong frontlist, higher-than-expected revenue from textbooks acquired during the year, solid growth from the Microsoft collaboration agreement, and the continued success of WileyPLUS. Th e continuing growth of WileyPLUS is indicated by several key metrics: global full-year billings refl ected annual growth of 38%, digital-only sales grew 70%, and the validation rate increased to 63%. Direct contribution to profi t decreased 10% to $62 million, or 3% on a currency neutral basis, from prior year. Th e decrease refl ected prior year contingency planning, which had signifi cantly curtailed expenditures in fi scal year 2008; higher accrued performance compensation; and increased spending to support a large frontlist. Th roughout the fi scal year, HE continued to build momentum through acquisitions, alliances, and innovative initiatives. Wiley acquired a list of business and modern language textbooks from Cengage Learning, and mathematics and statistics textbooks from Key College Publishing. Notable alliances include an agreement with Amazon to off er select Wiley eTextbooks for sale through the Kindle DX. Wiley Custom Select — an easy-to-use, Web-based custom textbook system that allows instructors to customize course materials to fi t their pedagogical needs and have the results delivered in very aff ordable print or eBook format — successfully launched during the fourth quarter. Leadership Development In late March, we announced the appointment of Stephen M. Smith as Executive Vice President and Chief Operating Offi cer, eff ective May 1, 2009. Steve is now responsible for the overall direction and leadership of Wiley’s 6 global publishing businesses. He has relocated to Wiley’s global headquarters in Hoboken from Chichester, U.K., where he was based as Senior Vice President, International Development, with responsibility for Europe, the Middle East, Africa, Asia, and Australia. Steve is a highly infl uential member of Wiley’s Leadership Team and a major contributor to the Company’s success. His leadership skills and extensive experience in Asia and Europe, where he has been actively involved in all of Wiley’s core businesses, will be critically important as Wiley evolves as a global enterprise. We value and appreciate his ability to lead and infl uence across organizational and geographic boundaries. Steve was actively engaged in the Blackwell acquisition and integration and is currently leading Wiley’s Corporate Citizenship initiative. He has an impressive record of recruiting and developing talent at Wiley. Th is appointment is tangible evidence of our commitment to the development of the next generation of leadership at Wiley. Steve joined Wiley in 1992 as Vice President, Wiley Asia. In 1995, he was promoted to the new position of Vice President, International Development. He became Senior Vice President, International Development, in 1996, when he assumed corporate responsibility for Wiley Australia. In May 2000, Wiley’s P/T business in Europe was added to his responsibilities. In 2006, Steve became Chief Operating Offi cer of Wiley’s U.K. business; he was appointed Senior Vice President, Wiley Europe, in 2007, while continuing his role in Asia and Australia. Outlook We are cautiously optimistic about our prospects for fi scal year 2010, despite continued uncertainty regarding the eff ect of the economy on our global businesses. In fi scal year 2010, projected operating performance improvements in each of our businesses and the positive eff ect of debt reduction will be partially off set by a higher tax rate and the eff ect of performance-based incentive compensation plans. On a currency neutral basis, we are currently projecting EPS growth of approximately 10% for fi scal year 2010. While we anticipate revenue growth on a currency neutral basis, top-line results will be highly dependent on economic conditions around the world. As we navigate through challenging market conditions, we remain keenly focused on our noble mission of promoting knowledge and understanding around the world. We are providing more access to more content by more people than ever before in our Company’s history. Our collection of businesses — STMS, P/T, and HE — is unique in the industry. Our brands are highly regarded by customers, authors, and partners. A signifi cant portion of our revenue is recurring and generated online. We are serving our customers through multiple channels of distribution, and we are doing it globally. Most important, Wiley’s culture, built on a solid foundation of ethics and integrity, is as strong as ever. None of Wiley’s accomplishments would be possible without the dedication and professionalism of our colleagues around the world. We are grateful for their contributions to Wiley’s success. William J. Pesce President and Chief Executive Offi cer Peter Booth Wiley Chairman, Board of Directors 7 I , L A C N H C E T , C I F I T N E I C S PRODUCTS Journals, encyclopedias, books, databases, and laboratory manuals in the life sciences, physical sciences, social sciences, medicine, the humanities, engineering, dentistry, veterinary science, nursing, and other research-based professions, delivered in print and online. S T R A T E G I E S Accelerate revenue and margin growth through collaboration across geographic and business boundaries. Grow revenue through acquisitions, alliances, and partnerships, including those in new, non-traditional markets. Partner with professional and scholarly societies. Develop workﬂ ow solutions that anticipate and respond to the needs of our customers and help them achieve their desired outcomes. Provide superior support to customers and clients. Expand and enhance online content portfolio with additional tools and services to improve researchers’ and professionals’ productivity. Make content and services more accessible via enhanced online platforms. Create new online business models and services. Transform Wiley InterScience with a robust new platform offering innovative architecture, user interface, and features. Provide smooth transition and positive user experience for customers. Expand online offerings of book backﬁ les and legacy reference works. Expand advertising-supported publications business. Grow business in Asia, adding new customers, authors, and publishing programs. Generate savings and drive productivity improvements in content management, manufacturing, and shared support services. Increase cross-business licensing, marketing, and publishing opportunities. Y L R A L O H C S D N A I , L A C D E M 8 PROVIDING MUST-HAVE CONTENT AND SERVICES TO RESEARCHERS AND PRACTITIONERS IN RESEARCH-BASED PROFESSIONS solution delivering the online reference library For researchers in the laboratory, the ability to access scientiﬁ c literature electronically at their desktops, day or night, has been transformative. The comprehensive online collection of journals that Wiley InterScience has offered since 1999 now has its counterpart in a virtual library of 7,600 books, 100 major reference works (eMRWs), a dozen databases, and the Current Protocols laboratory manuals. The online version ttte/Encyclopedia of Reagents for Orrganic Synthesis, which is 14 volumes in of Paquette/Encyclopedia of Reagents for Organic Synthesis, which is 14 volumes in rs not only ease of access, but also the ability to search chemical structures, print, offers not only ease of access, but also the ability to search chemical structures, urres, and reactions. The 2007 acqquisition of Blackwell Publishing spurred a substructures, and reactions. The 2007 acquisition of Blackwell Publishing spurred a eeffoort to digitize Blackwell’s books inn the humanities and social sciences, as massive effort to digitize Blackwell’s books in the humanities and social sciences, as aanny additional Wiley books, with a total of 4,500 added in the last two years. well as many additional Wiley books, with a total of 4,500 added in the last two years. aar year 2009 alone, we anticipate tthe addition of at least 1,400 Online In calendar year 2009 alone, we anticipate the addition of at least 1,400 Online nee eMRWs, nearly 70 new journalss, and more than 50 digital backﬁ les. Books, nine eMRWs, nearly 70 new journals, and more than 50 digital backﬁ les. F I S C A L Y E A R 2 0 0 9 H I G H L I G H T S Increased global revenue for STMS by 9% on a currency neutral basis, the result of higher journal subscription renewals, new business, and improved global rights income. All subject categories exhibited growth, reﬂ ecting the positive effect of combining the Wiley and Blackwell STMS businesses. Strengthened society relationships, with 32 new journals signed in ﬁ scal year 2009, 87 journal contracts renewed or extended, and only 9 journal contracts not renewed. Launched ﬁ ve new journals: the Journal of Research Synthesis Methods (in association with the Society for Research Synthesis Methodology); Clinical and Translational Science (for medical professionals’ research and educational endeavors); MaterialsViews.com to complement the print version of the journal; Sports Technology (in print and online); and the online Evolutionary Applications. 9 9 solution creating society opportunities Through our Custom Ventures program, we are collaborating with society partners to offer their members new types of content that can generate new revenue streams and assist with member growth and retention. Working with The Society of Hospital Medicine, we re-launched their newsletter, The Hospitalist, in 2005 as a four-color, controlled circulation magazine, followed in 2006 by the launch of the peer-reviewed Journal of Hospital Medicine. The relationship continues to expand, with new content offerings that provide outlets for medical advertising and sponsorship, including The-Hospitalist.org, featuring the exclusive Wachter’s World blog; a new book series; the availability of Accreditation Council for Continuing Medical Education (ACCME) materials through the Journal of Hospital Medicine; and an online SHM Career Center. solution helping societies tap the web Wiley is the world’s leading publisher on behalf of professional and scholarly societies. We are providing societies with services beyond publishing as well. Through our Society Web Services initiative, we are helping societies optimize their Web presence. We have created approximately 60 custom sites that serve as journal home pages, promote society brands, and provide a community environment for authors, readers, and members. For example, visitors to www.proteinscience.org can access The Protein Society’s Protein Science, submit a paper, and learn about the society’s travel grant program. For other societies, we have created webinars, podcasts of conference presentations, and special-topic virtual issues of journals. PUBLISHING CENTERS Australia, Germany, Singapore, U.K., U.S. DISTRIBUTION Multiple channels including libraries, library consortia, subscription agents, bookstores, online booksellers, and direct sales to customers. 10 CUSTOMERS Academic, corporate, government, and public libraries; researchers; clinicians; engineers and technologists; scholarly and professional societies; students; and professors worldwide. solution advancing interdisciplinary research Interdisciplinary research is yielding some of today’s most valuable scientiﬁ c ﬁ ndings, and Wiley Interdisciplinary Reviews (WIREs), a new series launched in January 2009, serves interdisciplinary researchers with top-quality, peer-reviewed content and an innovative publishing model that combines the best features of review journals and major reference works. WIREs articles, like journals, beneﬁ t from the high visibility conferred by Impact Factor ratings and abstracting and indexing (A&I) services, while providing the broad coverage and capacity for updating of online encyclopedias. WIREs are an important addition to our offerings on behalf of scholarly and professional societies. We are partnering with the Royal Meteorological Society and the Royal in 2010. Eleven Geographical Society (with IBG) to launch WIREs Climate Change in 2010. Eleven to launnch WIREs Climate Changee nanomedicine WIREs publications are under contract, in subject areas including nanomedicine ontract,, in subject areas including and nanobiotechnology, computational statistics, cognitive science, and systems e, and systems tational statistics, cognitive science biology and medicine. BRANDS/IMPRINTS Wiley, Wiley AcerS, Wiley AIChE, Wiley-Blackwell, Wiley InterScience, Wiley-VCH, Arnold, Blackwell Publishing, BMJ Books, BPS-Blackwell, Ernst & Sohn, Essential Evidence Plus (formerly InfoPOEMs), Five-Minute Veterinary Consult, GIT Verlag, IEEE Press, IFT Press, ISTE, PharmaFile, The Cochrane Library, UKVet, Verlag Chimica Acta. F I S C A L Y E A R 2 0 0 9 H I G H L I G H T S Published nearly 1,400 books, including Paquette/Crich/Fuchs/Molander’s 14-volume Encyclopedia of Reagents for Organic Synthesis, 2e (EROS2); Ness’s 8-volume International Encyclopedia of Revolution and Protest, the deﬁ nitive reference source for the history of protest and revolution over the past 500 years, available in print and online; and Jamieson/ Moenssens’s The Wiley Encyclopedia of Forensic Science. Merged Blackwell Synergy into Wiley InterScience, migrating approximately 2 million online journal articles, 29,000 customers, and 2 million access licenses. Sold the ﬁ rst combined Wiley-Blackwell journal license to Akademintorg, the Russian Academy of Sciences’ Foreign Economic Association. Acquired the Arnold statistics book program, consisting of more than 50 titles, from Hodder Education. Signed agreement with CambridgeSoft, a leading provider of knowledge enterprise solutions, to provide our organic chemistry content to its pharmaceutical, biotechnology, and chemical industry customers. 11 11 MAKING A DIFFERENCE IN THE PERSONAL AND PROFESSIONAL LIVES OF OUR TARGETED AUDIENCES CUSTOMERS Professionals, consumers, and students worldwide. S T R A T E G I E S Build core publishing categories, grow market share, and increase proﬁ tability through organic growth and acquisition. Strengthen and expand strategic alliances and franchise products globally. Develop and grow industry-leading brands; expand their reach through partnerships and electronic platforms. Accelerate revenue and margin growth through collaboration across geographic and business boundaries. Develop workﬂ ow solutions that anticipate and respond to the needs of our customers and help them achieve their desired outcomes. Leverage the Internet for online sales, advertising revenue from branded sites, and content licensing. Expand electronic publishing activities, focusing on key franchises, alliances, and brands. Grow custom and proprietary publishing business. Expand Asian publishing programs, including translations, co-publishing, and English-language reprints. Develop new products and services that leverage multi-channel print sales capabilities and/or electronic/ digital capabilities. Generate savings and drive productivity improvements by expanding offshoring and outsourcing of various content-management, manufacturing, and shared support services. rararatetete sasasavivivingngngs s s ananand d d drdrdrivivive e e prprprodododucucuctiiivivivitytyty uuus s s cococontntntenenent-t-t-mamamanananagegegememementntnt, , mamamanununufafafactctcturururinining,g,g, a a andndnd s s shahaharerered dd sususuppppppororortt p Enable expansion of online, mobile, and print publishing in B2C and B2B sectors by re-engineering ble expansion of online, mobile, and print publishing in B2C and B2B sectors by re-engineering content management and delivery infrastructure. tent management and delivery infrastructure. E D A R T / L A N O S S E F O R P I 12 solut solution tapping the emerging eBook With the Amazon Kindle®, the 700 series Sony Reader, and the iPhone® eBook application, readers are embracing the eBook’s promise. Wiley anticipated this development; we began of our 38,000 books offering STMS books online in the 1990s, and today more than 13,000 of our 38,000 books business and offer in print are available as eBooks. While we have a robust library eBook business and offer has surpassed textbooks as eBooks, this year marks the ﬁ rst time a retailer, Amazon, has surpassed 0 Wiley P/T library wholesalers as a Wiley eBook customer, offering more than 9,000 Wiley P/T graphy. Kindle titles in such top categories as business, technology, self-help, and biography. Kindle d recently to 2 For Dummies, our ﬁ rst product created solely for the Kindle, launched recently to with Higher become our number one eBook seller on Amazon. P/T is also working with Higher X . While Education and STMS to convert content for the larger-screen Kindle DX . While k of our pdf eBooks that exactly replicate the printed page are currently the bulk of our ate business, we also produce eBooks in reﬂ owable formats to accommodate prove mobile devices with varying screen sizes. As conversion techniques improve and to allow reﬂ owable rendering of technical books with complex graphics, and ture as more devices emerge with full-color displays, we envision a bright future delivering Wiley content to readers through multiple devices. F I S C A L Y E A R 2 0 0 9 H I G H L I G H T S Global P/T revenue declined 10% on a currency neutral basis, largely the result of a very weak retail environment, particularly in the U.S. Signed agreement to become exclusive global book publisher for Meredith Corporation’s Better Homes and Gardens brand. Renewed agreement with General Mills to publish Betty Crocker, Pillsbury, and other cookbooks. Became the ofﬁ cial publisher of the Graduate Management Admission Test® (GMAT®) study guides. Acquired 13 highly respected newsletters for higher education administrators from LRP Publications. 13 PRODUCTS Books, subscription content, and information services in all media. Subject areas include business, technology, architecture, cooking, psychology, education, travel, health, religion, consumer reference, pets, and general interest. solution leadership development, streamlined Leadership development is a priority in most organizations, and the Leadership Practices Inventory (LPI), the behavioral assessment and feedback component of our highly successful Kouzes/Posner/The Leadership Challenge franchise, is the most trusted 360-degree instrument on the market. The Web-based version, LPI Online, is an ideal application of online functionality, eliminating laborious print-on-paper processes that have become all but unworkable in today’s world of globally dispersed work forces. We continue to streamline its operation and incorporate new features in accordance with user feedback. LPI Online is a consistently strong seller, posting an increase in ﬁ scal year 2009 of 10% over prior year, an exceptional performance given the challenging economic conditions. In January 2010, we will launch another franchise product, the Emotional Intelligence Skills Assessment from Steven Stein/ Multi-Health Systems, the ﬁ rst of several new releases that will cover such training subjects as team development, coaching, diversity, and learning styles. solution helping partners grow, the Frommer’s way In today’s competitive global environment, companies need every possible advantage to build market share. Frommer’s Unlimited draws on the powerful Frommer’s brand and trusted content to offer businesses a one-stop travel content and delivery service that helps them attract new prospects and convert them to high-value customers. For KLM Royal Dutch Airlines, we created a branded destination guide Web site, drawing on local event and city guide content provided by Frommer’s Unlimited editors, as well as custom content. Users of the iPhone® and iPod Touch® can now access Frommer’s branded guides to such cities as New York, San Francisco, London, and Paris. Browsers in the Borders travel section can plan their next trip at interactive Borders-branded kiosks. Other partners include British Airways, Travelocity, MSN, and InterContinental Hotels Group. BRANDS/FRANCHISES Architectural Graphic Standards, Audel, Better Homes and Gardens, Betty Crocker, Capstone, CliffsNotes, Fisher Investments Press, For Dummies, Frommer’s, GMAT®, Howell Book House, J.K. Lasser, Jossey-Bass, Pfeiffer, Pillsbury, Sybex, Unofﬁ cial Guide, Visual, Webster’s New World, Weight Watchers, Wiley Nautical, Wrightbooks, Wrox. F I S C A L Y E A R 2 0 0 9 H I G H L I G H T S Re-launched Dummies.com, now featuring 25 topic areas, each with more than 250 pieces of content; 6,600 articles; 950 fully illustrated step-by-step articles; and 265 videos. Page viewership increased 23%. Launched ﬁ rst Frommer’s guides for Amazon Kindle wireless electronic-reading device and expanded Amazon partnership to offer select textbooks for sale through the enhanced, larger-screen Kindle DX, adding to the more than 9,000 books — approximately one-third of Wiley books in print — already available on the Kindle 2. Launched online the CliffsNotesTestSuccess test-prep tool and CliffsNotes AP Digital Flashcards; visitors to CliffsNotes.com increased 21%. Launched a custom travel guide for MasterCard, Priceless China, distributed prior to 2008 Summer Olympic Games, as well as two custom guides for the U.S. Olympic Committee. Signed an agreement with the Vancouver Olympic Organizing Committee to become the ofﬁ cial publication partner of the 2010 Winter Olympic and Paralympic Games. 14 solution effective treatment, efﬁ ciently planned Two important developments in health care are the adoption of evidence- based practices and the ability to incorporate patient information directly into electronic workﬂ ows. For mental health professionals, TheraScribe, a CD-based software product, provides a template for creating effective treatment plans PUBLISHING CENTERS rapidly and efﬁ ciently, using behavioral deﬁ nitions, therapeutic interventions, and diagnostic suggestions that meet the requirements of accrediting bodies, insurance companies, and third-party payors. TheraScribe 5.0, released in 2007, incorporates evidence-based treatment interventions, required by a growing number of funding sources and insurers. In March 2010, we will launch the Evidence-Based Treatment Planning Video Series, developed to assist practitioners in assimilating new evidence-based treatment strategies. TheraScribe has provided a model for other products across the Company that deliver Wiley content directly into customer workﬂ ows. Australia, Canada, Germany, Singapore, U.K., U.S. DISTRIBUTION Multiple channels globally, including major chains and online booksellers, independent bookstores, libraries, colleges and universities, warehouse clubs, corporations, direct marketing, and Web sites. 1515 DISTRIBUTION Multiple channels including college bookstores, online booksellers, and direct sales to customers. HELPING TEACHERS TEACH AND STUDENTS LEARN solution serving students with disabilities For students with visual impairment or other disabilities (such as the physical inability to turn a page) that make it difﬁ cult, if not impossible, for them to obtain information from print products, academic success depends on access to alternative versions of textbooks. While campus-based Disabled Student Services ofﬁ ces are federally mandated to provide such versions to students, they have had no uniform process for obtaining the electronic ﬁ les from publishers. Working with seven other publishers, Wiley played a key role in developing AccessText Network, which will launch this summer to give colleges will launch th a single online source for looking up textbooks and requesting ﬁ les. The initiative was launched ks and requesting ﬁ les. The i through a partnership between the Association of American Publishers and the University of Georgia’s the Association of American Publishers an Alternative Media Access Center, and is funded by donations from Wiley, Cengage Learning, CQ Press, Accesss Center, and is fundedd by donations from Wiley, C Macmillan, McGraw-Hill Education, Pearson, Reed Elsevier, and W.W. Norton. N O I T A C U D E R E H G H I 16 CUSTOMERS Undergraduate, graduate, and advanced placement students, educators, and lifelong learners worldwide, and secondary school students in Australia. S T R A T E G I E S Grow market positions in targeted academic disciplines. Increase market share through acquisitions. Accelerate revenue and margin growth through collaboration across geographic and business boundaries. Develop and promote products, services, tools, and business models that deliver value to our customers and promote brand loyalty. Expand market penetration and reach of WileyPLUS globally. Offer products in a variety of formats, both print and electronic, to provide customers with choices. Develop workﬂ ow solutions that anticipate and respond to the needs of our customers and help them achieve their desired outcomes. Leverage partnerships for expansion into new markets. Expand custom publishing business. Grow worldwide through adaptations, translations, and indigenous publishing. Tap opportunities in growth markets in Asia and the Middle East. Generate savings and drive productivity improvements by expanding offshoring and outsourcing of manufacturing and shared support services. PUBLISHING CENTERS Australia, Canada, India, U.K., U.S. PRODUCTS Educational materials in all media for two- and four-year colleges and universities and for-proﬁ t career colleges, as well as for secondary schools in Australia and advanced placement classes in the U.S. F I S C A L Y E A R 2 0 0 9 H I G H L I G H T S Increased global HE revenue 6% on a currency neutral basis. Results were driven by the continued success of WileyPLUS, revenue from acquired titles, solid growth in the Microsoft Ofﬁ cial Academic Course (MOAC) collaboration, and strong performance in virtually every subject category. The WileyPLUS digital learning suite continued to gain momentum around the world, accounting for 9% of global HE revenue in ﬁ scal year 2009; billings increased by 38%, and digital-only sales grew by 70%. Re-introduced WileyPLUS to the modern language market with added functionality, allowing professors to offer an online language lab. As a result, WileyPLUS student validations increased by 10,000 using Dawson/Dicho y hecho, 8e, and Lucas/Murillo/¡Con brío!. Increased Wiley Faculty Network (WFN) activity by 86% over ﬁ scal year 2008 and by 190% over ﬁ scal year 2007. WFN activities include WileyPLUS training, online guest lectures, campus events, virtual workshops, and live regional and national workshops. Published six Wiley Visualizing textbooks; surpassed revenue goal for this series (developed in collaboration with the National Geographic Society) and allowed more instructors to “share their passion” for their discipline by using these highly visual texts. Acquired market-leading textbooks and learning materials from Cengage Learning that complement HE’s business and modern language programs. Acquired mathematics and statistics textbooks by award- winning authors and educators from Key College Publishing. 17 solution teaching and learning Reading a textbook is just one component of coursework. WileyPLUS offers more by integrating digital text content with a suite of online resources and interactive functionality supporting a wide range of student and instructor activities — study, homework, automated grading, remediation, and concept mastery. Until recently, traditional paper homework retained one advantage: the instructor could see the steps a student took to solve a problem. With the January release of a new WileyPLUS, students using the new “Show Work” feature can now display these steps on an electronic “whiteboard” when submitting an answer for scoring, and instructors can respond directly with comments, advice, and explanations of errors in a virtual “ofﬁ ce hours” exchange. solution content they need, the way they need it Instructors’ course needs are not always met by one textbook, and within a given textbook, not all the material may be suited to their purposes. Wiley Custom Select (customselect.wiley.com) allows instructors to “build” customized course materials using a simple three-step process that takes just minutes to complete. They select content from hundreds of Wiley textbooks, add their own material if desired, and have the result delivered in very affordable eBook format or in a print version priced according to the content selected. Wiley Custom Select is powered by the Mark Logic XML Server, which hosts both content and functionality in a single location and provides an extensible framework that will eventually include all Wiley content, making our vision of “All Wiley, All the Time” a reality. BRANDS/FRANCHISES Wiley, Wiley Desktop Editions, WileyFLEX, Wiley/Jossey-Bass, Wiley/MOAC, Wiley Pathways, WileyPLUS, Wiley Visualizing, Business Extra Select, CATALYST, Jacaranda. 18 solution facilitating the GAAP/IFRS convergence With its anticipated inclusion on the 2012 CPA exam, the upcoming convergence of U.S. GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards) poses a major challenge for accounting instructors. The Wiley Faculty Network (WFN), which has been facilitating virtual peer-to-peer collaboration in the use of Wiley technology products and educational best practices since 2001, was invited by the American Accounting Association to help prepare educators for the convergence, because of both the WFN’s outstanding reputation and the strength of Wiley’s accounting program. The ﬁ rst Wiley Accounting IFRS “Boot Camp” was held in February and April, featuring academic experts’ presentations on key topics and drawing more than 500 virtual attendees from institutions across the U.S. solution affordable access for all With the budgetary pressures on today’s colleges and universities, instructors are being asked to produce improved outcomes at the same time that a growing number of students, with their own budgetary concerns, are opting to purchase used, sometimes out-of-date textbooks. Through a groundbreaking pilot program, the University of Texas at Austin is licensing Wiley content for a set of courses, guaranteeing every student equal access to the same top-quality material at a very affordable per-student cost — in eBook format as Wiley Desktop Editions, with WileyPLUS, or in print. Launched this spring, the program will be extended to the University of Texas-Pan American in Edinburg for the fall semester. 19 www.wiley.com/go/citizenship Sustainability is not a new concept at Wiley, a company that has prospered for more than 200 years. Throughout our long history, we have understood that responsibility to the communities we serve and those in which we live and work is an essential element of success. As professionals and as individuals, Wiley colleagues engage in a wide array of activities that demonstrate our deep commitment to this principle. Wiley’s Citizenship Initiative In 2008, Wiley introduced a company-wide Corporate Citizenship initiative to address the social, economic, environmental, and ethical challenges we face in our business that are most important to our diverse stakeholder groups — our colleagues, authors, customers, partners, and shareholders. With input from our colleagues and from business leaders, we reviewed our existing policies, practices, and programs and concluded that while we are performing well in certain areas — such as corporate governance and community engagement — we need to formalize and globalize our policies and strategies, improve our internal and external communications, and be more proactive in addressing our carbon footprint and supply chain issues. Working in collaboration with Business for Social Responsibility (BSR), a global non-profi t member orga- nization, and in accordance with our strategic plan, Wiley embarked on a global initiative to measure our performance, set realistic targets, and drive change in our social and environmental policies, practices, and programs. Because progress toward these goals is critical to our success, key business leaders and managers have begun to report on their Corporate Citizenship objectives in their annual performance evaluations. Th is is a long-term initiative, with the full support of our leadership team. It may take years to reach some of our ultimate goals, but we intend to achieve measurable improvement from year to year. For information on our initiative and our progress, please visit www.wiley.com/go/citizenship. Global Citizenship Council A key component of Wiley’s Corporate Citizenship initiative is the Global Citizenship Council that comprises colleagues from across our Company. Th e Council’s mission is to develop and implement a unifi ed global citizenship program that is fully integrated into Wiley’s business strategies; that drives positive change in our social, economic, environmental, and ethical management practices; and that brings to light the Company’s exemplary values and policies. Th e Council is engaging key Wiley stakeholders in order to be a better corporate citizen, enhance our reputation and leadership position, and improve fi nancial performance. Task Forces We have established task forces to address citizenship areas identifi ed as presenting key challenges and opportunities for Wiley. As needed, new task forces will be established, and when their goals are achieved, they will be disbanded. E T A R O P R O C I P H S N E Z I T I C 20 Ethical Conduct d Wiley is committed to achieving the highest standards in the ethical, social, and d d environmental aspects of our workplace. We are committed to protecting the health, alth, e ea , and l safety, and security of colleagues and upholding their economic, social, cultural, and d personal rights and freedoms. We expect that all our external suppliers, as valued e e stakeholders, will also adhere to these principles and pledge that all our publisher-vendor er-vendor h h applies to li a relations will be governed by them. Wiley’s Business Conduct and Ethics Policy applies to By creating all colleagues and is an important part of our Corporate Governance procedures. By creating ndors and promulgating a Vendor Code of Ethical Conduct, we try to ensure that all vendors n quirements, observe human rights standards, local environmental legislation and statutory requirements, eq e and applicable laws and regulations. t FY2009 ACHIEVEMENTS Drafted and validated the Vendor Code with Wiley colleagues. Developed distribution and reporting procedures. FY2010 OBJECTIVES Disseminate the Vendor Code to the major production and manufacturing companies around the world — including compositors, printers, bind- ers, freight companies, paper mills, and software companies — with whom we spend more than $100,000 annually. Monitor vendor performance by making annual visits to at least 75% of our major vendors and ﬁ ling subsequent reports with production management. Paper Wiley uses paper sourced from mills around the globe and recognizes our responsibility to select papers that meet the highest standards of sustain- able, clean, and efﬁ cient production. In 2008-2009, Wiley estab- lished global guidelines for environmentally favorable paper sourcing and procurement strategies based on generally accepted best practices, with guidance from stakeholders, industry trade associations, and third-party certiﬁ ers. Moving forward, Wiley will adopt locally tailored programs that apply these these global principles, guide decision making, and facilitate decisi externa external communication. CHIEVEMEENTS FY2009 ACHIEVEMENTS JECCTIVES FY2010 OBJECTIVES FY2010 OBJECCTIV Communicate Wiley’s sourcing Communicate Wiley’s sourcing g strategies to sstakeholders. strategies to stakeholders. Leverage the resources of Leverage the rresources of PREPS (Publishers Database PREPS (Publishers Database for Responsible Environmental Paper Sourcing) and EPAT (Environmental Paper Assess- ment Tools) to support our paper choices. Leverage new print technolo- gies such as Print On Demand and Ultra Short Run to reduce paper use. h Developed and implemented and impleemented e Paper Soourcing Responsible Paper Sourcing which givve guidelines, which give preference to producers who are recognized by one or more third-party certiﬁ ed sustainable forest management schemes; abide by all local environmental laws and regulations; demon- strate an ongoing commitment to clean and efﬁ cient produc- tion; and, whenever possible, align with producers who operate in accordance with the ISO 14001 environmental management standard. Implemented strategies to reduce consumption through the use of lighter weight papers, along with press and roll width optimization. Encouraged waste minimization through better control of print and bind spoilage. 21 Community Wiley’s corporate philanthropy program, which is linked to the Company’s mission, strives to improve the quality of life of people in the communities where we live and work, as well as those we serve, through support of educational and cultural institutions and environmental and social service organizations. Wiley supports many institutions and organizations offering programs that foster learning, expand cultural and educational opportunities, improve health resources, support social services, protect the environment, and provide disaster relief. Since community needs differ globally, our philanthropic policies and activities are managed locally. The mission of Wiley’s Community Impact Task Force is to build on Wiley’s long commitment to corporate philanthropy, which is currently realized through several programs and through voluntarism. This task force will establish local charitable committees to manage local activities that beneﬁ t our communities and complement The Wiley Vision (see page 24). FY2009 ACHIEVEMENTS Aligned philanthropic activities around Wiley’s mission and established guidelines that can be adapted for all company locations. Planned local charitable committees in North America, Asia, and Australia, joining existing teams in the U.K. and Germany. FY2010 OBJECTIVES Establish new charitable committees in Ames, Indianapolis, San Francisco, Asia, and Australia; plan local philanthropy group in Canada. Expand the Read Aloud Wiley Volunteer Program to the U.K. and Canada. Increase ServiceMatch program participation in the U.S. by 10%. Carbon In 2006, a year before it was acquired by Wiley, Blackwell Publishing became the ﬁ rst carbon neutral global publisher. This commitment was renewed in 2007 and 2008. Since then, we have assessed the feasibility of adopting carbon neutral policies and programs for the entire Company and have decided instead to focus on measuring and reducing our biggest contribution to carbon emissions — our shipping activity. The Carbon Task Force will measure Wiley’s current carbon emissions — from shipping book product from printer to distribution center and journal product from printer to cus- tomer, as well as all shipping between distribution centers — and will model scenarios to assess the effect on carbon emissions of various printing and shipping strategies. Based on an analysis of the data, the task force will develop carbon reduction strategies with measurable targets. FY2009 ACHIEVEMENTS FY2010 OBJECTIVES Joined BSR’s Clean Cargo Group, gaining access to the experience of peer companies, best practices, and tools. Adopted Clean Cargo’s inter- modal CO2 calculator, which computes the carbon emissions of road, rail, ocean, and air freight. Gathered data for FY2009 shipments of books from print- ers to distribution centers and began calculations. Produced a preliminary model for journal shipping data and veriﬁ ed its consistency with carbon measurement work undertaken by Blackwell in 2007. Determine the key performance indicators against which carbon emissions will be measured. Complete data collection of shipping information for books and journals, populate the intermodal CO2 calculator, and create scenarios. Gather detailed data from current and projected Print On Demand, Ultra Short Run, and Distributed Print initiatives to calculate their impact. Develop carbon reduction strategies with measurable targets based on an analysis of the data. 22 Colleague Engagement Wiley has always depended on our colleagues — our most valuable resource — to be the driving force behind the business. Colleagues constantly collaborate to develop new ways to meet our customers’ and partners’ needs, as well as reach team and organizational goals. This spirit of collaboration extends to our Corporate Citizenship initiative. Made up of volunteers, the local citizenship councils and similar groups will act as work place communities and conduits for engaged colleagues who contribute their time and energy. They will help foster, develop, and incorporate new and ongoing Citizenship efforts. FY2009 ACHIEVEMENTS Started development of a framework for company-wide coordination of local engagement and initiatives. Performed an audit of Wiley Corporate Citizenship grassroots efforts, identifying local leaders worldwide. FY2010 OBJECTIVES Establish a task force to help form local councils and engage with groups currently participating in formal and informal Citizenship activities. Develop a ﬂ exible framework that can be adapted locally; provide tools for making decisions based on business criteria; facilitate information sharing among local groups. Recruit local champions and identify chairs to help organize local councils and coordinate with existing groups. Strategic Issues The Strategic Issues Task Force provides a feedback loop through our external stakeholders, including authors, researchers, and society contacts who are experts in ﬁ elds of corporate social responsibility. These individuals will help Wiley scan the global market environment to identify opportunities or needs for policy development and will review key communications to ensure they are engaging and relevant. FY2009 ACHIEVEMENTS Commenced development of focus groups of six to eight external experts in corporate social responsibility drawn from Wiley’s network of authors, researchers, and society contacts. FY2010 OBJECTIVES Convene focus groups of global experts to review Wiley’s strategy, provide feedback, and identify opportunities for follow-up. The focus groups will be held initially in the U.S. and the U.K. with global representation, and may be expanded to other regions. Provide an interface with other Wiley advisory boards. v i s i o n C O R P O R A T E G O V E R N A N C E P R I N C I P L E S To promote the best corporate governance practices, John Wiley & Sons, Inc., adheres to the Corporate Governance Principles set forth in the Corporate Governance section on wiley. com and in the Company’s Proxy (online at www.wiley.com/go/ communications). The Board of Directors and management believe that these Principles, which are consistent with the requirements of the Securities and Exchange Commission and the New York Stock Exchange, are in the best interests of the Company, its shareholders, and other stakeholders, including colleagues, authors, customers, and suppliers. The Board is responsible for ensuring that the Company has a management team capable of representing these interests and of achieving superior business performance. 23 v i s i o n G O A L S Wiley has achieved superior results and continues to grow by focusing on three overarching goals: > Building long-term relationships with our customers > Increasing proﬁ tability, cash ﬂ ow, and return on investment > Enhancing Wiley’s position as the place to be for all our stakeholders. S T R A T E G I E S We are realizing these goals through the following strategies: > Exploiting our global positions and brands by collaborating across our organization and constantly striving to improve the quality of our products and services around the world > Capitalizing on the connections among our core businesses — Scientiﬁ c, Technical, Medical, and Scholarly; Professional/Trade; and Higher Education — to better serve customers and drive growth > Pursuing partnerships and alliances with highly regarded organizations to add content, services, and capabilities to our portfolio > Building on our successful track record with acquisitions by consummating transactions that are strategic and ﬁ nancially responsible, and executing our integration plans effectively by adhering to a best practices approach > Leveraging our investments in technology to create value for our customers, facilitate communication with our stake- holders, and increase productivity throughout the Company. M I S S I O N Wiley provides must-have content and services to professionals, scientists, educators, students, lifelong learners, and consumers worldwide. Wiley is dedicated to serving our customers’ needs, while generating attractive intellectual and ﬁ nancial rewards for all our stakeholders — authors, colleagues, partners, and stockholders. the wiley vision V A L U E S Founded in 1807, during the presidency of Th omas Jeff erson, Wiley has evolved into one of the world’s most respected publishing companies. We strongly believe in the enduring value of collaborative relationships, built on a solid foundation of trust and integrity. We strive to be the very best at all that we do, which strengthens our competitive position and results in consistently strong performance. Wiley’s strength is based on the eff orts and accomplishments of a diverse group of people who are distinguished by their integrity, creativity, talent, initiative, and dedication. WE ARE RESPONSIBLE TO OUR CUSTOMERS, who rely on the quality of our products and services to meet their needs. Service must be prompt and effi cient, and prices should be reasonable. WE ARE RESPONSIBLE TO OUR AUTHORS AND PARTNERS, who collaborate with us to create high-quality products and services, and who deserve appropriate recognition and compensation for their eff orts. WE ARE RESPONSIBLE TO OUR COLLEAGUES, whom we respect as human beings fi rst, professionals second. We must provide a reasonable sense of security, pleasant and safe working conditions, fair compensation and benefi t programs, and opportunities for professional growth. WE ARE RESPONSIBLE TO OUR SHAREHOLDERS, who should realize a fair return on their investments. Investors can rely on a highly capable leadership team and an independent Board of Directors distinguished by their commitment to eff ective governance, ethical behavior, and integrity in all that we do. WE ARE RESPONSIBLE TO THE COMMUNITIES in which we work. Th ese communities should benefi t from our good citizenship, including our support of educational and cultural organizations. 24 FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: April 30, 2009 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 State or other jurisdiction of incorporation or organization 111 River Street, Hoboken, NJ Address of principal executive offices 13-5593032 I.R.S. Employer Identification No. 07030 Zip Code (201) 748-6000 (cid:53)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:87)(cid:72)(cid:79)(cid:72)(cid:83)(cid:75)(cid:82)(cid:81)(cid:72)(cid:3)(cid:81)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3) including area code Securities registered pursuant to Section 12(b) of the Act: Title of each class Class A Common Stock, par value $1.00 per share Class B Common Stock, par value $1.00 per share Name of each exchange on which registered New York Stock Exchange New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes |X| No | | Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes | | No |X | 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 re(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3) (cid:78)(cid:81)(cid:82)(cid:90)(cid:79)(cid:72)(cid:71)(cid:74)(cid:72)(cid:15)(cid:3) (cid:76)(cid:81)(cid:3) (cid:71)(cid:72)(cid:73)(cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3) (cid:83)(cid:85)(cid:82)(cid:91)(cid:92)(cid:3) (cid:82)(cid:85)(cid:3) (cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3) incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. | | Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated (cid:73)(cid:76)(cid:79)(cid:72)(cid:85)(cid:17)(cid:3)(cid:54)(cid:72)(cid:72)(cid:3)(cid:71)(cid:72)(cid:73)(cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:179)(cid:68)(cid:70)(cid:70)(cid:72)(cid:79)(cid:72)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:76)(cid:79)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:68)(cid:85)(cid:74)(cid:72)(cid:3)(cid:68)(cid:70)(cid:70)(cid:72)(cid:79)(cid:72)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:76)(cid:79)(cid:72)(cid:85)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:53)(cid:88)(cid:79)(cid:72)(cid:3)(cid:20)(cid:21)(cid:69)-2 of the Exchange Act. Large accelerated filer |X| Accelerated filer | | Non-accelerated filer | | Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes | | No |X| The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the closing (cid:83)(cid:85)(cid:76)(cid:70)(cid:72)(cid:3)(cid:68)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:79)(cid:68)(cid:86)(cid:87)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:71)(cid:68)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:81)(cid:87)(cid:79)(cid:92)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:72)(cid:87)(cid:72)(cid:71)(cid:3)(cid:86)(cid:72)(cid:70)(cid:82)(cid:81)(cid:71)(cid:3)(cid:73)(cid:76)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:15)(cid:3)(cid:50)(cid:70)(cid:87)(cid:82)(cid:69)(cid:72)(cid:85)(cid:3)(cid:22)(cid:20)(cid:15)(cid:3) 2008, was approximately $1,536.1 million. The registrant has no non-voting common stock. (cid:55)(cid:75)(cid:72)(cid:3) (cid:81)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3) (cid:82)(cid:73)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)(cid:3) (cid:82)(cid:88)(cid:87)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3) Class A and Class B Common Stock as of May 31, 2009 was 48,745,940 and 9,644,115 respectively. DOCUMENTS INCORPORATED BY REFERENCE (cid:51)(cid:82)(cid:85)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:85)(cid:72)(cid:74)(cid:76)(cid:86)(cid:87)(cid:85)(cid:68)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3) (cid:71)(cid:72)(cid:73)(cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3) (cid:83)(cid:85)(cid:82)(cid:91)(cid:92)(cid:3) (cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:88)(cid:86)(cid:72)(cid:3) (cid:76)(cid:81)(cid:3) (cid:70)(cid:82)(cid:81)(cid:81)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:76)(cid:87)(cid:86)(cid:3) (cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3) (cid:80)(cid:72)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:82)(cid:73)(cid:3) (cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3) scheduled to be held on September 18, 2009, are incorporated by reference into Part III of this form 10-K. -2- JOHN WILEY AND SONS, INC. AND SUBSIDIARIES FORM 10-K FOR THE FISCAL YEAR ENDED APRIL 30, 2009 INDEX PART I ITEM 1. Business ITEM 1A. Risk Factors ITEM 1B. Unresolved Staff Comments ITEM 2. ITEM 3. ITEM 4 Properties Legal Proceedings Submission of Matters to a Vote of Security Holders PART II ITEM 5. (cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)Related Stockholder Matters and Issuer Purchases of Equity Securities ITEM 6. ITEM 7. Selected Financial Data (cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:39)(cid:76)(cid:86)(cid:70)(cid:88)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:81)(cid:68)(cid:79)(cid:92)(cid:86)(cid:76)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:53)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk ITEM 8. Financial Statements and Supplemental Data ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ITEM 9A. Controls and Procedures ITEM 9B. Other Information PART III ITEM 10. Directors and Executive Officers of the Registrant ITEM 11. Executive Compensation ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ITEM 13. Certain Relationships and Related Transactions ITEM 14. Principal Accounting Fees and Services PART IV ITEM 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K Signatures PAGE 4 4-7 7 8 9 9 9 9 9 9 9 74 74 74 75-76 76 76 76 76 77-79 80-87 -3- PART I Item 1. Business The Company, founded in 1807, was incorporated in the state of New York on January 15, 1904. (As used (cid:75)(cid:72)(cid:85)(cid:72)(cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:87)(cid:72)(cid:85)(cid:80)(cid:3) (cid:179)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:180)(cid:3) (cid:80)(cid:72)(cid:68)(cid:81)(cid:86)(cid:3) (cid:45)(cid:82)(cid:75)(cid:81)(cid:3) (cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:3) (cid:9)(cid:3) (cid:54)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3) (cid:44)(cid:81)(cid:70)(cid:17)(cid:15)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:76)(cid:87)(cid:86)(cid:3) (cid:86)(cid:88)(cid:69)(cid:86)(cid:76)(cid:71)(cid:76)(cid:68)(cid:85)(cid:76)(cid:72)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:68)(cid:73)(cid:73)(cid:76)(cid:79)(cid:76)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:76)(cid:72)(cid:86)(cid:15)(cid:3) unless the context indicates otherwise.) The Company is a global publisher of print and electronic products, providing content and digital solutions to customers worldwide. Core businesses produce scientific, technical, medical and scholarly journals, encyclopedias, books, online products and services; professional and consumer books, subscription products, training materials, online applications and websites; and educational materials, including integrated online teaching and learning resources, for undergraduate and graduate students, teachers and lifelong learners. The Company takes full advantage of its content from all three core businesses in developing and cross-marketing products to its diverse customer base of professionals, consumers, researchers, students, and educators. The use of technology enables the Company to make its content more accessible to its customers around the world. The Company maintains publishing, marketing, and distribution centers in the United States, Canada, Europe, Asia, and Australia. Further description of the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3) (cid:76)(cid:86)(cid:3) (cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:75)(cid:72)(cid:85)(cid:72)(cid:76)(cid:81)(cid:3) (cid:69)(cid:92)(cid:3) (cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3) (cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86) Discussion and Analysis section of this 10-K. Employees As of April 30, 2009, the Company employed approximately 5,100 people on a full-time equivalent basis worldwide. Financial Information About Industry Segments (cid:55)(cid:75)(cid:72)(cid:3) (cid:81)(cid:82)(cid:87)(cid:72)(cid:3) (cid:72)(cid:81)(cid:87)(cid:76)(cid:87)(cid:79)(cid:72)(cid:71)(cid:3) (cid:179)(cid:54)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:180)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:49)(cid:82)(cid:87)(cid:72)(cid:86)(cid:3) (cid:87)(cid:82)(cid:3) (cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:39)(cid:76)(cid:86)(cid:70)(cid:88)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:81)(cid:68)(cid:79)(cid:92)(cid:86)(cid:76)(cid:86)(cid:3)(cid:86)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:20)(cid:19)-K, both listed in the attached index, are incorporated herein by reference. Financial Information About Foreign and Domestic Operations and Export Sales (cid:55)(cid:75)(cid:72)(cid:3) (cid:81)(cid:82)(cid:87)(cid:72)(cid:3) (cid:72)(cid:81)(cid:87)(cid:76)(cid:87)(cid:79)(cid:72)(cid:71)(cid:3) (cid:179)(cid:54)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:180)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:49)(cid:82)(cid:87)(cid:72)(cid:86)(cid:3) (cid:87)(cid:82)(cid:3) (cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:39)(cid:76)(cid:86)(cid:70)(cid:88)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:81)(cid:68)(cid:79)(cid:92)(cid:86)(cid:76)(cid:86)(cid:3)(cid:86)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:20)(cid:19)-K, both listed in the attached index, are incorporated herein by reference. Item 1A. Risk Factors You should carefully consider all of the information set forth in this Form 10-K, including the following risk (cid:73)(cid:68)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:15)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:71)(cid:72)(cid:70)(cid:76)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:82)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)(cid:68)(cid:81)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:86)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:86)(cid:3)(cid:69)(cid:72)(cid:79)(cid:82)(cid:90)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:82)(cid:81)(cid:79)(cid:92)(cid:3)(cid:82)(cid:81)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3) Company faces. Additional risks not currently known to the Company or that the Company presently deems (cid:76)(cid:80)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3) (cid:80)(cid:68)(cid:92)(cid:3) (cid:68)(cid:79)(cid:86)(cid:82)(cid:3) (cid:76)(cid:80)(cid:83)(cid:68)(cid:76)(cid:85)(cid:3) (cid:76)(cid:87)(cid:86)(cid:3) (cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3) (cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3) (cid:55)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:15)(cid:3) (cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:70)(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3) (cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) operations or prospects could be materially adversely affected by any of these risks. Cautionary Statement Under the Private Securities Litigation Reform Act of 1995: -4- This 10-K and our Annual Report to Shareholders for the year ending April 30, 2009 report contains certain forward-(cid:79)(cid:82)(cid:82)(cid:78)(cid:76)(cid:81)(cid:74)(cid:3) (cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3) (cid:70)(cid:82)(cid:81)(cid:70)(cid:72)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:82)(cid:83)(cid:72)rations, performance, and financial condition. In addition, the Company provides forward-looking statements in other materials released to the public as well as oral forward-looking information. Statements which contain the words anticipate, expect, believes, estimate, project, forecast, plan, outlook, intend and similar expressions constitute forward-looking statements that involve risk and uncertainties. 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 (cid:79)(cid:72)(cid:89)(cid:72)(cid:79)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)(cid:87)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:30)(cid:3)(cid:11)(cid:76)(cid:76)(cid:12)(cid:3)(cid:86)(cid:88)(cid:69)(cid:86)(cid:70)(cid:85)(cid:76)(cid:69)(cid:72)(cid:85)(cid:3)(cid:85)(cid:72)(cid:81)(cid:72)(cid:90)(cid:68)(cid:79)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:77)(cid:82)(cid:88)(cid:85)(cid:81)(cid:68)(cid:79)(cid:86)(cid:30)(cid:3) (iii) the financial stability and liquidity of journal subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and financial stability of key retailers; (vi) the impact of the used- book market; (vii) worldwide economic and political c(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:30)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:11)(cid:89)(cid:76)(cid:76)(cid:76)(cid:12)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3) (cid:87)(cid:82)(cid:3) (cid:83)(cid:85)(cid:82)(cid:87)(cid:72)(cid:70)(cid:87)(cid:3) (cid:76)(cid:87)(cid:86)(cid:3) copyrights and other intellectual property worldwide (ix) other factors detailed from time to time in the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:73)(cid:76)(cid:79)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:91)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:87)(cid:68)(cid:78)(cid:72)(cid:86)(cid:3)(cid:81)(cid:82)(cid:3)(cid:82)bligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances. Operating Costs and Expenses The Company has a significant investment, and cost, in its employee base around the world. The Company offers competitive salaries and benefits in order to attract and retain the highly skilled workforce needed to sustain and develop new products and services required for growth. Employment and benefit costs are affected by competitive market conditions for qualified individuals, and factors such as healthcare, pension and retirement benefits costs. The Company is a large paper purchaser, and paper prices may fluctuate significantly from time-to-time. The Company attempts to moderate the exposure to fluctuations in price by entering into multi-year supply contracts and having alternative suppliers available. In general, however, any significant increase in the costs of goods and services provided to the Company may adversely affect the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:70)(cid:82)sts of operation. Protection of Intellectual Property Rights (cid:54)(cid:88)(cid:69)(cid:86)(cid:87)(cid:68)(cid:81)(cid:87)(cid:76)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:68)(cid:79)(cid:79)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:87)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:70)(cid:82)(cid:83)(cid:92)(cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:15)(cid:3)(cid:75)(cid:72)(cid:79)(cid:71)(cid:3)(cid:72)(cid:76)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:81)(cid:68)(cid:80)(cid:72)(cid:15)(cid:3) in the name of the author of the work, or in the name of the sponsoring professional society. Such copyrights (cid:83)(cid:85)(cid:82)(cid:87)(cid:72)(cid:70)(cid:87)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:72)(cid:91)(cid:70)(cid:79)(cid:88)(cid:86)(cid:76)(cid:89)(cid:72)(cid:3) (cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:3) (cid:87)(cid:82)(cid:3) (cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:90)(cid:82)(cid:85)(cid:78)(cid:3) (cid:76)(cid:81)(cid:3)(cid:80)(cid:68)(cid:81)(cid:92)(cid:3) (cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:85)(cid:76)(cid:72)(cid:86)(cid:3) (cid:68)(cid:69)(cid:85)(cid:82)(cid:68)(cid:71)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:73)(cid:76)(cid:72)(cid:71)(cid:3) (cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:86)(cid:15)(cid:3) (cid:76)(cid:81)(cid:3) (cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:70)(cid:68)(cid:86)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:182)(cid:86)(cid:3)(cid:79)(cid:76)(cid:73)(cid:72)(cid:3)(cid:83)(cid:79)(cid:88)(cid:86)(cid:3)(cid:26)(cid:19)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:15)(cid:3)(cid:69)(cid:88)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)(cid:68)(cid:81)(cid:92)(cid:3)(cid:72)(cid:89)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:3)(cid:80)(cid:76)(cid:81)(cid:76)(cid:80)(cid:88)(cid:80)(cid:3)(cid:82)(cid:73)(cid:3)(cid:24)(cid:19)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:90)(cid:82)(cid:85)(cid:78)(cid:86)(cid:3)(cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:72)(cid:71)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3) 1978. The ability of the Company to continue to achieve its expected results depends, in part, upon the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:83)(cid:85)(cid:82)(cid:87)(cid:72)(cid:70)(cid:87)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:79)(cid:79)(cid:72)(cid:70)(cid:87)(cid:88)(cid:68)(cid:79)(cid:3)(cid:83)(cid:85)(cid:82)(cid:83)(cid:72)(cid:85)(cid:87)(cid:92)(cid:3)(cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:86)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:80)(cid:68)(cid:92)(cid:3)(cid:69)(cid:72)(cid:3)(cid:68)(cid:71)(cid:89)(cid:72)(cid:85)(cid:86)(cid:72)(cid:79)(cid:92)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3) by lack of legal and/or technological protections for its intellectual property in some jurisdictions and markets. (cid:48)(cid:68)(cid:76)(cid:81)(cid:87)(cid:68)(cid:76)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:88)(cid:87)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81) (cid:51)(cid:85)(cid:82)(cid:73)(cid:72)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:86)(cid:3)(cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:90)(cid:76)(cid:71)(cid:72)(cid:3)(cid:85)(cid:72)(cid:79)(cid:92)(cid:3)(cid:88)(cid:83)(cid:82)(cid:81)(cid:3)(cid:80)(cid:68)(cid:81)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:3)(cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3)(cid:77)(cid:82)(cid:69)(cid:86). It is imperative that the Company consistently demonstrates its ability to maintain the integrity of the information included in its (cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3)(cid:36)(cid:71)(cid:89)(cid:72)(cid:85)(cid:86)(cid:72)(cid:3)(cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:76)(cid:87)(cid:92)(cid:15)(cid:3)(cid:90)(cid:75)(cid:72)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:82)(cid:85)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:89)(cid:68)(cid:79)(cid:76)(cid:71)(cid:15)(cid:3)(cid:80)(cid:68)(cid:92)(cid:3)(cid:85)(cid:72)(cid:71)(cid:88)(cid:70)(cid:72)(cid:3)(cid:71)(cid:72)(cid:80)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17) -5- Trade Concentration and Credit Risk In the journal publishing business, subscriptions are primarily sourced through journal subscription agents who, acting as agents for library customers, facilitate ordering by consolidating the subscription orders/billings of each subscriber with various publishers. Cash is generally collected in advance from subscribers by the subscription agents and is remitted to the journal publisher, including the Company, generally prior to the commencement of the subscriptions. Although at fiscal year-end the Company had minimal credit risk exposure to these agents, future calendar-year subscription receipts from these agents are highly dependent on their financial condition and liquidity. Subscription agents account for approximately 20% of consolidated book and journal revenue and no one agent accounts for more than 9% of total consolidated revenue. (cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:76)(cid:86)(cid:3)(cid:81)(cid:82)(cid:87)(cid:3)(cid:71)(cid:72)(cid:83)(cid:72)(cid:81)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:88)(cid:83)(cid:82)(cid:81)(cid:3)(cid:68)(cid:3)(cid:86)(cid:76)(cid:81)(cid:74)(cid:79)(cid:72)(cid:3)(cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:30)(cid:3)(cid:75)(cid:82)(cid:90)(cid:72)(cid:89)(cid:72)(cid:85)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:92)(cid:3)(cid:76)(cid:86)(cid:3)(cid:70)(cid:82)(cid:81)(cid:70)(cid:72)(cid:81)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3) national, regional, and online bookstore chains. Although no one book customer accounts for more than 7% of consolidated revenue, the top 10 book customers account for approximately 18% of total consolidated revenue and approximately 41% of accounts receivable, before reserves at April 30, 2009. Payments for the sale of subscription journals are predominantly collected in advance. Changes in Regulation and Accounting Standards The Company maintains publishing, marketing and distribution centers in Asia, Australia, Canada, Europe and the United States. The conduct of our business, including the sourcing of content, distribution, sales, marketing and advertising is subject to various laws and regulations administered by governments around the world. Changes in laws, regulations or government policies, including taxation requirements and accounting stand(cid:68)(cid:85)(cid:71)(cid:86)(cid:15)(cid:3)(cid:80)(cid:68)(cid:92)(cid:3)(cid:68)(cid:71)(cid:89)(cid:72)(cid:85)(cid:86)(cid:72)(cid:79)(cid:92)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:73)(cid:88)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:17) Introduction of New Technologies or Products Media and publishing companies exist in rapidly changing technological and competitive environments. Therefore, the Company must continue to invest in technological and other innovations and adapt in order to continue to add value to its products and services and remain competitive. There are uncertainties whenever developing new products and services, and it is often possible that such new products and services may not be launched or if launched, may not be profitable or as profitable as existing products and services. Competition for Market Share and Author and Society Relationships The Company operates in highly competitive markets. Success and continued growth depends greatly on developing new products and the means to deliver them in an environment of rapid technological change. Attracting new authors and professional societies, while retaining our existing business relationships are also critical to our success. We believe the Company is well positioned to meet these business challenges with the strength of our brands, our reputation and innovative abilities. Interest Rate and Foreign Exchange Risk Approximately 50% of our total consolidated revenue for fiscal year 2009 was derived from operations outside the United States. These international-based revenues, as well as our substantial international net assets, (cid:72)(cid:91)(cid:83)(cid:82)(cid:86)(cid:72)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3) (cid:87)(cid:82)(cid:3) (cid:73)(cid:82)(cid:85)(cid:72)(cid:76)(cid:74)(cid:81)(cid:3) (cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:70)(cid:92)(cid:3) (cid:72)(cid:91)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3) (cid:85)(cid:68)(cid:87)(cid:72)(cid:3) (cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:17)(cid:3) (cid:44)(cid:81)(cid:3) (cid:68)(cid:71)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3) (cid:82)(cid:88)(cid:85)(cid:3) (cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)-bearing loans and borrowings are subject to risk from changes in interest rates. These risks and the measures we have taken to help contain them are discussed in the Market Risk section of this 10-K. For additional details, -6- see Note 12 to our consolidated financial statements, Debt and Available Credit Facilities, in this 10-K. Those sections of our 2009 10-K are incorporated by reference. Notwithstanding our efforts to foresee and mitigate the effects of changes in fiscal circumstances, we cannot predict with certainty changes in currency and interest rates, inflation or other related factors affecting our business. Liquidity and Global Economic Conditions The recent changes in global financial markets have not had, nor do we anticipate they will have, a significant impact on our liquidity. Due to our significant operating cash flow, financial assets, access to capital markets and available lines of credit and revolving credit agreements, we continue to believe that we have the ability to meet our financing needs for the foreseeable future. As market conditions change, we will continue to monitor our liquidity position. However, there can be no assurance that our liquidity or our results of operations will not be affected by recent and possible future changes in global financial markets and global economic conditions. Moreover, like other businesses, we face the potential effects of the global economic recession. Unprecedented market conditions including illiquid credit markets, volatile equity markets, dramatic fluctuations in foreign currency rates and economic recession could affect future results. Effects of Inflation and Cost Increases The Company, from time to time, experiences cost increases reflecting, in part, general inflationary factors. To mitigate the effect of cost increases, the Company may take various steps to reduce development, production and manufacturing costs. In addition, the selling prices for our products may be selectively increased as marketplace conditions permit. Ability to Successfully Integrate Key Acquisitions (cid:55)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:3) (cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:74)(cid:92)(cid:3) (cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:86)(cid:3) (cid:87)(cid:76)(cid:87)(cid:79)(cid:72)(cid:15)(cid:3) (cid:76)(cid:80)(cid:83)(cid:85)(cid:76)(cid:81)(cid:87)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3) (cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3) (cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3) (cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:72)(cid:91)(cid:76)(cid:86)(cid:87)ing businesses; the development of new products and services; designing and implementing new methods of delivering products to our customers, and organic growth of existing brands and titles. Acquisitions may have a substantial impact on costs, revenues, cash flows, and financial position such as, the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3) (cid:51)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3)(cid:11)(cid:43)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:86)(cid:12)(cid:3)(cid:47)(cid:87)(cid:71)(cid:17)(cid:3)(cid:11)(cid:179)(cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:180)(cid:12)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:73)(cid:88)(cid:79)(cid:79)(cid:92)(cid:3)(cid:71)(cid:72)(cid:86)(cid:70)(cid:85)(cid:76)(cid:69)(cid:72)(cid:71)(cid:3) (cid:76)(cid:81)(cid:3)(cid:49)(cid:82)(cid:87)(cid:72)(cid:3)(cid:23)(cid:3)(cid:82)(cid:73)(cid:3) the Notes to Consolidated Financial Statements. Acquisitions involve risks and uncertainties, including difficulties in integrating acquired operations and in realizing expected opportunities, diversions of management resources and loss of key employees, challenges with respect to operating new businesses, debt incurred in financing such acquisitions, and other unanticipated problems and liabilities. Attracting and Retaining Key Employees (cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:86)(cid:88)(cid:70)(cid:70)(cid:72)(cid:86)(cid:86)(cid:3)(cid:76)(cid:86)(cid:3)(cid:75)(cid:76)(cid:74)(cid:75)(cid:79)(cid:92)(cid:3)(cid:71)(cid:72)(cid:83)(cid:72)(cid:81)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:88)(cid:83)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:87)(cid:72)(cid:81)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:78)(cid:72)(cid:92)(cid:3)(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:86)(cid:3)(cid:74)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:79)(cid:92)(cid:17)(cid:3)(cid:3)(cid:44)(cid:81)(cid:3)(cid:68)(cid:71)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:90)(cid:72)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3) dependent upon our ability to continue to attract new employees with key skills to support the continued organic growth of the business. Item 1B. Unresolved Staff Comments None -7- Item 2. Properties The Company occupies office, warehouse, and distribution facilities 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). All of the buildings and the equipment owned or leased are believed to be in good condition and are generally fully utilized. Location Purpose Approx. Sq. Ft. Lease Expiration 2018 2020 2019 2011 2010 2012 2027 2025 2021 2011 2011 2013 2011 2013 2017 2020 2021 2019 2012 2017 26,000 33,000 93,000 87,000 20,000 81,000 63,000 17,000 146,000 67,000 15,000 19,000 29,000 16,000 383,000 185,000 380,000 123,000 38,000 43,000 58,000 49,000 21,000 27,000 Leased Australia Canada England Singapore Germany Office Office Office & Warehouse Office & Warehouse Office Warehouse Office Office Warehouse Office & Warehouse Office Office Office India Warehouse United States: New Jersey Corporate Headquarters New Jersey Office & Warehouse New Jersey Warehouse Indiana California Office Office Massachusetts Office Owned Germany England Office Office Office Iowa Office & Warehouse -8- 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 (cid:49)(cid:82)(cid:3)(cid:80)(cid:68)(cid:87)(cid:87)(cid:72)(cid:85)(cid:86)(cid:3)(cid:90)(cid:72)(cid:85)(cid:72)(cid:3)(cid:86)(cid:88)(cid:69)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)security holders during the last quarter of the fiscal year ended April 30, 2009. PART II Item 5. (cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:3)(cid:48)(cid:68)(cid:87)(cid:87)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:44)(cid:86)(cid:86)(cid:88)(cid:72)(cid:85)(cid:3)(cid:51)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3) Equity Securities The Quarterly Share Prices, Dividends, and Related Stockholder Matters listed in the index on page 10 are incorporated herein by reference. Item 6. Selected Financial Data The Selected Financial Data listed in the index on page 10 is incorporated herein by reference. Item 7. (cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)Discussion and Analysis of Financial Condition and Results of Operations (cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:39)(cid:76)(cid:86)(cid:70)(cid:88)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:81)(cid:68)(cid:79)(cid:92)(cid:86)(cid:76)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:53)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:50)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:79)(cid:76)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:81)(cid:71)(cid:72)(cid:91)(cid:3) on page 10 are incorporated herein by reference. Item 7A. Quantitative and Qualitative Disclosures About Market Risk (cid:55)(cid:75)(cid:72)(cid:3) (cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:68)(cid:83)(cid:83)(cid:72)(cid:68)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3) (cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:179)(cid:48)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:3) (cid:53)(cid:76)(cid:86)(cid:78)(cid:180)(cid:3) (cid:76)(cid:81)(cid:3) (cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3) (cid:39)(cid:76)(cid:86)(cid:70)(cid:88)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:36)(cid:81)(cid:68)(cid:79)(cid:92)(cid:86)(cid:76)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) Financial Condition and Results of Operations listed in the index on page 10 is incorporated herein by reference. Item 8. Financial Statements and Supplemental Data The Financial Statements and Supplemental Data listed in the index on page 10 is incorporated herein by reference. -9- 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: (cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:39)(cid:76)(cid:86)(cid:70)(cid:88)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:81)(cid:68)(cid:79)(cid:92)(cid:86)(cid:76)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:15)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:81)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)nd Results of Operations 11-38 Page(s) Results by Quarter (Unaudited) Quarterly Share Prices, Dividends, and Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data (cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74) Reports of Independent Registered Public Accounting Firm Consolidated Statements of Financial Position as of April 30, 2009 and 2008 Consolidated Statements of Income for the years ended April 30, 2009, 2008, and 2007 Consolidated Statements of Cash Flows for the years ended April 30, 2009, 2008, and 2007 (cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:85)(cid:72)(cid:75)(cid:72)(cid:81)(cid:86)(cid:76)(cid:89)(cid:72)(cid:3)(cid:44)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:3)(cid:72)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3) April 30, 2009, 2008, and 2007 Notes to Consolidated Financial Statements 39 40 41 42 43-44 45 46 47 48 49-72 Schedule II (cid:178) Valuation and Qualifying Accounts for the years ended April 30, 2009, 2008, and 2007 73 Other schedules are omitted because of the absence of conditions under which they apply or because the information required is included in the Notes to Consolidated Financial Statements. -10- (cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:39)(cid:76)(cid:86)(cid:70)(cid:88)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:36)(cid:81)(cid:68)(cid:79)(cid:92)(cid:86)(cid:76)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:15)(cid:3) Financial Condition and Results of Operations The Company is a global publisher of print and electronic products, providing content and digital solutions to customers worldwide. Core businesses produce scientific, technical, medical and scholarly journals, encyclopedias, books, online products and services; professional and consumer books, subscription products, training materials, online applications and websites; and educational materials, including integrated online teaching and learning resources, for undergraduate and graduate students, teachers and lifelong learners. The Company takes full advantage of its content from all three core businesses in developing and cross-marketing products to its diverse customer base of professionals, consumers, researchers, students, and educators. The use of technology enables the Company to make its content more accessible to its customers around the world. The Company maintains publishing, marketing, and distribution centers in the United States, Canada, Europe, Asia, and Australia. Business growth comes from a combination of title, imprint and business acquisitions which complement the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:72)(cid:91)(cid:76)(cid:86)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:30)(cid:3) (cid:73)(cid:85)(cid:82)(cid:80)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:71)(cid:72)(cid:89)(cid:72)(cid:79)(cid:82)(cid:83)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:82)(cid:73)(cid:3) (cid:81)(cid:72)(cid:90)(cid:3) (cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:30)(cid:3) (cid:73)(cid:85)(cid:82)(cid:80)(cid:3) (cid:71)(cid:72)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) implementing new methods of delivering products to our customers; and from organic growth of existing brands and titles. Core Businesses Scientific, Technical, Medical and Scholarly (STMS): The Company is one of the most diversified leading publishers for the scientific, technical, medical and scholarly communities worldwide, including academic, corporate, government, and public libraries; researchers; scientists; clinicians; engineers and technologists; scholarly and professional societies; and students and professors. STMS products include journals, major reference works, books and protocols. STMS publishing areas include the physical sciences and engineering, medical, social science and humanities, life sciences, technology and professional. STMS products are sold and distributed globally, online and in print through multiple channels, including research libraries and library consortia, subscription agents, direct sales to professional society members, bookstores, online booksellers and other customers. Global STMS represented approximately 60% of total Company (cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:73)(cid:76)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:21)(cid:19)(cid:19)(cid:28)(cid:17)(cid:3)(cid:3)(cid:54)(cid:55)(cid:48)(cid:54)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:74)(cid:85)(cid:72)(cid:90)(cid:3)(cid:68)(cid:87)(cid:3)(cid:68)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:82)(cid:88)(cid:81)(cid:71)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3) rate of 23% over the past five years, including the acquisition of Blackwell in February 2007. The graph below presents STMS revenue by product type for fiscal year 2009: Publishing Rights 5% Books and Reference Works 17% Advertising 5% Other Publishing Income 9% Journal Subscriptions 64% -11- Approximately 56% of journal subscription revenue is derived from publishing rights owned by the Company. Publishing alliances also play a major role in STMS(cid:182)(cid:86)(cid:3) (cid:86)(cid:88)(cid:70)(cid:70)(cid:72)(cid:86)(cid:86)(cid:17)(cid:3) (cid:55)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3) (cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:72)(cid:86)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:77)(cid:82)(cid:88)(cid:85)(cid:81)(cid:68)(cid:79)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) prestigious societies, including the American Cancer Society, the British Journal of Surgery Society, the Federation of European Biochemical Societies, The European Molecular Biology Organization, American Anthropological Association and the German Chemical Society. Approximately 44% of journal subscription revenue is derived from publication rights which are owned by professional societies and published by the Company pursuant to long-term contract or owned jointly with a professional society. These society alliances bring mutual benefit, with the societ(cid:76)(cid:72)(cid:86)(cid:3) (cid:74)(cid:68)(cid:76)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:182)(cid:86)(cid:3) (cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3) (cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3) (cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:71)(cid:76)(cid:86)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:72)(cid:91)(cid:83)(cid:72)(cid:85)(cid:87)(cid:76)(cid:86)(cid:72)(cid:15)(cid:3) while Wiley benefits from being affiliated with prestigious societies and their members. STMS is a leading provider of evidence-based medicine (EBM). The Cochrane Collaboration database, a premier source of high-quality independent evidence to inform healthcare decision-making and provides the (cid:73)(cid:82)(cid:88)(cid:81)(cid:71)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:74)(cid:85)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:3) (cid:86)(cid:88)(cid:76)(cid:87)(cid:72)(cid:3) (cid:82)(cid:73)(cid:3) (cid:40)(cid:37)(cid:48)(cid:3) (cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3) (cid:71)(cid:72)(cid:86)(cid:76)(cid:74)(cid:81)(cid:72)(cid:71)(cid:3) (cid:87)(cid:82)(cid:3) (cid:76)(cid:80)(cid:83)(cid:85)(cid:82)(cid:89)(cid:72)(cid:3) (cid:83)(cid:68)(cid:87)(cid:76)(cid:72)(cid:81)(cid:87)(cid:3) (cid:75)(cid:72)(cid:68)(cid:79)(cid:87)(cid:75)(cid:70)(cid:68)(cid:85)(cid:72)(cid:17)(cid:3) (cid:3) (cid:40)(cid:37)(cid:48)(cid:3) facilitates the effective management of patients through clinical expertise informed by best practice evidence that is derived from medical literature. (cid:40)(cid:86)(cid:87)(cid:68)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:72)(cid:71)(cid:3) (cid:70)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:70)(cid:76)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3) (cid:76)(cid:81)(cid:3) (cid:20)(cid:28)(cid:28)(cid:28)(cid:15)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:90)(cid:72)(cid:69)-based publishing platform, Wiley InterScience® (www.interscience.wiley.com) is a leading international resource for scientific, technical, medical and scholarly content. In (cid:45)(cid:88)(cid:81)(cid:72)(cid:3) (cid:21)(cid:19)(cid:19)(cid:27)(cid:15)(cid:3) (cid:82)(cid:81)(cid:79)(cid:76)(cid:81)(cid:72)(cid:3) (cid:70)(cid:82)(cid:81)(cid:87)(cid:72)(cid:81)(cid:87)(cid:3) (cid:73)(cid:82)(cid:85)(cid:80)(cid:72)(cid:85)(cid:79)(cid:92)(cid:3) (cid:75)(cid:82)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3) (cid:82)(cid:81)(cid:3) (cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:182)(cid:86)(cid:3) (cid:90)(cid:72)(cid:69)-based platform, Synergy, was migrated to Wiley InterScience. The migration included approximately 29,000 customers, over two million licenses and nearly two million journal articles. Wiley InterScience now offers access to nearly 1,500 journals and their backfiles, over 7,000 online books and major reference works (encyclopedias and multi-volume handbooks), a selection of Current Protocols (laboratory manuals) and databases, as well as a suite of professional and management resources. Access to Wiley InterScience is sold through licenses with institutional and corporate libraries, consortia and other academic, government and corporate customers. The Company offers a range of licensing options including customized suites of journal publications for individual customer needs as well as subscriptions for individual journal publications. Licenses are typically sold in durations of one to three years. The Company also provides fee based access to Wiley InterScience through its Article Select and PayPerView programs which offer non-subscribed journal content, book chapters and major reference work articles. Wiley InterScience takes advantage of technology to update content frequently, and it adds new features and resources on an ongoing basis to increase the productivity of scientists, professionals and students. Two examples are EarlyView, through which customers can access individual articles well in advance of print publication, and MobileEditions, which enables users to view tables of content and abstracts on wireless handheld devices and Web-enabled phones. In 2008, the Company introduced its open access business model, OnlineOpen. Under this open access business model, the author, the author's funding agency, or the author's institution pays a fee to ensure that an article is made available via Wiley InterScience to all non-subscribers including the general public upon publication. The article is also deposited in the funding agency's preferred repository. In return for the service fee, the Company provides its customary publishing, editing and peer review and technology services. In 2005, the Company began a program to digitize its entire historical journal content, dating back to the 1800s. (cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:182)(cid:86)(cid:3)(cid:71)(cid:76)(cid:74)(cid:76)(cid:87)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:79)(cid:72)(cid:74)(cid:68)(cid:70)(cid:92)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:72)(cid:81)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:71)(cid:72)(cid:86)(cid:76)(cid:74)(cid:81)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:76)(cid:80)(cid:83)(cid:85)(cid:82)(cid:89)(cid:72) the research pathway and ensure content discovery is as seamless and efficient as possible. The backfile collection, which is available online through Wiley InterScience, spans two centuries of scientific research and comprise over 14 million pages (cid:177) one of the largest -12- archives of its kind issued by a single publisher. As of April 30, 2009 approximately 95% of (cid:68)(cid:79)(cid:79)(cid:3)(cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:182)(cid:86)(cid:3)(cid:72)(cid:91)(cid:76)(cid:86)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) journal content is digitized and made available to customers. Key Acquisitions: In February 2007, the Company acquired Blac(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3)(cid:51)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3)(cid:11)(cid:43)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:86)(cid:12)(cid:3)(cid:47)(cid:87)(cid:71)(cid:17)(cid:3)(cid:11)(cid:179)(cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:180)(cid:12)(cid:15)(cid:3)(cid:68)(cid:3) leading publisher of journals and books for the academic, research and professional markets focused on science, technology, medicine and social sciences and humanities. Headquartered in Oxford, England, Blackwell also maintained publishing locations in the United States, Asia, Australia, Denmark and Germany. (cid:36)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3) (cid:24)(cid:19)(cid:8)(cid:3) (cid:82)(cid:73)(cid:3) (cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:182)(cid:86)(cid:3) (cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3) (cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3) (cid:90)(cid:68)(cid:86)(cid:3) (cid:71)(cid:72)(cid:85)(cid:76)(cid:89)(cid:72)(cid:71)(cid:3) (cid:73)(cid:85)(cid:82)(cid:80)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:56)(cid:81)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3) (cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:86)(cid:17)(cid:3) (cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3) (cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:71)(cid:3) approximately 1,000 individuals worldwide with just over half located in the United Kingdom. The acquisition of (cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3)(cid:72)(cid:81)(cid:75)(cid:68)(cid:81)(cid:70)(cid:72)(cid:71)(cid:3)(cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:182)(cid:86)(cid:3)(cid:74)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:15)(cid:3)(cid:72)(cid:91)(cid:83)(cid:68)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:71)(cid:71)(cid:72)(cid:71)(cid:3)(cid:71)(cid:76)(cid:89)(cid:72)(cid:85)(cid:86)(cid:76)(cid:87)(cid:92)(cid:3) to the journal portfolio, increased both print and on-line advertising revenue and added more professional society relationships. Professional/Trade: (cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:51)(cid:85)(cid:82)(cid:73)(cid:72)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:18)(cid:55)(cid:85)(cid:68)(cid:71)(cid:72)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:86)(cid:15)(cid:3)(cid:71)(cid:72)(cid:89)(cid:72)(cid:79)(cid:82)(cid:83)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:72)(cid:86)(cid:3)(cid:69)(cid:82)(cid:82)(cid:78)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:88)(cid:69)(cid:86)(cid:70)(cid:85)(cid:76)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3) in all media, in the subject areas of business, technology, architecture, culinary, psychology, education, travel, consumer reference, and general interest. Products are developed for worldwide distribution through multiple channels, including major chains and online booksellers, independent bookstores, libraries, colleges and universities, warehouse clubs, corporations, direct marketing, and web sites. Global Professional/Trade publishing accounted for approximately 26% of total Company revenue in fiscal year 2009. The graph below presents P/T revenue by product type for fiscal year 2009: Publishing Rights 4% Other Publishing Income 5% Advertising 1% Journal Subscriptions 3% Books 87% Key revenue growth strategies of the Professional/Trade business include adding value to its content, (cid:71)(cid:72)(cid:89)(cid:72)(cid:79)(cid:82)(cid:83)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:69)(cid:85)(cid:68)(cid:81)(cid:71)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:85)(cid:68)(cid:81)(cid:70)(cid:75)(cid:76)(cid:86)(cid:72)(cid:86)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:72)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:74)(cid:76)(cid:70)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) worldwide Professional/Trade business grew at a compound annual rate of 2% over the past five years. (cid:51)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:79)(cid:79)(cid:76)(cid:68)(cid:81)(cid:70)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:85)(cid:68)(cid:81)(cid:70)(cid:75)(cid:76)(cid:86)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:70)(cid:72)(cid:81)(cid:87)(cid:85)(cid:68)(cid:79)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:74)(cid:92)(cid:17)(cid:3)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:82)(cid:74)(cid:72)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3) (cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:182)(cid:86)(cid:3) (cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3) (cid:71)(cid:72)(cid:89)(cid:72)(cid:79)(cid:82)(cid:83)(cid:80)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3) (cid:86)(cid:68)(cid:79)(cid:72)(cid:86)(cid:15)(cid:3) (cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3) (cid:71)(cid:76)(cid:86)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:87)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3) (cid:70)(cid:68)(cid:83)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:68)(cid:3) (cid:83)(cid:68)(cid:85)(cid:87)(cid:81)(cid:72)(cid:85)(cid:182)(cid:86)(cid:3) content and brand name recognition has been a driving factor in its success. Professional/Trade alliance partners include General Mills, the Culinary Institute of America, the American Institute of Architects, the Leader to Leader Institute, Fisher Investments, Meredith Corporation and Weight Watchers, among many others. (cid:55)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:51)(cid:85)(cid:82)(cid:73)(cid:72)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:18)(cid:55)(cid:85)(cid:68)(cid:71)(cid:72)(cid:3) (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) (cid:83)(cid:85)(cid:82)(cid:73)(cid:72)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:86)(cid:15)(cid:3) (cid:70)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)(cid:86)(cid:15)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:86)(cid:87)(cid:88)(cid:71)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3) (cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:90)(cid:76)(cid:71)(cid:72)(cid:17)(cid:3)(cid:3) Professional Trade brands and extensive backlists are especially well suited for online bookstores such as -13- Amazon.com. With (cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3)(cid:88)(cid:81)(cid:79)(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:179)(cid:89)(cid:76)(cid:85)(cid:87)(cid:88)(cid:68)(cid:79)(cid:180)(cid:3)(cid:86)(cid:75)(cid:72)(cid:79)(cid:73)(cid:3)(cid:86)(cid:83)(cid:68)(cid:70)(cid:72)(cid:15)(cid:3)(cid:82)(cid:81)(cid:79)(cid:76)(cid:81)(cid:72)(cid:3)(cid:85)(cid:72)(cid:87)(cid:68)(cid:76)(cid:79)(cid:72)(cid:85)(cid:86)(cid:3)(cid:82)(cid:73)(cid:73)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:79)(cid:82)(cid:81)(cid:74)(cid:72)(cid:85)(cid:3) periods of time than brick-and-mortar bookstores. The Company promotes an active and growing Professional/Trade custom publishing program. Custom publications are typically used by organizations for internal promotional or incentive programs. Books that are specifically written for a customer or an existing Professional/Trade publication can be customized, such as having the cover art include custom imprint, messages or slogans. Of special note are customized For Dummies publications, which leverage the power of this well-known brand to meet the specific information needs of a wide range of organizations around the world. Key Acquisitions: Key Professional/Trade acquisitions in recent years include: (i) In fiscal 2007, WhatsonWhen.com, a provider of travel-related online content, technology, and services which compliment the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:87)(cid:85)(cid:68)(cid:89)(cid:72)(cid:79)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:17)(cid:3)(cid:3)(cid:11)(cid:76)(cid:76)(cid:12)(cid:3)(cid:44)(cid:81)(cid:3)(cid:73)(cid:76)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:21)(cid:19)(cid:19)(cid:25)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:54)(cid:92)(cid:69)(cid:72)(cid:91)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)., a leading publisher to the global information technology professional community for nearly 30 years. Sybex published about 100 new titles a year and maintained a backlist of over 450 titles in digital photography, operating systems, programming and gaming categories. (iii) In fiscal year 2002, the Company acquired Hungry Minds Inc., a leading publisher with an outstanding collection of respected brands, with such product lines as the For Dummies series, the (cid:41)(cid:85)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:182)(cid:86) and Unofficial Guide travel series, the Bible and Visual technology series, the CliffsNotes study guides, (cid:58)(cid:72)(cid:69)(cid:86)(cid:87)(cid:72)(cid:85)(cid:182)(cid:86)(cid:3)(cid:49)(cid:72)(cid:90)(cid:3)(cid:58)(cid:82)(cid:85)(cid:79)(cid:71) dictionaries, and Betty Crocker and Weight Watchers cookbooks. Higher Education: The Company publishes educational materials in all media for two and four-year colleges and universities, for- profit career colleges and advanced placement classes as well as secondary schools in Australia. Higher Education products focus on courses in business and accounting, sciences, engineering, computer science, mathematics, social sciences, and other academic course materials for the professional technology market. Higher Education customers include undergraduate, graduate, and advanced placement students, educators, and lifelong learners worldwide and secondary school students in Australia. Product is delivered online and in print principally through college bookstores, online booksellers, and web sites. Globally, Higher Educational generated approximately (cid:20)(cid:23)(cid:8)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:73)(cid:76)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:21)(cid:19)(cid:19)(cid:28)(cid:17)(cid:3)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:90)(cid:76)(cid:71)(cid:72)(cid:3)(cid:43)igher Education revenue grew at a compound annual rate of 4% over the past five years. (cid:43)(cid:76)(cid:74)(cid:75)(cid:72)(cid:85)(cid:3)(cid:40)(cid:71)(cid:88)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:182)(cid:86)(cid:3)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:75)(cid:72)(cid:79)(cid:83)(cid:3)(cid:87)(cid:72)(cid:68)(cid:70)(cid:75)(cid:72)(cid:85)(cid:86)(cid:3)(cid:87)(cid:72)(cid:68)(cid:70)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:87)(cid:88)(cid:71)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:79)(cid:72)(cid:68)(cid:85)(cid:81)(cid:17)(cid:3)(cid:50)(cid:88)(cid:85)(cid:3)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:74)(cid:92)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)-added quality materials and services through textbooks, supplemental study aids, course and homework management tools and more, in print and electronic formats. The Higher Education web site offers online learning materials with links to more than 4,000 companion sub-sites to support and supplement textbooks. -14- Higher Education delivers high-quality online learning materials that offer more opportunities for customization and accommodate diverse learning styles. A prime example is WileyPLUS, an integrated suite of teaching and learning resources. By offering an electronic version of a text along with supplementary materials, content provided by the instructor, and administrative tools, WileyPLUS supports a full range of course-oriented activities, including online-planning, presentations, study, homework, and testing. The graph below presents Higher Education revenue by product type for fiscal year 2009: WileyPLUS 9% Other Publishing Income 2% Publishing Rights 2% Books 87% The Company also provides the services of the Wiley Faculty Network, a peer-to-peer network of faculty/professors supporting the use of online course material tools and discipline-specific software in the classroom. The Company believes this unique, reliable, and accessible service gives the Company a competitive advantage. Higher Education is also leveraging the web in its sales and marketing efforts. The web enhances the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:71)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:68)(cid:70)(cid:87)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:86)(cid:87)(cid:88)(cid:71)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:68)(cid:70)(cid:88)(cid:79)(cid:87)(cid:92)(cid:3)(cid:68)(cid:87)(cid:3)(cid:88)(cid:81)(cid:76)(cid:89)(cid:72)(cid:85)(cid:86)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:90)(cid:76)(cid:71)(cid:72)(cid:3)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:88)(cid:86)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3) interactive electronic brochures and e-mail campaigns. Key Acquisition/Collaborations: In the fiscal year 2009, the Company acquired the rights to publish a list of business and modern language textbooks from Cengage Learning. The titles provide a strong compliment to (cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:182)(cid:86)(cid:3)(cid:72)(cid:91)(cid:76)(cid:86)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:85)(cid:82)(cid:74)(cid:85)(cid:68)(cid:80)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:82)(cid:71)(cid:72)(cid:85)(cid:81)(cid:3)(cid:79)(cid:68)(cid:81)(cid:74)(cid:88)(cid:68)(cid:74)(cid:72)(cid:17)(cid:3) (cid:44)(cid:81)(cid:3) (cid:73)(cid:76)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3) (cid:92)(cid:72)(cid:68)(cid:85)(cid:3) (cid:21)(cid:19)(cid:19)(cid:26)(cid:15)(cid:3) (cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:3) (cid:69)(cid:72)(cid:70)(cid:68)(cid:80)(cid:72)(cid:3) (cid:48)(cid:76)(cid:70)(cid:85)(cid:82)(cid:86)(cid:82)(cid:73)(cid:87)(cid:182)(cid:86)(cid:3) (cid:86)(cid:82)(cid:79)(cid:72)(cid:3) (cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:76)ng partner worldwide for all Microsoft Official Academic Course (MOAC) materials. Microsoft and Wiley have begun publishing a co-branded series of textbook and e-learning products on several topics released under Wiley-Microsoft logos. Wiley has also assumed responsibility for the sale of existing MOAC titles. All titles are marketed globally and available in (cid:86)(cid:72)(cid:89)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3) (cid:79)(cid:68)(cid:81)(cid:74)(cid:88)(cid:68)(cid:74)(cid:72)(cid:86)(cid:17)(cid:3) (cid:3) (cid:58)(cid:76)(cid:87)(cid:75)(cid:3) (cid:48)(cid:76)(cid:70)(cid:85)(cid:82)(cid:86)(cid:82)(cid:73)(cid:87)(cid:182)(cid:86)(cid:3) (cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:68)(cid:86)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:182)(cid:86)(cid:3) (cid:79)(cid:72)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3) (cid:86)(cid:82)(cid:73)(cid:87)(cid:90)(cid:68)(cid:85)(cid:72)(cid:3) (cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:182)(cid:86)(cid:3) (cid:74)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3) presence in higher education, the alliance is an ideal strategic fit. (cid:44)(cid:81)(cid:3)(cid:73)(cid:76)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:21)(cid:19)(cid:19)(cid:22)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:48)(cid:68)(cid:85)(cid:76)(cid:86)(cid:3)(cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:76)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:72)(cid:73)(cid:73)(cid:82)(cid:85)(cid:87)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3) produce web-enabled products. This acquisition included the market-leading software Edugen, which provides the underlying technology for WileyPLUS. Located in Moscow, the development facility is staffed by approximately 75 programmers and designers. Publishing Operations Journal Products: The Company now publishes about 1,500 Scientific, Technical, Medical, Scholarly and 60 Professional/Trade journals. Journal subscription revenue and other related publishing income, such as advertising, backfile sales, -15- the sale of publishing rights, and reprints accounted for approximately (cid:24)(cid:20)(cid:8)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:73)(cid:76)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:21)(cid:19)(cid:19)(cid:28)(cid:3) revenue. The journal portfolio includes titles owned by the Company, in which case they may or may not be sponsored by a professional society, titles owned jointly with a professional society and titles owned by such societies and published by the Company pursuant to long-term contract. Societies that sponsor or own such journals generally receive a royalty and/or other consideration. The Company usually enters into agreements with outside independent editors of journals that state the duties of the editors, and the fees and expenses for their services. Contributors of journal articles transfer publication rights to the Company or a professional society, as applicable. Journal articles may be based on funded research through government or charitable grants. In certain cases the terms of the grant may require the grantholder to make articles (either the published version or an earlier unedited version) available free of charge to the public, typically after an embargo period. The Company provides various services, some for a fee, to enable the grantholder to comply. The Company sells journal subscriptions directly through sales representatives; indirectly through subscription agents; through promotional campaigns; and memberships in professional societies for those journals that are sponsored by societies. Journal subscriptions are primarily licensed through contracts for on-line content delivered through the Company(cid:182)(cid:86) web-based platform, Wiley InterScience. Contracts are negotiated by the Company directly with customers or their subscription agents. Licenses range from one to three years in duration and typically cover calendar years. Early in calendar year 2008, the Company announced its plan for a combined enhanced and rebranded online platform to support the Scientific, Technical, Medical and Scholarly business. The first phase was available to all customers beginning in July 2008. The final enhancements are expected to be completed in fiscal year 2010. Printed journals are generally mailed to subscribers directly from independent printers. The Company does not own or manage printing facilities. The print journal content is also available online. Subscription revenue is generally collected in advance, and is deferred and recognized as earned when the related issue is shipped or made available online, or over the term of the subscription as services are rendered. Book Products: Book products and book related publishing revenue, such as advertising revenue and the sale of publishing (cid:85)(cid:76)(cid:74)(cid:75)(cid:87)(cid:86)(cid:15)(cid:3) (cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3) (cid:23)(cid:28)(cid:8)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:73)(cid:76)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3) (cid:92)(cid:72)(cid:68)(cid:85)(cid:3) (cid:21)(cid:19)(cid:19)(cid:28)(cid:3) (cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:17)(cid:3) (cid:3) (cid:48)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:69)(cid:82)(cid:82)(cid:78)(cid:3) publications 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, or as a result of suggestion or solicitations by editors and advisors. The Company enters into agreements with authors that state the terms and conditions under which the materials will be published, the name in which the copyright will be registered, the basis for any royalties, and other matters. Most of the authors are compensated by royalties, which vary with the nature of the product and its anticipated potential profitability. The Company may make advance payments against future royalties to authors of certain publications. Royalty advances are reviewed for recoverability and a reserve for loss is maintained, if appropriate. The Company continues to add new titles, revise existing titles, and discontinue the sale of others in the normal course of its business, also creating adaptations of original content for specific markets fulfilling customer (cid:71)(cid:72)(cid:80)(cid:68)(cid:81)(cid:71)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3)(cid:83)(cid:85)(cid:68)(cid:70)(cid:87)(cid:76)(cid:70)(cid:72)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)o revise its textbooks every three to five years, if warranted, and to revise other titles as appropriate. Subscription-based products are updated more frequently on a regular (cid:86)(cid:70)(cid:75)(cid:72)(cid:71)(cid:88)(cid:79)(cid:72)(cid:17)(cid:3)(cid:36)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3)(cid:22)(cid:21)(cid:8)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:73)(cid:76)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:21)(cid:19)(cid:19)(cid:28)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:69)(cid:82)(cid:82)(cid:78)-publishing revenue was from titles published or revised in the current fiscal year. -16- Professional and consumer books are sold to bookstores and online booksellers serving the general public; wholesalers who supply such bookstores; warehouse clubs; college bookstores for their non-textbook requirements; individual practitioners; and research institutions, libraries (including public, professional, academic, and other special libraries), industrial organizations, and government agencies. The Company employs sales representatives who call upon independent bookstores, national and regional chain bookstores and wholesalers. Trade sales to bookstores and wholesalers are generally made on a returnable basis with certain restrictions. The Company provides for estimated future returns on sales made during the year principally based on historical return experience and current market trends. Sales of professional and consumer books also result from direct mail campaigns, telemarketing, online access, and advertising and reviews in periodicals. Adopted textbooks, related supplementary material, and online products such as WileyPLUS, are sold primarily to bookstores, including online bookstores, serving educational institutions. The Company employs sales representatives who call on faculty responsible for selecting books to be used in courses, and on the bookstores that serve such institutions and their students. Textbook sales are generally made on a fully returnable basis with certain restrictions. The textbook business is seasonal, with the majority of textbook sales occurring during the June through August and November through January periods. There is an active used textbook market, which adversely affects the sales of new textbooks. Like most other publishers, the Company generally contracts with independent printers and binderies for their services. The Company purchases its paper from independent suppliers and printers. The fiscal year 2009 weighted average U.S. paper prices increased approximately 4% over fiscal year 2008. Approximately 58% of Company paper inventory is held in the United States. Management 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. Printed book products are distributed from both Company-operated warehouses and independent distributors. The Company develops content in digital format that can be used for both online and print products, which results in productivity and efficiency savings, as well as enabling the Company to offer customized publishing and print-on-demand products. Book content is increasingly being made available online through Wiley InterScience, WileyPLUS and other platforms, and in eBook format through licenses with alliance partners. The Company also sponsors online communities of interest, both on its own and in partnership with others, to expand the market for its products. The Company believes that the demand for new electronic technology products will continue to 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. The Internet not only enables the Company to deliver content online, but also helps to sell more books. The (cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:3)(cid:82)(cid:73)(cid:3)(cid:82)(cid:81)(cid:79)(cid:76)(cid:81)(cid:72)(cid:3)(cid:69)(cid:82)(cid:82)(cid:78)(cid:86)(cid:72)(cid:79)(cid:79)(cid:72)(cid:85)(cid:86)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:69)(cid:72)(cid:70)(cid:68)(cid:88)(cid:86)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:92)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:3)(cid:88)(cid:81)(cid:79)(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:89)(cid:76)(cid:85)(cid:87)(cid:88)(cid:68)(cid:79)(cid:3)(cid:179)(cid:86)(cid:75)(cid:72)(cid:79)(cid:73)(cid:3)(cid:86)(cid:83)(cid:68)(cid:70)(cid:72)(cid:180)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:72)(cid:81)(cid:87)(cid:76)(cid:85)(cid:72)(cid:3)(cid:69)(cid:68)(cid:70)(cid:78)(cid:79)(cid:76)(cid:86)(cid:87)(cid:17)(cid:3)(cid:3) Marketing and distribution services are made available to other publishers under agency arrangements. The Company also engages in co-publishing of titles with international publishers and in publication of adaptations of works from other publishers for particular markets. The Company also receives licensing revenue from photocopies, reproductions, and electronic uses of its content as well as advertising revenue from web sites such as Frommers.com. -17- Global Operations (cid:55)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) (cid:86)(cid:82)(cid:79)(cid:71)(cid:3) (cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:82)(cid:88)(cid:87)(cid:3) (cid:80)(cid:82)(cid:86)(cid:87)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) world through operations located in Europe, Canada, Australia, Asia, and the United States. All operations market their indigenous publications, as well as publications produced by other parts of the Company. The Company also markets publications through agents as well as sales representatives in countries not served by the Company. John Wiley & Sons International Rights, Inc. sells reprint and translations rights worldwide. The Company publishes or licenses others to publish its products, which are distributed throughout the world in many languages. Approximately 50% of the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:73)(cid:76)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:21)(cid:19)(cid:19)(cid:28)(cid:3)(cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:71)(cid:72)(cid:85)(cid:76)(cid:89)(cid:72)(cid:71)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:81)(cid:82)(cid:81)-U.S. markets. (cid:55)(cid:75)(cid:72)(cid:3)(cid:74)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3)(cid:81)(cid:68)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:70)(cid:85)(cid:72)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:3)(cid:72)(cid:91)(cid:83)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:73)(cid:82)(cid:85)(cid:72)(cid:76)(cid:74)(cid:81)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:70)(cid:92)(cid:3)(cid:73)(cid:79)(cid:88)(cid:70)(cid:87)(cid:88)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72) (cid:56)(cid:17)(cid:54)(cid:3)(cid:71)(cid:82)(cid:79)(cid:79)(cid:68)(cid:85)(cid:17)(cid:3)(cid:40)(cid:68)(cid:70)(cid:75)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:74)(cid:72)(cid:82)(cid:74)(cid:85)(cid:68)(cid:83)(cid:75)(cid:76)(cid:70)(cid:3)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:86)(cid:72)(cid:79)(cid:79)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3)(cid:90)(cid:82)(cid:85)(cid:79)(cid:71)(cid:90)(cid:76)(cid:71)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:80)(cid:88)(cid:79)(cid:87)(cid:76)(cid:83)(cid:79)(cid:72)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:70)(cid:76)(cid:72)(cid:86)(cid:17)(cid:3)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3) and deferred revenue, although billed in multiple currencies are accounted for in the local currency of the selling location. Fiscal year 2009 revenue was recognized in the following currencies: approximately 56% U.S dollar; 28% British pound sterling; 8% Euro and 8% other currencies. Competition and Economic Drivers 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 considered to be the following: product quality, customer service, suitability of format and subject matter, author reputation, price, timely availability of both new titles and revisions of existing books, online availability of published information, and timely delivery of products to customers. The Company is in the top rank of publishers of scientific, technical, medical and scholarly journals worldwide, a leading commercial research chemistry publisher; the leading society journal publisher; one of the leading (cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:72)(cid:85)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:88)(cid:81)(cid:76)(cid:89)(cid:72)(cid:85)(cid:86)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:79)(cid:79)(cid:72)(cid:74)(cid:72)(cid:3)(cid:87)(cid:72)(cid:91)(cid:87)(cid:69)(cid:82)(cid:82)(cid:78)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:75)(cid:68)(cid:85)(cid:71)(cid:86)(cid:76)(cid:71)(cid:72)(cid:180)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:76)(cid:83)(cid:79)(cid:76)(cid:81)(cid:72)(cid:86)(cid:15)(cid:3)(cid:11)(cid:76)(cid:17)(cid:72)(cid:17)(cid:3)(cid:86)(cid:70)(cid:76)(cid:72)(cid:81)(cid:70)(cid:72)(cid:86)(cid:15)(cid:3) engineering, and mathematics), and a leading publisher in its targeted professional/trade markets. The Company knows of no reliable industry statistics that would enable it to determine its share of the various international markets in which it operates. Performance Measurements The Company measures its performance based upon revenue, operating income, earnings per share and cash flow, excluding unusual or one-time events, and considering worldwide and regional economic and market conditions. The Company evaluates market share statistics for publishing programs in each of its businesses. STMS uses various reports to monitor competitor performance and industry financial metrics. Specifically for STMS journal titles, the ISI Impact Factor, published by the Institute for Scientific Information, is used as a key metric of a journal titles influence in scientific publishing. For Professional/Trade, market share statistics published by BOOKSCAN, a statistical clearinghouse for book industry point of sale data in the United States, are used. The statistics include survey data from all major retail outlets, online booksellers, mass merchandisers, small chain and independent retail outlets. For Higher Education, the Company subscribes to Management Practices Inc., which publishes customized comparative sales reports. Results of Operations Fiscal Year 2009 Summary Results Revenue for fiscal year 2009 decreased 4% to $1,611.4 million. Excluding the unfavorable impact of foreign exchange revenue increased 3%. Growth in STMS journals, including an acquisition accounting adjustment that -18- reduced prior year STMS revenue by approximately $16.7 million, and growth in Higher Education were partially offset by a decline in P/T revenue due to weak market conditions. Gross profit margin in fiscal year 2009 of 68.0% was 0.2% lower than the prior year as lower P/T sales volume and higher inventory obsolescence and royalty advance provisions were partially offset by favorable product mix and lower production costs in Higher Education. Operating and administrative expenses for fiscal year 2009 of $839.6 million were 4% lower than the prior year, or increased 1% excluding the favorable impact of foreign exchange. Lower accrued incentive compensation expense and marketing and advertising cost containment programs were more than offset by annual merit increases; higher editorial and distribution costs to support new Higher Education and STMS titles; and higher occupancy, facilities and depreciation costs related to business expansion. Operating income for fiscal year 2009 decreased 3% to $218.5 million, or improved 11% excluding the unfavorable impact of foreign exchange. The improvement excluding foreign exchange was mainly due to revenue growth, including the acquisition accounting adjustment last year. Interest expense decreased $18.3 million to $48.4 million. Lower interest rates contributed approximately $10.8 million towards the improvement, while lower average outstanding debt contributed approximately $7.5 million. Interest income and other increased $0.3 million to $6.2 million principally due to a $4.6 million ($0.08 per diluted share) non-recurring insurance receipt received in the first quarter of fiscal year 2009, partially offset by higher interest income in the prior year. Losses on foreign currency transactions for fiscal year 2009 and 2008 were $11.8 million and $2.9 million, respectively. The increase in foreign currency transaction losses was mainly due to the strengthening of the U.S. dollar against the British pound sterling on intercompany payables and U.S. dollar third party debt outstanding in the U.K. The effective tax rates for fiscal years 2009 and 2008 were 22.0% and 8.7%, respectively. During fiscal year 2008, the Company recorded an $18.7 million tax benefit associated with new tax legislation enacted in the United Kingdom (UK) and Germany that reduced the corporate income tax rates from approximately 30% to 28% and 39% to 29%, respectively. The benefits recognized by the Company reflect the adjustments required to restate all applicable deferred tax balances at the new income tax rates. The new tax rates were effective in Germany as of May 1, 2007 and in the UK as of April 1, 2008. The effective tax rate for fiscal year 2009 was 22.0% compared to 20.2% for fiscal year 2008, excluding the deferred tax benefits described above. The increase was mainly due to lower foreign tax benefits. Earnings per diluted share and net income for fiscal year 2009 were $2.15 and $128.3 million, respectively. Reported earnings per diluted share and net income for fiscal year 2008 were $2.49 and $147.5 million, respectively. Adjusted to exclude the non-cash deferred tax benefits described above, earnings per diluted share and net income for fiscal year 2008 were $2.17 and $128.9 million, respectively. See Non-GAAP Financial Measures described below. Excluding the deferred tax benefits and the effect of foreign exchange transaction and translation losses of approximately $0.50 per share, earnings per share increased 22% to $2.15 per share. Non-(cid:42)(cid:36)(cid:36)(cid:51)(cid:3) (cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:29)(cid:3) (cid:3) (cid:55)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3) (cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3) (cid:76)(cid:87)(cid:86)(cid:3) (cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) excluding unusual and/or nonrecurring events. The Company believes excluding such events provides a more effective and comparable measure of current and future performance. We also believe that excluding the effects of the following tax benefits provides a more balances view of the underlying dynamics of our business. -19- Deferred Tax Benefit on Changes in Statutory Tax Rates The Company recorded an $18.7 million tax benefit ($15.6 million for Blackwell) associated with new tax legislation enacted in the United Kingdom (U.K.) and Germany that reduced the corporate income tax rates from approximately 30% to 28% and 39% to 29%, respectively. The benefits recognized by the Company reflect the adjustments required to restate all applicable deferred tax balances at the new income tax rates. These benefits have been adjusted below due to their infrequent non-recurring nature. Since adjusted net income and adjusted earnings per share are not measures calculated in accordance with US GAAP, they should not be considered as a substitute for other US GAAP measures, including net income and earnings per share as indicators of operating performance. Accordingly, adjusted net income and adjusted earnings per diluted share are reconciled below to net income and earnings per share on a US GAAP basis, for fiscal years 2009 and 2008. Reconciliation of Non-GAAP Financial Disclosure For the Years Ended April 30, Net Income (in thousands) 2009 2008 As Reported $128,258 $147,536 Deferred Tax Benefit on Changes in Statutory Rates - (18,663) Adjusted $128,258 $128,873 Earnings per Diluted Share As Reported For the Years Ended April 30, 2009 2008 $2.15 $2.49 Deferred Tax Benefit on Changes in Statutory Rates - (0.31) Adjusted $2.15 $2.17 Fiscal Year 2009 Segment Results (cid:44)(cid:81)(cid:3) (cid:70)(cid:82)(cid:81)(cid:81)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:76)(cid:81)(cid:87)(cid:72)(cid:74)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:73)(cid:3) (cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3) (cid:51)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3) (cid:47)(cid:87)(cid:71)(cid:17)(cid:3) (cid:11)(cid:179)(cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:180)(cid:12)(cid:15)(cid:3) (cid:90)(cid:72)(cid:3) (cid:75)(cid:68)(cid:89)(cid:72)(cid:3) (cid:70)(cid:82)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:72)(cid:71)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) classification of certain accounts in our Statements of Income and segment reporting and realigned certain product lines in our segment reporting to correspond with management responsibility. In addition, the Company reclassified foreign exchange transaction gains and losses, previously reported as a component of direct contribution to profit to a separate distinguishable line below operating income. All prior year periods have been (cid:85)(cid:72)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:85)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:17)(cid:3) (cid:3) (cid:55)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3) (cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3) (cid:75)(cid:68)(cid:71)(cid:3) (cid:81)(cid:82)(cid:3) (cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3) (cid:82)(cid:81)(cid:3) (cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:182)(cid:86)(cid:3) (cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:15)(cid:3) (cid:81)(cid:72)(cid:87)(cid:3) (cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3) (cid:82)(cid:85)(cid:3) earnings per share. During fiscal year 2008, the Company began developing a global organizational management structure enco(cid:80)(cid:83)(cid:68)(cid:86)(cid:86)(cid:76)(cid:81)(cid:74)(cid:3)(cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:182)(cid:86)(cid:3)(cid:87)(cid:75)(cid:85)(cid:72)(cid:72)(cid:3)(cid:70)(cid:82)(cid:85)(cid:72)(cid:3) (cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:11)(cid:54)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:76)(cid:73)(cid:76)(cid:70)(cid:15)(cid:3)(cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:76)(cid:70)(cid:68)(cid:79)(cid:15)(cid:3)(cid:48)(cid:72)(cid:71)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3) (cid:54)(cid:70)(cid:75)(cid:82)(cid:79)(cid:68)(cid:85)(cid:79)(cid:92)(cid:30)(cid:3) (cid:51)(cid:85)(cid:82)(cid:73)(cid:72)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)/Trade (cid:68)(cid:81)(cid:71)(cid:3) (cid:43)(cid:76)(cid:74)(cid:75)(cid:72)(cid:85)(cid:3) (cid:40)(cid:71)(cid:88)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:12)(cid:17)(cid:3) (cid:3) (cid:55)(cid:75)(cid:72)(cid:3) (cid:74)(cid:79)(cid:82)(cid:69)(cid:68)(cid:79)(cid:3) (cid:82)(cid:85)(cid:74)(cid:68)(cid:81)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3) (cid:86)(cid:87)(cid:85)(cid:88)(cid:70)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3) (cid:90)(cid:76)(cid:79)(cid:79)(cid:3) (cid:72)(cid:81)(cid:75)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3) (cid:87)(cid:82)(cid:3) (cid:79)(cid:72)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3) content, services and capabilities around the world to better serve authors, society partners and customers. During the first quarter of fiscal year 2009, the transition of all operational and financial systems necessary to support a global organization was finalized. As a result of this process, in the first quarter of fiscal year 2009 the -20- Company began reporting its financial results for the three global businesses as separate business segments and separately reported financial data for shared service functions which are centrally managed for the benefit of all the global business segments. Prior year segment data has been restated for comparability. Scientific, Technical, Medical and Scholarly (STMS): Dollars in thousands Revenue Direct Contribution Contribution Margin 2009 $969,184 $399,156 41.2% 2008 $975,797 $384,170 39.4% % change (1%) 4% % change w/o FX 9% 14% Global STMS revenue for fiscal year 2009 of $969.2 million declined 1% from prior year mainly due to unfavorable foreign exchange. Excluding the unfavorable impact of foreign exchange revenue increased 9%. Increased revenue from journal subscription renewals, new business, price increases, global rights and STMS books was partially offset by lower sales of backfiles, reprints and custom publishing. Also contributing to the increase in journal subscriptions was a $16.7 million acquisition accounting adjustment related to Blackwell that reduced revenue in the prior year. This adjustment contributed 2% to revenue growth excluding foreign exchange. Direct contribution to profit for fiscal year 2009 grew 4% from prior year to $399.2 million, or 14% excluding the unfavorable effect of foreign exchange. Direct contribution margin improved 180 basis points to 41.2%, or 41.1% excluding the unfavorable impact of foreign exchange, mainly due to the prior year acquisition accounting adjustment, a $2.0 million bad debt recovery and cost containment efforts, partially offset by higher performance compensation and other employment costs and editorial costs due to the addition of more society journals. Margins on professional society journals are lower than margins earned on Company owned journals. STMS Journals Journal revenue grew 8% excluding unfavorable foreign exchange and the prior year acquisition accounting adjustment related to Blackwell. All regions exhibited journal sales growth, excluding unfavorable foreign exchange. The performance is mainly attributed to renewals, new business, price increases and the acquisition accounting adjustment in fiscal year 2008. Subscription and pay-per-view revenue was up year-over-year, while backfile revenue fell due to the economic climate, particularly in the US. Society Journal Activity 32 New signings 87 Renewed/extended contracts 9 Contracts not renewed Key New Agreements A new journal launch for 2010 (cid:177) the Journal of Research Synthesis Methods in association with the Society for Research Synthesis Methodology Family and Consumer Science Research on behalf of the American Association of Family and Consumer Sciences Design Management Review and Design Management Journal with the Design Management Institute The Institute of Development Studies at the University o(cid:73)(cid:3) (cid:54)(cid:88)(cid:86)(cid:86)(cid:72)(cid:91)(cid:15)(cid:3) (cid:82)(cid:81)(cid:72)(cid:3) (cid:82)(cid:73)(cid:3) (cid:40)(cid:88)(cid:85)(cid:82)(cid:83)(cid:72)(cid:182)(cid:86)(cid:3) (cid:79)(cid:72)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3) (cid:85)(cid:72)(cid:86)(cid:72)(cid:68)(cid:85)(cid:70)(cid:75)(cid:3) institutions. The journal, IDS Bulletin, was previously self-published. The Economic Society of Australia for Economic Papers. Asian Journal of Endoscopic Surgery. -21- Key Journal Renewals Economic Journal and Econometrics Journal (Royal Economic Society) Journal of Accounting Research (Institute of Professional Accounting at the University of Chicago Booth School of Business) Cancer Science (Japanese Cancer Association) ANZ Journal of Surgery (Royal Australasian College of Surgeons) International Journal of Urology (Japanese Urological Association) Journal of Neuroendocrinology (European Neuroendocrine Association, the British Society for Neuroendocrinology and the International Neuroendocrine Federation) Therapeutic Aphaeresis and Dialysis (International Society for Aphaeresis, The Japanese Society for Aphaeresis and The Japanese Society for Dialysis Therapy) Journal of Philosophy of Education (Philosophy of Education Society of Great Britain) Journal Licenses Journal licenses, which represent approximately 60% of fiscal year 2009 journal subscription revenue, provide academic, government and corporate customers with online access to multiple journals. During fiscal year 2009, agreements were signed or renewed with universities, library consortia and government agencies in the US, Norway, Japan, China, Brazil, Canada, Greece, Chile, Denmark and India. STMS Books and References Book sales and other related income, which account for approximately 17% of fiscal year 2009 STMS revenue, were up 5% excluding unfavorable foreign exchange. The total number of books published increased slightly. Online book sales rose approximately 20% to $10 million. During the fiscal year, Wiley acquired the Arnold statistics book program from Hodder Education. The acquisition, which includes over 50 titles, complements (cid:68)(cid:85)(cid:72)(cid:68)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:86)(cid:87)(cid:85)(cid:72)(cid:81)(cid:74)(cid:87)(cid:75)(cid:3)(cid:76)(cid:81)(cid:3)(cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:182)(cid:86)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:76)(cid:86)(cid:87)(cid:76)(cid:70)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:74)(cid:85)(cid:68)(cid:80)(cid:15) while providing growth opportunities. Wiley InterScience Wiley achieved an important milestone in the early part of fiscal year 2009 by migrating online journal content, (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:68)(cid:70)(cid:70)(cid:72)(cid:86)(cid:86)(cid:3) (cid:79)(cid:76)(cid:70)(cid:72)(cid:81)(cid:86)(cid:72)(cid:86)(cid:3) (cid:73)(cid:85)(cid:82)(cid:80)(cid:3) (cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:182)(cid:86)(cid:3) Synergy platform to Wiley InterScience. The migration included approximately 29,000 customers, over two million licenses and nearly two million journal articles. Professional/Trade (P/T): Dollars in thousands Revenue Direct Contribution Contribution Margin 2009 $412,674 $94,620 22.9% 2008 $471,785 $136,619 29.0% % change (13%) (31%) % change w/o FX (10%) (27%) Global P/T revenue for fiscal year 2009 decreased 13% to $412.7 million, or 10% excluding the unfavorable impact of foreign exchange. The decline in revenue was due to a weak retail environment particularly in the U.S., partially offset by modest growth in the European and Canadian markets. Also affecting the comparison to last year was the termination of a publishing agreement in the culinary/hospitality publishing program. Direct contribution to profit decreased 31% to $94.6 million, or 27% excluding the unfavorable impact of foreign exchange. Direct contribution margin declined 610 basis points to 22.9%, or 540 basis points excluding the unfavorable impact of foreign exchange. The decline reflects lower sales volume, higher inventory obsolescence and royalty advance provisions and a $2.0 million bad debt recovery in the prior year, partially -22- offset by cost containment efforts in advertising, sales and marketing and lower accrued incentive compensation. Notable Alliances GMAC/Official Guide to the GMAT: Wiley became the official publisher of the Graduate Management Admission Test® (GMAT®) study guides in October 2008. In March, the 12th edition of the top-selling Official Guide for GMAT Review was released worldwide. It will be followed by The Official Guide for GMAT Verbal Review and The Official Guide for GMAT Quantitative. Meredith: In March 2009, as part of its multi-year agreement, Wiley began publishing Better Homes and Garden book titles and other brands such as Family Circle, as well as Food Network TV, Sandra Lee, Rocco DiSpirito and Tyler Florence. Kindle (Amazon): Currently, Wiley has over 9,000 P/T books available on the Kindle 2. General Mills: Wiley and General Mills signed an agreement to renew their publishing partnership. Under the agreement, Wiley will continue to publish the flagship (cid:37)(cid:72)(cid:87)(cid:87)(cid:92)(cid:3)(cid:38)(cid:85)(cid:82)(cid:70)(cid:78)(cid:72)(cid:85)(cid:3)(cid:179)(cid:37)(cid:76)(cid:74)(cid:3)(cid:53)(cid:72)(cid:71)(cid:180) cookbook and other cookbooks under the Betty Crocker, Pillsbury and other General Mills brands. Vancouver Olympic Organizing Committee: Wiley Canada entered into an agreement with VANOC, becoming the official publication partner of the 2010 Winter Olympic and Paralympics Games in Vancouver/Whistler. In close cooperation with VANOC, Wiley will produce commemorative books, games reports, and custom publications. Online Initiatives For the fiscal year, Frommers.com maintained its top position in website traffic by posting 137 million page views and nearly 29 million visits. The results were lower than last year due to the economy. Launched in November 2008, the new Dummies.com generated a total of 29 million page views by fiscal year-end, a 23% increase over prior year. Eleven million unique visitors represented a 21% increase. Users are spending 17% more time on content pages. The site now includes 25 topic areas with 250+ pieces of content in each, 950 fully illustrated step-by-step articles, 6,610 articles, and 265 videos. CliffsNotes.com recorded year-on-year increases of 5% in page views and 21% in unique visitors. Notable New Titles Business: Lee Bolman: Reframing Organizations, Fourth Edition Jim Kouzes and Barry Posner: Leadership Challenge, Fourth Edition GAAP 2009 CPA Exam Set, Thirty-fifth edition, Volumes 1 and 2 Mary Kay Ash: Mary Kay Way Patrick Lencioni: Three Big Questions for A Frantic Family Finance: JK Lasser, Year In Taxes 2009 Fischer: Ten Road to Riches John Bogle: Enough Peter Schiff: Little Book of Bull Moves in Bear Markets Martin Weiss: Depression Survival Guide Addison Wiggin: I.O.U.S.A.: One Nation. Under Stress. In Debt Psychology: Lenore Skenazy: Free Range Kids: Giving Our Children the Freedom We had without Going Nuts with Worry -23- Michael Gurian: The Purpose of Boys: Helping Our Sons Find Meaning, Significance and Direction in Their Lives Gary Groth-Marnat: Handbook of Psychological Assessment, Fifth Edition Richard Lerner: Handbook of Adolescent Psychology, Third Edition Consumer: Weight Watchers in 20 Minutes Mark Bittman: How to Cook Everything, Second Edition Bob Sehlinger: Unofficial Guide to Walt Disney World 2009 GMAC: The Official Guide to the GMAT, Twelfth Edition Jack Cafferty: Now Or Never: Getting Down To Business of Saving Our American Dream Alan Rubin: Diabetes for Dummies Paul McFedries: iPhone 3G Portable Genius Architecture: Edward Allen: Fundamentals of Building Construction, Fifth Edition Wiley CPE (Continuing Professional Education, a web-based online continuing education system) Higher Education (HE): Dollars in thousands Revenue Direct Contribution Contribution Margin 2009 $229,532 $61,677 26.9% 2008 $226,152 $68,270 30.2% % change 1% (10%) % change w/o FX 6% (3%) Global HE revenue for fiscal year 2009 grew 1% from the prior year period, or 6% excluding the unfavorable impact of foreign exchange. Revenue growth occurred in every region and in nearly every subject category. Contributing to these results were a strong frontlist; approximately $6.6 million of revenue from recently acquired titles; solid growth from the Microsoft publishing agreement; and the continued success of WileyPLUS. Direct contribution to profit decreased 10% to $61.7 million, or 3% excluding the unfavorable impact of foreign exchange. Direct contribution margin declined 330 basis points to 26.9%, or 260 basis points excluding the unfavorable impact of foreign exchange. The decline reflects prior year cost containment efforts which significantly curtailed expenditures in fiscal year 2008, higher accrued incentive compensation expense and increased marketing, advertising and content development costs to support the large frontlist. WileyPLUS Now accounts for 9% of global HE revenue Global full year billings increased 38% Digital-only sales grew 70% Validation/usage rates increased WileyPLUS sales outside the US represent 15% of the total Notable Alliances Microsoft Official Academic Course (MOAC) revenue was up 16% over prior year. Wiley is partnering with American Hospitality Training Institute, an online provider of hospitality training for students outside the US interested in working for US hotels and resorts. Twenty-one classes utilizing content from Barrows/Introduction to Management in the Hospitality Industry 9e will begin in June, 2009. Wiley and Learning House agreed to create highly integrative online courses based on Wiley textbooks. The courses will be bundled with the book. We received approval for a licensing agreement for two pilot -24- courses in world regional geography and Spanish 1. Learning House is an online education solutions partner helping small colleges and universities offer and manage their online degree programs. Wiley expanded its alliance with Amazon to offer select Wiley textbooks for sale through the Kindle DX. Books are set to go live on the Kindle Store in the summer of 2009. Acquisitions In August 2008, Wiley acquired business and modern language textbooks from Cengage Learning and mathematics and statistics textbooks from Key College Publishing. These acquisitions contributed approximately $6.6 million of revenue in fiscal year 2009, exceeding expectations. Custom Publishing Wiley Custom Select was successfully launched in the fourth quarter. Wiley Custom Select is a custom textbook system that allows instructors to "build" customized higher education course materials that fit their pedagogical needs, enabling users to easily find the content, personalize the material and format, and submit the order. In fiscal year 2009, custom sales increased approximately 25%. Shared Service and Administrative Costs Shared services and administrative costs for fiscal year 2009 decreased 7% to $337.0 million, or 2% excluding the favorable impact of foreign exchange. The improvement reflects lower accrued incentive compensation expense and lower integration costs, partially offset by planned salary merit increases, higher distribution costs due to increased journal shipping and handling and higher occupancy, facilities and depreciation costs related to business expansion. Results of Operations Fiscal Year 2008 Summary Results Revenue for fiscal year 2008 increased 36% to $1,673.7 million, or 33% excluding the favorable impact of foreign exchange. Blackwell Publishing (cid:47)(cid:87)(cid:71)(cid:17)(cid:3)(cid:11)(cid:179)(cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:180)(cid:12)(cid:15)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:72)(cid:69)(cid:85)(cid:88)(cid:68)(cid:85)(cid:92)(cid:3)(cid:21)(cid:15)(cid:3)(cid:21)(cid:19)(cid:19)7, contributed $379.4 million to the revenue growth, increasing from $105.8 million in fiscal year 2007 to $485.2 million in fiscal year 2008. Blackwell is a leading publisher of journals and books for the STMS business. Excluding Blackwell, revenue grew 5% to $1,188.5 million, or 3% excluding the favorable impact of foreign exchange. Strong revenue growth in Europe and Asia was tempered by moderate growth in the U.S. markets. Gross profit margin in fiscal year 2008 of 68.2% was essentially the same as in the prior year. Operating and administrative expenses for fiscal year 2008 increased 33% to $876.6 million, including $183.8 million of incremental operating expenses for Blackwell. Included in Blackwell operating and administrative expenses are approximately $21 million of costs related to the transition and integration of Blackwell. Operating and administrative expenses for fiscal year 2008 increased 3%, excluding Blackwell and the unfavorable impact of foreign exchange. The increase was mainly due to higher planned employment and other costs to support business growth; increased editorial and production associated with new journals; and costs associated with the development of indigenous publishing programs. The Company recorded a $4.4 million bad debt provision in fiscal year 2007 related to the bankruptcy of Advanced Marketing Services and a $1.9 million recovery of that bad debt in the current fiscal year. Amortization of intangibles increased $18.3 million, principally due to the Blackwell acquisition. -25- Operating income improved 39% to $225.2 million in fiscal year 2008, including incremental operating income of $60.3 million related to Blackwell, which increased from $6.7 million in fiscal year 2007 to $67.0 million in fiscal year 2008. Excluding Blackwell, operating income improved 2% to $158.2 million, or 1% excluding the favorable impact of foreign exchange. Revenue growth was partially offset by higher planned operating expenses. Interest expense increased $40.6 million to $66.7 million, mainly due to finance costs associated with the Blackwell acquisition. Losses on foreign currency transactions for fiscal years 2008 and 2007 were $2.9 million and $0.2 million, respectively. The effective tax rate for fiscal year 2008 was 8.7% compared to 28.6% in the prior year period. During fiscal year 2008, the Company recorded an $18.7 million tax benefit associated with new tax legislation enacted in the United Kingdom (U.K.) and Germany that reduced the corporate income tax rates from approximately 30% to 28% and 39% to 29%, respectively. The benefits recognized by the Company reflect the adjustments required to restate all applicable deferred tax balances at the new income tax rates. The new tax rates were effective in Germany as of May 1, 2007 and in the U.K. as of April 1, 2008. The tax provision for fiscal year 2007 included tax benefits of $5.5 million related to the settlement and resolution of certain tax matters with authorities in the U.S. and abroad. Excluding Blackwell and the tax benefits described above, the effective tax rates for fiscal years 2008 and 2007 were 30.2% and 35.1%, respectively. The decrease was principally due to lower taxes on non-U.S. sourced earnings. Black(cid:90)(cid:72)(cid:79)(cid:79)(cid:182)(cid:86)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:75)(cid:68)(cid:71)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:86)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:15)(cid:3)(cid:68)(cid:3)(cid:73)(cid:68)(cid:89)(cid:82)(cid:85)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:17)(cid:3)(cid:3) Reported earnings per diluted share and net income for fiscal year 2008 were $2.49 and $147.5 million, respectively. Adjusted to exclude the non-cash deferred tax benefits described above, earnings per diluted share and net income for fiscal year 2008 were $2.17 and $128.9 million, respectively. Earnings per diluted share and net income for fiscal year 2007 adjusted to exclude the 2007 tax benefits described above were $1.62 (cid:68)(cid:81)(cid:71)(cid:3)(cid:7)(cid:28)(cid:23)(cid:17)(cid:21)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:79)(cid:92)(cid:17)(cid:3)(cid:3)(cid:3)(cid:40)(cid:91)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:86)(cid:15)(cid:3)(cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3) (cid:90)(cid:72)(cid:85)(cid:72)(cid:3)(cid:68)(cid:70)(cid:70)(cid:85)(cid:72)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3) diluted share and net income by approximately $0.29 and $17.0 million, respectively. See Non-GAAP Financial Measures described below. Non-(cid:42)(cid:36)(cid:36)(cid:51)(cid:3) (cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:29)(cid:3) (cid:3) (cid:55)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3) (cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3) (cid:76)(cid:87)(cid:86)(cid:3) (cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) excluding unusual and/or nonrecurring events. The Company believes excluding such events provides a more effective and comparable measure of current and future performance. We also believe that excluding the effects of the following tax benefits provides a more balanced view of the underlying dynamics of our business. Deferred Tax Benefit on Changes in Statutory Tax Rates The Company recorded an $18.7 million tax benefit ($15.6 million for Blackwell) associated with new tax legislation enacted in the United Kingdom (U.K.) and Germany that reduced the corporate income tax rates from approximately 30% to 28% and 39% to 29%, respectively. The benefits recognized by the Company reflect the adjustments required to restate all applicable deferred tax balances at the new income tax rates. These benefits have been adjusted below due to their infrequent non-recurring nature. Benefits on the Finalization of Tax Audits Fiscal year 2007 includes a $5.5 million tax benefit, or $0.09 per diluted share, which resulted from the favorable resolution and settlements of certain tax matters with authorities in the U.S. and abroad. The Company has excluded these benefits from adjusted net income and adjusted earnings per share due to their significance to both measurements and uncertainty as to their reoccurrence in the future. Since adjusted net income and adjusted earnings per share are not measures calculated in accordance with GAAP, they should not be considered as a substitute for other GAAP measures, including net income and -26- earnings per share as indicators of operating performance. Accordingly, adjusted net income and adjusted earnings per diluted share are reconciled below to net income and earnings per share on a GAAP basis, for fiscal years 2008 and 2007. Reconciliation of Non-GAAP Financial Disclosure Net Income (in thousands) For the Years Ended April 30, 2008 2007 As Reported $147,536 $99,619 Deferred Tax Benefit on Changes in Statutory Rates (18,663) - Tax Benefits on The Finalization of Audits - (5,468) Adjusted $128,873 $94,151 Earnings Per Diluted Share As Reported For the Years Ended April 30, 2008 2007 $2.49 $1.71 Deferred Tax Benefit on Changes in Statutory Rates (0.31) - Tax Benefits on The Finalization of Audits - (0.09) Adjusted $2.17 $1.62 Fiscal Year 2008 Segment Results During fiscal year 2008, the Company began developing a global organizational management structure (cid:72)(cid:81)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:86)(cid:86)(cid:76)(cid:81)(cid:74)(cid:3)(cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:182)(cid:86)(cid:3)(cid:87)(cid:75)(cid:85)(cid:72)(cid:72)(cid:3)(cid:70)(cid:82)(cid:85)(cid:72)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:11)(cid:54)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:76)(cid:73)(cid:76)(cid:70)(cid:15)(cid:3)(cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:76)(cid:70)(cid:68)(cid:79)(cid:15)(cid:3)(cid:48)(cid:72)(cid:71)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3) (cid:54)(cid:70)(cid:75)(cid:82)(cid:79)(cid:68)(cid:85)(cid:79)(cid:92)(cid:30)(cid:3)(cid:51)(cid:85)(cid:82)(cid:73)(cid:72)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:55)(cid:85)(cid:68)(cid:71)(cid:72)(cid:3) and Higher Education). The global organizationa(cid:79)(cid:3) (cid:86)(cid:87)(cid:85)(cid:88)(cid:70)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3) (cid:90)(cid:76)(cid:79)(cid:79)(cid:3) (cid:72)(cid:81)(cid:75)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3) (cid:87)(cid:82)(cid:3) (cid:79)(cid:72)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3) content, services and capabilities around the world to better serve authors, society partners and customers. During the first quarter of fiscal year 2009, the transition of all operational and financial systems necessary to support a global organization was finalized. As a result of this process, in the first quarter of fiscal year 2009 the Company began reporting its financial results for the three global businesses as separate business segments and separately reported financial data for shared service functions which are centrally managed for the benefit of all the global businesses. (cid:44)(cid:81)(cid:3) (cid:70)(cid:82)(cid:81)(cid:81)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:76)(cid:81)(cid:87)(cid:72)(cid:74)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:73)(cid:3) (cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3) (cid:51)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3) (cid:47)(cid:87)(cid:71)(cid:17)(cid:3) (cid:11)(cid:179)(cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:180)(cid:12)(cid:15)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3) (cid:70)(cid:82)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:72)(cid:71)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) classification of certain accounts in the Statements of Income and Segment Reporting and realigned certain product lines in our segment reporting to correspond with management responsibility. In addition, the Company reclassified foreign exchange transaction gains and losses previously reported as a component of direct contribution to profit to a separate distinguishable line below operating income. All prior year periods have been (cid:85)(cid:72)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:85)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:17)(cid:3) (cid:3) (cid:55)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3) (cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3) (cid:75)(cid:68)(cid:71)(cid:3) (cid:81)(cid:82)(cid:3) (cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3) (cid:82)(cid:81)(cid:3) (cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:182)(cid:86)(cid:3) (cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) revenue, net income or earnings per share. -27- Scientific, Technical, Medical and Scholarly (STMS): Dollars in thousands Revenue Direct Contribution Contribution Margin 2008 $975,797 $384,170 39.4% 2007 $562,675 $240,446 42.7% % change 73% 60% Global STMS revenue for fiscal year 2008 grew 73% over prior year to $975.8 million, or 71% excluding the (cid:73)(cid:68)(cid:89)(cid:82)(cid:85)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:73)(cid:82)(cid:85)(cid:72)(cid:76)(cid:74)(cid:81)(cid:3)(cid:72)(cid:91)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:17)(cid:3)(cid:3)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:86)(cid:3)(cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:182)(cid:86)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:85)(cid:72)(cid:86)(cid:88)(cid:79)(cid:87)(cid:86)(cid:3)(cid:86)(cid:76)(cid:81)(cid:70)(cid:72)(cid:3)(cid:41)(cid:72)(cid:69)(cid:85)(cid:88)(cid:68)(cid:85)(cid:92)(cid:3)(cid:21)(cid:15)(cid:3) 2007, the date of the acquisition. Blackwell revenue for fiscal years 2008 and 2007 was $485.2 million and $105.8 million, respectively. Global STMS revenue advanced 4% for the full year, excluding Blackwell and favorable foreign exchange. Revenue growth was mainly attributable to solid global journal subscription growth and book growth in Asia. Direct contribution to profit for fiscal year 2008 increased 60% over fiscal year 2007 to $384.2 million. Blackwell direct contribution to profit was $174.1 million and $29.1 million for fiscal years 2008 and 2007, respectively. Included in Blackwell operating and administrative expenses are approximately $21 million of transition and integration related costs. Global STMS direct contribution to profit excluding Blackwell was $210.1 million. Excluding favorable foreign exchange and Blackwell, direct contribution to profit was flat with the prior year as revenue growth was offset by increased production costs associated with new journal titles, higher marketing costs and consulting fees. Over the course of the year, the Company added 65 society journals, renewed or extended 74 journals, and lost only 3 journals to competitors. In the fourth quarter, the American Cancer Society (ACS) selected the Company to publish CA, beginning in January 2009. Wiley and the ACS already collaborate on Cancer and Cancer Cytopathology. Wiley was also chosen by the Triological Society to publish The Laryngoscope, a venerable journal first published in 1896, and the Society of Plastics Engineers, to publish Plastics Engineering, a news magazine delivering the latest information for the global market in machinery, materials, plastics processing and all matters relating to the plastics industry. During the fiscal year, Wiley signed agreements with the Society for Science and the Public to electronically distribute its news magazine, Science News, and to designate the Wiley-published journal, Statistical Analysis and Data Mining, (cid:68)(cid:86)(cid:3) (cid:179)(cid:68)(cid:81)(cid:3) (cid:82)(cid:73)(cid:73)(cid:76)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:77)(cid:82)(cid:88)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:36)(cid:80)(cid:72)(cid:85)(cid:76)(cid:70)(cid:68)(cid:81)(cid:3) (cid:54)(cid:87)(cid:68)(cid:87)(cid:76)(cid:86)(cid:87)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3) (cid:36)(cid:86)(cid:86)(cid:82)(cid:70)(cid:76)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:11)(cid:36)(cid:54)(cid:36)(cid:12)(cid:15)(cid:180)(cid:3) (cid:55)(cid:75)(cid:72)(cid:3) (cid:36)(cid:54)(cid:36)(cid:3) (cid:90)(cid:76)(cid:79)(cid:79)(cid:3) (cid:68)(cid:79)(cid:86)(cid:82)(cid:3) collaborate with Wiley on the editorial direction, strategy and process for this new cross-disciplinary publication. Wiley reached an agreement to publish the quarterly Canadian Journal of Statistics in fiscal year 2009 on behalf of the Statistical Society of (cid:38)(cid:68)(cid:81)(cid:68)(cid:71)(cid:68)(cid:17)(cid:3) (cid:3) (cid:55)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3) (cid:87)(cid:90)(cid:82)(cid:3) (cid:68)(cid:74)(cid:85)(cid:72)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3) (cid:85)(cid:72)(cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:70)(cid:72)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:79)(cid:72)(cid:68)(cid:71)(cid:72)(cid:85)(cid:86)(cid:75)(cid:76)(cid:83)(cid:3) (cid:76)(cid:81)(cid:3) (cid:86)(cid:87)(cid:68)(cid:87)(cid:76)(cid:86)(cid:87)(cid:76)(cid:70)(cid:86)(cid:3) publishing. The Scandinavian Plant Physiology Society renewed the publishing agreement for one of its key plant science journals, Physiologia Plantarum. A new agreement was signed for Economic Geography, the leading journal in its field. The Australian Anthropological Society chose STMS as publisher of the Australian Journal of Anthropology. The Certified Public Accountants of Australia selected STMS to publish Australian Accounting Review. STMS entered into a collaborative agreement with the Association for the Study of Ethnicity and Nationalism to publish, Studies in Ethnicity and Nationalism and Nations and Nationalism. In January 2008, legislation was passed in the U.S. mandating the NIH Public Access Policy. Under this policy, all research funded by the National Institutes of Health (NIH) must be made available to the public free of charge -28- after a 12-month embargo. Wiley will support its authors by complying on their behalf through posting the accepted journal articles written by NIH grant-holders to PubMedCentral. In fiscal year 2008, Wiley nearly doubled its Online Books offering. Over 6,000 titles are now available on Wiley InterScience, including approximately 1,700 Blackwell books. STMS published a new edition of the Five Minute Veterinary Consult as a workflow tool on Personal Digital Assistants (PDAs). This best-selling reference book is now delivered to the point of care, providing veterinarians in the field with easy access to medical data. The service provides for instant information on diagnostic signs, causes of the disease, treatment protocols, medicines and dosage. Several STMS publications were highlighted by the media and honored with awards during the year. The British Medical Association recognized eleven STMS publications with book awards and the Association of American Publishers Professional and Scholarly Publishing Awards for Excellence named Mind, Brain, and Education as (cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:37)(cid:72)(cid:86)(cid:87)(cid:3)(cid:49)(cid:72)(cid:90)(cid:3)(cid:45)(cid:82)(cid:88)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:76)(cid:81)(cid:3)(cid:21)(cid:19)(cid:19)(cid:26)(cid:17)(cid:180)(cid:3)(cid:3)Blackwell Reference Online, which was enhanced by the addition of many new titles during the year, was cited by Choice (cid:68)(cid:86)(cid:3)(cid:179)(cid:68)(cid:81)(cid:3)(cid:82)(cid:88)(cid:87)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:70)(cid:68)(cid:71)(cid:72)(cid:80)(cid:76)(cid:70)(cid:3)(cid:85)(cid:72)(cid:86)(cid:82)(cid:88)(cid:85)(cid:70)(cid:72)(cid:17)(cid:180)(cid:3)(cid:3) The Hospitalist, which STMS publishes with the Society of Hospital Medicine (SHM), received two awards from the American Society of Healthcare Publication Editors: Bronze for Best Custom Publication and Gold for Best Regular Staff-Written column. Earlier in the year, in conjunction with SHM, Wiley launched "Wachter's World," a blog written by Dr. Robert M. Wachter, which addresses current issues in hospital care and inpatient medicine. Dr. Wachter is co-founder of SHM. In Asia, fiscal year 2008 offered the first glimpse of the powerful combination of Blackwell and Wiley. The efforts (cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:87)(cid:68)(cid:78)(cid:72)(cid:81)(cid:3) (cid:87)(cid:82)(cid:3) (cid:69)(cid:88)(cid:76)(cid:79)(cid:71)(cid:3) (cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:182)(cid:86)(cid:3) (cid:81)(cid:72)(cid:90)(cid:72)(cid:86)(cid:87)(cid:3) (cid:54)(cid:55)(cid:48)(cid:54)(cid:3) (cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3) (cid:70)(cid:72)(cid:81)(cid:87)(cid:72)(cid:85)(cid:3) (cid:76)(cid:81)(cid:3) (cid:36)(cid:86)(cid:76)(cid:68)(cid:15)(cid:3) (cid:90)(cid:75)(cid:76)(cid:79)(cid:72)(cid:3) (cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3) operations, produced strong book revenue growth, especially in Southeast Asia, China, and India. The Microscopy & Analysis Directory 2008 published during the fourth quarter to strong response. The Directory is primarily a print product with an online counterpart. In addition, two new major reference works were launched on Wiley InterScience, following their print publication earlier in the year: Handbook of Biosensors and Biochips by Robert S. Marks and Encyclopedia of Statistics in Quality and Reliability by Fabrizio Ruggeri, Ron S. Kennett and Frederick W. Faltin. During the year, Wiley signed an agreement with the Novartis Foundation to digitize the Ciba Foundation series (cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:69)(cid:72)(cid:74)(cid:76)(cid:81)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:3)(cid:20)(cid:28)(cid:24)(cid:22)(cid:3)(cid:88)(cid:83)(cid:3)(cid:87)(cid:82)(cid:3)(cid:20)(cid:28)(cid:27)(cid:25)(cid:3)(cid:90)(cid:75)(cid:72)(cid:81)(cid:3)(cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:3)(cid:69)(cid:72)(cid:70)(cid:68)(cid:80)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:41)(cid:82)(cid:88)(cid:81)(cid:71)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:182)(cid:86)(cid:3)(cid:83)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:72)(cid:85)(cid:17)(cid:3)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:79)(cid:79)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:82)(cid:81)(cid:79)(cid:92)(cid:3) be available electronically as a complete set or as separate volumes with individual chapters downloadable from Wiley InterScience. Professional/Trade (P/T): Dollars in thousands Revenue Direct Contribution Contribution Margin 2008 $471,785 $136,619 29.0% 2007 $456,820 $127,841 28.0% % change 3% 7% Global P/T revenue for fiscal year 2008 advanced 3% to $471.8 million from $456.8 million in the previous year, or 2% excluding the favorable impact of foreign exchange. Revenue was adversely affected by sluggish market conditions, tight inventory management by some key accounts late in the fiscal year and higher sales returns. Growth during the year was principally in business, psychology, technology and general interest programs and the sale of rights and brand licensing. Revenue from indigenous Dummies titles in Europe also contributed to the growth. -29- Direct contribution to profit for fiscal year 2008 improved 7% to $136.6 million, or 5% excluding favorable foreign exchange. The improvement for the year was principally due to the favorable year-on-year effect of a $4.4 million bad debt provision recorded in fiscal year 2007 related to the bankruptcy of Advanced Marketing Services and an approximate $2.0 million recovery of that bad debt in the current fiscal year. In addition, the effect of lower variable incentive compensation on direct contribution margin was partially offset by higher inventory obsolescence provisions. Highlights for fiscal year 2008 included the publication of the fifth title in the best-selling Little Book series, The Little Book That Builds Wealth: The Knockout Formula for Finding Great Investments by Pat Dorsey; two firsts (cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:41)(cid:82)(cid:85)(cid:3)(cid:39)(cid:88)(cid:80)(cid:80)(cid:76)(cid:72)(cid:86)(cid:3)(cid:87)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92)(cid:3)(cid:79)(cid:76)(cid:86)(cid:87)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:76)(cid:81)(cid:68)(cid:88)(cid:74)(cid:88)(cid:85)(cid:68)(cid:79)(cid:3)(cid:179)(cid:71)(cid:82)-it-(cid:92)(cid:82)(cid:88)(cid:85)(cid:86)(cid:72)(cid:79)(cid:73)(cid:180)(cid:3)(cid:87)(cid:76)(cid:87)(cid:79)(cid:72)(cid:15)(cid:3)Web Sites Do-It-Yourself For Dummies, (cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:76)(cid:85)(cid:86)(cid:87)(cid:3)(cid:87)(cid:76)(cid:87)(cid:79)(cid:72)(cid:3)(cid:87)(cid:68)(cid:85)(cid:74)(cid:72)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:82)(cid:89)(cid:72)(cid:85)-(cid:24)(cid:19)(cid:180)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)(cid:15)(cid:3)Computers For Seniors For Dummies. Quarter highlights (cid:68)(cid:79)(cid:86)(cid:82)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:71)(cid:3)(cid:45)(cid:76)(cid:80)(cid:3)(cid:43)(cid:76)(cid:74)(cid:75)(cid:87)(cid:82)(cid:90)(cid:72)(cid:85)(cid:182)(cid:86)(cid:3)Swim against the Current: Even a Dead Fish Can Go With the Flow; Heaven and Hell: My Life in the Eagles (1974-2001) by Don Felder; (cid:55)(cid:75)(cid:72)(cid:3)(cid:36)(cid:85)(cid:70)(cid:75)(cid:76)(cid:87)(cid:72)(cid:70)(cid:87)(cid:182)(cid:86)(cid:3)(cid:43)(cid:68)(cid:81)(cid:71)(cid:69)(cid:82)(cid:82)(cid:78)(cid:3)(cid:82)(cid:73)(cid:3)(cid:51)(cid:85)(cid:82)(cid:73)(cid:72)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:51)(cid:85)(cid:68)(cid:70)(cid:87)(cid:76)(cid:70)(cid:72), 14th edition, edited by the American Institute of Architects; (cid:38)(cid:79)(cid:76)(cid:81)(cid:76)(cid:70)(cid:76)(cid:68)(cid:81)(cid:182)(cid:86)(cid:3) (cid:42)(cid:88)(cid:76)(cid:71)(cid:72)(cid:3) (cid:87)(cid:82)(cid:3) (cid:55)(cid:85)(cid:72)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:54)(cid:87)(cid:85)(cid:72)(cid:86)(cid:86)(cid:3) (cid:36)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3) (cid:58)(cid:68)(cid:85) and Strategies for Managing Stress After War, both by Julia M. Whealin, Lori T. DeCarvalho and Edward M. Vega; and the four-volume reference work, Comprehensive Handbook of Social Work and Social Welfare by Karen M. Sowers and Catherine N. Dulmus. New timely P/T environmental titles, Green Building and Remodeling for Dummies, Green Living for Dummies and Solar Power Your Home for Dummies, sold well during the year. Previously published titles continued to sell well throughout the year, including Weight Watchers New Complete Cookbook and Weight Watchers All-Time Favorites(cid:15)(cid:3) (cid:68)(cid:79)(cid:82)(cid:81)(cid:74)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:48)(cid:68)(cid:85)(cid:78)(cid:3) (cid:37)(cid:76)(cid:87)(cid:87)(cid:80)(cid:68)(cid:81)(cid:182)(cid:86)(cid:15)(cid:3) How to Cook Everything Vegetarian. The Kouzes/Posner Leadership Challenge (cid:68)(cid:81)(cid:71)(cid:3)(cid:51)(cid:68)(cid:87)(cid:85)(cid:76)(cid:70)(cid:78)(cid:3)(cid:47)(cid:72)(cid:81)(cid:70)(cid:76)(cid:82)(cid:81)(cid:76)(cid:182)(cid:86)(cid:3)(cid:86)(cid:88)(cid:76)(cid:87)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:72)(cid:85)(cid:86)(cid:75)(cid:76)(cid:83)(cid:3)(cid:87)(cid:76)(cid:87)(cid:79)(cid:72)(cid:86)(cid:3)(cid:75)(cid:68)(cid:71)(cid:3)(cid:86)(cid:87)(cid:85)(cid:82)(cid:81)(cid:74)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:17)(cid:3)(cid:37)(cid:82)(cid:82)(cid:78)(cid:86)(cid:3)(cid:73)(cid:72)(cid:68)(cid:87)(cid:88)(cid:85)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:80)(cid:68)(cid:77)(cid:82)(cid:85)(cid:3)(cid:69)(cid:72)(cid:86)(cid:87)(cid:86)(cid:72)(cid:79)(cid:79)(cid:72)(cid:85)(cid:3) lists included Five Dysfunctions of a Team by Patrick Lencioni; Ready, Fire, Aim: Zero to $100 Million in No Time Flat by Michael Masterson; (cid:45)(cid:17)(cid:46)(cid:17)(cid:3) (cid:47)(cid:68)(cid:86)(cid:86)(cid:72)(cid:85)(cid:182)(cid:86)(cid:3) (cid:60)(cid:82)(cid:88)(cid:85)(cid:3) (cid:44)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3) (cid:55)(cid:68)(cid:91)(cid:3) (cid:21)(cid:19)(cid:19)(cid:28); Staring at the Sun: Overcoming the Terror of Death by Irvin D. Yalom; How: Why How We Do Anything Means Everything...in Business (and in Life) by Dov Seidman; and Swim against the Current: Even a Dead Fish Can Go With the Flow by Jim Hightower. Several P/T books received considerable media and customer attention during the year, including: Fred (cid:46)(cid:68)(cid:83)(cid:79)(cid:68)(cid:81)(cid:182)(cid:86)(cid:3) Daydream Believers: How a Few Grand Ideas Wrecked American Power, which was reviewed prominently in the New York Times(cid:182)(cid:86)(cid:3) (cid:36)(cid:85)(cid:87)(cid:86)(cid:3) (cid:54)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3) (cid:82)(cid:81)(cid:3) (cid:49)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3) (cid:51)(cid:88)(cid:69)(cid:79)(cid:76)(cid:70)(cid:3) (cid:53)(cid:68)(cid:71)(cid:76)(cid:82)(cid:15)(cid:3) (cid:48)(cid:54)(cid:49)(cid:37)(cid:38)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:76)(cid:81)(cid:3) (cid:85)(cid:72)(cid:74)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3) (cid:80)(cid:72)(cid:71)(cid:76)(cid:68)(cid:17)(cid:3)(cid:3) Swim against the Current: Even a Dead Fish Can Go with the Flow by Jim Hightower received national radio (cid:68)(cid:81)(cid:71)(cid:3) (cid:81)(cid:72)(cid:90)(cid:86)(cid:83)(cid:68)(cid:83)(cid:72)(cid:85)(cid:3) (cid:68)(cid:87)(cid:87)(cid:72)(cid:81)(cid:87)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3) (cid:3) (cid:48)(cid:68)(cid:85)(cid:78)(cid:3) (cid:37)(cid:76)(cid:87)(cid:87)(cid:80)(cid:68)(cid:81)(cid:182)(cid:86)(cid:3) How to Cook Everything Vegetarian continued to garner national (cid:80)(cid:72)(cid:71)(cid:76)(cid:68)(cid:3)(cid:68)(cid:87)(cid:87)(cid:72)(cid:81)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:82)(cid:85)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:88)(cid:87)(cid:75)(cid:82)(cid:85)(cid:182)(cid:86)(cid:3)(cid:85)(cid:72)(cid:74)(cid:88)(cid:79)(cid:68)(cid:85)(cid:3)(cid:68)(cid:83)(cid:83)(cid:72)(cid:68)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72) Today Show, the launch of his own New York Times (cid:69)(cid:79)(cid:82)(cid:74)(cid:15)(cid:3) (cid:179)(cid:37)(cid:76)(cid:87)(cid:87)(cid:72)(cid:81)(cid:15)(cid:180)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:68)(cid:3) (cid:70)(cid:82)(cid:79)(cid:88)(cid:80)(cid:81)(cid:3) (cid:76)(cid:81)(cid:3) (cid:48)(cid:72)(cid:81)(cid:182)(cid:86)(cid:3) (cid:43)(cid:72)(cid:68)(cid:79)(cid:87)(cid:75) magazine. Pauline Frommer continued to provide expert opinion in local and national media as an authority on budget travel. Several P/T titles were honored with awards during the year. The International Association of Culinary Professionals (IACP) named Fish Forever (cid:69)(cid:92)(cid:3)(cid:51)(cid:68)(cid:88)(cid:79)(cid:3)(cid:45)(cid:82)(cid:75)(cid:81)(cid:86)(cid:82)(cid:81)(cid:3)(cid:179)(cid:38)(cid:82)(cid:82)(cid:78)(cid:69)(cid:82)(cid:82)(cid:78)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:60)(cid:72)(cid:68)(cid:85)(cid:15)(cid:180)(cid:3)(cid:68)(cid:3)(cid:73)(cid:76)(cid:85)(cid:86)(cid:87)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:85)(cid:72)(cid:72)(cid:3) Wiley cookbooks won best-in-category, How to Cook Everything Vegetarian by Mark Bittman; Chocolates and Confections by Peter C. Greweling and The Culinary Institute of America; and Fish Forever. The Nautilus Book Awards recognized six Wiley publications that contribute to positive social change, spiritual growth, conscious living, high-level wellness and responsible leadership with silver awards. In fiscal year 2008 Wiley signed a contract with NYSE-Euronext to publish a series of introductory trading titles. Fiscal year 2008 was a strong year for P/T digital initiatives, including the launch of the (cid:58)(cid:72)(cid:69)(cid:86)(cid:87)(cid:72)(cid:85)(cid:182)(cid:86)(cid:3)(cid:49)(cid:72)(cid:90)(cid:3)(cid:58)(cid:82)(cid:85)(cid:79)(cid:71)(cid:3) Web site and JKLasser.com. Frommers.com included its first sponsored microsite, Family Vacations with Sheraton Hotels, as well as a custom site for Rail Europe, and a blog by Arthur Frommer, featuring travel resources, tips, travel bargains, message boards and current events. -30- In Europe, P/T had a solid year with indigenous For Dummies titles and P/T English language products contributing to the results. U.K. travel guides accelerated the global expansion of the (cid:41)(cid:85)(cid:82)(cid:80)(cid:80)(cid:72)(cid:85)(cid:182)(cid:86) brand outside North America. During the year, P/T continued to diversify into corporate sales, custom publishing and travel in Europe, thereby opening new revenue streams. Centre and in Second Life, the three-dimensional online virtual world. In fiscal year 2008, P/T was strong across most territories in Asia with frontlist performing well in a buoyant retail market. Sell-through was strong in all categories with business and finance leading the way, but with technology following close behind. Corporate sales, custom publishing, and translation licensing, involving titles such as The Future and Me: Power of Youth Market in Asia by MasterCard; A Guide to Asian High Yield Bonds: Financing Growth Enterprises by Florian Schmidt and Adam Harper, The Holy Grail of Macro Economics: Lessons from Japan's Great Recession by Richard Koo and Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market by Jim Rogers, also drove growth. Higher Education: Dollars in thousands Revenue Direct Contribution Contribution Margin 2008 $226,152 $68,270 30.2% 2007 $215,146 $62,996 29.3% % change 5% 8% Global Higher Education revenue increased 5% in fiscal year 2008 to $226.2 million, or 2% excluding the favorable impact of foreign exchange. Solid performances by the science and business/accounting programs; sales of Microsoft Official Academic Course titles; the sale of translation rights and reprints and growth in the Canadian indigenous publishing program were offset by backlist attrition in mathematics, engineering and the social sciences. Direct contribution to profit for fiscal year 2008 advanced 8% to $68.3 million, or 3% excluding the favorable impact of foreign exchange. Excluding the favorable impact of foreign exchange, direct contribution margin improved 41 basis points to 29.7% mainly due to revenue growth and prudent expense management partially offset by product mix. WileyPLUS delivered strong results in fiscal year 2008 with sales increasing 35% over prior year, and digital- only sales nearly doubling. Student usage around the world continued to climb sharply, with registered users increasing 10% in the U.S. and more than doubling outside the U.S. Seventeen percent of (cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:51)(cid:47)(cid:56)(cid:54)(cid:182) user base is located outside the U.S. WileyPLUS gained traction throughout the year, especially in the Middle East, where a new adoption was won earlier this year in Saudi Arabia. A successful class test was conducted in China in the fourth quarter. WileyPLUS ended the year with a milestone achievement, the validation of the 500,000th student user in April. Online sales directly to students grew significantly during the year. Wiley built on its successful relationships with online retailers by participating in a number of marketing promotions. Wiley also continued to utilize CourseSmart to distribute digital complimentary copies to faculty. CourseSmart is a venture founded by six higher education publishers, with the goal of providing instructors and students access to digital course materials. Launched in its Beta version this year, CourseSmart provides thousands of textbooks across hundreds of courses in an eTextbook format on a common platform. Nearly 200 Wiley titles were available to professors through the site for their review. -31- During the year, Wiley signed an agreement with Economic Modeling Specialists, Inc. (EMSI), a provider of detailed information about regional economies for assessment and planning purposes. Under the agreement, EMSI will produce co-branded regional reports focusing on the labor market demand for occupations linked to Wiley Pathways curricula, which cover four major fields: business, emergency management, health care management and information technology. The reports will inform colleges about opportunities for developing, expanding or supporting related programs. Key revisions published in fiscal year 2008 include Psychology, 5th edition, by Robin M. Kowalski and Drew Westen; Introduction to Finance: Markets, Investments, and Financial Management, 13th edition, by Ronald W. Melicher and Edgar A. Norton; Educational Psychology: Reflection for Action, 2nd edition, by Angela O'Donnell, Johnmarshall Reeve, and Jeffrey Smith; Financial Accounting in an Economic Context, 7th edition, by Jamie Pratt; Foundations of Multinational Financial Management, 6th edition, by Alan C. Shapiro and Atulya Sarin; Chemistry: Structure and Dynamics, 4th edition, by James N. Spencer, George M. Bodner and Lyman H. Rickard; and Principles of Anatomy and Physiology, 12th edition, by Gerard J. Tortora and Bryan H. Derrickson. Organizational Behaviour by Dr. Ray French, a European adaptation of a successful U.S. Higher Education textbook by John Schermerhorn, was released during the year. A showcase Web site, featuring video interviews for Managing Innovation: Integrating Technological, Market and Organizational Change by Joe Tidd, (cid:90)(cid:68)(cid:86)(cid:3)(cid:68)(cid:79)(cid:86)(cid:82)(cid:3)(cid:79)(cid:68)(cid:88)(cid:81)(cid:70)(cid:75)(cid:72)(cid:71)(cid:15)(cid:3)(cid:76)(cid:81)(cid:3)(cid:68)(cid:71)(cid:89)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:69)(cid:82)(cid:82)(cid:78)(cid:182)(cid:86)(cid:3)(cid:23)(cid:87)(cid:75)(cid:3)(cid:72)(cid:71)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)(cid:3) Higher Education experienced good results in China, Thailand, Japan and Indonesia, but this growth was offset by sluggish markets in Singapore and Taiwan. With several new Wiley Precise Edition textbooks publishing during the year, India delivered strong results. Wiley experienced considerable success in the Canadian Higher Education channel with a 25% revenue gain from WileyPLUS and excellent results from the indigenous publishing program. Shared Service and Administrative Costs Shared services and administrative costs for fiscal year 2008 increased 35% to $363.9 million, mainly due to $84.8 million of incremental shared service and administrative costs related to Blackwell. Included in shared service and administrative costs are Blackwell transition and integration costs of approximately $21 million. Shared services and administrative costs, excluding Blackwell and unfavorable foreign exchange, increased 5%, mainly due to higher employment costs, higher facility costs to support business growth and professional fees. Liquidity and Capital Resources (cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:7)(cid:20)02.8 million at the end of fiscal year 2009, compared with $59.3 million a year earlier. Cash provided by operating activities in fiscal year 2009 increased $61.1 million to $341.3 million due primarily to lower working capital, lower pension contributions, and higher cash earnings. The improvement in working capital was principally due to lower accounts receivable on reduced book sales, income tax refunds, and increased accounts and royalties payable due to timing. The reduction in cash provided from Deferred Revenue of $35.3 million was primarily due to the effect of a journal billing delay. Cash flow compared to the prior year was adversely affected by foreign exchange. Pension contributions in fiscal year 2009 were $21.0 million, compared to $59.4 million in the prior year. In fiscal year 2008, new regulations in the U.S. and the U.K. required companies to fully fund their statutory pension plans, generally within seven years. Over the seven-year transition funding period, companies face significantly increased levies based upon present funding levels and restricted flexibility in modifying those plans. The Company determined that it was appropriate, for both participants in the plans and the Company, to -32- accelerate a portion of the newly required funding in fiscal year 2008. The accelerated funding provides economic and earnings benefits to the Company in the form of a reduction in aggregate future cash funding to the plans and accretion to future earnings over the seven-year funding transition period. In addition, it will decrease future volatility in earnings and cash flows, and provide the Company flexibility in managing those plans involved. The accelerated funding was approximately $10 million to the U.S. statutory plan and approximately $15 million to a U.K. statutory plan. In addition, in fiscal 2008 the Company provided approximately $23 million of funding to the U.K. plan acquired with the Blackwell acquisition as anticipated. The Company anticipates making pension contributions in fiscal year 2010 of approximately $29 million. Cash used for investing activities for fiscal year 2009 was approximately $201.6 million compared to $170.2 million in fiscal year 2008. The Company invested $24.0 million in the acquisition of publishing businesses, assets and rights compared to $6.8 million in the prior year. Cash used for property, equipment and technology and product development increased $14.3 million in fiscal year 2009 versus the prior year with product development spending increasing approximately $18.6 million primarily reflecting higher royalty advances to support business growth. Cash used in financing activities was $89.1 million in fiscal year 2009, as compared to $124.5 million in fiscal year 2008. In fiscal 2009, cash was used primarily to repurchase shares, pay dividends to shareholders, and repay debt. During fiscal year 2009, the Company repurchased one million shares at an average price of $34.89. The Company increased its quarterly dividend to shareholders by 18% to $0.13 per share in fiscal year 2009 from $0.11 per share in the prior year. The aggregate notional amount of interest rate swap agreements associated with the Term Loan and Revolving Credit Facility were $500 million as of April 30, 2009. It is management's intention that the notional amount of the interest rate swap be less than the Term Loan and Revolving Credit Facility outstanding during the life of the derivative. (cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:73)(cid:79)(cid:82)(cid:90)(cid:3)(cid:76)(cid:86)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:72)(cid:68)(cid:86)(cid:82)(cid:81)(cid:68)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:76)(cid:80)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:76)(cid:83)(cid:87)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:54)(cid:55)(cid:48)(cid:54)(cid:3)(cid:77)(cid:82)(cid:88)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3) subscriptions and its Higher Education business. Receipts for calendar year STMS subscription journals occur typically from November through January. Due to journal billing delays this year, the principal receipts period will extend into the first quarter of fiscal year 2010. Reference is made to the Credit Risk section, which follows, for a description of the impact on the Company as it (cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:77)(cid:82)(cid:88)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:68)(cid:74)(cid:72)(cid:81)(cid:87)(cid:86)(cid:182)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:76)(cid:84)(cid:88)(cid:76)(cid:71)(cid:76)(cid:87)(cid:92)(cid:17)(cid:3) (cid:54)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3) primarily in the U.S. higher education market tend to be concentrated in June through August, and again in November through January. Due to this seasonality, the Company normally requires increased funds for working capital from May through September. Global capital and credit markets have recently experienced increased volatility and disruption. As of April 30, 2009, we had approximately $822.4 million of debt outstanding and approximately $470.7 million of unused borrowing capacity under the Revolving Credit Facility which is described in Note 12. We believe that our operating cash flow, together with our revolving credit facilities and other available debt financing, will be adequate to meet our operating, investing and financing needs in the foreseeable future, although there can be no assurance that continued or increased volatility and disruption in the global capital and credit markets will not impair our ability to access these markets on terms commercially acceptable to us or at all. Working capital at April 30, 2009 was negative $157.4 million. Working capital is negative as a result of including, in current liabilities, deferred revenue related to subscriptions for which cash has been collected in advance. This deferred revenue will be recognized into income as the products are shipped or made available online to the customers over the term of the subscription. Current liabilities as of April 30, 2009 include $246.6 million of such deferred subscription revenue for which cash was collected in advance. -33- The Company has adequate cash and cash equivalents available, as well as short-term lines of credit to finance its short-term seasonal working capital requirements. The Company does not have any off-balance-sheet debt. Projected product development and property, equipment and technology capital spending for fiscal year 2010 is forecast to be approximately $130 million and $50 million, respectively, primarily to enhance system functionality and drive future business growth. A summary of contractual obligations and commercial commitments, excluding interest charges on debt, and unrecognized tax benefits further described in Note 11, as of April 30, 2009 is as follows: Contractual Obligations Total Debt Total $822.4 Payments Due by Period 2-3 Years $421.9 Within Year 1 $67.5 4-5 Years $333.0 Non-Cancelable Leases 293.4 Minimum Royalty Obligations 193.1 Other Commitments 8.2 37.0 36.4 6.3 63.6 65.7 1.9 54.3 48.8 - After 5 Years - 138.5 42.2 - Total Market Risk $1,317.1 $147.2 $553.1 $436.1 $180.7 The Company is exposed to market risk primarily related to interest rates, foreign exchange, and credit risk. It is (cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:83)(cid:82)(cid:79)(cid:76)(cid:70)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:82)(cid:81)(cid:76)(cid:87)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:72)(cid:91)(cid:83)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:88)(cid:86)(cid:72)(cid:3)(cid:71)(cid:72)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:18)(cid:82)(cid:85)(cid:3)(cid:76)(cid:81)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) contracts from time to time to reduce fluctuations in earnings and cash flows 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 $822.4 million of variable rate loans outstanding at April 30, 2009, which approximated fair value. On February 16, 2007, the Company entered into an interest rate swap agreement, designated as a (cid:70)(cid:68)(cid:86)(cid:75)(cid:3) (cid:73)(cid:79)(cid:82)(cid:90)(cid:3) (cid:75)(cid:72)(cid:71)(cid:74)(cid:72)(cid:3) (cid:68)(cid:86)(cid:3) (cid:71)(cid:72)(cid:73)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3) (cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3) (cid:54)(cid:41)(cid:36)(cid:54)(cid:3) (cid:49)(cid:82)(cid:17)(cid:3) (cid:20)(cid:22)(cid:22)(cid:15)(cid:3) (cid:179)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:39)(cid:72)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3) (cid:44)(cid:81)(cid:86)(cid:87)(cid:85)(cid:88)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:43)(cid:72)(cid:71)(cid:74)(cid:76)(cid:81)(cid:74)(cid:3) (cid:36)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:180)(cid:17)(cid:3)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:75)(cid:72)(cid:71)(cid:74)(cid:72)(cid:3)locked-in a portion of the variable interest due on a portion of the Term Loan. Under the terms of the interest rate swap, the Company pays a fixed rate of 5.076% and receives a variable rate of interest based on three month LIBOR (as defined) from the counter party which is reset every three months for a four- year period ending February 8, 2011. The notional amount of the rate swap was initially $660 million which will decline through February 8, 2011, based on the expected amortization of the Term Loan. As of April 30, 2009, the notional amount of the rate swap was $400 million. On October 19, 2007, the Company entered into an additional interest rate swap agreement designed by the Company as a cash flow hedge that locked-in a portion of the variable interest due on the Revolving Credit Facility. Under the terms of this interest rate swap, the Company pays a fixed rate of 4.60% and receives a variable rate of interest based on three month LIBOR (as defined) from the counterparty which is reset every three months for a three-year period ending August 8, 2010. The notional amount of the rate swap is $100 million. -34- (cid:44)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:81)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:81)(cid:82)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:86)(cid:90)(cid:68)(cid:83)(cid:86)(cid:3)(cid:69)(cid:72)(cid:3)(cid:79)(cid:72)(cid:86)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:55)(cid:72)(cid:85)(cid:80)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3) Revolving Credit Facility outstanding during the life of the derivatives. During fiscal year 2009, the Company recognized a loss on its hedge contracts of approximately $17.4 million which is reflected in interest expense. At April 30, 2009, the aggregate fair value of the interest rate swaps was a net loss of $28.2 million which is included in Other Long Term Liabilities in the Consolidated Statement of Financial Position. On an annual basis, a hypothetical one percent change in interest rates for the $322.4 million of unhedged variable rate debt as of April 30, 2009 would affect net income and cash flow by approximately $2.0 million. Foreign Exchange Rates: The Company is exposed to foreign exchange movements primarily in British pound sterling, euros, Canadian and Australian dollars, and certain Asian currencies. The Statement of Financial Position of non-U.S. business units are translated into U.S. dollars using period-end exchange rates for assets and liabilities and weighted- average exchange rates for revenues and expenses. Adjustments resulting from translating net assets are reported a(cid:86)(cid:3)(cid:68)(cid:3)(cid:86)(cid:72)(cid:83)(cid:68)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:82)(cid:81)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:70)(cid:70)(cid:88)(cid:80)(cid:88)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:85)(cid:72)(cid:75)(cid:72)(cid:81)(cid:86)(cid:76)(cid:89)(cid:72)(cid:3)(cid:79)(cid:82)(cid:86)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:76)(cid:81)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3) the caption currency translation adjustment. The Company has significant investments in non-US businesses that are exposed to foreign currency risk. During fiscal year 2009 the Company recorded $256.3 million of currency translation adjustments in other comprehensive income primarily as a result of the strengthening of the U.S. dollar relative to the British pound sterling. The U.S. dollar to British pound sterling exchange rate was 1.45 to 1.00 as of April 30, 2009 compared to 1.99 to 1.00 as of April 30, 2008, approximately a 27% increase. Effective November 1, 2008, the Company changed its functional currency reporting basis for the non-Blackwell (cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:40)(cid:88)(cid:85)(cid:82)(cid:83)(cid:72)(cid:68)(cid:81)(cid:3)(cid:54)(cid:55)(cid:48)(cid:54)(cid:3)(cid:77)(cid:82)(cid:88)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:39)(cid:82)(cid:79)(cid:79)(cid:68)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:79)(cid:82)(cid:70)(cid:68)(cid:79)(cid:3)(cid:73)(cid:88)(cid:81)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:70)(cid:92)(cid:17)(cid:3)(cid:36)(cid:86)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:3) of the integration of Blackwell and Wiley fulfillment systems and licensing practices, in the third quarter of fiscal year 2009 the Company began pricing journal revenue based on local currency in Europe. Prior to the integration, journal revenue was principally priced and reported in U.S. Dollars. This change primarily impacted business denominated in Euros and Sterling. Under certain circumstances, the Company may enter into derivative financial instruments in the form of foreign currency forward contracts as a hedge against specific transactions, including intercompany purchases. The Company does not use derivative financial instruments for trading or speculative purposes. There were no contracts outstanding at April 30, 2009. Credit Risk: In the journal publishing business, in addition to direct customer sales, subscriptions are sourced through journal subscription agents who, acting as agents for library customers, facilitate ordering and consolidate the subscription orders/billings with various publishers. Subscription agents account for approximately 20% of total consolidated revenue and no one agent accounts for more than 9% of total consolidated revenue. Subscription agents generally collect cash in advance from subscribers and remit payments to journal publishers, including the Company, prior to the commencement of the subscriptions. While at fiscal year-end the Company had minimal credit risk exposure to these agents, future calendar-year subscription receipts from these agents may depend significantly on their financial condition and liquidity. Insurance for payment on these accounts is not commercially feasible and/or available. (cid:55)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3) (cid:76)(cid:86)(cid:3) (cid:81)(cid:82)(cid:87)(cid:3) (cid:71)(cid:72)(cid:83)(cid:72)(cid:81)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3) (cid:88)(cid:83)(cid:82)(cid:81)(cid:3) (cid:68)(cid:3) (cid:86)(cid:76)(cid:81)(cid:74)(cid:79)(cid:72)(cid:3) (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:30)(cid:3) (cid:75)(cid:82)(cid:90)(cid:72)(cid:89)(cid:72)(cid:85)(cid:15)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:76)(cid:81)(cid:71)(cid:88)(cid:86)(cid:87)(cid:85)(cid:92)(cid:3) (cid:76)(cid:86)(cid:3) (cid:70)(cid:82)(cid:81)(cid:70)(cid:72)(cid:81)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:76)(cid:81)(cid:3) national, regional, and online bookstore chains. Although no one book customer accounts for more than 7% of consolidated book and journal revenue, the top 10 book customers account for approximately 18% of total -35- consolidated revenue and approximately 41% of total gross trade accounts receivable at April 30, 2009. Payments for the sale of subscription journals are predominantly collected in advance. Critical Accounting Policies (cid:55)(cid:75)(cid:72)(cid:3) (cid:83)(cid:85)(cid:72)(cid:83)(cid:68)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3) (cid:76)(cid:81)(cid:3) (cid:70)(cid:82)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:76)(cid:87)(cid:92)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:83)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:79)(cid:72)(cid:86)(cid:3) (cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3) accepted in the U.S. requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Management continually evaluates the basis for its estimates. Actual results could differ from those estimates, which could affect the reported results. Financial Reporting Release No. 60, released by the Securities and Exchange Commission, requires all companies to discuss critical accounting policies or methods used in the preparation of financial statements. (cid:49)(cid:82)(cid:87)(cid:72)(cid:3) (cid:21)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:179)(cid:49)(cid:82)(cid:87)(cid:72)(cid:86)(cid:3) (cid:87)(cid:82)(cid:3) (cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:180)(cid:3) (cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:86)(cid:3) (cid:68)(cid:3) (cid:86)(cid:88)(cid:80)(cid:80)(cid:68)(cid:85)(cid:92)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3) (cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) policies and methods used in preparation of our Consolidated Financial Statements. Set forth below is a (cid:71)(cid:76)(cid:86)(cid:70)(cid:88)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:70)(cid:85)(cid:76)(cid:87)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:82)(cid:79)(cid:76)(cid:70)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:72)(cid:87)(cid:75)(cid:82)(cid:71)(cid:86)(cid:17) Revenue Recognition: (cid:44)(cid:81)(cid:3) (cid:68)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:54)(cid:40)(cid:38)(cid:3) (cid:54)(cid:87)(cid:68)(cid:73)(cid:73)(cid:3) (cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:37)(cid:88)(cid:79)(cid:79)(cid:72)(cid:87)(cid:76)(cid:81)(cid:3) (cid:49)(cid:82)(cid:17)(cid:3) (cid:20)(cid:19)(cid:23)(cid:15)(cid:3) (cid:179)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3) (cid:53)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:87)ion in (cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:15)(cid:180)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3) (cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:86)(cid:3) (cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3) (cid:90)(cid:75)(cid:72)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:73)(cid:82)(cid:79)(cid:79)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:3) (cid:70)(cid:85)(cid:76)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) (cid:80)(cid:72)(cid:87)(cid:29)(cid:3) (cid:83)(cid:72)(cid:85)(cid:86)(cid:88)(cid:68)(cid:86)(cid:76)(cid:89)(cid:72)(cid:3) evidence that an arrangement exists; delivery has occurred or services have been rendered; the price to the customer is fixed or determinable; and collectability is reasonably assured. If all of the above criteria have been met, revenue is principally recognized upon shipment of products or when services have been rendered. Subscription revenue is generally collected in advance. The prepayment is deferred and recognized as earned when the related issue is shipped or made available online over the term of the subscription. Where a product has been sold with multiple deliverables, the Company follows EITF No. 00-(cid:21)(cid:20)(cid:3) (cid:179)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3) Relationsh(cid:76)(cid:83)(cid:86)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:48)(cid:88)(cid:79)(cid:87)(cid:76)(cid:83)(cid:79)(cid:72)(cid:3) (cid:39)(cid:72)(cid:79)(cid:76)(cid:89)(cid:72)(cid:85)(cid:68)(cid:69)(cid:79)(cid:72)(cid:86)(cid:180)(cid:3) (cid:87)(cid:82)(cid:3) (cid:71)(cid:72)(cid:87)(cid:72)(cid:85)(cid:80)(cid:76)(cid:81)(cid:72)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:87)(cid:76)(cid:80)(cid:76)(cid:81)(cid:74)(cid:3) (cid:82)(cid:73)(cid:3) (cid:85)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3) (cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3) (cid:3) (cid:38)(cid:82)(cid:79)(cid:79)(cid:72)(cid:70)(cid:87)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3) (cid:76)(cid:86)(cid:3) (cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3) (cid:82)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3) (cid:76)(cid:81)(cid:89)(cid:82)(cid:79)(cid:89)(cid:72)(cid:71)(cid:15)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3) (cid:75)(cid:76)(cid:86)(cid:87)(cid:82)(cid:85)(cid:92)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:15)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:86)(cid:87)(cid:68)(cid:87)(cid:88)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:182)(cid:86)(cid:3) account with the Company. Revenue is reported net of any amounts billed to customers for taxes which are remitted to government authorities. Allowance for Doubtful Accounts: The estimated allowance for doubtful accounts is based on a review of the aging of the accounts receivable balances, the historical write-off experience, and a credit evaluation of the (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:17)(cid:3) (cid:3) (cid:36)(cid:3) (cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3) (cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:73)(cid:3) (cid:68)(cid:3) (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:182)(cid:86)(cid:3) (cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3) (cid:70)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3) (cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:68)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)(cid:17)(cid:3) (cid:3) (cid:55)(cid:75)(cid:72)(cid:3) allowance for doubtful accounts is shown as a reduction of accounts receivable in the Consolidated Statement of Financial Position and amounted to $5.7 million and $8.0 million at April 30, 2009 and 2008, respectively. Sales Return Reserve: The estimated allowance for sales returns is based on a review of the historical return patterns, as well as current market trends in the businesses in which we operate. Sales return reserves, net of estimated inventory and royalty costs, are reported as a reduction of accounts receivable in the Consolidated Statement of Financial Position and amounted to $55.2 million and $55.5 million at April 30, 2009 and 2008, respectively. A one percent change in the estimated sales return rate could affect net income by approximately $4.1 million. A change in the pattern or trends in returns could affect the estimated allowance. Reserve for Inventory Obsolescence: Inventories are carried at cost or market whichever is lower. A reserve for inventory obsolescence is estimated based on a review of damaged, obsolete, or otherwise unsalable inventory. The review encompasses historical unit sales trends by title; current market conditions, including estimates of customer demand; and publication revision cycles. A change in sales trends could affect the estimated reserve. The inventory obsolescence reserve is reported as a reduction of the inventory balance in -36- the Consolidated Statement of Financial Position and amounted to $36.3 million and $35.4 million as of April 30, 2009 and 2008, respectively. Allocation of Acquisition Purchase Price to Assets Acquired and Liabilities Assumed: In connection with acquisitions, the Company allocates the cost of the acquisition to the assets acquired and the liabilities assumed based on estimates of the fair value of such items including goodwill and other intangible assets. Such estimates include expected cash flows to be generated by those assets and the expected useful lives based on historical experience, current market trends, and synergies to be achieved from the acquisition and expected tax basis of assets acquired. For significant acquisitions, the Company uses independent appraisers to confirm the reasonableness of such estimates. Goodwill and Other Intangible Assets: Goodwill is the excess of the purchase price paid over the fair value of the net assets of the business acquired. Other intangible assets principally consist of branded trademarks, acquired publication rights, customer relationships and non-compete agreements. In accordance with SFAS 142, goodwill and indefinite-lived intangible assets are no longer amortized but are reviewed at least annually for impairment, or more often if events or circumstances occur which would more likely than not reduce the fair value of a reporting unit below its carrying amount. Other finite-lived intangible assets continue to be amortized over their useful lives. Acquired publication rights with definitive lives are amortized on a straight-line basis over periods ranging from 5 to 40 years. Non-compete agreements are amortized over the terms of the individual agreement. Impairment of Long-Lived Assets: Depreciable and amortizable assets are only evaluated for impairment upon a significant change in the operating or macroeconomic environment. In these circumstances, if an evaluation of the undiscounted cash flows indicates impairment, the asset is written down to its estimated fair value based on discounted future cash flow. Recently Issued Accounting Pronouncements: (cid:44)(cid:81)(cid:3)(cid:54)(cid:72)(cid:83)(cid:87)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:19)(cid:25)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:41)(cid:36)(cid:54)(cid:37)(cid:3)(cid:76)(cid:86)(cid:86)(cid:88)(cid:72)(cid:71)(cid:3)(cid:54)(cid:41)(cid:36)(cid:54)(cid:3)(cid:49)(cid:82)(cid:17)(cid:3)(cid:20)(cid:24)(cid:26)(cid:3)(cid:179)(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3) (cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:180)(cid:3)(cid:11)(cid:179)(cid:54)(cid:41)(cid:36)(cid:54)(cid:3)(cid:20)(cid:24)(cid:26)(cid:180)(cid:12)(cid:17)(cid:3)(cid:44)(cid:81)(cid:3)(cid:41)(cid:72)(cid:69)(cid:85)(cid:88)(cid:68)(cid:85)(cid:92)(cid:3)(cid:21)(cid:19)(cid:19)(cid:27)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:41)(cid:36)(cid:54)(cid:37)(cid:3)(cid:76)(cid:86)(cid:86)(cid:88)(cid:72)(cid:71)(cid:3)(cid:68)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:76)(cid:68)(cid:79)(cid:3)(cid:71)(cid:72)(cid:73)(cid:72)(cid:85)(cid:85)(cid:68)(cid:79)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3) date. SFAS 157 provides a new single authoritative definition of fair value and provides enhanced guidance for measuring the fair value of assets and liabilities and requires additional disclosures related to the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. As part of the deferral, the FASB agreed to a one-year delay of the fair value measurement requirement for certain nonfinancial assets and liabilities. The Company adopted SFAS 157 as of May 1, 2008 for assets and liabilities not subject to the deferral (see Note 18). The adoption did (cid:81)(cid:82)(cid:87)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:68)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:86)(cid:3)(cid:87)o adopt SFAS 157 as of May 1, 2009 for those nonfinancial assets and liabilities subject to the deferral. The adoption of the deferred portion of SFAS157 will not have a significant impact on its consolidated financial statements. The major categories of assets that the Company held in fiscal year 2009 for which application of SFAS 157 has been deferred are Goodwill and Other Intangible Assets and Long-lived Assets Held and Used. The Company currently holds no liabilities that are measured at fair value which were subject to the deferral. (cid:44)(cid:81)(cid:3) (cid:41)(cid:72)(cid:69)(cid:85)(cid:88)(cid:68)(cid:85)(cid:92)(cid:3) (cid:21)(cid:19)(cid:19)(cid:26)(cid:15)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:41)(cid:36)(cid:54)(cid:37)(cid:3) (cid:76)(cid:86)(cid:86)(cid:88)(cid:72)(cid:71)(cid:3) (cid:54)(cid:41)(cid:36)(cid:54)(cid:3) (cid:49)(cid:82)(cid:17)(cid:3) (cid:20)(cid:24)(cid:28)(cid:3) (cid:179)(cid:55)(cid:75)(cid:72)(cid:3) (cid:41)(cid:68)(cid:76)(cid:85)(cid:3) (cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3) (cid:50)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:180)(cid:3)(cid:11)(cid:179)(cid:54)(cid:41)(cid:36)(cid:54)(cid:3)(cid:20)(cid:24)(cid:28)(cid:180)(cid:12)(cid:17)(cid:3)(cid:54)(cid:41)(cid:36)(cid:54)(cid:3)(cid:20)(cid:24)(cid:28)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:86)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:76)(cid:72)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:68)(cid:81)(cid:3)(cid:82)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:76)(cid:85)(cid:85)(cid:72)(cid:89)(cid:82)(cid:70)(cid:68)(cid:69)(cid:79)(cid:92)(cid:3)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3) financial assets and financial liabilities at fair value on an instrument-by-instrument basis with the resulting (cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3) (cid:76)(cid:81)(cid:3) (cid:73)(cid:68)(cid:76)(cid:85)(cid:3) (cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3) (cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)(cid:3) (cid:76)(cid:81)(cid:3) (cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:17)(cid:3) (cid:55)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:68)(cid:71)(cid:82)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:73)(cid:3) (cid:54)(cid:41)(cid:36)(cid:54)(cid:3) (cid:20)(cid:24)(cid:28)(cid:3) (cid:68)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:48)(cid:68)(cid:92)(cid:3) (cid:20)(cid:15)(cid:3) (cid:21)(cid:19)(cid:19)(cid:27)(cid:3) (cid:71)(cid:76)(cid:71)(cid:3) (cid:81)(cid:82)(cid:87)(cid:3) have a significant impact on its consolidated financial statements since the Company did not apply the fair value option of SFAS 159 to any of its existing assets and liabilities. -37- In December 2007, the FASB issued SFAS No. (cid:20)(cid:23)(cid:20)(cid:53)(cid:15)(cid:3) (cid:179)(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3) (cid:38)(cid:82)(cid:80)(cid:69)(cid:76)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:180)(cid:3) (cid:11)(cid:179)(cid:54)(cid:41)(cid:36)(cid:54) (cid:20)(cid:23)(cid:20)(cid:53)(cid:180)(cid:12)(cid:17)(cid:3) (cid:54)(cid:41)(cid:36)(cid:54) 141R expands the scope of acquisition accounting to all transactions under which control of a business is obtained. Principally, SFAS 141R requires that contingent consideration be recorded at fair value on the acquisition date and that certain transaction and restructuring costs be expensed. SFAS 141R is effective for acquisitions made on and after May 1, 2009. While the Company is currently assessing the impact of SFAS 141(R) on its consolidated financial statements, the Company expects that upon adoption of SFAS 141(R), the application of the new standard is likely to have a significant impact on how the Company allocates the purchase price of any future acquired businesses. In April 2008, the FASB issued FASB Staff Position No. FSP SFAS 142-(cid:22)(cid:3)(cid:179)(cid:39)(cid:72)(cid:87)(cid:72)(cid:85)(cid:80)(cid:76)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:86)(cid:72)(cid:73)(cid:88)l Life of (cid:44)(cid:81)(cid:87)(cid:68)(cid:81)(cid:74)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3) (cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:180)(cid:3) (cid:11)(cid:179)(cid:54)(cid:41)(cid:36)(cid:54)(cid:3) (cid:20)(cid:23)(cid:21)-(cid:22)(cid:180)(cid:12)(cid:17)(cid:3) (cid:54)(cid:41)(cid:36)(cid:54)(cid:3) (cid:20)(cid:23)(cid:21)-3 amends the factors that must be considered in developing renewal or extension assumptions used to determine the useful life over which to amortize the cost of a recognized intangible asset under FASB (cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:49)(cid:82)(cid:17)(cid:3)(cid:20)(cid:23)(cid:21)(cid:15)(cid:3)(cid:179)(cid:42)(cid:82)(cid:82)(cid:71)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:44)(cid:81)(cid:87)(cid:68)(cid:81)(cid:74)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:17)(cid:180)(cid:3)(cid:54)(cid:41)(cid:36)(cid:54)(cid:3)(cid:20)(cid:23)(cid:21)- 3 requires an entity to consider its own experience with the renewal or extension of the terms of a contractual arrangement, consistent with its expected use of the asset. SFAS 142-3 also requires several incremental disclosures for renewable intangible assets. The Company is required to adopt SFAS 142-3 as of May 1, 2009. The guidance for determining the useful life of an intangible asset must be applied prospectively to intangible assets acquired after the effective date. The Company does not expect that the application of this new standard will significantly impact the process currently used to determine useful lives of its intangible assets. There have been no other new accounting pronouncements issued that have had, or are expected to have a (cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:17) (cid:179)(cid:54)(cid:68)(cid:73)(cid:72)(cid:3)(cid:43)(cid:68)(cid:85)(cid:69)(cid:82)(cid:85)(cid:180)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:56)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72) Private Securities Litigation Reform Act of 1995 This report contains certain forward-looking (cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3) (cid:70)(cid:82)(cid:81)(cid:70)(cid:72)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3) (cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:15)(cid:3) and financial condition. Reliance should not be placed on forward-looking statements, as actual results may differ materially from those in any forward-looking statements. Any such forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond the control of the Company, and are subject to change based on many important factors. Such factors include, but are not limited to (i) the level of investment in new technologies and products; (cid:11)(cid:76)(cid:76)(cid:12)(cid:3) (cid:86)(cid:88)(cid:69)(cid:86)(cid:70)(cid:85)(cid:76)(cid:69)(cid:72)(cid:85)(cid:3) (cid:85)(cid:72)(cid:81)(cid:72)(cid:90)(cid:68)(cid:79)(cid:3) (cid:85)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:77)(cid:82)(cid:88)(cid:85)(cid:81)(cid:68)(cid:79)(cid:86)(cid:30)(cid:3) (cid:11)(cid:76)(cid:76)(cid:76)(cid:12)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:86)(cid:87)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:79)(cid:76)(cid:84)(cid:88)(cid:76)(cid:71)(cid:76)(cid:87)(cid:92)(cid:3) (cid:82)(cid:73)(cid:3) (cid:77)(cid:82)(cid:88)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3) subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and (cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:78)(cid:72)(cid:92)(cid:3)(cid:82)(cid:81)(cid:79)(cid:76)(cid:81)(cid:72)(cid:3)(cid:85)(cid:72)(cid:87)(cid:68)(cid:76)(cid:79)(cid:72)(cid:85)(cid:86)(cid:30)(cid:3)(cid:11)(cid:89)(cid:76)(cid:12)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:72)(cid:68)(cid:86)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:81)(cid:68)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:72)(cid:71)(cid:88)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3) impact of the used-book market; (vii) worldwide economic and political cond(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:30)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:11)(cid:89)(cid:76)(cid:76)(cid:76)(cid:12)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) ability to protect its copyrights and other intellectual property worldwide (ix) other factors detailed from time to (cid:87)(cid:76)(cid:80)(cid:72)(cid:3) (cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:73)(cid:76)(cid:79)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:40)(cid:91)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3) (cid:3) (cid:55)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3) (cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:87)(cid:68)(cid:78)(cid:72)(cid:86)(cid:3) (cid:81)(cid:82)(cid:3) obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances. -38- Results By Quarter (Unaudited) Dollars in millions, except per share data 2009 2008 Revenue First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal Year Operating Income (a) First Quarter Second Quarter Third Quarter Fourth Quarter Fiscal Year Net Income First Quarter Second Quarter (b) Third Quarter (c) Fourth Quarter Fiscal Year Income Per Share First Quarter Second Quarter (b) Third Quarter (c) Fourth Quarter Fiscal Year $ $ $ $ $ $ 401.7 431.9 374.4 403.4 1,611.4 44.3 70.2 63.3 40.7 218.5 30.2 40.1 33.4 24.6 128.3 $ $ $ $ $ $ 388.7 423.2 429.4 432.4 1,673.7 46.9 62.1 68.0 48.2 225.2 40.2 38.3 40.0 29.0 147.5 Diluted 0.50 $ 0.67 0.57 0.42 2.15 $ Basic 0.52 $ 0.68 0.58 0.42 2.20 $ $ $ Diluted 0.68 0.65 0.67 0.49 2.49 $ $ Basic 0.70 0.67 0.69 0.49 2.55 (a) (b) (c) In fiscal year 2009, the Company reclassified foreign exchange transaction gains and losses from operating and administrative expenses to a distinct line below operating income. Prior period results have been restated for comparability. In the second quarter of fiscal year 2008, the Company recognized a net tax benefit of $15.3 million, or $0.26 per diluted share, associated with a new tax law enacted in the United Kingdom on July 19, 2008 that reduced the corporate income tax rate from 30% to 28%. The benefit recognized by the Company reflects the adjustment required to record all UK-related deferred tax balances at the new UK corporate income tax rate of 28%. In the third quarter of fiscal year 2008, the Company recognized a $3.4 million, or $0.06 per diluted share, tax benefit associated with new tax laws enacted in Germany that reduced the corporate income tax rate from 39% to 29%. The benefits recognized by the Company reflect the adjustments required to record all Germany-related deferred tax balances at the new corporate income tax rates. -39- Quarterly Share Prices, Dividends, and Related Stockholder Matters (cid:55)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:38)(cid:79)(cid:68)(cid:86)(cid:86)(cid:3) (cid:36)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:38)(cid:79)(cid:68)(cid:86)(cid:86)(cid:3) (cid:37)(cid:3) (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) (cid:79)(cid:76)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3) (cid:82)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:49)(cid:72)(cid:90)(cid:3) (cid:60)(cid:82)(cid:85)(cid:78)(cid:3) (cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3) (cid:40)(cid:91)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3) (cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:86)(cid:92)(cid:80)(cid:69)(cid:82)(cid:79)(cid:86)(cid:3) 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 Market Price Class B Common Stock Market Price Dividends High Low Dividends High Low $0.13 0.13 0.13 0.13 $49.76 48.88 37.60 36.72 $43.39 27.75 26.21 27.55 $0.13 0.13 0.13 0.13 $49.52 49.11 37.58 36.63 $43.53 28.02 26.05 27.50 $0.11 0.11 0.11 $49.35 45.24 44.33 $38.01 40.00 35.98 $0.11 0.11 0.11 $49.03 45.21 43.72 $38.00 40.22 36.14 2009 First Quarter Second Quarter Third Quarter Fourth Quarter 2008 First Quarter Second Quarter Third Quarter Fourth Quarter 0.11 46.54 36.01 0.11 46.63 36.02 As of April 30, 2009, (cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:3)(cid:81)(cid:88)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:38)(cid:79)(cid:68)(cid:86)(cid:86)(cid:3)(cid:36)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:79)(cid:68)(cid:86)(cid:86)(cid:3)(cid:37)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3) were 1,212 and 111 respectively, based on the holders of record. The Company did not repurchase any common stock during the fourth quarter of fiscal year 2009. The (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:68)(cid:74)(cid:85)(cid:72)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:68)(cid:76)(cid:81)(cid:86)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:85)(cid:72)(cid:86)(cid:87)(cid:85)(cid:76)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:70)(cid:82)(cid:89)(cid:72)(cid:81)(cid:68)(cid:81)(cid:87)(cid:86)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:68)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:71)(cid:76)(cid:89)(cid:76)(cid:71)(cid:72)(cid:81)(cid:71)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3) share repurchases. Under the most restrictive covenant, approximately $59.0 million was available for such restricted payments as of April 30, 2009. 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. -40- Selected Financial Data For the Years Ended April 30, Dollars in millions (except per share data) 2009 2008 2007 2006 2005 Revenue $1,611.4 $1,673.7 $1,234.6 $1,043.9 218.5 128.3 (157.4) 2,223.7 754.9 513.5 225.2 147.5 (243.6) 2,576.2 797.3 689.1 161.5 99.6 (199.7) 2,553.1 977.7 529.5 152.9 110.3 (35.8) $974.0 139.6 83.8 (2.4) 1,026.0 1,032.6 160.5 401.8 196.2 396.6 Operating Income (a-b) Net Income (b-c) Working Capital (d) Total Assets Long-Term Debt (cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92) Per Share Data Income Per Share (b-c) Diluted Basic Cash Dividends $2.15 $2.49 $1.71 $1.85 $1.35 $2.20 $2.55 $1.75 $1.90 $1.38 Class A Common $0.52 $0.44 $0.40 $0.36 $0.30 Class B Common $0.52 $0.44 $0.40 $0.36 $0.30 NOTE: (cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3)(cid:51)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3)(cid:11)(cid:43)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:86)(cid:12)(cid:3)(cid:47)(cid:87)(cid:71)(cid:17)(cid:3)(cid:3)(cid:11)(cid:179)(cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:180)(cid:12)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:72)(cid:69)(cid:85)(cid:88)(cid:68)(cid:85)(cid:92)(cid:3)(cid:21)(cid:15)(cid:3)(cid:21)(cid:19)(cid:19)(cid:26)(cid:17)(cid:3)(cid:3) (a) In fiscal year 2009, the Company reclassified foreign exchange transaction gains and losses from operating and administrative expenses to a distinct line below operating income. Prior period results have been restated for comparability. (b) Tax benefits included in fiscal year results are as follows: Fiscal year 2008 includes a $18.7 million tax benefit, or $0.32 per diluted share, associated with new tax legislation enacted in the United Kingdom and Germany that reduced the corporate income tax rates from 30% to 28% and from 39% to 29%, respectively. The benefits recognized by the Company reflect the adjustments required to record all U.K. and Germany-related deferred tax balances at the new corporate income tax rates. Fiscal year 2007 includes a $5.5 million tax benefit, or $0.09 per diluted share. This benefit coincides with the resolution and settlements of certain tax matters with authorities in the U.S. and abroad. Fiscal year 2006 includes a net tax benefit of $6.8 million, or $0.11 per diluted share, related to the favorable resolution of certain matters with tax authorities. In the fourth quarter of fiscal year 2005, the Company elected to repatriate approximately $94 million of dividends from its European subsidiaries under the American Jobs Creation Act of 2004. The law provided for a favorable one-time tax rate on dividends from foreign subsidiaries. The tax accrued on the dividend in the fourth quarter of fiscal year 2005 was approximately $7.5 million, or $0.12 per diluted share. Pursuant to guidance issued by the Internal Revenue Service in May 2005, the Company recorded a tax benefit in the first quarter of fiscal year 2006 reversing the accrued tax recorded in the previous year. Neither the first quarter fiscal year 2006 tax benefit nor the corresponding fourth quarter fiscal year 2005 tax accrual had a cash impact on the Company. (c) (d) Effective May 1, 2006, the Company adopted SFAS 123R which required that companies recognize share-based compensation to employees in the Statement of Income based on the fair value of the share-based awards. The adoption of SFAS 123R resulted in the recognition of an incremental share-based compensation expense of $11.3 million ($7.0 million after taxes) or $0.12 per diluted share for the full year ended April 30, 2007. Working capital is reduced or negative as a result of including in current liabilities the deferred revenue related to journal subscriptions for which the cash has been received. The deferred revenue will be recognized into income as the journals are shipped or made available online to the customers over the term of the subscription. -41- Financial Statements and Supplementary Data (cid:48)(cid:36)(cid:49)(cid:36)(cid:42)(cid:40)(cid:48)(cid:40)(cid:49)(cid:55)(cid:182)(cid:54)(cid:3)(cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)(cid:3)(cid:50)(cid:49)(cid:3)(cid:44)(cid:49)(cid:55)(cid:40)(cid:53)(cid:49)(cid:36)(cid:47)(cid:3)(cid:38)(cid:50)(cid:49)(cid:55)(cid:53)(cid:50)(cid:47)(cid:3)(cid:50)(cid:57)(cid:40)(cid:53)(cid:3)(cid:41)(cid:44)(cid:49)(cid:36)(cid:49)(cid:38)(cid:44)(cid:36)(cid:47)(cid:3)(cid:53)(cid:40)(cid:51)(cid:50)(cid:53)(cid:55)(cid:44)(cid:49)(cid:42) To our Shareholders John Wiley and Sons, Inc.: The management of John Wiley and Sons, Inc. and subsidiaries is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control (cid:177) Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under the framework in Internal Control (cid:177) Integrated Framework issued by COSO, our management concluded that our internal control over financial reporting was effective as of April 30, 2009. Changes in Internal Control over Financial Reporting: There were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during fiscal year 2009. The effectiveness of our internal control over financial reporting as of April 30, 2009 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included herein. The Company(cid:182)(cid:86)(cid:3) (cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3) (cid:42)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:51)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:79)(cid:72)(cid:86)(cid:15)(cid:3) (cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)(cid:3) (cid:38)(cid:75)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:86)(cid:15)(cid:3) (cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3) (cid:38)(cid:82)(cid:81)(cid:71)(cid:88)(cid:70)(cid:87)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:40)(cid:87)(cid:75)(cid:76)(cid:70)(cid:86)(cid:3) (cid:51)(cid:82)(cid:79)(cid:76)(cid:70)(cid:92)(cid:3) and the Code of Ethics for Senior Financial Officers are published on our web site at www.wiley.com under the (cid:179)(cid:36)(cid:69)(cid:82)(cid:88)(cid:87)(cid:3)(cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:178)Investor Relations(cid:178)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:42)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:180)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3)(cid:3)(cid:38)(cid:82)(cid:83)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:68)(cid:79)(cid:86)(cid:82)(cid:3)(cid:68)(cid:89)(cid:68)(cid:76)(cid:79)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:73)(cid:85)(cid:72)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:3) to shareholders on request to the Corporate Secretary, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774. /s/ William J. Pesce William J. Pesce President and Chief Executive Officer /s/ Ellis E. Cousens Ellis E. Cousens Executive Vice President and Chief Financial and Operations Officer /s/ Edward J. Melando Edward J. Melando Vice President, Controller and Chief Accounting Officer June 24, 2009 -42- Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders John Wiley & Sons, Inc.: We have audited the accompanying consolidated statements of financial position of John Wiley & Sons, Inc. (cid:11)(cid:87)(cid:75)(cid:72)(cid:3) (cid:179)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:180)(cid:12)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:86)(cid:88)(cid:69)(cid:86)(cid:76)(cid:71)(cid:76)(cid:68)(cid:85)(cid:76)(cid:72)(cid:86)(cid:3) (cid:68)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:36)(cid:83)(cid:85)(cid:76)(cid:79)(cid:3) (cid:22)(cid:19)(cid:15)(cid:3) (cid:21)(cid:19)(cid:19)(cid:28)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:21)(cid:19)(cid:19)(cid:27)(cid:15)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:15)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:85)(cid:72)(cid:75)(cid:72)(cid:81)(cid:86)(cid:76)(cid:89)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:73)(cid:79)(cid:82)(cid:90)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:72)(cid:68)(cid:70)(cid:75)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:75)(cid:85)(cid:72)(cid:72)-year period ended April 30, 2009. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule (as listed in the index to Item 8). These consolidated financial statements and financial statement schedule are the responsibi(cid:79)(cid:76)(cid:87)(cid:92)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:17)(cid:3) (cid:50)(cid:88)(cid:85)(cid:3) responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 consolidated 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, 2009 and 2008, and the results of their operations and their cash flows for each of the years in the three-year period ended April 30, 2009, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (cid:11)(cid:56)(cid:81)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:86)(cid:12)(cid:15)(cid:3)(cid:45)(cid:82)(cid:75)(cid:81)(cid:3)(cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:3)(cid:9)(cid:3)(cid:54)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:36)(cid:83)(cid:85)(cid:76)(cid:79)(cid:3)(cid:22)(cid:19)(cid:15)(cid:3)(cid:21)(cid:19)(cid:19)(cid:28)(cid:15)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3) criteria established in Internal Control (cid:177) Integrated Framework issued by the Committee of Sponsoring (cid:50)(cid:85)(cid:74)(cid:68)(cid:81)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:55)(cid:85)(cid:72)(cid:68)(cid:71)(cid:90)(cid:68)(cid:92)(cid:3) (cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3) (cid:11)(cid:38)(cid:50)(cid:54)(cid:50)(cid:12)(cid:180)(cid:12)(cid:15)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:82)(cid:88)(cid:85)(cid:3) (cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3) (cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:45)(cid:88)(cid:81)(cid:72)(cid:3) (cid:21)4, 2009 expressed an (cid:88)(cid:81)(cid:84)(cid:88)(cid:68)(cid:79)(cid:76)(cid:73)(cid:76)(cid:72)(cid:71)(cid:3)(cid:82)(cid:83)(cid:76)(cid:81)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)eporting. (signed) KPMG LLP New York, New York June 24, 2009 -43- Report of Independent Registered Public Accounting Firm The Board of Directors and Stockholders John Wiley & Sons, Inc.: (cid:58)(cid:72)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:45)(cid:82)(cid:75)(cid:81)(cid:3)(cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:3)(cid:9)(cid:3)(cid:54)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3) financial reporting as of April 30, 2009, based on criteria established in Internal Control (cid:177) Integrated Framework issued by the Committee of Sponsoring (cid:50)(cid:85)(cid:74)(cid:68)(cid:81)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:55)(cid:85)(cid:72)(cid:68)(cid:71)(cid:90)(cid:68)(cid:92)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:11)(cid:38)(cid:50)(cid:54)(cid:50)(cid:12)(cid:17)(cid:3)(cid:45)(cid:82)(cid:75)(cid:81)(cid:3)(cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:3)(cid:9)(cid:3)(cid:54)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:182)(cid:86)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:86)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:73)(cid:82)r maintaining effective internal control over financial reporting and for its assessment of the effectiveness of (cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:38)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3) Over Financial Reporting. Our r(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:86)(cid:76)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3) (cid:76)(cid:86)(cid:3) (cid:87)(cid:82)(cid:3) (cid:72)(cid:91)(cid:83)(cid:85)(cid:72)(cid:86)(cid:86)(cid:3) (cid:68)(cid:81)(cid:3) (cid:82)(cid:83)(cid:76)(cid:81)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3) (cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3) (cid:82)(cid:89)(cid:72)(cid:85)(cid:3) financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. (cid:36)(cid:3) (cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3) (cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3) (cid:82)(cid:89)(cid:72)(cid:85)(cid:3) (cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:76)(cid:86)(cid:3) (cid:68)(cid:3) (cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:86)(cid:86)(cid:3) (cid:71)(cid:72)(cid:86)(cid:76)(cid:74)(cid:81)(cid:72)(cid:71)(cid:3) (cid:87)(cid:82)(cid:3) (cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:3) (cid:85)(cid:72)(cid:68)(cid:86)(cid:82)(cid:81)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3) (cid:68)(cid:86)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) regarding the reliability of financial reporting and the preparation of financial statements for external purposes in (cid:68)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:74)(cid:72)(cid:81)(cid:72)(cid:85)(cid:68)(cid:79)(cid:79)(cid:92)(cid:3)(cid:68)(cid:70)(cid:70)(cid:72)(cid:83)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:83)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:79)(cid:72)(cid:86)(cid:17)(cid:3)(cid:36)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or (cid:71)(cid:76)(cid:86)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:70)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:68)(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:17) Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, John Wiley & Sons, Inc. maintained, in all material respects, effective internal control over financial reporting as of April 30, 2009, based on criteria established in Internal Control (cid:177) Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of financial position of John Wiley & Sons, Inc. and subsidiaries as of April (cid:22)(cid:19)(cid:15)(cid:3) (cid:21)(cid:19)(cid:19)(cid:28)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:21)(cid:19)(cid:19)(cid:27)(cid:15)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3) (cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3) (cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) comprehensive income, and cash flows for each of the years in the three-year period ended April 30, 2009, and our report dated June 24, 2009 expressed an unqualified opinion on those consolidated financial statements. (signed) KPMG LLP New York, New York June 24, 2009 -44- CONSOLIDATED STATEMENTS OF FINANCIAL POSITION John Wiley & Sons, Inc., and Subsidiaries Dollars in thousands Assets: Current Assets Cash and cash equivalents Accounts receivable Inventories Prepaid and other Total Current Assets Product Development Assets Property, Equipment and Technology Intangible Assets Goodwill Deferred Income Tax Benefits Other Assets Total Assets (cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:29) Current Liabilities Accounts and royalties payable Deferred revenue Accrued income taxes Accrued pension liability Other accrued liabilities Current portion of long-term debt Total Current Liabilities Long-Term Debt Accrued Pension Liability Other Long-Term Liabilities Deferred Income Taxes (cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92) Preferred Stock, $1 par value: Authorized - 2 million, Issued - zero Class A Common Stock, $1 par value: Authorized - 180 million, Issued (cid:177) 69,643,571 and 69,641,921 Class B Common Stock, $1 par value: Authorized - 72 million, Issued (cid:177) 13,546,691 and 13,548,341 Additional paid-in capital Retained earnings Accumulated other comprehensive gain (loss): Foreign currency translation adjustment Unamortized pension and retiree medical Unrealized gain (loss) on interest rate swap $ $ $ April 30 2009 2008 102,828 $ 178,550 111,267 46,924 439,569 89,662 141,196 919,375 589,993 14,065 29,848 2,223,708 $ 160,275 $ 246,584 4,281 2,483 115,844 67,500 596,967 754,900 90,621 91,292 176,412 59,311 212,158 118,209 45,303 434,981 95,126 145,709 1,120,398 708,233 29,136 42,632 2,576,215 189,332 303,231 1,633 2,499 136,867 45,000 678,562 797,318 82,755 100,421 228,041 - - 69,644 69,642 13,547 164,592 892,542 (203,023) (41,978) (13,397) 881,927 13,549 140,723 794,762 53,292 (26,813) (13,831) 1,031,324 (342,206) 689,118 2,576,215 Less Treasury Shares At Cost (Class A (cid:177) 20,907,317 and 20,661,469; Class B (cid:177) 3,902,576 and 3,902,576) (cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92) (cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92) (368,411) 513,516 2,223,708 $ $ The accompanying notes are an integral part of the consolidated financial statements. -45- CONSOLIDATED STATEMENTS OF INCOME John Wiley & Sons, Inc., and Subsidiaries Dollars in thousands, except per share data 2009 For the years ended April 30 2008 2007 Revenue Costs and Expenses Cost of sales Operating and administrative expenses Amortization of intangibles Total Costs and Expenses Operating Income Interest expense Foreign exchange losses Interest income and other, net Net Interest Expense and Other Income Before Taxes Provision for Income Taxes Net Income Income Per Share Diluted Basic Cash Dividends Per Share Class A Common Class B Common Average Shares Diluted Basic $ 1,611,390 $ 1,673,734 $ 1,234,641 516,420 839,648 36,844 1,392,912 218,478 (48,424) (11,759) 6,180 (54,003) 164,475 36,217 532,908 876,635 38,980 1,448,523 392,692 659,793 20,675 1,073,160 225,211 161,481 (66,738) (2,863) 5,918 (63,683) 161,528 13,992 (26,188) (177) 4,386 (21,979) 139,502 39,883 $ $ $ 128,258 $ 147,536 $ 99,619 2.15 $ 2.20 0.52 $ 0.52 2.49 $ 2.55 0.44 $ 0.44 1.71 1.75 0.40 0.40 59,610 58,419 59,323 57,921 58,287 56,932 The accompanying notes are an integral part of the consolidated financial statements. -46- CONSOLIDATED STATEMENTS OF CASH FLOWS John Wiley & Sons, Inc., and Subsidiaries Dollars in thousands For the years ended April 30 2009 2008 2007 Operating Activities Net Income Noncash Items Amortization of intangibles Amortization of composition costs Depreciation of property, equipment and technology Stock-based compensation (net of tax) Excess tax benefits from stock-based compensation Non-cash tax benefits Reserves for returns, doubtful accounts, and obsolescence Deferred income taxes Pension expense Earned royalty advances and other Changes in Operating Assets and Liabilities Increase/(Decrease), excluding acquisitions Accounts receivable Inventories Accounts and royalties payable Deferred revenue Net taxes payable Other accrued liabilities Pension contributions Other Cash Provided by Operating Activities Investing Activities Additions to product development assets Additions to property, equipment and technology Blackwell acquisition, net of cash acquired Acquisition of other publishing businesses, assets and rights Sale of marketable securities Cash Used for Investing Activities Financing Activities Repayment of long-term debt Borrowings of long-term debt Purchase of treasury stock Change in book overdrafts Debt financing costs Cash dividends Proceeds from exercise of stock options and other Excess tax benefit from stock-based compensation Cash (Used for)/Provided by Financing Activities Effects of Exchange Rate Changes on Cash Cash and Cash Equivalents Increase/(Decrease) for year Balance at beginning of year Balance at end of year Cash paid During the Year for Interest Income taxes, net $ 128,258 $ 147,536 $ 99,619 36,844 43,767 35,134 10,625 (5,350) - 13,355 17,141 18,324 38,980 43,613 33,330 17,475 (11,223) (18,663) 6,419 10,784 22,894 76,175 58,100 20,675 38,722 28,926 12,559 (4,455) (5,468) 6,931 3,604 16,710 40,662 (25,937) (47,427) 1,167 (6,696) 8,070 2,430 11,411 (2,657) (21,020) 1,381 341,255 (131,666) (46,009) - (23,960) - (201,635) (618,512) 598,594 (35,110) (20,522) - (30,478) 11,623 5,350 (89,055) (7,048) (10,038) 4,421 37,697 20,311 (10,838) (59,360) (3,876) 280,135 (113,069) (50,315) - (6,802) - (170,186) (1,049,360) 891,476 (3,679) 36,253 - (25,613) 15,190 11,223 (124,510) 2,379 (4,060) (22,465) (15,872) (956) 11,543 (8,338) 1,090 220,594 (76,225) (31,445) (953,197) (19,712) 42,334 (1,038,245) (620,678) 1,458,400 (7,278) 6,754 (8,315) (22,839) 6,462 4,455 816,961 2,437 43,517 59,311 (12,182) 71,493 1,747 69,746 102,828 $ 59,311 $ 71,493 50,108 $ 15,942 $ 69,071 $ 24,679 $ 12,294 40,422 $ $ $ The accompanying notes are an integral part of the consolidated financial statements. -47- CONSOLIDATED STATEMENTS OF (cid:54)(cid:43)(cid:36)(cid:53)(cid:40)(cid:43)(cid:50)(cid:47)(cid:39)(cid:40)(cid:53)(cid:54)(cid:182)(cid:3)(cid:40)(cid:52)(cid:56)(cid:44)(cid:55)(cid:60) AND COMPREHENSIVE INCOME John Wiley & Sons, Inc., and Subsidiaries Dollars in thousands Common Stock Class A Common Stock Class B Additional Paid-in Capital Retained Earnings Treasury Stock Unearned Deferred Comp- ensation Accumulated Other Comp- rehensive Income (Loss) Total Share- (cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:182)(cid:86) Equity Balance at May 1, 2006 $69,035 $14,156 $69,587 $596,474 $(351,569) $(3,512) $7,669 $401,840 Shares Issued Under Employee Benefit Plans Purchase of Treasury Shares Exercise of Stock Options, including taxes Stock-based compensation expense Class A Common Stock Dividends Class B Common Stock Dividends Other Adoption of FASB Statement No. 158, net of a $6,025 tax benefit Comprehensive Income: Net income Foreign currency translation adjustments Unamortized pension and retiree medical, net of a $3,217 tax benefit Unrealized loss on interest rate swap, net of a $1,086 tax benefit Total Comprehensive Income 8,149 5,663 20,126 (18,806) (4,033) 2,976 (7,278) 3,964 353 (353) (3,512) 3,512 99,619 11,125 (7,278) 9,627 20,126 (18,806) (4,033) (8,078) (8,078) 31,484 99,619 31,484 (4,316) (4,316) (1,802) (1,802) 124,985 Balance at April 30, 2007 $69,388 $13,803 $100,013 $673,254 $(351,907) $ - $24,957 $529,508 Shares Issued Under Employee Benefit Plans Purchase of Treasury Shares Exercise of Stock Options, including taxes Stock-based compensation expense Class A Common Stock Dividends Class B Common Stock Dividends Other Adoption of FIN 48, tax liability adjustment Comprehensive Income: Net income Foreign currency translation adjustments Unamortized pension and retiree medical, net of a $ 1,848 tax benefit Unrealized loss on interest rate swap, net of a $7,248 tax benefit $ Total Comprehensive Income 254 (254) (2,665) 15,334 28,041 3,590 (3,679) 9,790 (21,263) (4,350) (415) 147,536 925 (3,679) 25,124 28,041 (21,263) (4,350) (415) 147,536 (3,932) (3,932) 3,652 3,652 (12,029) (12,029) 135,227 Balance at April 30, 2008 $69,642 $13,549 $140,723 $794,762 $(342,206) $- $12,648 $689,118 Shares Issued Under Employee Benefit Plans Purchase of Treasury Shares Exercise of Stock Options, including taxes Stock-based compensation expense Class A Common Stock Dividends Class B Common Stock Dividends Other Comprehensive (Loss): Net income Foreign currency translation adjustments Unamortized pension and retiree medical, net of a $5,553 tax benefit Unrealized gain on interest rate swap, net of a $261 tax provision Total Comprehensive (Loss): (3,325) 10,152 17,042 3,209 (35,110) 5,696 (25,463) (5,015) 128,258 2 (2) (116) (35,110) 15,848 17,042 (25,463) (5,015) (256,314) 128,258 (256,314) (15,165) (15,165) 433 433 (142,788) Balance at April 30, 2009 $69,644 $13,547 $164,592 $892,542 $(368,411) $- $(258,398) $513,516 The accompanying notes are an integral part of the consolidated financial statements. -48- Notes to Consolidated Financial Statements Note 1 (cid:177) Description of Business The Company, founded in 1807, was incorporated in the state of New York on January 15, 1904. (As used (cid:75)(cid:72)(cid:85)(cid:72)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:72)(cid:85)(cid:80)(cid:3)(cid:179)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:180)(cid:3)(cid:80)(cid:72)(cid:68)(cid:81)(cid:86)(cid:3)(cid:45)(cid:82)(cid:75)(cid:81)(cid:3)(cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:3)(cid:9)(cid:3)(cid:54)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:86)(cid:88)(cid:69)(cid:86)(cid:76)(cid:71)(cid:76)(cid:68)(cid:85)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:73)(cid:73)(cid:76)(cid:79)(cid:76)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:76)(cid:72)(cid:86)(cid:15)(cid:3)(cid:88)(cid:81)(cid:79)(cid:72)(cid:86)(cid:86) the context indicates otherwise). The Company is a global publisher of print and electronic products, providing content to customers worldwide. Core businesses include scientific, technical, medical and scholarly journals, encyclopedias, books, online products and services; professional and consumer books, subscription products, training materials, online applications and websites; and educational materials, including integrated online teaching and learning resources, for undergraduate and graduate students, teachers and lifelong learners. The Company has publishing, marketing, and distribution centers in the United States, Canada, Europe, Asia, and Australia. Note 2 - Summary of Significant Accounting Policies Principles of Consolidation: The consolidated financial statements include the accounts of the Company. Investments in entities in which the Company has at least a 20%, but less than a majority interest, are accounted for using the equity method of accounting. Investments in entities in which the Company has less than a 20% ownership and in which it does not exercise significant influence are accounted for using the cost method of accounting. All intercompany accounts and transactions have been eliminated in consolidation. In connect(cid:76)(cid:82)(cid:81)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:76)(cid:81)(cid:87)(cid:72)(cid:74)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:73)(cid:3) (cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3) (cid:51)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3) (cid:11)(cid:43)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:86)(cid:12)(cid:3) (cid:47)(cid:87)(cid:71)(cid:17)(cid:3) (cid:11)(cid:179)(cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:180)(cid:12)(cid:3) (cid:82)(cid:81)(cid:3) (cid:41)(cid:72)(cid:69)(cid:85)(cid:88)(cid:68)(cid:85)(cid:92)(cid:3) (cid:21)(cid:15)(cid:3) (cid:21)(cid:19)(cid:19)(cid:26)(cid:15)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3) (cid:80)(cid:68)(cid:71)(cid:72)(cid:3) (cid:89)(cid:68)(cid:85)(cid:76)(cid:82)(cid:88)(cid:86)(cid:3) (cid:85)(cid:72)(cid:70)(cid:79)(cid:68)(cid:86)(cid:86)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:81)(cid:71)(cid:72)(cid:81)(cid:86)(cid:72)(cid:71)(cid:3) Consolidated Statements of Income which mainly consisted of a realignment of the reporting of journal distribution and composition costs from cost of sales to operating and administrative costs. Additional reclassification of these costs resulted in reductions of cost of sales of $3.9 million and $0.9 million, for the fiscal years ended April 30, 2008 and 2007 respectively, with corresponding increases to operating and administrative costs for those periods. In addition, the Company reclassified foreign exchange transaction gains and losses from operating and administrative costs to a distinct line on the Consolidated Statements of Income below operating income. Bank Overdrafts: (cid:56)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:70)(cid:68)(cid:86)(cid:75)(cid:3) (cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:86)(cid:92)(cid:86)(cid:87)(cid:72)(cid:80)(cid:15)(cid:3) (cid:68)(cid:3) (cid:69)(cid:82)(cid:82)(cid:78)(cid:3) (cid:82)(cid:89)(cid:72)(cid:85)(cid:71)(cid:85)(cid:68)(cid:73)(cid:87)(cid:3) (cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:72)(cid:91)(cid:76)(cid:86)(cid:87)(cid:86)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:83)(cid:85)(cid:76)(cid:80)(cid:68)(cid:85)(cid:92)(cid:3) (cid:71)(cid:76)(cid:86)(cid:69)(cid:88)(cid:85)(cid:86)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)(cid:17) This overdraft represents uncleared checks in excess of cash balances in individual (cid:69)(cid:68)(cid:81)(cid:78)(cid:3) (cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)(cid:17)(cid:3) (cid:55)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:73)(cid:88)(cid:81)(cid:71)(cid:86)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) (cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:73)(cid:72)(cid:85)(cid:85)(cid:72)(cid:71)(cid:3) (cid:73)(cid:85)(cid:82)(cid:80)(cid:3) other existing bank account balances or from lines of credit as needed to fund checks presented for payment. As of April 30, 2009 and April 30, 2008, book overdrafts of $31.5 million and $52.0 million, respectively, were included in Accounts and Royalties payable. Use of Estimates: (cid:55)(cid:75)(cid:72)(cid:3) (cid:83)(cid:85)(cid:72)(cid:83)(cid:68)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3) (cid:76)(cid:81)(cid:3) (cid:70)(cid:82)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:76)(cid:87)(cid:92)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) principles generally accepted in the United States 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 revenue and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition: (cid:44)(cid:81)(cid:3) (cid:68)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:54)(cid:40)(cid:38)(cid:3) (cid:54)(cid:87)(cid:68)(cid:73)(cid:73)(cid:3) (cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:37)(cid:88)(cid:79)(cid:79)(cid:72)(cid:87)(cid:76)(cid:81)(cid:3) (cid:49)(cid:82)(cid:17)(cid:3) (cid:20)(cid:19)(cid:23)(cid:15)(cid:3) (cid:179)(cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3) (cid:53)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:76)(cid:81)(cid:3) (cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:15)(cid:180)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)ompany recognizes revenue when the following criteria are met: persuasive evidence that an arrangement exists; delivery has occurred or services have been rendered; the price to the customer is fixed or determinable; and collectability is reasonably assured. If all of the above criteria have been -49- met, revenue is principally recognized upon shipment of products or when services have been rendered. Subscription revenue is generally collected in advance. The prepayment is deferred and recognized as earned when the related issue is shipped or made available online over the term of the subscription. Where a product has been sold with multiple deliverables the Company follows EITF No. 00-(cid:21)(cid:20)(cid:3) (cid:179)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:53)(cid:72)(cid:89)(cid:72)(cid:81)(cid:88)(cid:72)(cid:3) (cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:75)(cid:76)(cid:83)(cid:86)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:48)(cid:88)(cid:79)(cid:87)(cid:76)(cid:83)(cid:79)(cid:72)(cid:3) (cid:39)(cid:72)(cid:79)(cid:76)(cid:89)(cid:72)(cid:85)(cid:68)(cid:69)(cid:79)(cid:72)(cid:86)(cid:180)(cid:3) (cid:87)(cid:82)(cid:3) (cid:71)etermine the timing of revenue recognition. Collectability is (cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3) (cid:82)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3) (cid:76)(cid:81)(cid:89)(cid:82)(cid:79)(cid:89)(cid:72)(cid:71)(cid:15)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3) (cid:75)(cid:76)(cid:86)(cid:87)(cid:82)(cid:85)(cid:92)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:15)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:86)(cid:87)(cid:68)(cid:87)(cid:88)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:182)(cid:86)(cid:3) account with the Company. Revenue is reported net of any amounts billed to customers for taxes which are remitted to government authorities. Cash Equivalents: Cash equivalents consist of highly liquid investments with an original maturity of three months or less and are stated at cost plus accrued interest, which approximates market value. Allowance for Doubtful Accounts: The estimated allowance for doubtful accounts is based on a review of the aging of the accounts receivable balances, the historical write-off experience, and a credit evaluation of a customer. A change in the evaluation (cid:82)(cid:73)(cid:3) (cid:68)(cid:3) (cid:70)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:182)(cid:86)(cid:3) (cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3) (cid:70)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3) (cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:68)(cid:79)(cid:79)(cid:82)(cid:90)(cid:68)(cid:81)(cid:70)(cid:72)(cid:17)(cid:3) (cid:55)(cid:75)(cid:72)(cid:3) allowance for doubtful accounts is shown as a reduction of accounts receivable in the Consolidated Statement of Financial Position and amounted to $5.7 million and $8.0 million at April 30, 2009 and 2008, respectively. Sales Return Reserves: The process which the Company uses to determine its sales returns and the related reserve provision charged against revenue is based on applying an estimated return rate to current year sales. This rate is based upon an analysis of actual historical return experience in the various markets and geographic regions in which the Company does business. The Company collects, maintains and analyzes significant amounts of sales returns data for large volumes of homogeneous transactions. This allows the Company to make reasonable estimates of the amount of future returns. All available data is utilized to identify the returns by market and as to which fiscal year the sales returns apply. This enables management to track the returns in detail and identify and react to trends occurring in the marketplace, with the objective of being able to make the most informed judgments possible in setting reserve rates. Sales return reserves, net of estimated inventory and royalty costs, are reported as a reduction of accounts receivable in the Consolidated Statement of Financial Position and amounted to $55.2 million and $55.5 million at April 30, 2009 and 2008, respectively. Reserve for Inventory Obsolescence: A reserve for inventory obsolescence is estimated based on a review of damaged, obsolete, or otherwise unsalable inventory. The review encompasses historical unit sales trends by title; current market conditions, including estimates of customer demand; and publication revision cycles. The inventory obsolescence reserve is reported as a reduction of the inventory balance in the Consolidated Statement of Financial Position and amounted to $36.3 million and $35.4 million as of April 30, 2009 and 2008, respectively. Allocation of Acquisition Purchase Price to Assets Acquired and Liabilities Assumed: In connection with acquisitions, the Company allocates the cost of the acquisition to the assets acquired and the liabilities assumed based on estimates of the fair value of such items, including goodwill and other intangible assets. Such estimates include discounted estimated cash flows to be generated by those assets and the expected useful lives based on historical experience, current market trends, and synergies to be achieved from the acquisition and expected tax basis of assets acquired. For major acquisitions, the Company may use an independent appraiser to confirm the reasonableness of such estimates. Inventories: Inventories are stated at cost or market, whichever is lower. U.S. book inventories aggregating $73.6 million and $73.9 million at April 30, 2009 and 2008, respectively, are valued using the last-in, first-out (LIFO) method. All other inventories are valued using the first-in, first-out (FIFO) method. -50- Product Development Assets: Product development assets consist of composition costs and royalty advances to authors. Costs associated with developing any publication are expensed until the product is determined to be commercially viable. Composition costs, primarily representing the costs incurred to bring an edited commercial manuscript to publication including typesetting, proofreading, design and illustration, etc., are capitalized and generally amortized on a double-declining basis over estimated useful lives, ranging from 1 to 3 years. Royalty advances to authors are capitalized and, upon publication, are recovered as royalties earned by the authors based on sales of the published works. Royalty advances are reviewed for recoverability and a reserve for loss is maintained, if appropriate. Advertising Expense: Advertising costs are expensed as incurred. The Company incurred $28.6 million, $34.1 million and $39.8 million in advertising costs in fiscal years 2009, 2008 and 2007, respectively. Property, Equipment and Technology: Property, equipment and technology is recorded at cost. Major renewals and improvements are capitalized, while maintenance and repairs are expensed as incurred. Costs incurred for computer software developed or obtained for internal use are capitalized during the application development stage and expensed as incurred during the preliminary project and post- implementation stages. Costs incurred during the application development stage include costs of materials and services, and payroll and payroll-related costs for employees who are directly associated with the software project. Such costs are amortized over the expected useful life of the related software generally 3 to 5 years. Maintenance, training, and upgrade costs that do not result in additional functionality are expensed as incurred. Buildings, leasehold improvements, and capital leases are depreciated over the lesser of the estimated useful lives of the assets up to 40 years, or over the duration of the lease, using the straight-line method. Furniture and fixtures are depreciated principally on the straight-line method over estimated useful lives ranging from 3 to 10 years. Computer hardware and software is amortized on a straight-line basis over estimated useful lives ranging from 3 to 5 years. Goodwill and Other Intangible Assets: Goodwill is the excess of the purchase price paid over the fair value of the net assets of the business acquired. Other intangible assets principally consist of brands, trademarks, acquired publication rights, customer relationships and non-compete agreements. Goodwill and indefinite-lived intangible assets are not amortized but are reviewed at least annually for impairment, or more often if events or circumstances occur that would more likely than not reduce the fair market value of a reporting unit, or intangible (cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:15)(cid:3)(cid:69)(cid:72)(cid:79)(cid:82)(cid:90)(cid:3)(cid:76)(cid:87)(cid:86)(cid:182)(cid:3)(cid:70)(cid:68)(cid:85)(cid:85)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:17)(cid:3)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:89)(cid:72)(cid:85)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:81)(cid:71)(cid:72)(cid:73)(cid:76)(cid:81)(cid:76)(cid:87)(cid:72)-lived intangible assets by comparing the fair value of the intangible asset to the carrying value. For goodwill impairment, the Company uses a two-step impairment test approach at the reporting unit level. In the first step, the fair value for the reporting unit is compared to its book value including goodwill. In the case that the fair value of the reporting unit is less than the book value, a second step is performed which compares the implied fair value of the (cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:88)(cid:81)(cid:76)(cid:87)(cid:182)(cid:86)(cid:3)(cid:74)(cid:82)(cid:82)(cid:71)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:69)(cid:82)(cid:82)(cid:78)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:74)(cid:82)(cid:82)(cid:71)(cid:90)(cid:76)(cid:79)(cid:79)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:73)(cid:68)(cid:76)(cid:85)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:74)(cid:82)(cid:82)(cid:71)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:76)(cid:86)(cid:3)(cid:71)(cid:72)(cid:87)(cid:72)(cid:85)(cid:80)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3) the difference between the fair values of the reporting units and the net carrying values of the identifiable assets and liabilities of such reporting units. If the fair value of the goodwill is less than the book value, the difference is recognized as impairment. Finite-lived intangible assets are amortized over their useful lives and management evaluates the estimated life in accordance with SFAS 142 (cid:179)(cid:42)(cid:82)(cid:82)(cid:71)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3) (cid:44)(cid:81)(cid:87)(cid:68)(cid:81)(cid:74)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3) (cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:180). The most significant factors in determining the life of these intangibles is the history and longevity of the brands, trademarks or titles acquired, combined with the strength of cash flows. Acquired publishing rights that have an indefinite life are typically characterized by intellectual property with a long and well-established revenue stream resulting from strong and well-established imprint/brand recognition in the market. -51- Acquired publication rights, trademarks, customer relationships and brands with finite lives are amortized on a straight-line basis over periods ranging from 5 to 40 years. Non-compete agreements are amortized over the terms of the individual agreement. Impairment of Long-Lived Assets: Depreciable and amortizable assets are only evaluated for impairment upon a significant change in the operating or macroeconomic environment. In these circumstances, if an evaluation of the undiscounted cash flows indicates impairment, the asset is written down to its estimated fair value based on the discounted future cash flows. Derivative Financial Instruments: The Company, from time to time, enters into forward exchange and interest rate swap contracts as a hedge against foreign currency asset and liability commitments, and anticipated transaction exposures, including intercompany purchases. The Company accounts for its derivative instruments (cid:76)(cid:81)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:54)(cid:41)(cid:36)(cid:54)(cid:3)(cid:49)(cid:82)(cid:17)(cid:3)(cid:20)(cid:22)(cid:22)(cid:15)(cid:3)(cid:179)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:39)(cid:72)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:44)(cid:81)(cid:86)(cid:87)(cid:85)(cid:88)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:43)(cid:72)(cid:71)(cid:74)(cid:76)(cid:81)(cid:74)(cid:3)(cid:36)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:15)(cid:180)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:80)(cid:72)(cid:81)(cid:71)(cid:72)(cid:71)(cid:17)(cid:3) Accordingly, all derivatives are recognized as assets or liabilities and measured at fair value. Derivatives that are not determined to be effective hedges are adjusted to fair value with a corresponding effect on earnings. The Company does not use financial instruments for trading or speculative purposes. Foreign Currency Gains/Losses: The Company translates the results of operations of its international subsidiaries using average monthly exchange rates during each period. The Statement of financial position of non-U.S. business units are translated into U.S. dollars using period-end exchange rates for assets and liabilities and weighted-average exchange rates for revenues and expenses. Adjustments resulting from translating net assets are reported as a separate component of accumulated other comprehensive loss within (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3) (cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3) (cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:70)(cid:92)(cid:3) (cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:68)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)ment. The Company has significant investments in non-US businesses that are exposed to foreign currency risk. During fiscal year 2009 the Company recorded $256.3 million of currency translation adjustments in other comprehensive income primarily as a result of the strengthening of the U.S. dollar relative to the British pound sterling. The U.S. dollar to British pound sterling exchange rate was 1.45 to 1.00 as of April 30, 2009 compared to 1.99 to 1.00 as of April 30, 2008, approximately a 27% increase. Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains or losses in the income statement as incurred. Effective November 1, 2008, the Company changed its functional currency reporting basis for the non-Blackwell (cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:40)(cid:88)(cid:85)(cid:82)(cid:83)(cid:72)(cid:68)(cid:81)(cid:3)(cid:54)(cid:55)(cid:48)(cid:54)(cid:3)(cid:77)(cid:82)(cid:88)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:39)(cid:82)(cid:79)(cid:79)(cid:68)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:79)(cid:82)(cid:70)(cid:68)(cid:79)(cid:3)(cid:73)(cid:88)(cid:81)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:70)(cid:92)(cid:17)(cid:3)(cid:36)(cid:86)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:3) of the integration of Blackwell and Wiley fulfillment systems and licensing practices, in the third quarter of fiscal year 2009 the Company began pricing journal revenue based on local currency in Europe. Prior to the integration, journal revenue was principally priced and reported in U.S. Dollars. This change primarily impacted business denominated in Euros and Sterling. Share-Based Compensation: The Company accounts for its share-based compensation in accordance with (cid:54)(cid:41)(cid:36)(cid:54)(cid:3)(cid:49)(cid:82)(cid:17)(cid:3)(cid:20)(cid:21)(cid:22)(cid:53)(cid:3)(cid:179)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)-(cid:37)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:51)(cid:68)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)(cid:180)(cid:15)(cid:3)(cid:68)(cid:86)(cid:3)(cid:68)(cid:80)(cid:72)(cid:81)(cid:71)(cid:72)(cid:71), which requires that companies recognize share-based compensation to employees in the Statement of Income based on the fair value of the share-based awards, reduced by the estimated cost of anticipated forfeited awards. As such, share-based compensation expense is only recognized for those awards that are expected to ultimately vest. Share-based compensation expense (cid:68)(cid:86)(cid:86)(cid:82)(cid:70)(cid:76)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:85)(cid:72)(cid:86)(cid:87)(cid:85)(cid:76)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:68)(cid:90)(cid:68)(cid:85)(cid:71)(cid:86)(cid:3)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:69)(cid:72)(cid:86)(cid:87)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3) the achievement of the performance goals specified in such awards and the estimated number of shares that will be earned. The cumulative effect on current and prior periods of a change in the estimated number of performance share awards, or estimated forfeiture rate is recognized as an adjustment to earnings in the period of the revision. -52- Recently Issued Accounting Pronouncements: (cid:44)(cid:81)(cid:3)(cid:54)(cid:72)(cid:83)(cid:87)(cid:72)(cid:80)(cid:69)(cid:72)(cid:85)(cid:3)(cid:21)(cid:19)(cid:19)(cid:25)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:41)(cid:36)(cid:54)(cid:37)(cid:3)(cid:76)(cid:86)(cid:86)(cid:88)(cid:72)(cid:71)(cid:3)(cid:54)(cid:41)(cid:36)(cid:54)(cid:3)(cid:49)(cid:82)(cid:17)(cid:3)(cid:20)(cid:24)(cid:26)(cid:3)(cid:179)(cid:41)(cid:68)(cid:76)(cid:85)(cid:3)(cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3) (cid:48)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:180)(cid:3)(cid:11)(cid:179)(cid:54)(cid:41)(cid:36)(cid:54)(cid:3)(cid:20)(cid:24)(cid:26)(cid:180)(cid:12)(cid:17)(cid:3)(cid:44)(cid:81)(cid:3)(cid:41)(cid:72)(cid:69)(cid:85)(cid:88)(cid:68)(cid:85)(cid:92)(cid:3)(cid:21)(cid:19)(cid:19)(cid:27)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:41)(cid:36)(cid:54)(cid:37)(cid:3)(cid:76)(cid:86)(cid:86)(cid:88)(cid:72)(cid:71)(cid:3)(cid:68)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:76)(cid:68)(cid:79)(cid:3)(cid:71)(cid:72)(cid:73)(cid:72)(cid:85)(cid:85)(cid:68)(cid:79)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3) date. SFAS 157 provides a new single authoritative definition of fair value and provides enhanced guidance for measuring the fair value of assets and liabilities and requires additional disclosures related to the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. As part of the deferral, the FASB agreed to a one-year delay of the fair value measurement requirement for certain nonfinancial assets and liabilities. The Company adopted SFAS 157 as of May 1, 2008 for assets and liabilities not subject to the deferral (see Note 18). The adoption did (cid:81)(cid:82)(cid:87)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:68)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:71)(cid:82)(cid:83)(cid:87)(cid:3) SFAS 157 as of May 1, 2009 for those nonfinancial assets and liabilities subject to the deferral. The major categories of assets that the Company held in fiscal year 2009 for which application of SFAS 157 has been deferred are Goodwill and Other Intangible Assets and Long-lived Assets. The Company currently holds no liabilities that are measured at fair value which were subject to the deferral. The Company does not expect the deferred portion of SFAS 157 to have a significant impact on its consolidated financial statements. (cid:44)(cid:81)(cid:3) (cid:41)(cid:72)(cid:69)(cid:85)(cid:88)(cid:68)(cid:85)(cid:92)(cid:3) (cid:21)(cid:19)(cid:19)(cid:26)(cid:15)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:41)(cid:36)(cid:54)(cid:37)(cid:3) (cid:76)(cid:86)(cid:86)(cid:88)(cid:72)(cid:71)(cid:3) (cid:54)(cid:41)(cid:36)(cid:54)(cid:3) (cid:49)(cid:82)(cid:17)(cid:3) (cid:20)(cid:24)(cid:28)(cid:3) (cid:179)(cid:55)(cid:75)(cid:72)(cid:3) (cid:41)(cid:68)(cid:76)(cid:85)(cid:3) (cid:57)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3) (cid:50)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:47)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:180)(cid:3)(cid:11)(cid:179)(cid:54)(cid:41)(cid:36)(cid:54)(cid:3)(cid:20)(cid:24)(cid:28)(cid:180)(cid:12)(cid:17)(cid:3)(cid:54)(cid:41)(cid:36)(cid:54)(cid:3)(cid:20)(cid:24)(cid:28)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:86)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:76)(cid:72)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:68)(cid:81)(cid:3)(cid:82)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:76)(cid:85)(cid:85)(cid:72)(cid:89)(cid:82)(cid:70)(cid:68)(cid:69)(cid:79)(cid:92)(cid:3)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3) financial assets and financial liabilities at fair value on an instrument-by-instrument basis with the resulting (cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3) (cid:76)(cid:81)(cid:3) (cid:73)(cid:68)(cid:76)(cid:85)(cid:3) (cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3) (cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:72)(cid:71)(cid:3) (cid:76)(cid:81)(cid:3) (cid:72)(cid:68)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:86)(cid:17)(cid:3) (cid:55)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:68)(cid:71)(cid:82)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:73)(cid:3) (cid:54)(cid:41)(cid:36)(cid:54)(cid:3) (cid:20)(cid:24)(cid:28)(cid:3) (cid:68)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:48)(cid:68)(cid:92)(cid:3) (cid:20)(cid:15)(cid:3) (cid:21)(cid:19)(cid:19)(cid:27)(cid:3) (cid:71)(cid:76)(cid:71)(cid:3) (cid:81)(cid:82)(cid:87)(cid:3) have a significant impact on its consolidated financial statements since the Company did not apply the fair value option of SFAS 159 to any of its existing assets and liabilities. In December 2007, the FASB issued SFAS No. (cid:20)(cid:23)(cid:20)(cid:53)(cid:15)(cid:3) (cid:179)(cid:37)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3) (cid:38)(cid:82)(cid:80)(cid:69)(cid:76)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:180)(cid:3) (cid:11)(cid:179)(cid:54)(cid:41)(cid:36)(cid:54) (cid:20)(cid:23)(cid:20)(cid:53)(cid:180)(cid:12)(cid:17)(cid:3) (cid:54)(cid:41)(cid:36)(cid:54) 141R expands the scope of acquisition accounting to all transactions under which control of a business is obtained. Principally, SFAS 141R requires that contingent consideration be recorded at fair value on the acquisition date and that certain transaction and restructuring costs be expensed. SFAS 141R is effective for acquisitions made on and after May 1, 2009. While the Company is currently assessing the impact of SFAS 141R on its consolidated financial statements, the Company expects that upon adoption of SFAS 141R, the application of the new standard is likely to have a significant impact on how the Company allocates the purchase price of any future acquired businesses. In April 2008, the FASB issued FASB Staff Position No. FSP SFAS 142-(cid:22)(cid:3)(cid:179)(cid:39)(cid:72)(cid:87)(cid:72)(cid:85)(cid:80)(cid:76)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:86)(cid:72)(cid:73)(cid:88)(cid:79)(cid:3)(cid:47)(cid:76)(cid:73)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3) (cid:44)(cid:81)(cid:87)(cid:68)(cid:81)(cid:74)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3) (cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:180)(cid:3) (cid:11)(cid:179)(cid:54)(cid:41)(cid:36)(cid:54)(cid:3) 142-(cid:22)(cid:180)(cid:12)(cid:17)(cid:3) (cid:54)(cid:41)(cid:36)(cid:54)(cid:3) (cid:20)(cid:23)(cid:21)-3 amends the factors that must be considered in developing renewal or extension assumptions used to determine the useful life over which to amortize the cost of a (cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:87)(cid:68)(cid:81)(cid:74)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:41)(cid:36)(cid:54)(cid:37)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:49)(cid:82)(cid:17)(cid:3)(cid:20)(cid:23)(cid:21)(cid:15)(cid:3)(cid:179)(cid:42)(cid:82)(cid:82)(cid:71)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:44)(cid:81)(cid:87)(cid:68)(cid:81)(cid:74)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:36)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:17)(cid:180)(cid:3)(cid:54)(cid:41)(cid:36)(cid:54)(cid:3)(cid:20)(cid:23)(cid:21)- 3 requires an entity to consider its own experience with the renewal or extension of the terms of a contractual arrangement, consistent with its expected use of the asset. SFAS 142-3 also requires several incremental disclosures for renewable intangible assets. The Company is required to adopt SFAS 142-3 as of May 1, 2009. The guidance for determining the useful life of an intangible asset must be applied prospectively to intangible assets acquired after the effective date. The Company does not expect that the application of this new standard will significantly impact the process currently used to determine useful lives of its intangible assets. There have been no other new accounting pronouncements issued that have had, or are expected to have a (cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:17) -53- Note 3 (cid:177) Reconciliation of Weighted Average Shares Outstanding A reconciliation of the shares used in the computation of net income per share for the years ended April 30 follows (in thousands): 2009 2008 2007 Weighted Average Shares Outstanding 58,665 58,193 57,191 Less: Unearned Restricted Shares (246) (272) (259) Shares Used for Basic Income Per Share 58,419 57,921 56,932 Dilutive Effect of Stock Option and Other Stock Awards 1,191 1,402 1,355 Shares Used for Diluted Income Per Share 59,610 59,323 58,287 For the years ended April 30, 2009, 2008, and 2007, options to purchase Class A Common Stock of 2,210,837, 1,591,593 and 2,587,569 shares, respectively, have been excluded from the shares used for diluted income per share as their inclusion would have been antidilutive. In addition, for the years ended April 30, 2009 and 2008, unearned restricted shares of 24,250 and 19,000 have been excluded as their inclusion would have been antidilutive. No unearned restricted shares were excluded for the year ended April 30, 2007. Note 4 (cid:177) Significant Acquisitions Fiscal Year 2009: On June 12, 2008, the Company acquired the publishing rights to a list of business and modern language textbooks and learning materials. The cost of acquisition was principally allocated to acquired publication rights and is being amortized over a 20-year period. Fiscal Year 2008: The Company entered into a contract with Microsoft to develop, publish, and deliver Microsoft Official Academic Curriculum (MOAC) textbooks and e-learning tools to the higher education markets. The Company recorded amounts due under the Microsoft agreement which were primarily allocated to acquired publication rights and are being amortized over the life of the contract. Fiscal Year 2007: Blackwell Acquisition: On February 2, 2007 the Company acquired all the outstanding shares of Blackwell Publishing (Holdings) Ltd. (cid:11)(cid:179)(cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:180)(cid:12)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:7)(cid:20)(cid:17)(cid:20)(cid:3) (cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3) (cid:11)(cid:133)(cid:24)(cid:26)(cid:21)(cid:3) (cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:12)(cid:3) (cid:82)(cid:73)(cid:3) (cid:70)(cid:68)(cid:86)(cid:75)(cid:3) (cid:83)(cid:79)(cid:88)(cid:86)(cid:3) (cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3) (cid:68)(cid:86)(cid:86)(cid:88)(cid:80)(cid:72)(cid:71)(cid:3) (cid:79)(cid:72)(cid:86)(cid:86)(cid:3) (cid:70)(cid:68)(cid:86)(cid:75)(cid:3) (cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:17)(cid:3) (cid:3) (cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3) publishes journals and books for the academic, research and professional markets focused on science, technology, medicine and social sciences and humanities. The Company accounted for the acquisition using (cid:87)(cid:75)(cid:72)(cid:3) (cid:83)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:3) (cid:80)(cid:72)(cid:87)(cid:75)(cid:82)(cid:71)(cid:3) (cid:82)(cid:73)(cid:3) (cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:76)(cid:81)(cid:3) (cid:68)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:54)(cid:41)(cid:36)(cid:54)(cid:3) (cid:49)(cid:82)(cid:17)(cid:3) (cid:20)(cid:23)(cid:20)(cid:15)(cid:3) (cid:179)(cid:37)(cid:88)(cid:86)iness (cid:38)(cid:82)(cid:80)(cid:69)(cid:76)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:180)(cid:3) (cid:11)(cid:179)(cid:54)(cid:41)(cid:36)(cid:54)(cid:3) (cid:20)(cid:23)(cid:20)(cid:180)(cid:12)(cid:17)(cid:3) (cid:3) (cid:55)(cid:75)(cid:72)(cid:3) (cid:83)(cid:88)(cid:85)(cid:70)(cid:75)(cid:68)(cid:86)(cid:72)(cid:3) (cid:83)(cid:85)(cid:76)(cid:70)(cid:72)(cid:3) (cid:90)(cid:68)(cid:86)(cid:3) (cid:68)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:87)(cid:82)(cid:3) (cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:182)(cid:86)(cid:3) (cid:87)(cid:68)(cid:81)(cid:74)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:73)(cid:76)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3) intangible assets and liabilities based on their fair values as of February 2, 2007 as set forth below (in thousands): -54- Current Assets Intangible Assets Goodwill Other Noncurrent Assets Total Assets Acquired Deferred Revenue Other Current Liabilities Noncurrent Deferred Tax Liabilities Other Noncurrent Liabilities Total Liabilities Assumed Net Assets Acquired $ 345,200 830,400 497,400 43,700 $ 1,716,700 $ 172,300 130,900 256,300 36,200 $ 595,700 $ 1,121,000 Included in current assets above is $188.9 million of cash acquired. All valuations and plans related to the integration of the Blackwell acquisition have been finalized along with the final purchase price allocation, as reflected in the above schedule. Unaudited Pro Forma Financial Information The following unaudited pro forma statement of operations information gives effect to the Blackwell acquisition and related financing as if it had occurred at the beginning of fiscal year 2007. The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition and the $1.35 billion Credit Agreement had taken place at the beginning of the period presented nor is it indicative of future financial performance. The pro forma financial information for fiscal year 2007 includes the recurring effect from the amortization of acquired intangible assets and the increase in interest expense associated with the Credit Agreement. Cost savings from future synergies are not reflected in the pro forma financial information. The unaudited pro forma statement of operations information for the year ended April 30, 2007 combines the historical results of Wiley for the year ended April 30, 2007, which includes post-acquisition Blackwell results for the period from February 2, 2007 to April 30, 2007, and the historical results of pre-acquisition Blackwell for the period from April 1, 2006 to December 31, 2006. In thousands, except per share data Revenue Net Income Net Income Per Common Share - Basic Net Income Per Common Share - Diluted For the year ended April 30, 2007 $1,558,887 $108,301 $1.90 $1.86 Goodwill and Acquisition Related Intangible Assets Goodwill resulting from the acquisition of $497.4 million was recorded within the STMS segment as reported in Note 17 of these consolidated financial statements. None of the goodwill is deductible for tax purposes. The -55- acquisition value and weighted average amortization period assigned to each intangible asset class as of February 2, 2007 were as follows: Weighted Average Amortization Period (in years) Cost of Blackwell Acquisition Related Intangible Assets (in thousands) Acquired Publication Rights 37 Trademarks and Trade Names Indefinite Customer Relationships 20 Total $617,800 142,600 70,000 $830,400 The total amortization expense for Blackwell acquisition related intangible assets was $19.3 million, $22.3 million and $5.5 million for the fiscal years ended April 30, 2009, 2008 and 2007, respectively, and is included in (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:179)(cid:36)(cid:80)(cid:82)(cid:85)(cid:87)(cid:76)(cid:93)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:73)(cid:3) I(cid:81)(cid:87)(cid:68)(cid:81)(cid:74)(cid:76)(cid:69)(cid:79)(cid:72)(cid:86)(cid:180)(cid:3) (cid:82)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:38)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:44)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:17)(cid:3) (cid:3) (cid:40)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) future amortization expense related to the acquisition for the next five years is approximately $19.0 million per year. Identifiable intangible assets (cid:177) Acquired publication rights represent the rights to publish current and new editions of journal and book titles. Acquired journal publishing rights are segregated into owned, non-owned and joint owned titles. The right to publish a joint or non-owned journal is determined based upon individual negotiated contractual arrangements, typically with membership organizations referr(cid:72)(cid:71)(cid:3) (cid:87)(cid:82)(cid:3) (cid:68)(cid:86)(cid:3) (cid:179)(cid:54)(cid:82)(cid:70)(cid:76)(cid:72)(cid:87)(cid:76)(cid:72)(cid:86)(cid:180)(cid:3) (cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3) specialize in the particular field or discipline. Owned journal publishing rights of approximately $476.3 million are expected to have an estimated useful life of 40 years. Joint and non-owned journal publishing rights are expected to have estimated useful lives of 40 and 30 years, respectively. Trademarks and trade names are expected to have an indefinite life due to the fact that the Blackwell name will be used by the Company on an ongoing basis, the name is important to the C(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:79)(cid:82)(cid:81)(cid:74)(cid:3)(cid:72)(cid:86)(cid:87)(cid:68)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:71)(cid:17)(cid:3)(cid:3) Customer relationships are expected to have an estimated useful life of approximately 20 years. Book publishing rights are expected to have estimated useful lives of 10 to 15 years. The fair value of intangible assets was based on (cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:86)(cid:86)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:76)(cid:86)(cid:87)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:82)(cid:73) a third party specialist using income approach methodologies. The discount rates used to determine present value of net cashflows ranged from 9.5% to 15%. These discount rates were determined after consideration of (cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:182)(cid:86)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:90)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:85)(cid:72)(cid:87)(cid:88)(cid:85)(cid:81)(cid:3)(cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:73)(cid:76)(cid:70)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3) acquisition. As part of the strategic acquisition plan, the Company planned to reorganize certain functions, cancel certain contractual obligations and close duplicate facilities. The plan encompassed the termination and relocation of certain employees. Estimated costs associated with employee severance and relocation was approximately $7.1 million. These costs were included as a component of net assets acquired. As of April 30, 2009 approximately $6.3 million of the severance costs were paid. Other Significant Fiscal Year 2007 Acquisitions: Excluding the Blackwell acquisition, in fiscal year 2007 the Company acquired certain other businesses, assets and rights for $19.7 million, including acquisition costs plus liabilities assumed. Approximately $14.1 million of brands, trademarks and acquired publishing rights and $6.6 million of goodwill were recorded in the aggregate. -56- The brands, trademarks and acquired publishing rights are being amortized over a weighted average period of approximately 11 years. The acquisitions consist primarily of the following: On July 20, 2006, the Company acquired the assets of a publisher of two medical journals. The cost of acquisition was principally allocated to acquired publication rights and is being amortized over a 15-year period. On October 18, 2006, the Company acquired an on-line provider of travel-related content, technology, and services. The acquisition cost was allocated to goodwill, branded trademarks and the net tangible assets acquired consisting primarily of computer software. The branded trademarks are being amortized over a 10- year period. On January 24, 2007, the Company acquired the assets of a publisher of three advertising based journals. The cost of acquisition was primarily allocated to acquired publication rights and is being amortized over a 10-year period. Note 5 - Marketable Securities The Company accounts for these securities as available-for-(cid:86)(cid:68)(cid:79)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:54)(cid:41)(cid:36)(cid:54)(cid:3)(cid:49)(cid:82)(cid:17)(cid:3)(cid:20)(cid:20)(cid:24)(cid:3)(cid:179)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3)(cid:38)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:44)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:39)(cid:72)(cid:69)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:17)(cid:180)(cid:3)(cid:3)(cid:36)(cid:86)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3)(cid:68)(cid:70)(cid:84)(cid:88)(cid:76)(cid:86)(cid:76)(cid:87)ion on February 2, 2007, the Company acquired $42.3 million in marketable securities which were all sold by the Company during the fourth quarter of fiscal year 2007. There were no securities outstanding as of April 30, 2009 and 2008. Note 6 (cid:177) Inventories Inventories at April 30 were as follows (in thousands): Finished Goods Work-in-Process Paper, Cloth, and Other LIFO Reserve Total Inventories 2009 2008 $97,013 $103,138 9,507 9,002 11,074 8,303 115,522 122,515 (4,255) (4,306) $111,267 $118,209 Note 7 (cid:177) Product Development Assets Product development assets consisted of the following at April 30 (in thousands): Composition Costs Royalty Advances Total 2009 2008 $46,686 $49,054 42,976 46,072 $89,662 $95,126 Composition costs are net of accumulated amortization of $107.6 million and $122.8 million as of April 30, 2009 and 2008, respectively. -57- Note 8 - Property, Equipment and Technology Property, equipment and technology consisted of the following at April 30 (in thousands): 2009 2008 Land and Land Improvements $3,860 $5,105 Buildings and Leasehold Improvements Furniture, Fixtures and Warehouse Equipment 83,618 67,095 96,302 72,763 Computer Hardware and Capitalized Software 259,999 233,682 Accumulated Depreciation Total 414,572 407,852 (273,376) (262,143) $141,196 $145,709 The net book value of capitalized software costs was $45.7 million and $30.4 million as of April 30, 2009 and 2008, respectively. Depreciation expense recognized in 2009, 2008, and 2007 for capitalized software costs was approximately $14.5 million, $11.9 million, and $12.0 million, respectively. Note 9 - Goodwill and Other Intangible Assets The following table summarizes the activity in goodwill by segment (in thousands): STMS P/T Total As of April 30, 2008 Acquisitions and Dispositions Foreign Translation and Other Adjustments As of April 30, 2009 $547,090 161,143 $708,233 $- - $- $(114,672) (3,568) $(118,240) $432,418 157,575 $589,993 Identified intangible assets as of April 30, 2009 and 2008 were as follows (in thousands): 2009 2008 Cost Accumulated Amortization Cost Accumulated Amortization Intangible Assets with Determinable Lives Acquired Publishing Rights $723,702 $(153,917) $834,556 $(121,924) Brands & Trademarks Covenants not to Compete Customer Relationships Intangible Assets with Indefinite Lives Acquired Publishing Rights Brands & Trademarks 16,034 2,240 (4,613) (1,571) 17,209 2,500 (3,436) (1,460) 60,481 (7,585) 70,937 (4,472) 802,457 (167,686) 925,202 (131,292) 120,771 163,833 - - 123,963 - 202,525 - $1,087,061 $(167,686) $1,251,690 $(131,292) The decrease in intangible assets at April 30, 2009 compared to April 30, 2008 is primarily due to foreign exchange. Based on the current amount of intangible assets subject to amortization assuming current exchange -58- rates, the estimated amortization expense for each of the succeeding 5 fiscal years are as follows: 2010 - $31.4 million; 2011 - $30.1 million; 2012 - $29.5 million; 2013 - $27.4 million; and 2014 - $25.9 million. Note 10 - Other Accrued Liabilities Other accrued liabilities as of April 30 consisted of the following (in thousands): Accrued Compensation and Benefits $54,700 $59,046 2009 2008 Accrued Interest Other Accrued Operating Expenses Total Note 11 - Income Taxes 2,524 58,620 7,409 70,412 $115,844 $136,867 The provision for income taxes for the years ending April 30 were as follows (in thousands): Current Provision US (cid:177) Federal International State and Local 2009 2008 2007 $7,795 10,006 1,275 $9,397 $23,684 10,088 9,872 2,386 2,723 Total Current Provision $19,076 $21,871 $36,279 Deferred Provision(Benefit) US (cid:177) Federal International State and Local $7,520 $5,183 $(2,409) 8,619 1,002 (13,414) 6,265 352 (252) Total Deferred Provision $17,141 $(7,879) $3,604 Total Provision $36,217 $13,992 $39,883 International and United States pretax income for the year ended April 30 was as follows (in thousands): International United States Total 2009 2008 2007 $107,013 $122,369 $58,165 57,462 39,159 81,337 $164,475 $161,528 $139,502 (cid:55)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3) (cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3) (cid:87)(cid:68)(cid:91)(cid:3) (cid:85)(cid:68)(cid:87)(cid:72)(cid:3) (cid:68)(cid:86)(cid:3) (cid:68)(cid:3) (cid:83)(cid:72)(cid:85)(cid:70)(cid:72)(cid:81)(cid:87)(cid:68)(cid:74)(cid:72)(cid:3) (cid:82)(cid:73)(cid:3) (cid:83)(cid:85)(cid:72)(cid:87)(cid:68)(cid:91)(cid:3) (cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3) (cid:71)(cid:76)(cid:73)(cid:73)(cid:72)(cid:85)(cid:72)(cid:71)(cid:3) (cid:73)(cid:85)(cid:82)(cid:80)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:56)(cid:17)(cid:54)(cid:17)(cid:3) (cid:73)(cid:72)(cid:71)(cid:72)(cid:85)(cid:68)(cid:79)(cid:3) statutory rate as shown below: 2009 2008 2007 U.S. Federal Statutory Rate 35.0% 35.0% 35.0% State Income Taxes, Net of U.S. Federal Tax Benefit Benefit from Taxes on Non-US Income Deferred Tax Benefit From Statutory Tax Rate Change Other, including Tax Adjustments Effective Income Tax Rate 0.9 (11.2) - (2.7) 22.0% 1.2 (14.2) (11.6) (1.7) 1.1 (3.0) - (4.5) 8.7% 28.6% -59- Tax Adjustments: In fiscal years 2009, 2008 and 2007 the Company reported tax benefits of $3.3 million, $3.9 million and $5.5 million, respectively, related to the favorable resolution of certain federal, state and foreign tax matters. Deferred Tax Benefit from Statutory Tax Rate Change: In fiscal year 2008 the Company recognized tax benefits in the amount of $18.7 million associated with new tax laws enacted in the United Kingdom and Germany that reduced the corporate income tax rate from 30% to 28% and from 39% to 29%, respectively. The benefit recognized by the Company reflected the adjustment to record the U.K. and Germany related deferred tax balances at the new tax rates. (cid:41)(cid:36)(cid:54)(cid:37)(cid:3)(cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:83)(cid:85)(cid:72)(cid:87)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:49)(cid:82)(cid:17)(cid:3)(cid:23)(cid:27)(cid:3)(cid:11)(cid:179)(cid:41)(cid:44)(cid:49)(cid:3)(cid:23)(cid:27)(cid:180)(cid:12)(cid:3)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74) for Uncertainty In Income Taxes: On May 1, 2007, the Company adopted the provisions of FIN 48, an interpretation of FASB Statement No. 109, which prescribes a recognition threshold and measurement attributes for financial statement recognition of income taxes. Upon adoption, the Company recognized a $0.4 million increase to reserves for income taxes, with a corresponding decrease of $0.4 million in retained earnings. As of April 30, 2009 and April 30, 2008, the total amount of unrecognized tax benefits were $30.4 million and $32.4 million, respectively, of which $5.4 million and $4.7 million represented accruals for interest and penalties that were recorded as additional tax expense in (cid:68)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:83)(cid:82)(cid:79)(cid:76)(cid:70)(cid:92)(cid:17)(cid:3) (cid:3) (cid:55)(cid:75)(cid:72)(cid:3) (cid:81)(cid:72)(cid:87)(cid:3) (cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3) (cid:68)(cid:81)d penalties charged to tax expense in fiscal year 2009 and 2008 were $0.7 million and $0.2 million, respectively. As of April 30, 2009 and April 30, 2008(cid:15)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3) (cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3) (cid:82)(cid:73)(cid:3) (cid:88)(cid:81)(cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:71)(cid:3) (cid:87)(cid:68)(cid:91)(cid:3) (cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:86)(cid:3) (cid:87)(cid:75)(cid:68)(cid:87)(cid:15)(cid:3) (cid:76)(cid:73)(cid:3) (cid:85)(cid:72)(cid:70)(cid:82)(cid:74)(cid:81)(cid:76)(cid:93)(cid:72)(cid:71)(cid:15)(cid:3) (cid:90)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3) (cid:85)(cid:72)(cid:71)(cid:88)(cid:70)(cid:72)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72) taxes was approximately $27.8 million and $21.8 million, respectively. The Company does not expect any significant change to the unrecognized tax benefits within the next year. The Company files income tax returns in the U.S. and various states and foreign tax jurisdictions. The (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:80)(cid:68)(cid:77)(cid:82)(cid:85)(cid:3)(cid:87)(cid:68)(cid:91)(cid:76)(cid:81)(cid:74)(cid:3)(cid:77)(cid:88)(cid:85)(cid:76)(cid:86)(cid:71)(cid:76)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:81)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:86)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:81)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:46)(cid:76)(cid:81)(cid:74)(cid:71)(cid:82)(cid:80)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:42)(cid:72)(cid:85)(cid:80)(cid:68)(cid:81)(cid:92)(cid:17)(cid:3)(cid:3)(cid:50)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:42)(cid:72)(cid:85)(cid:80)(cid:68)(cid:81)(cid:3) (cid:86)(cid:88)(cid:69)(cid:86)(cid:76)(cid:71)(cid:76)(cid:68)(cid:85)(cid:76)(cid:72)(cid:86)(cid:15)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3) (cid:76)(cid:86)(cid:3) (cid:81)(cid:82)(cid:3) (cid:79)(cid:82)(cid:81)(cid:74)(cid:72)(cid:85)(cid:3) (cid:86)(cid:88)(cid:69)(cid:77)(cid:72)(cid:70)(cid:87)(cid:3) (cid:87)(cid:82)(cid:3) (cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:3) (cid:87)(cid:68)(cid:91)(cid:3) (cid:72)(cid:91)(cid:68)(cid:80)(cid:76)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3) (cid:69)(cid:92)(cid:3) (cid:87)(cid:68)(cid:91)(cid:3) jurisdictions for years prior to its 2005 fiscal year. With respect to Germany, all years including fiscal year 2003 forward remain subject to an income tax examination. All U.S. federal tax years prior to fiscal year 2004 have been audited by the Internal Revenue Service and closed. The statute of limitations for fiscal year 2004 and fiscal 2005 expired during January 2008 and January 2009 respectively. Various state and foreign tax jurisdictions are in the process of examining tax returns for years ranging from fiscal years 2003 to 2007. A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended April 30 were as follows (in thousands): Balance at the Beginning of Year Additions for Current Year Tax Positions Additions for Prior Year Tax Positions Reductions for Prior Year Tax Positions Cumulative Translation Adjustment Acquisitions Reductions for lapse of statute of limitations 2009 2008 $32,432 $30,406 944 1,550 (3,319) (678) - (561) 524 373 (4,228) - 5,624 (267) Balance at the End of Year $30,368 $32,432 -60- Deferred taxes result from temporary differences in the recognition of revenue and expense for tax and financial reporting purposes. It is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets. The significant components of deferred tax assets and liabilities at April 30 were as follows (in thousands): Net Operating Loss Reserve for Sales Returns and Doubtful Accounts Inventory Accrued Expenses Accrued Employee Compensation Retirement and Post-Employment Benefits Intangible and Fixed Assets Net Deferred Tax Assets (Liabilities) 2009 2008 $1,354 9,551 (6,140) 7,572 27,288 24,412 $1,480 10,081 (6,090) 2,210 22,008 18,795 (229,532) (248,690) $(165,495) $(200,206) The Company intends to continue to reinvest earnings outside the U.S. for the foreseeable future and, therefore, has not recognized U.S. tax expense on non-U.S. earnings. At April 30, 2009, the undistributed earnings of international subsidiaries approximated $203.3 million. The related tax cost, if the earnings were remitted, cannot be reasonably determined. Note 12 - Debt and Available Credit Facilities At April 30, (in thousands): Revolving Credit Facility (cid:177) Due 2012 Term Loan (cid:177) Due 2009 - 2013 Total Debt Less: Current Portion Total Long-Term Debt 2009 2008 $219,400 $191,318 603,000 651,000 822,400 842,318 (67,500) (45,000) $754,900 $797,318 In connection with the Blackwell acquisition, the Company entered into a new Credit Agreement with Bank of America and Royal Bank of Scotland as Co-Lead Arrangers in the aggregate amount of $1.35 billion. The financing was comprised of a six-year Term Loan (Term Loan) in the amount of $675 million and a $675 million five-year revolving credit facility (Revolver) which can be drawn in multiple currencies. The agreement provides financing to complete the acquisition, refinance the existing revolving debt of the Company, as well as meet future seasonal operating cash requirements. The Company has the option of borrowing at the following floating interest rates: (i) at the rate as announced from time to time by Bank of America as its prime rate or (ii) at a rate based on the London Bank Interbank Offered Rate (LIBOR) plus an applicable margin ranging from .37% to (cid:20)(cid:17)(cid:19)(cid:24)(cid:8)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:53)(cid:72)(cid:89)(cid:82)(cid:79)(cid:89)(cid:72)(cid:85)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:17)(cid:23)(cid:24)(cid:8)(cid:3) (cid:87)(cid:82)(cid:3) (cid:20)(cid:17)(cid:21)(cid:24)(cid:8)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:55)(cid:72)(cid:85)(cid:80)(cid:3) (cid:47)(cid:82)(cid:68)(cid:81)(cid:3) (cid:71)(cid:72)(cid:83)(cid:72)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3) (cid:82)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) leverage ratio, as defined. In addition, the Company will pay a facility fee ranging from .08% to .20% on the Revolver depend(cid:76)(cid:81)(cid:74)(cid:3) (cid:82)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:79)(cid:72)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3) (cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:15)(cid:3) (cid:68)(cid:86)(cid:3) (cid:71)(cid:72)(cid:73)(cid:76)(cid:81)(cid:72)(cid:71)(cid:17)(cid:3) (cid:3) (cid:55)(cid:75)(cid:72)(cid:3) (cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:68)(cid:83)(cid:83)(cid:79)(cid:76)(cid:70)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3) margin and facility fee at both April 30, 2009 and 2008 was .63%. The Term loan has quarterly mandatory principle payments ranging from zero to $33.8 million. For the fiscal years ending April 30, 2009 and 2008, these payments were $45.0 million and $22.5 million, respectively. The final amount due at maturity in 2013 is $231.8 million. The Company has the option to request an increase of up to $250 million in the size of the -61- Revolver in minimum amounts of $50 million. The Term Loan matures on February 2, 2013 and the Revolver will terminate on February 2, 2012. Simultaneous with the execution of the new Credit Agreement, the Company terminated all of its previous credit agreements and paid in full amounts outstanding under those agreements by utilizing funds from the new Credit facility. In connection with the early termination of the previous credit agreements, the Company wrote off approximately $0.5 million of unamortized debt origination fees in fiscal year 2007. The credit agreements contain certain restrictive covenants related to Leverage Ratio, Fixed Charge coverage ratio, property, equipment and technology expenditures, and restricted payments, including a limitation for dividends paid and share repurchases. Under the most restrictive covenant, approximately $59 million was available for such restricted payments as of April 30, 2009. The Company and its subsidiaries have other short-term lines of credit aggregating $15 million at various interest rates. No borrowings under the credit lines were outstanding at April 30, 2009 or 2008. (cid:55)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3) (cid:68)(cid:89)(cid:68)(cid:76)(cid:79)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3) (cid:79)(cid:76)(cid:81)(cid:72)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3) (cid:68)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:36)(cid:83)(cid:85)(cid:76)(cid:79)(cid:3) (cid:22)(cid:19)(cid:15)(cid:3) (cid:21)(cid:19)(cid:19)(cid:28)(cid:3) (cid:90)(cid:72)(cid:85)(cid:72)(cid:3) (cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:91)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:79)(cid:92)(cid:3) (cid:7)(cid:20)(cid:17)(cid:22)(cid:3) (cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3) (cid:82)(cid:73)(cid:3) (cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3) approximately $471 million was unused. The weighted average interest rates on long term debt outstanding during fiscal years 2009 and 2008 were 5.02% and 6.01%, respectively. As of April 30, 2009 and 2008, the weighted average interest rates for the long-term debt were 4.11% and 5.74% respectively. Based on estimates of interest rates currently available to the Company for loans with similar terms and maturities, the fair value of amounts outstanding under the Credit Agreement approximate the carrying value. Total debt maturing in each of the next four years are: 2010 (cid:177) $67.5 million; 2011 (cid:177) $90.0 million; 2012 (cid:177) $331.9 million; 2013 (cid:177) $333.0 million. HEDGING ACTIVITY: On February 16, 2007, the Company entered into an interest rate swap agreement, designated as a cash flow (cid:75)(cid:72)(cid:71)(cid:74)(cid:72)(cid:3) (cid:68)(cid:86)(cid:3) (cid:71)(cid:72)(cid:73)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3) (cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3) (cid:54)(cid:41)(cid:36)(cid:54)(cid:3) (cid:49)(cid:82)(cid:17)(cid:3) (cid:20)(cid:22)(cid:22)(cid:15)(cid:3) (cid:179)(cid:36)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:39)(cid:72)(cid:85)(cid:76)(cid:89)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3) (cid:44)(cid:81)(cid:86)(cid:87)(cid:85)(cid:88)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:43)(cid:72)(cid:71)(cid:74)(cid:76)(cid:81)(cid:74)(cid:3) (cid:36)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:180)(cid:17)(cid:3) (cid:3) (cid:55)(cid:75)(cid:72)(cid:3) hedge locked-in a portion of the variable interest due on a portion of the Term Loan. Under the terms of the interest rate swap, the Company pays a fixed rate of 5.076% and receives a variable rate of interest based on three month LIBOR (as defined) from the counter party which is reset every three months for a four-year period ending February 8, 2011. The notional amount of the rate swap was initially $660 million which declined through February 8, 2011, based on the expected amortization of the Term Loan. As of April 30, 2009 and 2008 the notional amount of this rate swap was $400 million and $615 million, respectively. On October 19, 2007, the Company entered into an additional interest rate swap agreement, designated by the Company as a cash flow hedge that locked-in a portion of the variable interest due on the Revolving Credit Facility. Under the terms of this interest rate swap, the Company pays a fixed rate of 4.60% and receives a variable rate of interest based on three month LIBOR (as defined) from the counterpart which is reset every three months for a three-year period ending August 8, 2010. The notional amount of the rate swap is $100 million. (cid:44)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:81)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:81)(cid:82)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:72)(cid:86)(cid:87)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:86)(cid:90)(cid:68)(cid:83)(cid:86)(cid:3)(cid:69)(cid:72)(cid:3)(cid:79)(cid:72)(cid:86)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:55)(cid:72)(cid:85)(cid:80)(cid:3)(cid:47)(cid:82)(cid:68)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3) Revolving Credit Facility outstanding during the life of the derivatives. For the fiscal years ending April 30, 2009 and April 30, 2008, the Company recognized a loss on the interest hedge contracts of approximately $17.4 million and $2.2 million, respectively. All amounts are reflected in interest expense. At April 30, 2009 and 2008, the aggregate fair value of all interest rate swaps is a liability of -62- $28.2 million and $27.1 million, respectively, and is accrued in Other Long Term Liabilities in the Consolidated Statements of Financial Position with a corresponding charge, net of income taxes, in Accumulated Other Comprehensive Income. In the event of a change of control, as defined, the banks have the option to terminate the agreements and require repayment of any amounts outstanding. The fair value of the interest rate swaps is an estimate at a point in time based on the terms of the agreements and the current interest rate environment. The amount that will ultimately be recognized in net income is uncertain and will be impacted by changes in the future interest rate environment. Based on the amount in Accumulated Other Comprehensive Income at April 30, 2009, approximately $12.3 million, net of tax, of unrecognized loss would be reclassified into net income in the next twelve months. Note 13 - Commitments and Contingencies The following schedule shows the composition of rent expense for operating leases (in thousands): 2009 2008 2007 Minimum Rental $37,561 $36,002 $31,142 Less: Sublease Rentals (1,828) (1,624) (1,754) Total $35,733 $34,378 $29,388 Future minimum payments under operating leases were $293.4 million at April 30, 2009. Annual minimum payments under these leases for fiscal years 2010 through 2014 are approximately $37.0 million, $33.8 million, $29.8 million, $27.3 million, and $27.0 million, respectively. Rent expense associated with operating leases that include scheduled rent increases net of tenant incentives, such as rent holidays, are recorded on a straight-line basis over the term of the lease. Future aggregate minimum rentals to be received under non-cancelable subleases were $1.6 million at April 30, 2009. 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. Note 14 - Retirement Plans The Company and its principal subsidiaries have contributory and noncontributory retirement plans that cover substantially all employees. The plans generally provide for employee retirement between the ages of 60 and 65, and benefits based on length of service and compensation, as defined. Effective April 30, 2007, the Company adopted the recognition and disclosure provisions of Statement No. 158 which requires employers to recognize in the Statement of Financial Position the overfunded or underfunded status of defined benefit postretirement plans, measured as the difference between the fair value of plan assets and the projected benefit obligation. The Company recognizes the change in the funded status of the plan in accumulated other comprehensive income. Statement No. 158 also requires plan assets and obligations to be (cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:71)(cid:3)(cid:68)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:86)(cid:75)(cid:72)(cid:72)(cid:87)(cid:3)(cid:71)(cid:68)(cid:87)(cid:72)(cid:17)(cid:3)(cid:3) (cid:55)(cid:75)(cid:72)(cid:3)(cid:68)(cid:71)(cid:82)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:49)(cid:82)(cid:17)(cid:3)(cid:20)(cid:24)(cid:27)(cid:3)(cid:75)(cid:68)(cid:71)(cid:3)(cid:81)(cid:82)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)Consolidated Statement of Income for the year ended April 30, 2009, or for any prior period presented and does not have a material impact to any of the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:71)(cid:72)(cid:69)(cid:87)(cid:3)(cid:70)(cid:82)(cid:89)(cid:72)(cid:81)(cid:68)(cid:81)(cid:87)(cid:86)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:76)(cid:87)(cid:86)(cid:3)(cid:89)(cid:68)(cid:85)(cid:76)(cid:82)(cid:88)(cid:86)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:68)(cid:74)(cid:85)(cid:72)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:17)(cid:3)(cid:3) -63- The amounts in accumulated other comprehensive income that are expected to be recognized as components of net periodic benefit cost during the next fiscal year are as follows (in thousands): Actuarial Loss Prior Service Cost Total Funded Unfunded Total $3,485 453 $79 118 $3,564 571 $3,938 $197 $4,135 The Company has agreements with certain officers and senior management 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. Net pension expense included below for plans outside of the United States amounted to approximately $7.4 million, $13.2 million and $10.2 million for fiscal years 2009, 2008 and 2007, respectively. The components of net pension expense for the defined benefit plans were as follows (in thousands): Service Cost Interest Cost Expected Return on Plan Assets 2009 2008 2007 $13,835 $19,639 $13,210 22,715 22,030 15,408 (21,470) (22,443) (14,850) Net Amortization of Prior Service Cost and Transition Asset 589 608 742 Recognized Net Actuarial Loss Net Pension Expense 2,654 3,060 2,200 $18,323 $22,894 $16,710 The weighted-average assumptions used to determine net pension expense for the years ended April 30 were as follows: Discount Rate Rate of Compensation Increase Expected Return on Plan Assets 2009 2008 2007 6.3% 4.3% 7.4% 5.7% 4.6% 7.6% 5.8% 4.1% 8.2% The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the retirement plans with accumulated benefit obligations in excess of plan assets were $153.8 million, $144.5 million, and $70.5 million, respectively, as of April 30, 2009, and $279.9 million, $256.2 million and $195.8 million, respectively, as of April 30, 2008. -64- The following (cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3) (cid:86)(cid:72)(cid:87)(cid:86)(cid:3) (cid:73)(cid:82)(cid:85)(cid:87)(cid:75)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3) (cid:76)(cid:81)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:86)(cid:87)(cid:68)(cid:87)(cid:88)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:83)(cid:79)(cid:68)(cid:81)(cid:86)(cid:182)(cid:3) (cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:3) (cid:82)(cid:69)(cid:79)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)(cid:3) (cid:3) (cid:55)(cid:75)(cid:72)(cid:3) unfunded plans relate primarily to a non-U.S. subsidiary, which is governed by local statutory requirements, and the domestic supplemental retirement plans for certain officers and senior management personnel. Dollars in thousands CHANGE IN PLAN ASSETS Fair Value of Plan Assets, Beginning of Year Actual Return on Plan Assets Employer Contributions (cid:40)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:86)(cid:182)(cid:3)(cid:38)(cid:82)(cid:81)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86) Benefits Paid Foreign Currency Rate Changes Amendments and Other Fair Value, End of Year CHANGE IN PROJECTED BENEFIT OBLIGATION 2009 2008 Funded Unfunded Funded Unfunded $321,713 (45,032) 18,788 2,157 (8,899) (58,796) - $229,931 $- - 2,229 - (2,229) - - $- $273,346 1,052 57,218 2,891 $- - 2,142 - (10,180) (2,142) (1,211) (1,403) $321,713 - - $- Benefit Obligation, Beginning of Year $(339,526) $(57,521) $(336,457) $(51,041) Service Cost Interest Cost Employee Contributions Actuarial Gain (Loss) Benefits Paid Foreign Currency Rate Changes Amendments and Other Benefit Obligation, End of Year Funded Status Amounts Recognized in the Statement of Financial Position: Deferred Pension Asset Current Pension Liability Noncurrent Pension Liability Net Amount Recognized in Statement of Financial Position AMOUNTS RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE INCOME CONSIST OF (before tax) Net Actuarial Loss Prior Service Cost Total Accumulated Other Comprehensive Loss (Decrease)/Increase in Accumulated other Comprehensive Income WEIGHTED AVERAGE ASSUMPTIONS USED IN DETERMINING ASSETS AND LIABILITIES (11,942) (19,358) (2,157) 32,439 8,899 60,972 (54) $(270,727) $(40,796) $388 - (41,184) $(40,796) $(59,178) (1,849) $(61,027) $(26,314) (1,893) (3,357) - 4,590 2,229 4,032 - $(51,920) $(51,920) $- (2,483) (49,437) $(51,920) $(785) (1,164) $(1,949) $5,596 (17,429) (19,095) (2,891) 23,706 10,180 1,057 1,403 (2,210) (2,935) - (252) 2,142 (3,008) (217) $(339,526) $(57,521) $(17,813) $(57,521) $9,920 - (27,733) $- (2,499) (55,022) $(17,813) $(57,521) $(32,340) (2,373) $(34,713) $(6,017) (1,528) $(7,545) $4,941 $667 Discount Rate Rate of Compensation Increase Accumulated Benefit Obligations 7.2% 4.2% 6.9% 4.0% 6.4% 4.4% 6.1% 4.0% $(244,929) $(45,495) $(306,011) $(49,600) -65- Basis for determining discount rate: The discount rates for the United States and Canadian pension plans were based on the derivation of a single- equivalent discount rate using a standard spot rate curve and the timing of plan liabilities as of April 30, 2009. (cid:55)(cid:75)(cid:72)(cid:3) (cid:86)(cid:83)(cid:82)(cid:87)(cid:3) (cid:85)(cid:68)(cid:87)(cid:72)(cid:3) (cid:70)(cid:88)(cid:85)(cid:89)(cid:72)(cid:3) (cid:88)(cid:86)(cid:72)(cid:71)(cid:3) (cid:76)(cid:86)(cid:3) (cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3) (cid:88)(cid:83)(cid:82)(cid:81)(cid:3) (cid:68)(cid:3) (cid:83)(cid:82)(cid:85)(cid:87)(cid:73)(cid:82)(cid:79)(cid:76)(cid:82)(cid:3) (cid:82)(cid:73)(cid:3) (cid:48)(cid:82)(cid:82)(cid:71)(cid:92)(cid:182)(cid:86)-rated Aa3 (or higher) corporate bonds. The discount rates for the other international plans were based on similar published indices with durations (cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:85)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:72)(cid:68)(cid:70)(cid:75)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:182)(cid:86)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:17) Basis for determining the expected asset return: The expected long-term rates of return were estimated using market benchmarks for equities, real estate, and (cid:69)(cid:82)(cid:81)(cid:71)(cid:86)(cid:3) (cid:68)(cid:83)(cid:83)(cid:79)(cid:76)(cid:72)(cid:71)(cid:3) (cid:87)(cid:82)(cid:3) (cid:72)(cid:68)(cid:70)(cid:75)(cid:3) (cid:83)(cid:79)(cid:68)(cid:81)(cid:182)(cid:86)(cid:3) (cid:87)(cid:68)(cid:85)(cid:74)(cid:72)(cid:87)(cid:3) (cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:3) (cid:68)(cid:79)(cid:79)(cid:82)(cid:70)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3) (cid:3) (cid:40)(cid:91)(cid:83)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3) (cid:85)(cid:72)(cid:87)(cid:88)(cid:85)(cid:81)(cid:86)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) (cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:69)(cid:92)(cid:3) (cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:3) (cid:70)(cid:79)(cid:68)(cid:86)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) represent the sum of expected rates of return plus anticipated inflation. The expected long-term rates are then compared to actual historic investment performance of the plan assets as well as future expectations and evaluated through consultation with investment advisors and actuaries. The table below represents the asset mix of the investment portfolio of the post-retirement benefit plan as of April 30: Percentage of Plan Assets Asset Category 2009 2008 Equities Debt Securities and Cash Real Estate Total 46% 51% 3% 51% 46% 3% 100% 100% The investment guidelines for the defined benefit pension plans are established based upon an evaluation of market conditions and tolerance for risk. The investment objective is to ensure that funds are available to meet (cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:182)(cid:86)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:3)(cid:82)(cid:69)(cid:79)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:90)(cid:75)(cid:72)(cid:81)(cid:3)(cid:87)(cid:75)ey are due. The investment strategy is to invest in high quality diversified securities to achieve our long-(cid:87)(cid:72)(cid:85)(cid:80)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:70)(cid:87)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:86)(cid:182)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:83)(cid:85)(cid:68)(cid:70)(cid:87)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:71)(cid:72)(cid:3)(cid:74)(cid:88)(cid:76)(cid:71)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3) investment managers, including guidelines for asset concentration, credit rating and liquidity. Asset allocation favors a balanced portfolio, with a target allocation of approximately 49% equity securities, 46% fixed income securities and cash, and 5% real estate. Due to volatility in the market, the target allocation is not always desirable and asset allocations will fluctuate between acceptable ranges. Expected employer contributions to the defined benefit pension plans in fiscal year 2010 will be approximately (cid:7)(cid:21)(cid:28)(cid:17)(cid:21)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:7)(cid:26)(cid:17)(cid:25)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:80)(cid:76)(cid:81)(cid:76)(cid:80)(cid:88)(cid:80)(cid:3)(cid:68)(cid:80)(cid:82)(cid:88)(cid:81)(cid:87)(cid:86)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)non-U.S. plans. From time to time, the Company may elect to make voluntary contributions to its defined benefit plans to improve their funded status. Expected benefit payments from all plans are expected to approximate $11.0 million in fiscal year 2010, $11.4 million in fiscal year 2011, $13.0 million in fiscal year 2012, $13.4 million in fiscal year 2013, $15.0 million in fiscal year 2014, and $102.8 million for fiscal years 2015 through 2019. The Company provides contributory life insurance and health care benefits, subject to certain dollar limitations for substantially all of its eligible retired U.S. employees. The cost of such benefits is expensed over the years the employee renders service and is not funded in advance. The accumulated post-retirement benefit obligation -66- recognized in the Statement of Financial Position as of April 30, 2009 and 2008 was $2.8 million and $2.5 million, respectively. Annual expenses for these plans for the fiscal years ending April 30, 2009, 2008 and 2007 were $0.4 million, $0.3 million and $0.3 million, respectively. The Company has defined contribution savings plans. The Company contribution is based on employee contributions and the level of Company match. The expense for these plans amounted to approximately $7.3 million, $6.3 million, and $5.4 million in 2009, 2008, and 2007, respectively. Note 15 (cid:177) Share-Based Compensation All equity compensation plans have been approved by security holders. Under the Key Employee Stock Plan (cid:11)(cid:179)(cid:87)(cid:75)(cid:72)(cid:3) (cid:51)(cid:79)(cid:68)(cid:81)(cid:180)(cid:12)(cid:15)(cid:3) (cid:84)(cid:88)(cid:68)(cid:79)(cid:76)(cid:73)(cid:76)(cid:72)(cid:71)(cid:3) (cid:72)(cid:80)(cid:83)(cid:79)(cid:82)(cid:92)(cid:72)(cid:72)(cid:86)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) (cid:72)(cid:79)(cid:76)(cid:74)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3) (cid:87)(cid:82)(cid:3) (cid:85)(cid:72)(cid:70)(cid:72)(cid:76)(cid:89)(cid:72)(cid:3) (cid:68)(cid:90)(cid:68)(cid:85)(cid:71)(cid:86)(cid:3) (cid:87)(cid:75)(cid:68)(cid:87)(cid:3) (cid:80)(cid:68)(cid:92)(cid:3) (cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:72)(cid:3) (cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3) (cid:82)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3) (cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:81)(cid:70)(cid:72)- based stock awards, and restricted stock awards. Under the Plan, a maximum number of 8,000,000 shares of Company Class A stock may be issued. As of April 30, 2009 there were 2,829,523 securities remaining available for future issuance under the Plan. The Company issues treasury shares to fund stock options and performance-based and restricted stock awards. Stock Option Activity: (cid:56)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:72)(cid:85)(cid:80)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:82)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81), the exercise price of stock options granted may not be less than 100% of the fair market value of the stock at the date of grant. Options are exercisable over a maximum period of 10 years from the date of grant and generally vest 50% on the fourth and fifth anniversary date after the award is granted. Under certain circumstances relating to a change of control, as defined, the right to exercise options outstanding could be accelerated. The following table provides the estimated weighted average fair value, under the Black-Scholes option-pricing model, for each option granted during the periods and the significant weighted average assumptions used in their determination. The expected life represents an estimate of the period of time stock options are outstanding based on the historical exercise behavior of the employees. The risk-free interest rate is based on the corresponding U.S. Treasury yield curve in effect at the time of the grant. Similarly, the volatility is estimated based on the expected volatility over the estimated life, while the dividend yield is based on expected dividend payments to be made by the Company. For the Twelve Months Ending April 30, Expected Life of Options (years) Risk-Free Interest Rate Expected Volatility Expected Dividend Yield Fair Value of Common Stock on Grant Date Per Share Fair Value of Options Granted 2008 7.7 5.1% 27.3% 0.9% $48.46 $18.42 2007 7.8 5.2% 29.1% 1.2% $33.05 $12.65 2009 7.7 3.8% 25.2% 1.1% $47.55 $15.30 -67- (cid:36)(cid:3)(cid:86)(cid:88)(cid:80)(cid:80)(cid:68)(cid:85)(cid:92)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:88)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:82)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:83)(cid:79)(cid:68)(cid:81)(cid:86)(cid:3)(cid:90)(cid:68)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:73)(cid:82)(cid:79)(cid:79)(cid:82)(cid:90)(cid:86)(cid:29) 2009 2008 2007 Weighted Average Exercise Price Options (in (cid:19)(cid:19)(cid:19)(cid:182)(cid:86)(cid:12) Weighted Average Remaining Contractual Term (in years) Average Intrinsic Value (in millions) Weighted Average Exercise Price Weighted Average Exercise Price Options (in (cid:19)(cid:19)(cid:19)(cid:182)(cid:86)(cid:12) Options (in (cid:19)(cid:19)(cid:19)(cid:182)(cid:86)) Stock Options Outstanding at Beginning of Year 5,730 $31.27 Granted Exercised Expired or Forfeited 631 $47.55 (622) $22.02 (17) $34.66 Outstanding at End of Year 5,722 $34.05 Exercisable at End of Year Vested and Expected to Vest in the Future at April 30, 2009 2,937 $27.38 5,645 $34.08 5.5 3.8 5.5 $21.3 $20.3 $20.9 6,216 $27.37 6,084 $25.95 627 $48.46 640 $33.05 (1,001) $17.89 (462) $16.30 (112) $30.45 (46) $30.52 5,730 $31.27 6,216 $27.37 2,657 $24.40 2,801 $21.20 (cid:55)(cid:75)(cid:72)(cid:3)(cid:76)(cid:81)(cid:87)(cid:85)(cid:76)(cid:81)(cid:86)(cid:76)(cid:70)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:71)(cid:76)(cid:73)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:69)(cid:72)(cid:87)(cid:90)(cid:72)(cid:72)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:86)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:83)(cid:85)(cid:76)(cid:70)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:82)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:72)(cid:91)(cid:72)(cid:85)(cid:70)(cid:76)(cid:86)(cid:72)(cid:3)(cid:83)(cid:85)(cid:76)(cid:70)(cid:72)(cid:17)(cid:3) Total intrinsic value of options exercised during the twelve months ended April 30, 2009, 2008 and 2007 were $11.8 million, $25.3 million and $10.0 million, respectively. As of April 30, 2009, there was $12.2 million of unrecognized share-based compensation expense related to stock options, which is expected to be recognized over a period up to 5 years, or 2 years on a weighted average basis. The following table summarizes information about stock options outstanding and exercisable at April 30, 2009: Options Outstanding Options Exercisable Range of Exercise Prices Number of Options (in (cid:19)(cid:19)(cid:19)(cid:182)(cid:86)) Weighted Average Remaining Term (in years) Weighted Average Exercise Price Number of Options (in (cid:19)(cid:19)(cid:19)(cid:182)(cid:86)) Weighted Average Exercise Price $17.25 to $20.54 64 $20.56 to $23.40 374 $23.56 to $25.32 1,547 $31.89 to $38.78 2,482 $47.55 to $48.46 1,255 Total/Average 5,722 2.0 2.1 3.2 6.0 8.7 5.5 $19.33 $23.16 $24.86 $34.75 $48.00 $34.05 Performance-Based and Other Restricted Stock Activity: 64 $19.33 374 $23.16 1,547 $24.86 952 $33.67 - - 2,937 $27.38 Under the terms of (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:79)(cid:82)(cid:81)(cid:74)-term incentive plans, upon the achievement of certain three-year financial performance-(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3) (cid:87)(cid:68)(cid:85)(cid:74)(cid:72)(cid:87)(cid:86)(cid:15)(cid:3) (cid:68)(cid:90)(cid:68)(cid:85)(cid:71)(cid:86)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) (cid:83)(cid:68)(cid:92)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3) (cid:76)(cid:81)(cid:3) (cid:85)(cid:72)(cid:86)(cid:87)(cid:85)(cid:76)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3) (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:38)(cid:79)(cid:68)(cid:86)(cid:86)(cid:3) (cid:36)(cid:3) common stock. During each three-year period the Company adjusts compensation expense based upon its best estimate of expected performance. The restricted performance shares vest 50% on the first and second anniversary date after the award is earned. -68- The Company may also grant individual restricted shares awards of the Compa(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:38)(cid:79)(cid:68)(cid:86)(cid:86)(cid:3)(cid:36)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:87)(cid:82)(cid:3) key employees in connection with their employment. The restricted shares generally vest 50% at the end of the fourth and fifth years 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. Activity for performance-based and other restricted stock awards during the fiscal years ended April 30, 2009, 2008 and 2007 was as follows (shares in thousands): 2009 2008 2007 Restricted Shares Weighted Average Grant Date Value Nonvested Shares at Beginning of Year Granted Change in shares due to performance Vested and Issued Forfeited Nonvested Shares at End of Year 1,096 308 (459) (228) (35) 682 $38.25 $47.55 $47.11 $34.06 $40.01 $37.81 Restricted Shares Restricted Shares 814 609 307 211 (224) (12) 1,096 276 96 (161) (6) 814 As of April 30, 2009, there was $8.9 million of unrecognized share-based compensation cost related to restricted stock awards, which is expected to be recognized over a period up to 5 years, or 3 years on a weighted average basis. Compensation expense for restricted stock awards is computed using the closing market price of the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:38)(cid:79)(cid:68)(cid:86)(cid:86)(cid:3) (cid:36)(cid:3) (cid:38)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3) (cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3) (cid:68)(cid:87)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:71)(cid:68)(cid:87)(cid:72)(cid:3) (cid:82)(cid:73)(cid:3) (cid:74)(cid:85)(cid:68)(cid:81)(cid:87)(cid:17)(cid:3) (cid:3) (cid:55)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3) (cid:74)(cid:85)(cid:68)(cid:81)(cid:87)(cid:3) (cid:71)(cid:68)(cid:87)(cid:72)(cid:3) (cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3) (cid:82)(cid:73)(cid:3) (cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:86)(cid:3) (cid:89)(cid:72)(cid:86)(cid:87)(cid:72)(cid:71)(cid:3) (cid:71)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) fiscal years ended April 30, 2009, 2008 and 2007 was $7.8 million, $6.4 million and $4.1 million, respectively. Director Stock Awards: (cid:56)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:87)(cid:72)(cid:85)(cid:80)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:3) (cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3) (cid:51)(cid:79)(cid:68)(cid:81)(cid:3) (cid:11)(cid:87)(cid:75)(cid:72)(cid:3) (cid:179)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:3) (cid:51)(cid:79)(cid:68)(cid:81)(cid:180)(cid:12)(cid:15)(cid:3) (cid:72)(cid:68)(cid:70)(cid:75)(cid:3) (cid:81)(cid:82)(cid:81)-employee director receives an annual award of Class A Common Stock equal in value to 100% of the annual director fee, based on the stock price on the date of grant. The granted shares may not be sold or transferred during the time the non-employee director remains a director. There were 9,667, 7,680 and 6,642 shares awarded under the Director Plan for the fiscal years ending April 30, 2009, 2008 and 2007, respectively. Note 16 - Capital Stock and Changes in Capital Accounts (cid:40)(cid:68)(cid:70)(cid:75)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:38)(cid:79)(cid:68)(cid:86)(cid:86)(cid:3)(cid:37)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:76)(cid:86)(cid:3)(cid:70)(cid:82)(cid:81)(cid:89)(cid:72)(cid:85)(cid:87)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:76)(cid:81)(cid:87)(cid:82)(cid:3)(cid:82)(cid:81)(cid:72)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:38)(cid:79)(cid:68)(cid:86)(cid:86)(cid:3)(cid:36)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:82)(cid:81)(cid:3)(cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:17)(cid:3) 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. (cid:56)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86) current stock repurchase program, up to four million shares of its Class A Common Stock may be purchased from time to time in the open market and through privately negotiated transactions. During fiscal year 2009, the Company repurchased 1,006,400 shares at an average price of $34.89 per share. As of April 30, 2009, the Company has authorization from its Board of Directors to purchase up to approximately 798,630 additional shares. -69- Note 17 - Segment Information The Company is a global publisher of print and electronic products, providing content and services to customers worldwide. The Company has publishing, marketing and distribution centers principally in Asia, Australia, Canada, Germany, the United Kingdom and the United States. During fiscal year 2008, the Company began developing a global organizational structure encompassing the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:87)(cid:75)(cid:85)(cid:72)(cid:72)(cid:3)(cid:70)(cid:82)(cid:85)(cid:72)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:29)(cid:3)(cid:54)(cid:70)(cid:76)(cid:72)(cid:81)(cid:87)(cid:76)(cid:73)(cid:76)(cid:70)(cid:15)(cid:3)(cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:76)(cid:70)(cid:68)(cid:79)(cid:15)(cid:3)(cid:48)(cid:72)(cid:71)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:54)(cid:70)(cid:75)(cid:82)(cid:79)(cid:68)(cid:85)(cid:79)(cid:92)(cid:30)(cid:3)(cid:51)(cid:85)(cid:82)(cid:73)(cid:72)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:18)(cid:55)(cid:85)(cid:68)(cid:71)(cid:72)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:43)(cid:76)(cid:74)(cid:75)(cid:72)(cid:85)(cid:3) Education. This global organizational structure will enhance th(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:79)(cid:72)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:86)(cid:3) and capabilities around the world to better serve authors, society partners and customers. Previously, the management structure was organized geographically. As of May 1, 2008, the beginning of the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:21)(cid:19)(cid:19)(cid:28)(cid:3) (cid:73)(cid:76)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3) (cid:92)(cid:72)(cid:68)(cid:85)(cid:15)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:73)(cid:3) (cid:68)(cid:79)(cid:79)(cid:3) (cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) financial systems necessary to support a global organization were finalized. As part of this process, the impact on business segment reporting was evaluated and changed to conform to the requirements of SFAS No. 131, (cid:179)(cid:39)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3) (cid:68)(cid:69)(cid:82)(cid:88)(cid:87)(cid:3) (cid:54)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:68)(cid:81)(cid:3) (cid:40)(cid:81)(cid:87)(cid:72)(cid:85)(cid:83)(cid:85)(cid:76)(cid:86)(cid:72)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:53)(cid:72)(cid:79)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:180)(cid:17)(cid:3) (cid:55)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3) (cid:90)(cid:76)(cid:79)(cid:79)(cid:3) (cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:3) (cid:87)(cid:82)(cid:3) (cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3) separate financial data for shared service functions, which are centrally managed for the benefit of the three global businesses, including Distribution, Technology Services, Finance and Other Administration support. The changes in segment reporting will enable investors to view the performance of the Company in the same way as management assesses business performance. The Company reclassified foreign exchange transaction gains and losses from operating and administrative costs to a distinct line on the Condensed Consolidated Statements of Income below operating income. As such, the foreign exchange gains and losses are no longer included in Direct Contribution to Profit in the following (cid:86)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:71)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:17)(cid:3) (cid:36)(cid:79)(cid:79)(cid:3) (cid:83)(cid:85)(cid:76)(cid:82)(cid:85)(cid:3) (cid:92)(cid:72)(cid:68)(cid:85)(cid:3) (cid:86)(cid:72)(cid:74)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:71)(cid:68)(cid:87)(cid:68)(cid:3) (cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:72)(cid:71)(cid:3) (cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3) (cid:75)(cid:68)(cid:86)(cid:3) (cid:69)(cid:72)(cid:72)(cid:81)(cid:3) (cid:85)(cid:72)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:85)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:17)(cid:3)(cid:37)(cid:72)(cid:79)(cid:82)(cid:90)(cid:3)(cid:76)(cid:86)(cid:3)(cid:68)(cid:3)(cid:71)(cid:72)(cid:86)(cid:70)(cid:85)(cid:76)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:87)(cid:75)(cid:85)(cid:72)(cid:72)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74) segments. Scientific, Technical, Medical and Scholarly includes the publishing of titles for the scientific, technical, medical and scholarly communities worldwide including academic, corporate, government and public libraries; researchers; clinicians; engineers and technologists; scholarly and professional societies; students; and professors. Products include journals, encyclopedias, books, databases and laboratory manuals. Publishing areas include life sciences; medicine; the humanities; engineering; dentistry; veterinary science; nursing and other research based professions, delivered in print and online. Products are sold and distributed globally online and in print through multiple channels, including research libraries; library consortia; subscription agents; direct sales to professional society member bookstores, online booksellers, and other customers. Publishing centers include Australia; Germany; Singapore; the United Kingdom and the United States. Professional/Trade includes the publishing of books, subscription content and information services in all media. Subject areas include business, technology, architecture, professional culinary, psychology, education, travel, health, religion, consumer reference, pets and general interest. Products are developed for worldwide distribution through multiple channels, including major retail chains and online booksellers, independent bookstores, libraries, colleges and universities, warehouse clubs, corporations, direct marketing and Web sites. Publishing centers include Australia, Canada, Germany, Singapore, the United Kingdom and the United States. Higher Education includes the publishing of educational materials in all media for two and four-year colleges and universities, for-profit career colleges and advanced placement classes, as well as for secondary schools in Australia. Higher education products focus on courses in business and accounting, sciences, engineering, computer science, math, social sciences and other academic course material for the professional technology market. Customers include undergraduate, graduate and advanced placement students, educators and lifelong -70- learners worldwide and secondary school students in Australia. Products are sold and delivered online and in print through multiple channels including college bookstore, online booksellers and direct sales to customers. The Company maintains centers in Australia, Canada, India, the United Kingdom and the United States. Segment information is as follows (in thousands) : 2009 For the years ended April 30, 2008 2007 Revenue Scientific, Technical, Medical and Scholarly Professional/Trade Higher Education $969,184 412,674 229,532 $975,797 471,785 226,152 $562,675 456,820 215,146 Total $1,611,390 $1,673,734 $1,234,641 Direct Contribution to Profit Scientific, Technical, Medical and Scholarly Professional/Trade Higher Education Total Shared Services and Administration Costs Distribution Technology Services Finance Other Administration Operating Income Interest Expense & Other, net Income Before Taxes Total Assets $399,156 94,620 61,677 $555,453 $(112,961) (93,413) (45,937) (84,664) Total $(336,975) $218,478 (54,003) $164,475 $384,170 136,619 68,270 $589,059 $(116,147) (95,412) (49,684) (102,605) $(363,848) $225,211 (63,683) $161,528 $240,446 127,841 62,996 $431,283 $(82,975) (71,799) (37,989) (77,039) $(269,802) $161,481 (21,979) $139,502 Scientific, Technical, Medical and Scholarly $1,380,991 $1,715,292 $1,726,303 Professional/Trade Higher Education Corporate/Shared Services 462,482 165,839 214,396 506,838 160,292 193,793 503,727 153,278 169,761 Total $2,223,708 $2,576,215 $2,553,069 Expenditures for Other Long Lived Assets Scientific, Technical, Medical and Scholarly Professional/Trade Higher Education Corporate/Shared Services Depreciation and Amortization Scientific, Technical, Medical and Scholarly Professional/Trade Higher Education Corporate/Shared Services $95,417 55,433 36,287 14,498 $83,464 50,638 20,117 15,967 $1,005,314 49,197 16,089 9,979 Total $201,635 $170,186 $1,080,579 $51,045 31,703 21,926 11,071 Total $115,745 -71- $52,101 32,322 20,924 10,576 $115,923 $32,084 28,788 18,272 9,180 $88,324 Export sales from the United States to unaffiliated customers amounted to approximately $142.3 million, $95.2 million, and $88.0 million in fiscal years 2009, 2008, and 2007, respectively. The pretax income for consolidated operations outside the United States was approximately $107.0 million, $122.4 million, and $58.2 million in 2009, 2008, and 2007, respectively. Revenue from external customers based on the location of the customer and long-lived assets by geographic area was as follows (in thousands): Revenue Long-Lived Assets 2009 2008 2007 2009 2008 2007 United States $812,416 $856,438 $711,665 $731,535 $702,722 $693,242 United Kingdom 126,190 131,642 Germany 88,336 91,130 94,556 66,333 845,681 1,203,700 1,221,676 140,507 149,403 142,477 Asia 220,107 209,436 111,910 3,309 2,789 Australia 65,084 76,530 Canada 67,189 68,609 51,068 51,280 44,618 48,411 4,424 5,073 Other Countries 232,068 239,949 147,829 - - 2,054 45,139 4,522 - Total $1,611,390 $1,673,734 $1,234,641 $1,770,074 $2,112,098 $2,109,110 Note 18 - Fair Value Measurements SFAS 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS 157 also establishes a fair value measurement hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The Company measures the fair value of its interest rate swap liabilities on a recurring basis using Level 2 inputs, which represent quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets. As of April 30, 2009, the fair value of interest rate swap liability was approximately $28.2 million. Note 19 (cid:177) Interest Income and Other, Net Included in interest income and other for fiscal year 2009 is a $4.6 million ($0.08 per diluted share) non-recurring insurance receipt. Note 20 (cid:177) Functional Currency Change Effective November 1, 2008, the Company changed its functional currency reporting basis for the non-Blackwell (cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:40)(cid:88)(cid:85)(cid:82)(cid:83)(cid:72)(cid:68)(cid:81)(cid:3)(cid:54)(cid:55)(cid:48)(cid:54)(cid:3)(cid:77)(cid:82)(cid:88)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:56)(cid:17)(cid:54)(cid:17)(cid:3)(cid:39)(cid:82)(cid:79)(cid:79)(cid:68)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:79)(cid:82)(cid:70)(cid:68)(cid:79)(cid:3)(cid:73)(cid:88)(cid:81)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:81)(cid:70)(cid:92)(cid:17)(cid:3)(cid:36)(cid:86)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3) integration of Blackwell and Wiley fulfillment systems and licensing practices, in the third quarter the Company began pricing journal revenue based on local currency in Europe. Prior to the integration, journal revenue was principally priced and reported in U.S. Dollars. This change primarily impacted business denominated in Euros and Sterling. -72- JOHN WILEY & SONS, INC., AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED APRIL 30, 2009, 2008, AND 2007 Schedule II (Dollars in thousands) Description Year Ended April 30, 2009 Additions/(Deductions) Balance at Beginning of Period Charged to Cost & Expenses From Acquisitions Deductions From Reserves(3) Balance at End of Period Allowance for Sales Returns (1) $55,483 $93,738 Allowance for Doubtful Accounts $8,025 $2,019 Allowance for Inventory Obsolescence $35,420 $28,405 Year Ended April 30, 2008 Allowance for Sales Returns (1) $56,148 $93,909 Allowance for Doubtful Accounts $11,206 $(638) Allowance for Inventory Obsolescence $32,244 $22,156 Year Ended April 30, 2007 $- $- $- $- $- $- $94,014 $55,207 $4,389(2) $5,655 $27,496 $36,329 $94,574 $55,483 $2,543(2) $8,025 $18,980 $35,420 Allowance for Sales Returns (1) $55,805 $102,293 $2,069 $104,019 $56,148 Allowance for Doubtful Accounts $6,615 $6,421 $1,577 $3,407(2) $11,206 Allowance for Inventory Obsolescence $30,716 $20,555 $5,843 $24,870 $32,244 Allowance for sales returns represents anticipated returns net of inventory and royalty costs. The provision is reported as a reduction of gross sales to arrive at revenue and the reserve balance is reported as a deduction of accounts receivable. Accounts written off, less recoveries. Deductions from reserves include foreign exchange translation adjustments. (1) (2) (3) -73- Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None Item 9A. Controls and Procedures Disclosure Controls and Procedures: As of the end of the period covered by this report, an evaluation was (cid:83)(cid:72)(cid:85)(cid:73)(cid:82)(cid:85)(cid:80)(cid:72)(cid:71)(cid:3) (cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:86)(cid:88)(cid:83)(cid:72)(cid:85)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:83)(cid:68)(cid:85)(cid:87)(cid:76)(cid:70)(cid:76)(cid:83)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3) (cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:71)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:68)(cid:86)(cid:3)(cid:86)(cid:88)(cid:70)(cid:75)(cid:3)(cid:87)(cid:72)(cid:85)(cid:80)(cid:3)(cid:76)(cid:86)(cid:3)(cid:71)(cid:72)(cid:73)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:53)(cid:88)(cid:79)(cid:72)(cid:3)(cid:20)(cid:22)(cid:68)-15(e) of the Exchange Act. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:71)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72) controls and procedures were effective in alerting them on a timely basis to information required to be included in our submissions and filings with the SEC. (cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:182)(cid:86)(cid:3) (cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3) (cid:82)(cid:81)(cid:3) (cid:44)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3) (cid:38)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3) (cid:82)(cid:89)(cid:72)(cid:85)(cid:3) (cid:41)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:29)(cid:3) (cid:3) Our Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control (cid:177) Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, our management concluded that our internal control over financial reporting is effective as of April 30, 2009. KPMG LLP, an independent registered public accounting firm, has audited the consolidated financial statements included in this Annual Report on Form 10-K and, as part of their audit, has issued their report, included herein, on the effectiveness of our internal control over financial reporting. Changes in Internal Control over Financial Reporting: There were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during fiscal year 2009. Item 9B. Other Information Information (cid:82)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:36)(cid:88)(cid:71)(cid:76)(cid:87)(cid:3) (cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)(cid:3) (cid:38)(cid:75)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:3) (cid:76)(cid:86)(cid:3) (cid:70)(cid:82)(cid:81)(cid:87)(cid:68)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3) (cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:51)(cid:85)(cid:82)(cid:91)(cid:92)(cid:3) (cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:21)(cid:19)(cid:19)(cid:28)(cid:3) (cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3) (cid:48)(cid:72)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:82)(cid:73)(cid:3) (cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3) (cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:179)(cid:38)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3) (cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:38)(cid:82)(cid:81)(cid:70)(cid:72)(cid:85)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:37)(cid:82)(cid:68)(cid:85)(cid:71)(cid:180)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:76)(cid:86)(cid:3) incorporated herein by reference. Information with respect to the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3) (cid:74)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:83)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:79)(cid:72)(cid:86)(cid:3) (cid:76)(cid:86)(cid:3) (cid:70)(cid:82)(cid:81)(cid:87)(cid:68)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3) (cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:51)(cid:85)(cid:82)(cid:91)(cid:92)(cid:3) (cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:21)(cid:19)(cid:19)(cid:28)(cid:3) (cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3) (cid:48)(cid:72)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:82)(cid:73)(cid:3) (cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3) (cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:179)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3) (cid:42)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3) (cid:51)(cid:85)(cid:76)(cid:81)(cid:70)(cid:76)(cid:83)(cid:79)(cid:72)(cid:86)(cid:180)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:86)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:75)(cid:72)(cid:85)(cid:72)(cid:76)(cid:81)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:17) -74- PART III Item 10. Directors and Executive Officers of the Registrant The name, age and background of each of the directors nominated for election are contained under the (cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:40)(cid:79)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:51)(cid:85)(cid:82)(cid:91)(cid:92)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:21)(cid:19)(cid:19)(cid:28)(cid:3)(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:48)(cid:72)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)(cid:3)(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3) incorporated herein by reference. Information on the beneficial ownership reporting for the directors and executive officers is contained under (cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:179)(cid:54)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:20)(cid:25)(cid:11)(cid:68)(cid:12)(cid:3)(cid:37)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:50)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:75)(cid:76)(cid:83)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:79)(cid:76)(cid:68)(cid:81)(cid:70)(cid:72)(cid:180)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:51)(cid:85)(cid:82)(cid:91)(cid:92)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:21)(cid:19)(cid:19)(cid:28)(cid:3) Annual Meeting of Shareholders and is incorporated herein by reference. Information on the audit committee financial experts is contained in the Proxy Statement for the 2009 Annual (cid:48)(cid:72)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:82)(cid:73)(cid:3) (cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3) (cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:179)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:36)(cid:88)(cid:71)(cid:76)(cid:87)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)(cid:180)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:76)(cid:86)(cid:3) (cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)ted herein by reference. Executive Officers Set forth below as of April 30, 2009 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. Name and Age Officer Since Present Office Peter Booth Wiley 2002 Chairman of the Board since September 2002 and a Director since 66 1984. William J. Pesce 1989 President and Chief Executive Officer and a Director since May 1998. 58 Ellis E. Cousens 2001 Executive Vice President and Chief Financial and Operations Officer. 57 Stephen A. Kippur 1986 Executive Vice President; and President, Professional and Trade 62 Publishing, since July 1998. William Arlington 1990 Senior Vice President, Human Resources, since June 1996. 60 Bonnie E. Lieberman 1990 Senior Vice President, Higher Education, since 1996. 61 -75- Gary M. Rinck 2004 Senior Vice President, General Counsel, (previously Group General 57 Counsel of Pearson PLC, from 2000, Managing Partner of the London office of Morrison & Foerster from 1995). Stephen M. Smith 1995 Executive Vice President and Chief Operating Officer since March 54 2009. (Previously Senior Vice President, EMEA & International Development since 2007). Eric A. Swanson 1989 Senior Vice President, Wiley-Blackwell since January 2007 (previously 61 Senior Vice President, Scientific Technical and Medical, since 1996). Deborah E. Wiley 1982 Senior Vice President, Corporate Communications, since June 1996. 63 Vincent Marzano 2006 Vice President, Treasurer, (previously Vice President, Treasurer of 46 Scholastic Corporation from 2000). Edward J. Melando 2002 Vice President, Corporate Controller and Chief Accounting Officer. 53 Josephine Bacchi 1992 Vice President and Corporate Secretary, since January 2007 62 (previously Corporate Secretary since 1992). Each of the other officers listed above will serve until the next organizational meetings of the Board of Directors of the Company and until each of the respective successors are duly elected and qualified. Deborah E. Wiley is the sister of Peter Booth Wiley. There is no other family relationship among any of the aforementioned individuals. Item 11. Executive Compensation Information on compensation of the directors and executive officers is contained in the Proxy Statement for (cid:87)(cid:75)(cid:72)(cid:3) (cid:21)(cid:19)(cid:19)(cid:28)(cid:3) (cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3) (cid:48)(cid:72)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:82)(cid:73)(cid:3) (cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3) (cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3) (cid:179)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:182)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:72)(cid:81)(cid:86)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:180)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:179)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:72)(cid:81)(cid:86)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:180)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:79)(cid:92)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:86)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:75)(cid:72)(cid:85)(cid:72)(cid:76)(cid:81)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:17) Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters (cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3) (cid:69)(cid:92)(cid:3) (cid:87)(cid:75)(cid:76)(cid:86)(cid:3) (cid:76)(cid:87)(cid:72)(cid:80)(cid:3) (cid:76)(cid:86)(cid:3) (cid:70)(cid:82)(cid:81)(cid:87)(cid:68)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3) (cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:51)(cid:85)(cid:82)(cid:91)(cid:92)(cid:3) (cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:21)(cid:19)(cid:19)(cid:28)(cid:3) (cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3) (cid:48)(cid:72)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:82)(cid:73)(cid:3) (cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3) (cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:179)(cid:37)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:50)(cid:90)(cid:81)(cid:72)(cid:85)(cid:86)(cid:75)(cid:76)(cid:83)(cid:3) (cid:82)(cid:73)(cid:3) (cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:48)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:180)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:76)(cid:86)(cid:3) incorporated herein by reference. Item 13. Certain Relationships and Related Transactions None. Item 14. Principal Accountant Fees and Services (cid:44)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3) (cid:69)(cid:92)(cid:3) (cid:87)(cid:75)(cid:76)(cid:86)(cid:3) (cid:76)(cid:87)(cid:72)(cid:80)(cid:3) (cid:76)(cid:86)(cid:3) (cid:70)(cid:82)(cid:81)(cid:87)(cid:68)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3) (cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:51)(cid:85)(cid:82)(cid:91)(cid:92)(cid:3) (cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) (cid:73)(cid:82)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:21)(cid:19)(cid:19)(cid:28)(cid:3) (cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3) (cid:48)(cid:72)(cid:72)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:82)(cid:73)(cid:3) (cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3) (cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:70)(cid:68)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:179)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:36)(cid:88)(cid:71)(cid:76)(cid:87)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)(cid:180)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:76)(cid:86)(cid:3) (cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:75)(cid:72)(cid:85)(cid:72)(cid:76)(cid:81)(cid:3) (cid:69)(cid:92)(cid:3) reference. -76- PART IV Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) Financial Statements and Schedules Financial Statements and Schedules are listed in the attached index on page 10 and are filed as part of this Report. (b) Reports on Form 8-K Earnings release on the third quarter fiscal 2009 results issued on Form 8-K dated March 10, 2009, which included certain condensed financial statements of the Company. Earnings release on the fiscal year 2009 results issued on Form 8-K dated June 18, 2009, which included certain condensed financial statements of the Company. Exhibits Agreement and Plan of Merger dated as of August 12, 2001, among the Company, HMI Acquisition Corp. (cid:68)(cid:81)(cid:71)(cid:3) (cid:43)(cid:88)(cid:81)(cid:74)(cid:85)(cid:92)(cid:3) (cid:48)(cid:76)(cid:81)(cid:71)(cid:86)(cid:15)(cid:3) (cid:44)(cid:81)(cid:70)(cid:17)(cid:3) (cid:11)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:69)(cid:92)(cid:3) (cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3) (cid:87)(cid:82)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3) (cid:82)(cid:81)(cid:3) (cid:41)(cid:82)(cid:85)(cid:80)(cid:3) (cid:27)-K dated as of August 12, 2001). Scheme of Arrangement dated as of November 21, 2006, among the Company, Wiley Europe Investment (cid:43)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:86)(cid:3)(cid:47)(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:37)(cid:79)(cid:68)(cid:70)(cid:78)(cid:90)(cid:72)(cid:79)(cid:79)(cid:3)(cid:51)(cid:88)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3)(cid:11)(cid:43)(cid:82)(cid:79)(cid:71)(cid:76)(cid:81)(cid:74)(cid:86)(cid:12)(cid:3)(cid:47)(cid:76)(cid:80)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:11)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) Report on Form 8-K dated as of November 21, 2006). (cid:53)(cid:72)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:38)(cid:72)(cid:85)(cid:87)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:87)(cid:72)(cid:3) (cid:82)(cid:73)(cid:3) (cid:44)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:11)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:69)(cid:92)(cid:3) (cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3) (cid:87)(cid:82)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3) (cid:82)(cid:81)(cid:3) (cid:41)(cid:82)(cid:85)(cid:80)(cid:3) (cid:20)(cid:19)-K for the year ended April 30, 1992). Certificate of Amendment of the Certificate of Incorporation dated October 13, 1995 (incorporated by reference (cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the year ended April 30, 1997). Certificate of Amendment of the Certificate of Incorporation dated as of September 1998 (incorporated by (cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-Q for the quarterly period ended October 31, 1998). Certificate of Amendment of the Certificate of Incorporation dated as of September 1999 (incorporated by (cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-Q for the quarterly period ended October 31, 1999). By-Laws as Amended and Restated dated as of September 2007 (incorporated by reference to the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the year ended April 30, 2008). Credit Agreement dated as of February 2, 2007, among the Company and Bank of America, N.A., as Administrative Agent and Swing Line Lender and the Other Lenders Party Hereto (incorporated by (cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:27)-K dated as of February 8, 2007). Agreement of the Lease dated as of June 7, 2006 between One Wiley Drive, LLC, an independent third (cid:83)(cid:68)(cid:85)(cid:87)(cid:92)(cid:15)(cid:3)(cid:68)(cid:86)(cid:3)(cid:79)(cid:68)(cid:81)(cid:71)(cid:79)(cid:82)(cid:85)(cid:71)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:45)(cid:82)(cid:75)(cid:81)(cid:3)(cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:54)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:15)(cid:3)(cid:68)(cid:86)(cid:3)(cid:55)(cid:72)(cid:81)(cid:68)(cid:81)(cid:87)(cid:3)(cid:11)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) Report on Form 10-K for the year ended April 30, 2006). Agreement of Lease dated as of August 4, 2000, between, Block A South Waterfront Development L.L.C., (cid:68)(cid:86)(cid:3)(cid:47)(cid:68)(cid:81)(cid:71)(cid:79)(cid:82)(cid:85)(cid:71)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:15)(cid:3)(cid:68)(cid:86)(cid:3)(cid:55)(cid:72)(cid:81)(cid:68)(cid:81)(cid:87)(cid:3)(cid:11)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3) 10-Q for the quarterly period ended July 31, 2000). Summary of Lease Agreement dated as of March 4, 2005, between, Investa Properties Limited L.L.C. as (cid:47)(cid:68)(cid:81)(cid:71)(cid:79)(cid:82)(cid:85)(cid:71)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:15)(cid:3)(cid:68)(cid:86)(cid:3)(cid:55)(cid:72)(cid:81)(cid:68)(cid:81)(cid:87)(cid:3)(cid:11)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the year ended April 30, 2005). (cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:3)(cid:54)(cid:87)(cid:82)(cid:70)(cid:78)(cid:3)(cid:51)(cid:79)(cid:68)(cid:81)(cid:3)(cid:11)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:39)(cid:72)(cid:73)(cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:51)(cid:85)(cid:82)(cid:91)(cid:92)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)nt date August, 2004). (cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:44)(cid:81)(cid:70)(cid:72)(cid:81)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:51)(cid:79)(cid:68)(cid:81)(cid:3)(cid:11)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:39)(cid:72)(cid:73)(cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:51)(cid:85)(cid:82)(cid:91)(cid:92)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) dated August 5, 2004). 2004 Key Employee Stock Plan as amended and restated effective December 18, 2008 (incorporated by (cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86) third quarter fiscal year 2009 report on Form 10-Q). Senior executive employment Agreement to Arbitrate dated as of April 29, 2003 (incorporated by reference (cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the year ended April 30, 2003). (c) 2.1 2.2 3.1 3.2 3.3 3.4 3.5 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 -77- 10.10 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 10.20 10.21 10.22 10.23 10.24 10.25 10.26 10.27 10.28 21* 23* Senior executive Non-competition and Non-disclosure Agreement dated as of April 29, 2003 (incorporated (cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the year ended April 30, 2003). 2005 Supplemental Executive Retirement (cid:51)(cid:79)(cid:68)(cid:81)(cid:3) (cid:11)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:69)(cid:92)(cid:3) (cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3) (cid:87)(cid:82)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3) (cid:82)(cid:81)(cid:3) Form 10-K for the year ended April 30, 2008). Form of the Fiscal Year 2010 Qualified Executive Long Term Incentive Plan (incorporated by reference to (cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the year ended April 30, 2009). Form of the Fiscal Year 2010 Qualified Executive Annual Incentive Plan (incorporated by reference to the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the year ended April 30, 2009). Form of the Fiscal Year 2010 Executive Annual Strategic Milestones Incentive Plan (incorporated by refer(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the year ended April 30, 2009). Form of the Fiscal Year 2009 Qualified Executive Long Term Incentive Plan (incorporated by reference to (cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the year ended April 30, 2008). Form of the Fiscal Year 2009 Qualified Executive Annual Incentive Plan (incorporated by reference to the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the year ended April 30, 2008). Form of the Fiscal Year 2009 Executive Annual Strategic Milestones Incentive Plan (incorporated by (cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the year ended April 30, 2008). Form of the Fiscal Year 2008 Qualified Executive Long Term Incentive Plan (incorporated by reference to (cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)Report on Form 10-K for the fiscal year ended April 30, 2007). Form of the Fiscal Year 2008 Qualified Executive Annual Incentive Plan (incorporated by reference to the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)Report on Form 10-K for the fiscal year ended April 30, 2007). Form of the Fiscal Year 2008 Executive Annual Strategic Milestones Incentive Plan (incorporated by (cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)Report on Form 10-K for the fiscal year ended April 30, 2007). Senior executive Employment Agreement dated as of December 1, 2008, between William J. Pesce and (cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:11)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) third quarter fiscal year 2009 report on Form 10-Q). Senior executive Employment Agreement dated as of March 1, 2003, between Stephen A. Kippur and the Com(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:11)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the year ended April 30, 2003). Senior executive Employment Agreement dated as of December 1, 2008, between Ellis E. Cousens and (cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:11)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) third quarter fiscal year 2009 report on Form 10-Q). Senior executive Employment Agreement letter dated as of March 1, 2003, between Eric A Swanson and the Company (incorporated by referen(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the year ended April 30, 2008). Senior executive Employment Agreement letter dated as of March 1, 2003, between Bonnie E. Lieberman (cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:11)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3) Form 10-K for the year ended April 30, 2008). (cid:39)(cid:72)(cid:73)(cid:72)(cid:85)(cid:85)(cid:72)(cid:71)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:72)(cid:81)(cid:86)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3) (cid:51)(cid:79)(cid:68)(cid:81)(cid:3) (cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:68)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:48)(cid:68)(cid:85)(cid:70)(cid:75)(cid:3) (cid:20)(cid:15)(cid:3) (cid:20)(cid:28)(cid:28)(cid:24)(cid:3) (cid:11)(cid:76)(cid:81)(cid:70)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:69)(cid:92)(cid:3) (cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:3) (cid:87)(cid:82)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) Report on Form 10-K for the year ended April 30, 2008). (cid:39)(cid:72)(cid:73)(cid:72)(cid:85)(cid:85)(cid:72)(cid:71)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:72)(cid:81)(cid:86)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:51)(cid:79)(cid:68)(cid:81)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:39)(cid:76)(cid:85)(cid:72)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:182)(cid:3)2005 & After Compensation (incorporated by reference to the report on Form 8-K, filed December 21, 2005). List of Subsidiaries of the Company Consent of KPMG LLP 31.1* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. -78- 31.2* Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.2* Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. * Filed herewith -79- 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. SIGNATURES JOHN WILEY & SONS, INC. (Company) By: /s/ William J. Pesce William J. Pesce President and Chief Executive Officer By: /s/ Ellis E. Cousens Ellis E. Cousens Executive Vice President and Chief Financial and Operations Officer By: /s/ Edward J. Melando Edward J. Melando Vice President, Controller and Chief Accounting Officer Dated: June 24, 2009 -80- 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 24, 2009. /s/ Warren J. Baker Warren J. Baker /s/ Eduardo R. Menascé Eduardo R. Menascé /s/ Richard M. Hochhauser Richard M. Hochhauser /s/ William J. Pesce William J. Pesce /s/ Kim Jones Kim Jones /s/ William B. Plummer William B. Plummer /s/ Mathew S. Kissner Mathew S. Kissner /s/ Bradford Wiley II Bradford Wiley II /s/ Raymond McDaniel, Jr. Raymond McDaniel, Jr. /s/ Peter Booth Wiley Peter Booth Wiley -81- SUBSIDIARIES OF JOHN WILEY & SONS, INC.(1) Exhibit 21 Jurisdiction In Which Incorporated John Wiley & Sons International Rights, Inc. JWS HQ, LLC JWS DCM, LLC Wiley-Liss, Inc. Wiley Publishing Services, Inc. Wiley Periodicals, Inc. Wiley Subscription Services, Inc. WWL Corp. John Wiley & Sons (Asia) Pte. Ltd. John Wiley & Sons Australia, Ltd. John Wiley & Sons Canada Limited John Wiley & Sons (HK) Limited Wiley HMI Holdings, Inc. Wiley Europe Investment Holdings, Ltd. Delaware New Jersey New Jersey Delaware Delaware Delaware Delaware Delaware Singapore Australia Canada Hong Kong Delaware United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom Singapore United Kingdom Blackwell Science (Overseas Holdings) United Kingdom Wiley Services Singapore Pte. Limited John Wiley & Sons, Ltd. Wiley Heyden Ltd. Wiley Distribution Services Ltd. Blackwell Publishing (Holdings) Ltd. Blackwell Publishing Ltd. Wiley U.K. (Unlimited Co.) Wiley Europe Ltd. Blackwell Science Ltd. Munksgaard Als Blackwell (cid:177) Verlag GmbH Blackwell Pub. Asia Put. Ltd. Blackwell Science KK Japan Blackwell Science (HK) Ltd. Denmark Germany Australia HMI Investment, Inc Wiley Publishing Inc. Wiley India Private Ltd. Wiley Publishing Australia Pty Ltd. John Wiley & Sons GmbH Wiley-VCH Verlag GmbH & Co. KGaA GIT Verlag GmbH & Co. KG Hong Kong Delaware Delaware India Australia Germany Germany Germany (1) The names of other subsidiaries that would not constitute a significant subsidiary in the aggregate have been omitted. -82- CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Exhibit 23 The Board of Directors and Stockholders John Wiley & Sons, Inc.: We consent to the incorporation by reference in the Registration Statement Nos. 333-123359, 333-93591, 33-60268 and 33-(cid:25)(cid:21)(cid:25)(cid:19)(cid:24)(cid:3) (cid:82)(cid:73)(cid:3) (cid:45)(cid:82)(cid:75)(cid:81)(cid:3) (cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:3) (cid:9)(cid:3) (cid:54)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3) (cid:44)(cid:81)(cid:70)(cid:17)(cid:3) (cid:11)(cid:87)(cid:75)(cid:72)(cid:3) (cid:179)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:180)(cid:12)(cid:3) (cid:82)(cid:73)(cid:3) (cid:82)(cid:88)(cid:85)(cid:3) (cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:86)(cid:3) (cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) June 24, 2009, with respect to the consolidated statements of financial position of John Wiley & Sons, Inc. as of April 30, 2009 and 2008, and the related (cid:70)(cid:82)(cid:81)(cid:86)(cid:82)(cid:79)(cid:76)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:15)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:75)(cid:82)(cid:79)(cid:71)(cid:72)(cid:85)(cid:86)(cid:182)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:85)(cid:72)(cid:75)(cid:72)(cid:81)(cid:86)(cid:76)(cid:89)(cid:72)(cid:3)(cid:76)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:73)(cid:79)(cid:82)(cid:90)(cid:86)(cid:15)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:72)(cid:68)(cid:70)(cid:75)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3) years in the three-year period ended April 30, 2009, and the related financial statement schedule, and the effectiveness of internal control over financial reporting as of April 30, 2009, which reports appear in the April 30, 2009 annual report on Form 10-K of John Wiley & Sons, Inc. /s/ KPMG LLP New York, New York June 24, 2009 -83- CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 (cid:44)(cid:15)(cid:3)(cid:58)(cid:76)(cid:79)(cid:79)(cid:76)(cid:68)(cid:80)(cid:3)(cid:45)(cid:17)(cid:3)(cid:51)(cid:72)(cid:86)(cid:70)(cid:72)(cid:15)(cid:3)(cid:51)(cid:85)(cid:72)(cid:86)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:38)(cid:75)(cid:76)(cid:72)(cid:73)(cid:3)(cid:40)(cid:91)(cid:72)(cid:70)(cid:88)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:50)(cid:73)(cid:73)(cid:76)(cid:70)(cid:72)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:45)(cid:82)(cid:75)(cid:81)(cid:3)(cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:3)(cid:9)(cid:3)(cid:54)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:180)(cid:12)(cid:15)(cid:3)(cid:75)(cid:72)(cid:85)(cid:72)(cid:69)(cid:92)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:76)(cid:73)(cid:92)(cid:3) that: Exhibit 31.1 1. I have reviewed this annual report on Form 10-K of the Company; 2. Based on my knowledge, this annual report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 4. (cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:76)(cid:73)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)(cid:73)(cid:76)(cid:70)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:44)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:86)(cid:83)(cid:82)(cid:81)(cid:86)(cid:76)(cid:69)(cid:79)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:72)(cid:86)(cid:87)(cid:68)(cid:69)(cid:79)(cid:76)(cid:86)(cid:75)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:68)(cid:76)(cid:81)(cid:87)(cid:68)(cid:76)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3) controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. 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(cid:39)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:68)(cid:81)(cid:92)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)financial reporting that (cid:82)(cid:70)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:71)(cid:3)(cid:71)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)(cid:73)(cid:76)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:73)(cid:82)(cid:88)(cid:85)(cid:87)(cid:75)(cid:3)(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:86)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3) an annual report) that has materially affected, or is reasonably likely to materially affect, the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85) financial reporting; and 5. (cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:76)(cid:73)(cid:92)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)(cid:73)(cid:76)(cid:70)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:44)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:72)(cid:71)(cid:15)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)(cid:72)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3) (cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:69)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3) directors (or persons performing the equivalent function): a. all significant deficiencies and material weaknesses in the design or operation of internal controls over (cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:85)(cid:72)(cid:68)(cid:86)(cid:82)(cid:81)(cid:68)(cid:69)(cid:79)(cid:92)(cid:3)(cid:79)(cid:76)(cid:78)(cid:72)(cid:79)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:71)(cid:89)(cid:72)(cid:85)(cid:86)(cid:72)(cid:79)(cid:92)(cid:3)(cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:15)(cid:3) process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:85)(cid:82)(cid:79)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:17) By: /s/ William J. Pesce William J. Pesce President and Chief Executive Officer Dated: June 24, 2009 -84- CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Ellis E. Cousens, Executive Vice President and Chief Financial and Operations Officer of John Wiley & Sons, Inc. (cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:180)(cid:12)(cid:15)(cid:3)(cid:75)(cid:72)(cid:85)(cid:72)(cid:69)(cid:92)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:76)(cid:73)(cid:92)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:29)(cid:3) Exhibit 31.2 1. I have reviewed this annual report on Form 10-K of the Company; 2. Based on my knowledge, this annual report does not contain any untrue statements of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; 4. 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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. (cid:40)(cid:89)(cid:68)(cid:79)(cid:88)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3) (cid:82)(cid:73)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:71)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3) (cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:83)(cid:85)(cid:82)(cid:70)(cid:72)(cid:71)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3) (cid:76)(cid:81)(cid:3) this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and d. (cid:39)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:72)(cid:71)(cid:3) (cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:76)(cid:86)(cid:3) (cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3) (cid:68)(cid:81)(cid:92)(cid:3) (cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3) (cid:76)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3) (cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3) (cid:82)(cid:89)(cid:72)(cid:85)(cid:3) (cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:87)(cid:75)(cid:68)(cid:87)(cid:3) (cid:82)(cid:70)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:71)(cid:3)(cid:71)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:80)(cid:82)(cid:86)(cid:87)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:81)(cid:87)(cid:3)(cid:73)(cid:76)(cid:86)(cid:70)(cid:68)(cid:79)(cid:3)(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:73)(cid:82)(cid:88)(cid:85)(cid:87)(cid:75)(cid:3)(cid:84)(cid:88)(cid:68)(cid:85)(cid:87)(cid:72)(cid:85)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:86)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3) an annual report) that has materially affected, or is reasonably likely to materially affect, the (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3) 5. (cid:55)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)(cid:70)(cid:72)(cid:85)(cid:87)(cid:76)(cid:73)(cid:92)(cid:76)(cid:81)(cid:74) officer and I have disclosed, based on our most recent evaluation of internal (cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:15)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:88)(cid:71)(cid:76)(cid:87)(cid:3)(cid:70)(cid:82)(cid:80)(cid:80)(cid:76)(cid:87)(cid:87)(cid:72)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:69)(cid:82)(cid:68)(cid:85)(cid:71)(cid:3)(cid:82)(cid:73)(cid:3) directors (or persons performing the equivalent function): a. all significant deficiencies and material weaknesses in the design or operation of internal controls over (cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) (cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) (cid:87)(cid:75)(cid:68)(cid:87)(cid:3) (cid:68)(cid:85)(cid:72)(cid:3) (cid:85)(cid:72)(cid:68)(cid:86)(cid:82)(cid:81)(cid:68)(cid:69)(cid:79)(cid:92)(cid:3) (cid:79)(cid:76)(cid:78)(cid:72)(cid:79)(cid:92)(cid:3) (cid:87)(cid:82)(cid:3) (cid:68)(cid:71)(cid:89)(cid:72)(cid:85)(cid:86)(cid:72)(cid:79)(cid:92)(cid:3) (cid:68)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3) (cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3) (cid:87)(cid:82)(cid:3) (cid:85)(cid:72)(cid:70)(cid:82)(cid:85)(cid:71)(cid:15)(cid:3) process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a (cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:85)(cid:82)(cid:79)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:182)(cid:86)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:81)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:17) By: /s/ Ellis E. Cousens Ellis E. Cousens Executive Vice President and Chief Financial and Operations Officer Dated: June 24, 2009 -85- CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Exhibit 32.1 (cid:44)(cid:81)(cid:3)(cid:70)(cid:82)(cid:81)(cid:81)(cid:72)(cid:70)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:45)(cid:82)(cid:75)(cid:81)(cid:3)(cid:58)(cid:76)(cid:79)(cid:72)(cid:92)(cid:3)(cid:9)(cid:3)(cid:54)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:180)(cid:12)(cid:3)(cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the year ended (cid:36)(cid:83)(cid:85)(cid:76)(cid:79)(cid:3)(cid:22)(cid:19)(cid:15)(cid:3)(cid:21)(cid:19)(cid:19)(cid:28)(cid:3)(cid:68)(cid:86)(cid:3)(cid:73)(cid:76)(cid:79)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:91)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:71)(cid:68)(cid:87)(cid:72)(cid:3)(cid:75)(cid:72)(cid:85)(cid:72)(cid:82)(cid:73)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:180)(cid:12)(cid:15)(cid:3)(cid:44)(cid:15)(cid:3)(cid:58)(cid:76)(cid:79)(cid:79)(cid:76)(cid:68)(cid:80)(cid:3)(cid:45)(cid:17)(cid:3) Pesce, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. By: /s/ William J. Pesce William J. Pesce President and Chief Executive Officer Dated: June 24, 2009 -86- CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Exhibit 32.2 In connection with the Annual Report of John Wiley & (cid:54)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:44)(cid:81)(cid:70)(cid:17)(cid:3)(cid:11)(cid:87)(cid:75)(cid:72)(cid:3)(cid:179)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:180)(cid:12)(cid:3) (cid:82)(cid:81)(cid:3)(cid:41)(cid:82)(cid:85)(cid:80)(cid:3)(cid:20)(cid:19)-K for the year ended (cid:36)(cid:83)(cid:85)(cid:76)(cid:79)(cid:3) (cid:22)(cid:19)(cid:15)(cid:3) (cid:21)(cid:19)(cid:19)(cid:28)(cid:3) (cid:68)(cid:86)(cid:3) (cid:73)(cid:76)(cid:79)(cid:72)(cid:71)(cid:3) (cid:90)(cid:76)(cid:87)(cid:75)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:54)(cid:72)(cid:70)(cid:88)(cid:85)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3) (cid:68)(cid:81)(cid:71)(cid:3) (cid:40)(cid:91)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3) (cid:38)(cid:82)(cid:80)(cid:80)(cid:76)(cid:86)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3) (cid:82)(cid:81)(cid:3) (cid:87)(cid:75)(cid:72)(cid:3) (cid:71)(cid:68)(cid:87)(cid:72)(cid:3) (cid:75)(cid:72)(cid:85)(cid:72)(cid:82)(cid:73)(cid:3) (cid:11)(cid:87)(cid:75)(cid:72)(cid:3) (cid:179)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:180)(cid:12)(cid:15)(cid:3) (cid:44)(cid:15)(cid:3) (cid:40)(cid:79)(cid:79)(cid:76)(cid:86)(cid:3) (cid:40)(cid:17)(cid:3) Cousens, Executive Vice President and Chief Financial and Operations Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. By: /s/ Ellis E. Cousens Ellis E. Cousens Executive Vice President and Chief Financial and Operations Officer Dated: June 24, 2009 -87- am Stephen A. Kippur Clifford Kline Bonnie Lieberman Gary M. Rinck Stephen M. Smith Eric A. Swanson Deborah E. Wiley J O S E P H I N E B A C C H I - M O U R T Z I O U Josephine (Jo) Bacchi-Mourtziou retired from Wiley as Vice President and Corporate Secretary on July 31, 2009, after nearly 43 years with the Company. Following her graduation from high school, Jo served in the ofﬁ ce of the Brooklyn District Attorney for two years. She joined Wiley in 1966 as a secretary in Customer Service. In 1977, Jo became Administrative Assistant to W. Bradford Wiley, who was Chairman and CEO at the time. Further promotions led to her becoming Corporate Secretary in 1992. Attending night classes, she earned her Bachelor of Arts degree from Marymount Manhattan College in 1997 and was named Vice President and Corporate Secretary in 2007. Jo brought new meaning to the words learning on the job. As Wiley evolved, so did Jo. During her more than four decades of dedicated service, she performed her responsibilities as the consummate professional. Known for her total dedication to Wiley, Jo is admired and respected by her colleagues around the world for her thoughtful and ethical approach to everything she has done at and for our Company. We also learned to appreciate her wonderful sense of humor. We wish our esteemed colleague, Josephine Bacchi-Mourtziou, all the best that life has to offer. She truly deserves it. B O A R D O F D I R E C T O R S Peter Booth Wiley Chairman Warren J. Baker2,3 President California Polytechnic State University at San Luis Obispo Richard M. Hochhauser2 Adjunct Professor New York University Kim Jones4 President and Managing Director, U.K. and Ireland Sun Microsystems, Inc. Matthew S. Kissner1,3 President and Chief Executive Ofﬁ cer The Kissner Group LLC Raymond W. McDaniel, Jr.4 Chairman and Chief Executive Ofﬁ cer Moody‘s Corporation Eduardo Menascé1,3 Retired President, Enterprise Solutions Group Verizon Communications, Inc. William J. Pesce1 President and Chief Executive Ofﬁ cer William B. Plummer2 Executive Vice President and Chief Financial Ofﬁ cer United Rentals, Inc. Bradford Wiley II4 1. Executive Committee 2. Audit Committee 3. Compensation Committee 4. Governance Committee C O R P O R A T E A N D B U S I N E S S O F F I C E R S Mark Allin Vice President Wiley Asia-Paciﬁ c Jim Dicks Chief Financial and Operations Ofﬁ cer Wiley Europe Bijan Ghawami Chief Financial and Operations Ofﬁ cer John Wiley & Sons GmbH Heather Linaker Managing Director Wiley Australia Vincent Marzano Vice President and Treasurer Edward J. Melando Vice President Corporate Controller Chief Accounting Ofﬁ cer Michael L. Preston Corporate Secretary Bill Zerter Chief Operating Ofﬁ cer John Wiley & Sons Canada, Ltd. TO CONTACT THE NON- MANAGEMENT DIRECTORS: Non-Management Directors c/o Corporate Secretary John Wiley & Sons, Inc. 111 River Street Mail Stop 7-02 Hoboken, NJ 07030-5774 Email: non-managementdirectors@wiley. com INVESTOR RELATIONS Brian Campbell Director, Investor Relations 201.748.6874 brian.campbell@wiley.com W I L E Y L E A D E R S H I P T E A M William J. Pesce President and Chief Executive Ofﬁ cer Stephen M. Smith* Executive Vice President and Chief Operating Ofﬁ cer William J. Arlington Senior Vice President Human Resources Ellis E. Cousens Executive Vice President and Chief Financial and Operations Ofﬁ cer Warren C. Fristensky Senior Vice President Information Technology Chief Information Ofﬁ cer Stephen A. Kippur Executive Vice President and President Professional/Trade C O R P O R A T E I N F O R M A T I O N TRANSFER AGENT Registrar and Transfer Company 10 Commerce Drive Cranford, NJ 07016 Telephone: 800.368.5948 Email: info@rtco.com Web site: www.rtco.com INDEPENDENT PUBLIC ACCOUNTANTS KPMG LLP 345 Park Avenue New York, NY 10154 ANNUAL MEETING to be held on Thursday, September 17, 2009, at 9:30 A.M. local time, at Company Headquarters, 111 River Street, Hoboken, NJ 07030-5774 Clifford Kline Senior Vice President Customer and Product Support Operations Bonnie Lieberman Senior Vice President and General Manager Higher Education Gary M. Rinck Senior Vice President and General Counsel Eric A. Swanson Senior Vice President Scientiﬁ c, Technical, Medical, and Scholarly Deborah E. Wiley Senior Vice President Corporate Communications * Appointed COO in May 2009. Previously was Senior Vice President, Europe, Middle East & Africa and International Development. DIVIDENDS On June 18, 2009, the Board of Directors approved a quarterly dividend of $0.14 per share on both Class A Common and Class B Common shares, payable on July 14, 2009, to shareholders of record as of July 6, 2009. EMPLOYMENT John Wiley & Sons, Inc., is an equal opportunity employer. CERTIFICATIONS The Company has ﬁ led the required certiﬁ cations under Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 as Exhibits 31.1, 31.2, 32.1, and 32.2 to our annual report on Form 10-K for the ﬁ scal year ended April 30, 2009. Following the 2009 Annual Meeting of shareholders, the Company intends to ﬁ le with the New York Stock Exchange the CEO certiﬁ cation regarding the Company’s compliance with the NYSE’s corporate governance listing standards as required by NYSE rule 303A.12. Last year the Company ﬁ led this CEO certiﬁ cation with the NYSE on September 22, 2008, without qualiﬁ cation. highlights For the fiscal year ended April 30 2009 2008 excluding FX including FX rEvENuE $ 1,611,390,000 $ 1,673,734,000 opErAtiNG iNComE $ 218,478,000 $ 225,211,000 3% 11% (4%) (3%) CHANGE NEt iNComE adjusted b gaap EArNiNGs pEr dilutEd sHArE adjusted b gaap rEturN oN Equity adjusted b gaap dividENds pEr sHArE class a common class b common $ 128,258,000 $ 128,873,000 $ 128,258,000 $ 147,536,000 23% 7% —% (13%) $ $ $ $ 2.15 2.15 $ $ 22% 21% 0.52 0.52 $ $ 2.17 2.49 22% 24% 0.44 0.44 22% 6% (1%) (14%) n/a n/a 18% 18% 2009 revenue By CORE BUSINESS Scientific, Technical, 60% Medical, and Scholarly 26% Professional/Trade 14% Higher Education 4% CANADA 50% UNITED STATES 24% EUROPE 3% OTHER 2009 revenue By LOCATION OF CUSTOMER 14% ASIA C o r p o r a t e H e a d q u a r t e r s , M a i n o f f i C e s , a n d d i s t r i b u t i o n C e n t e r s North AmericA Corporate Headquarters John Wiley & Sons, Inc. 111 River Street Hoboken, NJ 07030-5774 Telephone: 201.748.6000 Facsimile: 201.748.6088 Email: info@wiley.com Web site: www.wiley.com 350 Main Street Commerce Place Malden, MA 02148 Telephone: 781.388.8200 Facsimile: 781.388.8210 989 Market Street San Francisco, CA 94103-1741 Telephone: 415.433.1740 Facsimile: 415.433.0499 10475 Crosspoint Blvd. Indianapolis, IN 46256 Telephone: 317.572.3000 Facsimile: 317.572.4000 2121 State Avenue Ames, IA 50014-8300 Telephone: 515.292.0140 Facsimile: 515.292.3348 U.S. Distribution Center 1 Wiley Drive Somerset, NJ 08875-1272 Telephone: 800.225.5945 Facsimile: 732.302.2300 Email: custserv@wiley.com Wiley customer Service Support centers are located in North America, europe, Asia, and Australia for books, journals, and online customers. to contact a center near you, visit www.wiley.com and select “contact Us” in the green toolbar. 5353 Dundas Street West Suite 400 Toronto, Ontario Canada M9B 6H8 Telephone: 416.236.4433 Facsimile: 416.236.8743 Email: canada@wiley.com Canadian Distribution Center 6045 Freemont Blvd. Mississauga, Ontario Canada L5R 4J3 Telephone: 416.236.4433 Facsimile: 416.236.8743 eUrope The Atrium Southern Gate, Chichester West Sussex PO19 8SQ England Telephone: 44.1243.779777 Facsimile: 44.1243.775878 Email: customer@wiley.co.uk 9600 Garsington Road Oxford OX4 2DQ England Telephone: 44.1865.776868 Facsimile: 44.1865.714591 1 Rosenørns Allé DK-1970 Frederiksberg C Denmark Telephone: 45.7733.3333 Facsimile: 45.7733.3377 101 George Street Edinburgh EH2 3ES Scotland Telephone: 44.131.226.7232 Facsimile: 44.131.226.3803 Boschstrasse 12 D-69469 Weinheim Germany Telephone: 49.6201.6060 Facsimile: 49.6201.606328 Email: info@wiley-vch.de European Distribution Center 1 Oldlands Way Bognor Regis West Sussex PO22 9SA England Telephone: 44.1243.779777 Facsimile: 44.1243.850250 SuSan Spilka Corporate Communications Director / BernharDt FuDyma DeSign group Concept and Design SpenCer JoneS product photography / Bill haywarD portrait photography / graytor printing Company printing AUStrAliA 42 McDougall Street Milton, Queensland 4064 Australia Telephone: 61.7.3859.9755 Facsimile: 61.7.3859.9715 Email: brisbane@johnwiley.com.au 155 Cremorne Street Richmond, Victoria 3121 Australia Telephone: 61.3.9274.3100 Facsimile: 61.3.9274.3101 Email: melbourne@johnwiley.com.au Australian Distribution Center 33 Windorah Street Stafford, Queensland 4053 Australia Telephone: 61.7.3354.8455 Facsimile: 61.7.3352.7109 ASiA 2 Clementi Loop #02-01 Singapore 129809 Telephone: 65.64632400 Facsimile: 65.64634605 Email: enquiry@wiley.com.sg 600 North Bridge Road #05-01 Parkview Square Singapore 188778 Telephone: 65.65118188 Facsimile: 65.65118288 Frontier Koishikawa Bldg., 4F 1-28-1 Koishikawa, Bunkyo-Ku Tokyo 112-0002 Japan Telephone: 81.3.3830.1232 Facsimile: 81.3.5689.7276 4435-36/7, Ansari Road Darya Ganj, New Delhi 110 002 India Telephone: 91.11.4636.0000/01 Facsimile: 91.11.2327.5895 Asian Distribution Center 2 Clementi Loop #02-01 Singapore 129809 Telephone: 65.64632400 Facsimile: 65.64634605 Email: enquiry@wiley.com.sg This document is a publication of Wiley’s Corporate Communications department. An electronic version of this report is available online at www.wiley.com. This annual report is printed on FSC-certified paper from mixed sources. Cert no. SGS-COC-003604 BF55539_Cover.indd 2 7/16/09 10:21:25 AM financial john wiley & sons, inc. 111 River Street Hoboken, NJ 07030-5774 201.748.6000 www.wiley.com john wiley & sons, inc. 2009 annual report solutions connecting people, products, and knowledge BF55539_Cover.indd 1 7/16/09 9:45:39 AM

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